<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K



[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the fiscal year ended March 31, 1997

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 5-10065

                           EARLE M. JORGENSEN COMPANY
             (Exact name of registrant as specified in its charter)

               Delaware                                     95-0886610
     ----------------------------                           ----------
     (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                        Identification No.)

     3050 East Birch Street, Brea, California               92822
     ----------------------------------------               -----
     (Address of principal executive offices)              (Zip Code)

                Registrant's telephone number:    (714) 579-8823
                                                  --------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes  X   No
    ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]


State the aggregate market value of the voting stock held by non-affiliates of
the registrant.  None
                 ----

Number of shares outstanding of the registrant's common stock, par value $.01
per share at May 31, 1997 - 128 shares


<PAGE>

                                     PART I

SAFE HARBOR ACT STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:  SOME OF THE INFORMATION CONTAINED IN THIS REPORT IS FORWARD LOOKING AND
INVOLVES RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY IMPACT EXPECTED
RESULTS.  WHILE IT IS IMPOSSIBLE TO ITEMIZE THE MANY FACTORS AND SPECIFIC EVENTS
THAT COULD AFFECT THE COMPANY'S OUTLOOK, THE STATEMENTS CONTAINED HEREIN ARE
BASED ON EXPECTATIONS REGARDING FUTURE SALES, COMMITMENTS, EXPENSES AND THE
COSTS OF GOODS SOLD.  EACH OF SUCH ITEMS COULD BE FURTHER AFFECTED BY THE IMPACT
OF GENERAL ECONOMIC FACTORS AND CONDITIONS IN THE METALS DISTRIBUTION INDUSTRY
AND IN THE INDUSTRIES IN WHICH THE COMPANY'S CUSTOMERS OPERATE.


ITEM 1.   BUSINESS

          Earle M. Jorgensen Company (the "Company") is one of the largest
independent distributors of metal products in the United States.  The Company
was formed on May 3, 1990, in a transaction structured by Kelso & Companies Inc.
("Kelso"), through the combination of two leading metals distributors, Earle M.
Jorgensen Company ("EMJ") (founded in 1921) and Kilsby-Roberts Holding Co.
("Kilsby") (successor to C.A. Roberts Company, founded in 1915).  In connection
with the combination of EMJ and Kilsby, the Company became a wholly owned
subsidiary of Earle M. Jorgensen Holding Company, Inc. ("Holding").  The events,
activities and transactions associated with the Company becoming a wholly owned
subsidiary of Holding are together sometimes hereinafter referred to as the
"Acquisition."

THE COMPANY

          The Company is one of the largest independent distributors of metals
products in the United States, with approximately 2,300 full-time employees.
The Company operates a domestic network of 25 service centers, one sales office,
one merchandising office, one cutting center, two tube honing facilities and
four plate processing centers.  In addition, the Company operates five foreign
service centers.  The Company sells metal in a wide variety of capital goods
related industries. Sales orders are filled from stock inventory maintained at
company facilities (stock sales) and by arranging direct shipments from mills to
the Company's customers (mill-direct sales).  The Company's foreign service
centers are operated through wholly-owned subsidiaries in the United Kingdom,
Canada and Mexico that together accounted for approximately 6.2% of revenues in
fiscal 1997.  See "Business--Foreign Operations."

          Since the merger in 1990, the Company has initiated various programs,
including the consolidation and sale of facilities, to align its operations with
its strategic goals.  In fiscal 1996, the Company implemented a plan designed to
enhance operating productivity and efficiencies resulting in workforce
reductions and asset write-downs.  On January 30, 1997, the Company elected a
new President, Chief Executive Officer and Chief Operating Officer.  Under his
direction the Company developed a plan to restructure and realign its operations
and to further reduce its workforce.  In March 1997, the Company began
implementing its 1997 restructuring which, among other things, included the
closure of service centers in Birmingham, Alabama; Hartford, Connecticut;
Detroit, Michigan and Buffalo, New York, the elimination of its flat-rolled
processing center, and the consolidation of its two honing operations.  The
Company anticipates that it will be able to continue to serve substantially all
of its customers of the closed facilities from other nearby facilities.  In
addition, the Company is currently in negotiations for the sale of its
operations in Hawaii, the United Kingdom and Mexico.  See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
General".

          The Company's primary business goal is to increase market share while
maintaining its gross margins.  The Company believes its market penetration,
reputation for quality and customer service, economies of scale and broad
product lines make it a strong competitor in the metals distribution industry.
See "Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations--General."  The Company has invested significant resources
to upgrade its management information and financial reporting system. The new
system, named "WIN", for  "worldwide information network", was brought on line
in February 1995.  Management believes the WIN system provides the Company with
improved information processing capabilities over its former systems.  The
Company is using WIN to support electronic commerce, including electronic data
interchange ("EDI"), remote inquiry and order ("RIO") and other productivity
enhancing functions, to better serve its customers and suppliers.


                                        1
<PAGE>

CUSTOMERS AND MARKETS

          The Company services the steel or aluminum requirements of over 40,000
active customers throughout the United States in a wide variety of industries,
including machinery manufacturing, transportation, fabricated metal products,
aerospace, oil tools, construction, shipbuilding, plastics, chemicals,
petrochemicals, farm equipment, food processing, energy and environmental
control. The Company is not dependent on any single customer, and during fiscal
1997 no single customer accounted for more than 4% of its revenues.

          During fiscal 1997, the Company handled approximately 8,300 sales
transactions per business day generating an average revenue of approximately
$490 per transaction. Stock sales represented approximately 86% of Company
revenues in fiscal 1997.  Special requirements of the customer are met by
arranging mill-direct sales and by making buy-outs from other distributors of
items the Company does not maintain as stock inventory.  Such sales generally
have lower margins than stock sales, but provide a valuable customer service.

          The vast majority of sales are from individual orders and are not
subject to ongoing contracts; however, the Company enters into contracts to
purchase and supply specific products over a period of a year or longer.  Such
contracts provide the customer with greater certainty as to timely delivery,
price stability and continuity of supply, and sometimes satisfy particular
processing or inventory management requirements.  Such contracts have resulted
in new customer relationships and increased sales volumes for the Company, but
generally, have a slightly lower gross margin than ordinary sales.  Such
contracts, in the aggregate, represented less than 10% of Company revenues in
fiscal 1997.

SEASONAL FLUCTUATIONS AND BACKLOG

          Seasonal fluctuations in the Company's business generally occur in the
summer months and in November and December, when many customers' plants are
closed for vacations. Order backlog is not a significant factor in the business
of the Company, as orders are generally filled within 24 hours.

PRODUCTS

          The Company has designated certain carbon and alloy, aluminum, and
stainless commodities as core product offerings under its Bar, Tubing and Pipe,
Plate, and Sheet product lines. The Company is committed to stocking a broad
range of shapes and sizes of each of these commodities in each service center
(unless there is no market for the product line at a particular location), and
each service center is expected to be a market leader in the Company's core
product lines in its geographic area. In addition to stocking core products,
each service center tailors its inventory to the customer and market
requirements of its geographic area.

          Major markets for the Company's products include construction, farm
and other special machinery, aircraft and aerospace components, biomedical,
defense, automotive and truck manufacturing, shipbuilding and repair, oil
refining and exploration, chemical and petrochemical and utilities. Carbon steel
products (hot-rolled and cold-finished) are used in construction equipment, farm
equipment, automotive and truck manufacturing, shipbuilding and oil exploration
as well as a wide range of other products. Stainless steel is used widely in the
chemical, petrochemical, oil refining and biomedical industries where resistance
to corrosion is important. Aluminum is frequently used in aircraft and aerospace
applications where weight is a factor. Different tubing products are appropriate
for particular uses based on different characteristics of the tubing materials,
including strength, weight, resistance to corrosion and cost. Carbon pipe and
tubing are used in general manufacturing. Alloy tubing is used primarily in the
manufacturing of oil field equipment and farm equipment. Stainless steel pipe
and tubing are used in applications requiring a high resistance to corrosion,
such as food processing. Aluminum pipe and tubing are used in applications that
put a premium on light weight (such as aerospace manufacturing).


                                        2
<PAGE>

          The following table sets forth a percentage breakdown of revenue from
stock sales (excludes mill-direct revenue and buy-outs) by product group for
U.S. operations for the last three fiscal years ended March 31, 1997.

                             PERCENTAGE BREAKDOWN OF
                   REVENUES FROM STOCK SALES BY PRODUCT GROUP


<TABLE>
<CAPTION>

                                                                        (PERCENTAGES)
                                                                      FISCAL YEAR ENDED
                                                                           MARCH 31,
                                                                   ------------------------
                                                                   1997      1996      1995
                                                                   ------------------------
<S>    <C>                                                         <C>        <C>      <C>
BARS:
      Carbon and Alloy . . . . . . . . . . . . . . . . . . .        33.9      32.6      37.1
      Stainless. . . . . . . . . . . . . . . . . . . . . . .        13.6      14.2      12.0
      Aluminum.. . . . . . . . . . . . . . . . . . . . . . .         5.5       5.7       6.6
                                                                   -----     -----     -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . .        53.0      52.5      55.7
                                                                   -----     -----     -----

TUBING AND PIPE:
      Carbon and Alloy . . . . . . . . . . . . . . . . . . .        26.8      26.4      26.0
      Stainless. . . . . . . . . . . . . . . . . . . . . . .         3.7       3.8       3.5
      Aluminum.. . . . . . . . . . . . . . . . . . . . . . .         3.6       3.7       3.3
                                                                   -----     -----     -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . .        34.1      33.9      32.8
                                                                   -----     -----     -----
PLATE:
      Carbon.. . . . . . . . . . . . . . . . . . . . . . . .         5.6       5.4       4.8
      Stainless. . . . . . . . . . . . . . . . . . . . . . .         1.8       2.2       1.1
      Aluminum.. . . . . . . . . . . . . . . . . . . . . . .         2.5       2.8       2.2
                                                                   -----     -----     -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . .         9.9      10.4       8.1
                                                                   -----     -----     -----

SHEET:
      Carbon . . . . . . . . . . . . . . . . . . . . . . . .         0.5       0.6       1.0
      Stainless. . . . . . . . . . . . . . . . . . . . . . .         0.6       0.9       0.7
      Aluminum.. . . . . . . . . . . . . . . . . . . . . . .         1.8       1.5       1.3
                                                                   -----     -----     -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.9       3.0       3.0
                                                                   -----     -----     -----
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .         0.1       0.2       0.4
                                                                   -----     -----     -----
                                                                   100.0     100.0     100.0
                                                                   -----     -----     -----
                                                                   -----     -----     -----
Revenues from stock sales as a percentage of total revenues.        85.7      83.4      79.5
                                                                   -----     -----     -----
                                                                   -----     -----     -----
</TABLE>

INTELLECTUAL PROPERTY AND LICENSES

          The Company has registered "EMJ" as a trademark and service mark in
the United States and in other countries where it does or expects to do
business.

          The Company considers certain other information owned by it to be
trade secrets and the Company takes measures to protect the confidentiality and
control the disclosure of such information.  The Company believes that these
safeguards


                                        3
<PAGE>

adequately protect its proprietary rights and the Company vigorously defends
these rights.  While the Company considers all of its intellectual property
rights as a whole to be important, the Company does not consider any single
right to be essential to its operations.

MANAGEMENT INFORMATION SYSTEMS

          In February 1995, the Company implemented a new management information
system that integrated three different systems the Company had operated in prior
years into one system for most Company operations.  While the transition to the
new system was disruptive and required a Company-wide training effort and
changes in operational processes, the new system is designed to increase the
Company's ability to analyze and manage the operations and improve the
productivity of the Company and its customers and suppliers.  The new system
enhances the Company's ability to utilize electronic commerce in dealing with
its customers and suppliers, including EDI, RIO, bar coding and other functions
that can result in more efficiency and greater productivity for all users.  The
Company's Information Technology Department continues to refine and upgrade the
new system to provide better information and services for its employees and
customers.

SUPPLIERS

          In March 1997, the Company consolidated its purchasing functions in
Brea, California and Chicago to its merchandising office in Chicago.  Purchases
are made by specialists in each of the Company's major product lines. The
Company concentrates on developing close working relationships with high-quality
suppliers to ensure quality and timely delivery to the Company's customers.

          The vast majority of the Company's purchases are made by purchase
order and the Company has no significant supply contracts with periods in excess
of one year. The Company is not dependent on any single supplier for a material
portion of its purchases, and in fiscal year 1997 no single supplier represented
more than 10% of its total purchases. The Company purchased less than 3% of its
inventory requirements from foreign based suppliers in fiscal 1997.

EMPLOYEES

          As of May 31, 1997, the Company employed approximately 2,300 persons,
of whom approximately 1,400 were in production or shipping, 450 were in sales
and 450 served in executive, administrative or office capacities.
Approximately 800 of the Company's employees from nineteen locations are
represented by four different unions.  The related collective bargaining
agreements expire on staggered dates between August 1997 and May 2001.  The
Company believes that it has a good overall relationship with its employees.  As
of May 31, 1997, the Company had terminated the employment of 154 employees
pursuant to the 1997 restructuring plan.  The Company anticipates that upon
completion of the 1997 restructuring plan, including the disposition of
operations, the aggregate reduction of employees will be approximately 300.

FOREIGN OPERATIONS

          The Company's five service centers outside the United States operate
through three wholly-owned foreign subsidiaries:  Kilsby Jorgensen Steel &
Aluminium Ltd., a United Kingdom limited liability company; Earle M. Jorgensen
(Canada) Inc., a Canadian limited liability company; and Kilsby Jorgensen Steel
& Aluminum S.A. de C.V., a Mexican limited liability company.  The foreign
service centers carry product lines tailored to the customers and the markets
they serve.  For the fiscal years ended March 31, 1997, 1996 and 1995, revenues
from foreign operations totaled $63.8 million, $66.7 million and $58.7 million
or 6.2%, 6.5% and 5.7% of the Company's total revenues, respectively.

          As of March 1997, the foreign operations in the United Kingdom and in
Mexico were being held for sale.  See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations".  The Company intends
to continue its operations in Canada.

COMPETITION

          The metals service center industry is highly fragmented and generally
competes on price, product availability, timely delivery, reliability, quality
and processing capability.  Apart from price, these services are all "value-
added" services provided by metals service centers to lower customers' overall
costs.  The industry includes both general-line distributors,  which handle a
wide range of metal products, and specialty distributors, which specialize in
particular categories of metal products.  Metals service centers range from
nationwide to regional and local in geographic coverage.  Although the


                                        4
<PAGE>

Company is one of the largest distributors of metals in the United States, some
of its competitors have greater financial resources than the Company.

ENVIRONMENTAL MATTERS

          The Company is subject to extensive and changing federal, state, local
and foreign laws and regulations designed to protect the environment and human
health and safety, including those relating to the use, handling, storage,
discharge and disposal of hazardous substances and the remediation of
environmental contamination.  As a result, the Company is from time to time
involved in administrative and judicial proceedings and inquiries relating to
environmental matters.

          During fiscal 1997, expenditures made in connection with environmental
matters totaled approximately $1.1 million, principally for remediation and
investigation activities at sites where contamination of soil and/or groundwater
is present.  Of these sites, only those environmental matters related to former
facilities of the Company are expected to require significant future
expenditures.  As of  March 31, 1997, the Company had accrued approximately $1.4
million for future investigation and remediation expenditures to the extent such
expenditures could be reasonably estimated.  Although it is possible that new
information or future developments could require the Company to reassess its
potential exposure relating to all pending environmental matters, management
believes that, based upon all currently available information, the resolution of
such environmental matters will not have a material adverse effect on the
Company's financial condition, results of operations and liquidity. The
possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated and
that may be material.  See Note 9 to the Company's Consolidated Financial
Statements included elsewhere herein for a more detailed discussion of specific
environmental contingencies.


ITEM 2.   PROPERTIES

          The Company currently maintains 25 domestic service centers, one sales
office, one merchandising office, one cutting center, two tube honing facilities
and four plate processing centers at various locations throughout the United
States and is headquartered in Brea, California.  The Company also maintains
five foreign metals service centers through its subsidiaries in Canada, Mexico
and the United Kingdom.  Service centers in Birmingham, Alabama; Hartford,
Connecticut; Detroit, Michigan and Buffalo, New York have been closed in
connection with the 1997 restructuring plan described under "Item 1. Business --
- The Company".  In addition, the Company discontinued its flat-rolled
processing operations in April 1997 and is in negotiations for the sale of its
operations in Hawaii, the United Kingdom and Mexico.  The Company's facilities
are in good condition and are equipped to provide efficient processing of
customer orders.  The Company's facilities generally are capable of being
utilized at higher capacities, if necessary.  Most leased facilities have
initial terms of more than one year and include renewal options.  While some of
the leases expire in the near term, the Company does not believe that it will
have difficulty renewing such leases or finding alternative sites.

          Set forth below is a table summarizing certain information with
respect to the Company's facilities.

                                         Owned/  Facility
    Country/City/State                   Leased   (Sq.Ft)
    ------------------                   ------  --------
    United States
       Birmingham, Alabama           (a)  Owned    69,900
          Atlanta, Georgia               Leased    27,300
       Phoenix, Arizona                   Owned    72,200
       Little Rock, Arkansas             Leased    28,800
       Hayward, California               Leased    86,000
       Los Angeles, California            Owned   632,700
       Los Angeles, California           Leased    83,600
       Denver, Colorado                  Leased    78,800
       Hartford, Connecticut         (a)  Owned    48,000
       Honolulu, Hawaii                   Owned   109,200


                                        5
<PAGE>

       Blue Island, Illinois             Leased    20,500
       Chicago, Illinois                  Owned   554,000
       Roselle, Illinois                 Leased     4,900
       Plainfield, Indiana                Owned   142,700
       Davenport, Iowa                   Leased    59,200
       Boston, Massachusetts              Owned    64,200
       Detroit, Michigan             (a)  Owned   116,400
       Minneapolis, Minnesota             Owned   160,000
       Kansas City, Missouri              Owned   126,500
       Kansas City, Missouri             Leased    66,500
       St. Louis, Missouri               Leased   106,700
       Buffalo, New York             (a)  Owned    37,000
       Charlotte, North Carolina          Owned   178,200
       Cincinnati, Ohio                  Leased   137,000
       Cleveland, Ohio                    Owned   199,600
       Cleveland, Ohio                    Owned   134,500
       Tulsa, Oklahoma                    Owned   106,500
       Tulsa, Oklahoma                   Leased    37,000
       Tulsa, Oklahoma                    Owned   137,900
       Portland, Oregon                  Leased    31,300
       Philadelphia, Pennsylvania        Leased   234,800
       Memphis, Tennessee                Leased    56,500
       Dallas, Texas                      Owned   132,200
       Dallas, Texas                      Owned    72,000
       Houston, Texas                     Owned   276,000
       Kent, Washington                  Leased    83,700
    Canada
       Toronto, Ontario                  Leased    38,600
       Montreal, Quebec                  Leased    57,000
    Mexico
       Toluca                        (a) Leased    27,000
    United Kingdom
       Sheffield                     (a) Leased    78,400
       Arbroath, Scotland            (a) Leased    10,000
    Other Properties
       Brea, California (headquarters)   Leased    38,300
-------------------------

   (a)    Closed and/or held for sale as part of the 1997 restructuring plan.
          See "Item 7. Management's Discussion and Analysis of Financial
          Condition and Results of Operations".  The sale of the Birmingham
          facility is expected to be completed in June 1997.

ITEM 3.   LEGAL PROCEEDINGS

          The Company and its subsidiaries and branches are occasionally 
involved in ordinary, routine litigation incidental to their normal course of 
business, none of which they believe to be material to their financial 
condition or results of operations.  The Company and its subsidiaries and 
branches maintain various liability insurance coverages to protect their 
assets from losses arising out of or involving activities associated with 
ongoing and normal business operations. See also "Item 1.  Business -- 
Environmental Matters."

                                        6
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

                                     PART II


ITEM 5.   MARKET FOR REGISTRANTS COMMON EQUITY

        The Company has 128 shares of common stock par value $.01 per 
share, all of which is owned by Holding.  During the fiscal years ended March 
31, 1997, 1996 and 1995, the Company paid dividends of $5,552,000, 
$22,289,000 and $3,654,000, respectively, to Holding in connection with 
Holding's repurchasing of its capital stock from employees of the Company 
whose employment had terminated, as required by the terms of Holding's 
Stockholders Agreement and the ESOP.  The Company has not declared or paid 
any other dividends on its capital stock since the Acquisition.

ITEM 6.   SELECTED FINANCIAL DATA

        The following selected consolidated financial data are derived from the
audited consolidated financial statements of the Company.  The consolidated
financial statements of the Company have been audited by Ernst & Young LLP,
independent auditors.  All information contained in the following table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with the consolidated financial
statements of the Company and the related notes thereto included elsewhere in
this Form 10-K.

<TABLE>
<CAPTION>

                                                                                      YEAR ENDED MARCH 31,
                                                            ----------------------------------------------------------------------
                                                                                     (DOLLARS IN THOUSANDS)
                                                                1997          1996           1995            1994           1993
                                                            ----------     ----------     ----------       --------       --------
<S>                                                         <C>            <C>            <C>              <C>            <C>
STATEMENT OF OPERATIONS DATA:
   Revenues                                                 $1,023,565     $1,025,659     $1,022,884       $843,380       $781,926
   Gross profit (1)                                            280,739        261,021        305,909        249,758        238,951
   Operating expenses exclusive of restructuring,
     consolidation and other non-recurring
     charges                                                   245,826        245,619        247,184        222,750        214,790
   Restructuring, consolidation and other
     non-recurring charges                                      20,088         12,776            715          1,282          9,063
   Income from operations                                       14,825          2,626         58,010         25,726         15,098
   Net interest expense                                         40,880         40,874         34,604         30,032         42,941
   Extraordinary item and cumulative effect
      of accounting changes                                        ---            ---            ---            ---         68,320
   Net income (loss)                                           (26,556)       (29,311)        19,919         (4,306)       (89,463)

BALANCE SHEET DATA:
   Working capital                                            $180,637       $166,587       $243,738       $176,280       $146,861
   Net property, plant & equipment                             120,050        134,259        139,705        143,099        154,317
   Total assets                                                454,882        484,911        543,548        505,928        479,303
   Long-term debt (including current portion)                  291,286        279,952        296,274        294,136        273,128
</TABLE>

                                        7
<PAGE>

<TABLE>
<CAPTION>

                                                                                      YEAR ENDED MARCH 31,
                                                            ----------------------------------------------------------------------
                                                                                     (DOLLARS IN THOUSANDS)
                                                                1997          1996           1995            1994           1993
                                                            ----------     ----------     ----------       --------       --------
<S>                                                         <C>            <C>            <C>              <C>            <C>
   Stockholder's equity                                          1,927         25,141         76,400         54,708         59,632

OTHER SUPPLEMENTAL DATA:
   Depreciation and amortization (2)                         $  10,620       $ 12,022       $ 14,135      $  14,680      $  17,000
   Non-cash ESOP expense (3)                                     3,102          3,401          7,694          6,005          5,919
   Net cash interest expense (4)                                37,747         37,310         31,592         26,457         48,422
   Capital expenditures                                          4,449         16,658         16,177         12,371          5,898
   Ratio of earnings to fixed charges (5)                          ---            ---           1.58            ---            ---
   Dividends paid (6)                                            5,552         22,289          3,654          5,898          2,908
</TABLE>

_______________

(1)  In February 1995, the Company began the implementation of a new enhanced
     inventory and management information system.  To ensure the accuracy of the
     conversion of the perpetual inventory records, the Company performed
     physical inventory counts and other procedures at all of its locations
     during the second, third and fourth quarters of fiscal 1996.  The Company
     identified a difference between the perpetual inventory records and the
     general ledger amounting to $26.9 million and, accordingly, has recorded a
     special charge to cost of sales for this difference in the fourth quarter
     of fiscal 1996.

(2)  Depreciation and amortization excludes amortization of debt issue costs
     aggregating $2,144, $2,144, $2,117, $2,040 and $4,229 for the years ended
     March 31, 1997, 1996, 1995, 1994 and 1993, respectively, and debt issue
     costs of $550 written off in connection with an amendment to the Company's
     revolving loan agreement in fiscal 1996, reflected in the Company's
     consolidated statements of operations as interest expense.

(3)  Non-cash ESOP expense represents the amount of ESOP expense charged to
     operations that were or will be paid in the form of Holding's equity
     securities.

(4)  Net cash interest expense represents net interest expense adjusted to
     exclude (i) the amortization and write-off of debt issue costs (see note
     (2) above) and bond discount, and  (ii) accrued interest.

(5)  In computing the ratio of earnings to fixed charges, "earnings" represents
     pre-tax income (loss) plus fixed charges except capitalized interest, if
     any.  "Fixed charges" represents interest whether expended or capitalized,
     debt cost amortization, and 33% of rent expense, which is representative of
     the interest factor.  Earnings were insufficient to cover fixed charges for
     the fiscal years ended March 31, 1997, 1996, 1994 and 1993 by $26,055,
     $38,248, $4,306 and $27,843, respectively.  Earnings were sufficient to
     cover fixed charges for the fiscal year ended March 31, 1995.

(6)  Dividends to Holding in connection with Holding's repurchasing of its
     capital stock from terminated employees.  See "Item 7.  Management's
     Discussion and Analysis of Financial Condition and Results of Operations -
     Liquidity and Capital Resources".


                                        8
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with "Item 6.
Selected Financial Data" and the consolidated financial statements of the
Company, and the notes related thereto appearing elsewhere in this Form 10-K.

GENERAL

          In May 1990, Kelso and its affiliates acquired control of EMJ and
Kilsby in the Acquisition and combined their operations to form the Company.  As
a result of the Acquisition, the Company incurred substantial indebtedness and
remains highly leveraged.

          During the past two years, the Company has undergone substantial
changes.  In March 1997, the Company announced a $15.6 million restructuring
plan which included selling certain foreign operations, closing four domestic
distribution centers, and reducing the Company's workforce in order to improve
operating efficiencies and margins.  In addition, fiscal 1997 included a $4.5
million write-off of certain costs related to its management information and
reporting system.  In fiscal 1996, the Company recorded a $3.6 million
restructuring charge for workforce reductions and a non-recurring charge of $9.2
million for asset write-downs and write-offs.  In addition, fiscal 1996 included
an inventory adjustment of $26.9 million representing the difference between the
Company's physical inventory balances and its perpetual inventory records after
the implementation and conversion to a new management information system in
February 1995.  The implementation of the new computer system adversely affected
the Company's results of operations in fiscal 1996.  Start-up difficulties
impacted sales, purchasing, receivables and inventory management causing the
Company to incur additional expense in correcting errors arising in the
transition process.

          The Company's results of operations are affected by trends in the 
metals distribution industry, which is generally cyclical.  Prices paid for 
steel and other metal commodities are affected by changes in worldwide 
supplies and demand, which can significantly impact revenues and gross 
margin.   Increases in raw material prices generally result in increased 
revenues; however, the ability to sustain gross and operating margins also 
depends on the ability of the Company to pass such price increases on to its 
customers.

          While economic and industry trends have an important effect on the
Company's results of operations, the Company believes its results have been less
sensitive to economic trends affecting certain segments of the industry due to
its geographically diversified operations, its broad customer base and the
variety of industries served.  In addition, the Company had concentrated on
higher margin specialty products, such as bar and tubing which have historically
been less vulnerable to industry cycles.

STATEMENT OF OPERATIONS INFORMATION

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH
31, 1996

          REVENUES. Revenues for fiscal 1997 decreased 0.2% to $1,023.6 million,
compared to $1,025.7 million in fiscal 1996.  Revenues from domestic operations
for fiscal 1997 increased $0.8 million to $959.8 million compared to $959.0


                                        9
<PAGE>

million in fiscal 1996.  Foreign revenues decreased $2.9 million to $63.8
million. While domestic revenues were relatively flat, foreign revenues were
adversely impacted by general weaknesses in the local economies.

          GROSS PROFIT. Gross profit increased $19.7 million to $280.7 million
in fiscal 1997 compared to $261.0 million in fiscal 1996 while gross margin
increased to 27.4% compared to 25.4%.  The increases were primarily attributable
to an inventory adjustment of $26.9 million recorded in fiscal 1996 (see Note 2
to Consolidated Financial Statements).  Fiscal 1997 also included a LIFO credit
of $3.5 million compared to a corresponding LIFO charge of $9.7 million in
fiscal 1996.  Gross profit and gross margin from foreign operations was $13.4
million and 21.0% in fiscal 1997, compared to $15.6 million and 23.4% in fiscal
1996.  Exclusive of foreign operations, LIFO, and the 1996 inventory adjustment,
gross margin was 27.5% for fiscal 1997, compared to 29.4% in fiscal 1996.  The
decrease of 1.9% reflects changes in product and customer mix resulting from
cyclical changes in industrial production, competitive pricing pressures,
disposition of slow moving and discontinued inventory, and a sudden decline in
stainless and aluminum commodity sheet prices.

          EXPENSES.  Total operating expenses of $265.9 million in fiscal 1997
included a restructuring charge of $15.6 million and a non-recurring charge for
asset write-offs of $4.5 million (see Note 1 to Consolidated Financial
Statements). Total operating expenses of $258.4 million in fiscal 1996 included
a restructuring charge of $3.6 million for workforce realignment, and a non-
recurring charge of $9.2 million for asset write-downs and write-offs (see Note
1 to Consolidated Financial Statements).  Excluding such charges, operating
expenses in fiscal 1997 would have been $245.8 million, or 24.0% of revenues,
compared to $245.6 million, or 23.9% of revenues, in fiscal 1996.

          Warehouse and delivery expenses increased $5.3 million (4.1%) to
$135.3 million in fiscal 1997 compared to $130.0 million in fiscal 1996.  As a
percent of revenues, warehouse and delivery expenses were 13.2% in 1997 and
12.7% in fiscal 1996.  The increases are primarily attributable to higher
freight costs and related handling expenses resulting from the expansion of
services from existing inventory depots and from additional depots established
in fiscal 1996.

          Selling, general and administrative expenses decreased $5.2 million
(4.4%) to $110.5 million in fiscal 1997 compared to $115.7 million in fiscal
1996.  In fiscal 1997 selling expenses decreased $1.0 million (2.4%) to $40.8
million, and decreased as a percent of revenues to 4.0% from 4.1% in fiscal 1996
due to lower compensation costs.  General and administrative expenses decreased
by $4.1 million (5.5%) to $69.7 million in fiscal 1997, and to 6.8% of revenues
from 7.2% in fiscal 1996.  The decrease in general and administrative expenses
was primarily due to lower compensation expense, lower depreciation and
amortization of property, plant and equipment resulting from a change in
accounting estimate in fiscal 1996 (see Note 1 to Consolidated Financial
Statements), higher income from cash discounts taken on vendor payments and
gains from sales of surplus facilities.

          NET INTEREST EXPENSE. Net interest expense was $40.9 million in both
fiscal 1997 and 1996. Such amounts include interest on the Revolving Credit
Facility, Senior Notes, interest on borrowings against the cash surrender value
of certain life insurance policies and the amortization or write-off of debt
issue costs ($2.1 million in fiscal 1997 and $2.7 million in fiscal 1996).

          During fiscal 1997 the average outstanding indebtedness (excluding
borrowings against the cash surrender value of certain life insurance policies)
was $304.5 million versus $305.4 million in fiscal 1996.  The weighted average
interest rate on such indebtedness during fiscal 1997 was 9.62% versus 9.83% in
fiscal 1996.  The decrease in the average outstanding indebtedness and the
weighted average interest rate was attributable to the Company's Revolving
Credit Facility borrowings.  The average borrowings under the Revolver decreased
to $130.4 million from $131.6 million in fiscal 1996, and the average interest
rate decreased to 8.54% in fiscal 1997 from 9.09% in fiscal 1996.

          The outstanding borrowings against the cash surrender value of life
insurance policies was $76.5 million at March 31, 1997 and $65.9 million at
March 31, 1996, and the total interest expense on such borrowings increased to
$8.6 million in fiscal 1997 compared to $7.2 million in fiscal 1996.   Such
increases resulted from a borrowing of $11.4 million against the increased cash
surrender value of life insurance policies in November 1996 to pay annual
premiums on such policies and to pay interest on previous borrowings (see
Liquidity and Capital Resources).  As specified in the terms of the insurance
policies, the rates for dividends payable on the policies correspondingly
increase when borrowings are outstanding under the policies. This increase in
dividends is greater than the increase in the incremental borrowing rate.
Dividend income is reported in general and administrative expenses in the
Company's statements of operations and is not offset against the interest
expense.


                                       10
<PAGE>

          The interest rates on the Senior Notes and on the life insurance
policy borrowings are fixed at 10.75% and 11.76%, respectively.  The interest
rate on the Revolving Credit Facility is at a floating rate (10.0% as of March
31, 1997).

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 1996 COMPARED TO YEAR ENDED MARCH
31, 1995

          REVENUES. Revenues for fiscal 1996 increased 0.3% to $1,025.7 million,
compared to $1,022.9 million in fiscal 1995.

          Revenues from domestic operations for fiscal 1996 decreased $5.2
million (0.5%) to $959.0 million compared to $964.2 million in fiscal 1995.
Foreign revenues increased $8.0 million (13.7%) to $66.7 million. The decrease
in domestic revenues was related to a weakening of the U.S. economy, primarily
in the northeast and midwest regions, softening in prices for certain of the
Company's products, and changes in product mix.  Demand flattened in the second
quarter and declined in the third and fourth quarters of fiscal 1996 when
compared to the same periods in the prior year.  In addition, the transition to
the Company's new management information system in 1996 was disruptive to
operations and contributed to the decrease in domestic revenues.

          GROSS PROFIT. Gross profit decreased $44.9 million (14.7%) to $261.0
million compared to $305.9 million fiscal 1995 while gross margin decreased to
25.4% compared to 29.9%.  The decrease was primarily attributable to an
inventory adjustment of $26.9 million (see Note 2 to Consolidated Financial
Statements).  Fiscal 1996 included a LIFO charge of $9.7 million reflecting
higher material costs and product mix changes compared to a corresponding LIFO
charge of $7.6 million in fiscal 1995.  Gross profit from foreign operations was
$15.6 million and gross margin was 23.4%, compared to $14.0 million and 23.9%,
respectively, in fiscal 1995. Exclusive of foreign operations, LIFO charges and
the inventory adjustment, the domestic operations gross margin was 29.4% for
fiscal 1996 compared to 31.1% in the prior year.  The difference is primarily
due to changes in product mix resulting from domestic cyclical changes in
industrial production, higher scrap charges recognized in fiscal 1996 versus
1995 and competitive pricing pressures.

          EXPENSES.  Total operating expenses in fiscal 1996 included a second
quarter restructuring charge of $12.8 million for workforce realignment ($3.6
million) and asset write-downs or write-offs ($9.2 million) (see Note 1 to
Consolidated Financial Statements).  Excluding such charges total operating
expenses decreased $1.6 million (0.6%) to $245.6 million compared to $247.2
million in fiscal 1995.   As a percentage of revenues, these expenses decreased
to 23.9% compared to 24.2% in fiscal 1995.

          Warehouse and delivery expenses increased $4.3 million (3.4%) to
$130.0 million and to 12.7% as a percentage of revenue in fiscal 1996 compared
to $125.7 million or 12.3% in fiscal 1995.  The increases are primarily
attributable to  additional costs incurred in connection with physical inventory
counts and higher freight costs resulting from an inventory balancing program
implemented during the year to better serve geographic demand and designed to
reduce inventories.

          Selling, general and administrative expenses decreased $5.8 million
(4.8%) to $115.7 million and to 11.3% as a percentage of revenues in fiscal 1996
compared to $121.5 million or 11.9% in fiscal 1995.  In fiscal 1996, selling
expenses decreased $2.8 million (6.3%) to $41.8 million and decreased, as a
percentage of revenue, to 4.1% from 4.4% in fiscal 1995, primarily due to lower
compensation costs.  General and administrative expenses decreased by $3.0
million (3.9%) to $73.9 million compared to fiscal 1995, and decreased, as a
percentage of revenue, to 7.2% from 7.5% in fiscal 1995. The decrease in general
and administrative expenses was primarily due to lower insurance and
communication costs, lower amortization of step-up of property, plant and
equipment resulting from a change in accounting estimate (see Note 1 to
Consolidated Financial Statements), and higher dividend income earned from life
insurance policies maintained by the Company, partially offset by higher
professional services costs incurred in connection with environmental,
information technology, marketing and human resource projects.

          NET INTEREST EXPENSE. Net interest expense during fiscal 1996
increased $6.3 million to $40.9 million compared to $34.6 million in fiscal
1995.  Such increase was primarily the result of higher average outstanding
indebtedness ($305.4 million versus $290.4 million in fiscal 1995), a higher
weighted average interest rate (9.83% versus 9.44% in fiscal 1995), and higher
interest costs associated with increased borrowings against the cash surrender
value of life insurance policies. The increase in the average outstanding
indebtedness and the weighted average interest rate is primarily attributable to
the Company's Revolving Credit Facility borrowings.  The average borrowings
under the Revolver increased to $131.6 million compared to $124.1 million in
fiscal 1995 and the average interest rate increased from 8.02% in fiscal 1995 to
9.09% in fiscal 1996.  The increased average borrowings under the Revolver were
primarily attributable to the higher level of receivables in the first quarter
of fiscal 1996 in part arising from the transition to the new computer system.
The outstanding principal amount of borrowings against the cash surrender value
of life insurance policies was $65.9 million at


                                       11
<PAGE>


March 31, 1996 versus $55.6 million at March 31, 1995, and the interest expense
on such borrowings increased to $7.2 million in fiscal 1996 compared to $4.7
million in fiscal 1995.

          Almost all of the interest expense of the Company was payable in
respect of three items of indebtedness: the Senior Notes, the life insurance
policy borrowings, and the Revolving Credit Facility. The interest rate of the
Senior Notes, representing approximately $154.5 million (or 55.2%) in the
aggregate in principal amount of the indebtedness of the Company, at March 31,
1996, is fixed, as is the interest rate on the life insurance policy borrowings.
The interest rate on the Revolving Credit Facility, representing approximately
$105.9 million (or 37.8%) in principal amount of the indebtedness of the Company
at March 31, 1996, is at a floating rate (8.3% as of March 31, 1996).  The
interest rate payable by the Company on $20.2 million of such indebtedness was
effectively capped at 9-3/4% pursuant to an interest rate protection agreement
entered into with Bankers Trust Company on April 14, 1993 and expiring on April
6, 1996.  Such interest rate protection agreement required Bankers Trust Company
to make payments to the Company each quarter, in an amount equal to the product
of the notional amount of $20.2 million and the difference between the three
month London interbank offered rate and the cap rate of 7%, if the London
interbank offered rate exceeds the cap rate.  The three month London interbank
offered rate at March 31, 1996 was 5.47% and no payments to the Company were
required under the agreement since it was entered into. The Company paid a one
time fee of $101,000 when it entered into the agreement, which was included in
interest expense in fiscal 1994.

          During fiscal 1996, the Company borrowed $10.3 million against certain
life insurance policies to pay annual premiums on such policies and to pay
interest on previous borrowings (see Liquidity and Capital Resources).  As a
result of this borrowing, the Company's interest expense increased in the second
half of fiscal 1996 due to the higher incremental borrowings.

LIQUIDITY AND CAPITAL RESOURCES

          The Company's ongoing cash requirements for debt service and capital
expenditures through fiscal 1998 will consist primarily of interest payments
under its Revolving Credit Facility, interest payments on the Senior Notes,
dividend payments to Holding in connection with the required repurchase of its
capital stock from departing stockholders pursuant to Holding's Stockholders
Agreement and the ESOP, capital expenditures and principal and interest payments
on the Company's industrial revenue bond and purchase money indebtedness.
Principal payments required by the Company's currently outstanding industrial
revenue bonds and purchase money indebtedness amount to $1.0 million in fiscal
1998, $1.5 million in fiscal 1999 and 2000 and $14.7 million in the aggregate
thereafter through 2010.  The Company will not be required to make any principal
payments in respect of the Senior Notes until 2000.  On March 19, 1997, the
Company received an amendment to the Revolving Credit Facility which, among
other things, extended the expiration date to September 1999.  In June 1997, the
Company received a waiver with respect to fiscal 1997 financial covenants
relating to consolidated net worth and fixed charge coverage ratio and received
amendments to other financial covenants for future periods.  Although compliance
with such covenants in the future is largely dependent on the future performance
of the Company and general economic conditions, for which there can be no
assurance, the Company expects that it will continue to be in compliance with
such covenants for the foreseeable future.  The Company is not in default under
the Senior Note Indenture and does not anticipate any default thereunder for the
foreseeable future.

          At March 31, 1997, the Company's primary sources of liquidity were
available borrowings of $44.3 million under the Revolving Credit Facility,
borrowings of approximately $5.0 million against certain life insurance policies
and internally generated funds.  Borrowings under the Revolving Credit Facility
are secured by the Company's domestic inventory and accounts receivable, and
future availability under the facility is determined by prevailing levels of the
Company's accounts receivable and inventory.  The life insurance policy loans
are secured by the cash surrender value of the


                                       12
<PAGE>

policies and are non-recourse to the Company. The interest rate on the loans is
0.5% greater than the dividend income rate on the policies.  As of March 31,
1997, there was approximately $14.3 million of cash surrender value in all life
insurance policies maintained by the Company, net of borrowings.

          The Company's capital expenditures were $4.4 million in fiscal 1997,
$16.7 million in fiscal 1996 and $16.2 million in fiscal 1995.  Capital
expenditures in fiscal 1996 and 1995 included $6.3 million and $5.7 million,
respectively, of expenditures financed through purchase money and industrial
revenue bond indebtedness.  During the year ended March 31, 1997, capital
expenditures were primarily for routine replacement of machinery and equipment
and for computer hardware and software.  For fiscal 1998, the Company has
budgeted approximately $7.0 million for similar capital expenditures.
Approximately $4.8 million is for the acquisition of equipment and machinery and
warehouse expansions, and $2.2 million of the budget is for further enhancement
of the Company's information technology systems.  The Company expects to finance
such expenditures from internal cash flows.

          During fiscal 1997, the Company redeemed $5.6 million of its capital
stock from retiring and terminated employees, as required by the terms of the
Company's ESOP and Holding's Stockholders Agreement.  The Company expects that
such redemptions for fiscal 1998 will be higher than fiscal 1997 due to the
workforce reductions resulting from the March 1997 restructuring plan, although
the timing of such expenditures is not within the control of the Company and
there can be no assurance in this regard.

         The cash required to complete the 1997 restructuring including the 
redemption of stock from terminated employees, will be approximately $17.2 
million. Such amount is expected to be financed from proceeds from the sale 
of domestic facilities and foreign operations as discussed above, and from 
internal cash flows.

          Working capital and cash flows of the Company over the past three
fiscal years are summarized below:


<TABLE>
<CAPTION>

     SELECTED DATA                                                                             FISCAL YEAR
                                                                                  --------------------------------------
                                                                                    1997           1996          1995
                                                                                  --------------------------------------
                                                                                          (DOLLARS IN THOUSANDS)
     <S>                                                                          <C>            <C>            <C>
     Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . .        $180,637       $166,587       $243,738
     Net cash provided by (used in) operating activities . . . . . . . . .         (5,504)         67,058       (15,201)
     Net cash provided by (used in) investing activities . . . . . . . . .           (680)       (16,105)       (10,352)
     Net cash provided by (used in) financing activities . . . . . . . . .           4,838       (38,745)         23,384
</TABLE>

          The Company's working capital increased $14.0 million to $180.6 
million at March 31, 1997 versus $166.6 million at March 31, 1996, primarily 
as the result of lower accounts payable offset by higher accruals associated 
with the 1997 restructuring plan and lower inventory levels.  The Company's 
average accounts receivable days outstanding (including foreign accounts) 
were 39.1 days in fiscal 1997 and 40.8 days in fiscal 1996.

          Net cash provided by operations decreased $72.6 million in fiscal 1997
compared to fiscal 1996 primarily due to changes in accounts receivable in
fiscal 1996 and 1995 attributable to the unusually large increase in accounts
receivable in the last quarter of fiscal 1995 in connection with the
implementation of the new computer system, lower accounts payable and the non-
cash charge of $26.9 million for the inventory adjustment recorded in fiscal
1996.

          Net cash used in investing activities decreased $15.4 million in 
1997 compared to 1996 primarily resulting from lower capital expenditures for 
property, plant and equipment and higher proceeds from fixed asset 
dispositions.

          Net cash provided by financing activities increased $43.6 million 
in 1997 compared to 1996 primarily as a result of lower funding requirements 
for the repurchase of capital stock from retiring and departing employees 
pursuant to the Company's ESOP and Holding's Stockholders Agreement and 
higher borrowings against the Revolving Credit Facility.

          As of March 31, 1997, the Company believes its sources of liquidity 
and capital resources are sufficient to meet all currently anticipated 
operating cash requirements, including debt service payments on the revolving 
loans and the Senior Notes prior to their respective maturities. However, the 
Company anticipates that it will be necessary to replace the Revolving Credit 
Facility on or prior to its maturity in September 1999 and to refinance all 
or a portion of the Senior Notes on or prior to their maturity in March 2000, 
although there can be no assurance on what terms, if any, the Company would 
be able to obtain such refinancing or additional financing.  In addition, the 
Company might be required to dispose of material assets or operations to meet 
its obligations under the terms of the Company's indebtedness; however, there 
can be no assurance as to the timing of such sales, the proceeds which the 
Company could realize therefrom or that such proceeds

                                       13
<PAGE>

would be adequate to meet the obligations then due.  The Company's ability to
make interest payments on the revolving loans and the Senior Notes will be
dependent on improvements in the Company's future operating performance above
historical levels which will be dependent on a number of factors, many of which
are beyond its control, and the continued availability of revolving credit
borrowings.  There can be no assurance that the Company will be able to effect
any improvements in its operating results or that any improvements achieved will
be realized in time or will be of sufficient magnitude to enable the Company to
meet its debt service obligations.

ENVIRONMENTAL CONTINGENCIES

          The Company is currently involved with remediation and/or 
investigation activities at several former facilities where soil and/or 
groundwater contamination is present.  As of March 31, 1997, reserves 
totaling $1.4 million have been established to cover those future 
environmental costs that are known or can be reasonably estimated.  See Note 
9 to the Company's Consolidated Financial Statements included elsewhere 
herein for a more detailed discussion of specific environmental contingencies.

          Although it is possible that new information or future developments 
could require the Company to reassess its potential exposure relating to all 
pending environmental matters, management believes that, based upon all 
currently available information, the resolution of such environmental matters 
will not have a material adverse effect on the Company's financial condition, 
results of operations or liquidity. The possibility exists, however, that new 
environmental legislation and/or environmental regulations may be adopted, or 
other environmental conditions may be found to exist, that may require 
expenditures not currently anticipated and that may be material.  See "Item 
1. Business--Environmental Matters."

FOREIGN EXCHANGE EXPOSURE

          The functional currency for the Company's foreign subsidiaries is the
applicable local currency.  Exchange adjustments resulting from foreign currency
transactions are recognized in net earnings, whereas adjustments resulting from
the translation of financial statements are reflected as a separate component of
stockholder's equity.  The Company does not hedge its exposure to foreign
currency fluctuations.  Net foreign currency transaction gains or losses have
not been material in any of the years presented.  See "Item 1.  Business--
Foreign Operations." However, the 1995 devaluation of the Mexican peso and
ongoing instability of the peso and the Mexican economy have had a negative
impact on the Company's operations.

          In March 1997, the Company approved a restructuring plan that 
included selling its foreign operations in the United Kingdom and Mexico.  As a
result of this decision, the cumulative foreign currency translation losses for
these operations were recognized as part of the estimated loss on sale of these
operations.  See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations".

INFLATION

          The Company's operations have not been, nor are they expected to be,
materially affected by inflation.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          Financial statements and supplementary data required by this Item 8 
are set forth as indicated in Item 14(a)(1) and (2) below.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                       14
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The following table sets forth the name, age (at March 31, 1997),
principal occupation and business experience during the last five years of each
of the directors and executive officers of the Company and Holding. The
directors and executive officers of  the Company and Holding are identical.  The
executive officers serve at the pleasure of the Board of Directors of  the
Company and Holding, respectively.

          Each member of the Board of Directors of the Company and of Holding
holds office until the next annual meeting of the stockholders thereof or until
his successor is elected and qualified. The election of directors of Holding is
subject to the provisions of a Stockholders' Agreement described below.

          Non-officer directors of the Company, other than Messrs. Schuchert 
and Nickell, are paid an annual retainer of $25,000 plus $1,000 for each 
board meeting attended. In addition, outside directors are reimbursed for all 
out-of-pocket expenses related to meetings attended. In consideration of his 
service as Chairman of the Board, Holding entered into an incentive 
compensation agreement with Mr. Roderick pursuant to which he was granted 
50,000 shares of Holding Common Stock, 34,000 of which were vested pursuant 
to such agreement as of its March 31, 1997 expiration date.  Pursuant to the 
agreement, Mr. Roderick was paid a cash payment in fiscal 1996 totaling 
$145,309 equal to the federal, state and local income tax liability payable 
by him by reason of the value of the initial payment to him of 20,000 
unrestricted shares of Holding Common and such cash payment. The directors 
receive no additional compensation for their services as directors of 
Holding. Officers of the Company and Holding who serve as directors do not 
receive compensation for their services as directors other than the 
compensation they receive as officers of the Company and Holding.

          On December 23, 1992, Kelso and its chief executive officer, Joseph S.
Schuchert, a director of the Company and Holding, without admitting or denying
the findings contained therein, consented to the entry of an administrative
order in respect of a Securities and Exchange Commission (the "Commission")
inquiry relating to the Acquisition. The order found that the tender offer
filing of Kelso & Companies, Inc. in connection with the Acquisition did not
comply fully with the Commission's tender offer reporting requirements, and
required Kelso and Companies Inc. and Mr. Schuchert to comply with those
requirements in the future.

          There are no family relationships among directors and executive 
officers of the Company and Holding. For information regarding the stock 
ownership of Holding by the Company's and Holding's directors and executive 
officers, see "Item 12.  Security Ownership of Certain Beneficial Owners and 
Management."

NAME           AGE    POSITION


     Earle M. Jorgensen       98     Chairman Emeritus and Director

     David M. Roderick        73     Chairman of the Executive Committee and
                                     Director

     Neven C. Hulsey          62     Chairman of the Board and Director

     Maurice S. Nelson, Jr.   59     President, Chief Executive Officer and
                                     Chief Operating Officer and Director

     Charles P. Gallopo       55     Vice President and Chief Financial Officer

     Randal J. Haas           48     Vice President Strategic Business
                                     Development and Secretary and Secretary

     Frank D. Travetto        44     Vice President Merchandising

     Kenneth L. Henery        50     Vice President Central Region

    James D. Hoffman          38     Vice President Eastern Region


                                       15
<PAGE>

     R. Neil McCaffery        47     Vice President Western Region

     Mark R. McWhirter        37     Vice President and Chief Information
                                     Officer

     Joseph S. Schucher       68     Director

     William A. Marquard      77     Director

     Frank Nickell            49     Director

     John Rutledge            48     Director




          EARLE M. JORGENSEN.  Mr. Jorgensen founded EMJ and was Chairman of the
Board of EMJ and its successor, the Company, from 1924 until April 1994. He was
also Chairman of the Board of Holding from May 1990 until April 1994.  Mr.
Jorgensen was Chief Executive Officer of EMJ from 1924 to June 1986. Until
February 1990, Mr. Jorgensen was a director of Northrop Corporation. Mr.
Jorgensen has been a director of Holding since May 1990. In April 1994, Mr.
Jorgensen became Chairman Emeritus of the Board of the Company and Holding.

          DAVID M. RODERICK.  Mr. Roderick became Chairman of the Executive
Committee of the Company and Holding on February 1, 1997.  Prior to that, Mr.
Roderick was Chairman of the Board of the Company and Holding from April 1994.
Mr. Roderick has been a director of the Company and Holding since January 1994.
Mr. Roderick also serves as director of American Standard Companies Inc., Baron
Enterprises and Kelso & Companies Inc.  Previously, Mr. Roderick served as
Director, Chairman, and CEO of the USX Corporation.  Mr. Roderick joined USX in
1959, was Chairman of USX Finance Committee and a Director from 1973 to 1975,
was President and Director from 1975 until 1979 and was CEO and Chairman from
1979 to 1989.

          NEVEN C. HULSEY.  Mr. Hulsey became Chairman of the Board of the
Company and Holding on February 1, 1997.  Prior to that, Mr. Hulsey was
President and Chief Executive Officer of the Company from April 1990, and of
Holding from May 1990.  Mr. Hulsey was Chairman of the Board, Director,
President and Chief Executive Officer of Kilsby from 1984 until May 1990. Mr.
Hulsey has been a director of the Company from March 1990, and a director of
Holding from May 1990. Mr. Hulsey also serves as a director of International
House of Pancakes, Inc. and Webco Industries Inc.

          MAURICE S. NELSON, JR.  Mr. Nelson was elected President, Chief
Executive Officer and Chief Operating Officer and a director of the Company and
Holding effective February 1, 1997.  Prior to that, Mr. Nelson served as
President, Chief Executive Officer and Chief Operating Officer of Inland Steel
Company from 1992 until April 1996.  Prior to that, Mr. Nelson was the President
of the Aerospace and Commercial division of the Aluminum Company of America
(Alcoa) from 1987 to 1992.

          CHARLES P. GALLOPO.  Mr. Gallopo has been Vice President and Chief
Financial Officer of the Company and Holding since December 1993. Prior to that,
Mr. Gallopo was Chief Financial Officer of Severin Montres, Ltd., since July
1989. Severin Montres, Ltd. is a manufacturer and distributor of Gucci watches.

          RANDAL J. HAAS.  Mr. Haas has been Vice President Strategic Business
Development and Secretary of the Company and Holding from 1996.  Prior to that,
Mr. Haas was Vice President Quality and Secretary of the Company and Holding
since 1993 and Vice President Administration and Human Resources and Secretary
since May 1990.

          FRANK D. TRAVETTO.  Mr. Travetto has been the Company's Vice President
Merchandising since March 1997.  Prior to that, Mr. Travetto was the Company's
Vice President Western Region since 1996, the Company's Vice President Eastern
Region from 1992 to 1996, and the Company's Division President, Canadian
Operations from 1990 to 1992.


                                       16
<PAGE>

          KENNETH L. HENRY.  Mr. Henry has been the Company's Vice President
Central Region since October 1995.  Prior to that, Mr. Henry was the Company's
Vice President Southern Region since 1994, and Vice President of the Kilsby-
Roberts Division of EMJ from April 1992 to 1994.

          JAMES D. HOFFMAN.  Mr. Hoffman has been the Company's Vice President
Eastern Region since July 1996.  Prior to that, Mr. Hoffman was District Manager
for the Company's Cleveland and Buffalo operations since June 1992.

          R. NEIL MCCAFFERY.  Mr. McCaffery has been the Company's Vice 
President Western Region since March 1997.  Prior to that, Mr. McCaffery was 
the Company's Vice President Southern Region since April 1996, and was 
District Manager for the Company's Los Angeles and Phoenix operations from 
1991 to 1996.

          MARK R. MCWHIRTER.  Mr. McWhirter has been Vice President and Chief
Information Officer of the Company since February 1995.  Prior to that, Mr.
McWhirter was an Account Manager at Electronic Data Systems since March 1988.

          JOSEPH S. SCHUCHERT.  Mr. Schuchert has been Chairman and Chief
Executive Officer and a director of Kelso & Companies Inc. since March 1989.
Kelso & Companies Inc. is the general partner of Kelso, a Delaware limited
partnership. Prior to the formation of Kelso & Companies Inc. in 1989, Mr.
Schuchert was Managing General Partner of Kelso. Mr. Schuchert is a director of
American Standard Companies Inc. and Kelso Insurance Services, Inc.  Mr.
Schuchert has been a director of the Company since March 1990, and a director of
Holding since May 1990.

          WILLIAM A. MARQUARD.  Mr. Marquard has been a director of the Company
since March 1990, and a director of Holding since May 1990. Mr. Marquard also
serves as a director and Chairman of the Board of Arkansas Best Corporation and
Mosler, Inc., and as a director of Americold Corporation, Kelso and Companies
Inc., Treadco, Inc. and EarthShell Container Corporation.

          FRANK NICKELL.  Mr. Nickell has served as director of the Company 
and Holding since August 1993. He has been President and a director of Kelso 
& Companies Inc. since March 1989. Kelso & Companies Inc. is the general 
partner of Kelso, a Delaware limited partnership.   Prior to the formation of 
Kelso & Companies Inc., from 1984 to 1989, Mr. Nickell was a general partner 
of Kelso. He is also a director of Charter Communications Long Beach, Inc., 
CCA Holdings Corp., CCT Holdings Corporation, Tyler Holdings Corporation, 
Peebles Inc., Kelso Insurance Services, Inc., and The Bear Stearns Companies.

          JOHN RUTLEDGE.  Dr. Rutledge has been a director of the Company and 
Holding since June 1992. Dr. Rutledge is the founder of Rutledge & Company, 
Inc., a merchant banking firm, and has been Chairman since January 1991. He 
is the founder of Claremont Economics Institute, and has been Chairman since 
January 1979. Dr. Rutledge is also a director of American Standard Companies, 
Inc., Amerindo Investment Advisers, Inc., Utendahl Capital Partners, Lazard 
Freres Funds, Fluidrive Inc., United Refrigerated Services, Inc., Adobe Air 
Inc. and CST Office Products, and is a consultant to Kelso.

STOCKHOLDERS' AGREEMENT

          Holding's Bylaws provide for one to ten directors. The Board of
Directors of Holding currently consists of eight directors.  Certain of
Holding's shareholders have agreed, pursuant to the Stockholders' Agreement
dated as of September 14, 1990, as amended ( the "Stockholders' Agreement"),
that two directors shall be designated by the Management Stockholders (as
defined in the Stockholders' Agreement), so long as they are reasonably
acceptable to Kelso, and that five directors shall be designated by Kelso.
Messrs. Nelson and Hulsey are the directors designated by the Management
Stockholders and the remaining directors were designated by Kelso. The current
vacancies are for one of the directors to be elected by the holders of Series A
Preferred Stock of Holding and for one of the directors to be designated by
Kelso. The Stockholders' Agreement also provides that (i) prior to the earlier
of May 3, 1995 or the occurrence of an initial public offering of at least 50%
of the outstanding shares of Holding Common Stock pursuant to an effective
registration statement under the Securities Act, sales of shares of Holding
Common Stock by a Management Stockholder are subject to a right of first refusal
granted to Holding, Kelso and certain Management Stockholders who are parties to
the Stockholders' Agreement and, (ii) in the event of termination of employment,
under certain circumstances, the Management Stockholders are entitled to sell
their shares of Holding Common Stock to Holding and Holding is required to
repurchase such shares at their appraised value.


                                       17
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

          Set forth below is information concerning the compensation levels for
the executive officers of Holding and the Company serving as of March 31, 1997.
Officers of the Company receive no additional compensation for their services as
officers of Holding.

          CASH COMPENSATION. The following table sets forth compensation for the
three fiscal years ended March 31, 1997 for the Chief Executive Officer and the
four most highly compensated executive officers of the Company as of March 31,
1997.

<TABLE>
<CAPTION>

                                                          Summary of Compensation Table

                                                             Annual Compensation                  Long-Term
                                                                                              Compensation
                                                                                                  Awards
                                                   -------------------------------------    ------------------
                                                                                               Securities
      Name and                                                                               Underlying Stock          All Other
   Principal Position                     Year             Salary              Bonus         Options/SAR(#)(2)     Compensation (3)
   ------------------                     ----             ------              -----         -----------------     ----------------
<S>                                       <C>            <C>                <C>              <C>                   <C>
Maurice S. Nelson, Jr.                    1997           $  91,670          $     --             1,320,000             $150,000
   President, Chief Executive
   Officer and Chief Operating
   Officer (4)

Neven C. Hulsey
   Chairman and Director                  1997             444,344                --                                    123,048
   (served as Chief Executive             1996             421,997            62,500                                    153,380
   Officer through January 1997)          1995             379,382           607,987                                    129,034

Lonnie R. Terry
   Former Vice President Vice             1997             275,246            50,000                                    486,164
   President, Chief                       1996             272,688            68,125                                     63,452
   Operating Officer                      1995             270,706           355,970                                    125,773
   and Director (5)

Charles P. Gallopo
   Vice President and                     1997             196,470            84,714                                     28,272
   Chief Financial                        1996             195,023            12,102                                     32,397
   Officer                                1995             186,351           241,555                16,000               35,881

John W. Ruck
    Former Vice President Chief           1997             151,800                --                                    133,174
    Value Officer (5)                     1996             150,329            13,750                                     33,838
                                          1995             136,589           163,953                                     32,882

Randal J. Haas
    Vice President,                       1997             139,174            35,000                                     23,601
    and Secretary                         1996             138,425            47,500                                     27,768
                                          1995             138,682           193,953                                     48,533
</TABLE>

_______________




                                       18
<PAGE>

(1)  Amounts reflect cash compensation earned by executive officers in each of
     the fiscal years presented, including amounts received after fiscal
     yearend, or deferred at the election of those officers.  Bonus includes (i)
     a cash bonus payable each year to all management investors pursuant to the
     Company's Management Stock Bonus Plan (or, in the case of Mr. Gallopo,
     equivalent policy) in proportion to their ownership of Holding Common
     Stock, and (ii) a cash bonus payable each year pursuant to the Company's
     Key Employee Incentive Compensation Plan ("Incentive Plan") which became
     effective April 1, 1994.  The following bonuses were paid to Messrs.
     Nelson, Hulsey, Terry, Gallopo, Ruck and Haas under the Company's
     Management Stock Bonus Plan (a) in fiscal 1997: none, except Mr. Gallopo
     ($84,714), (b) in fiscal 1996: none, $62,500, $18,125, $12,102, $13,750 and
     $12,500, and (c) in fiscal 1995: none, $250,000, $72,500, $48,408, $55,000
     and $50,000, respectively.  The following allocations were made under the
     Incentive Plan to Messrs. Nelson, Hulsey, Terry, Gallopo, Ruck and Haas,
     respectively, (a) in fiscal 1997 and 1996: none, and (b) in fiscal 1995:
     none, $357,987, $233,470, $155,647, $108,953 and $108,953.  In addition,
     Mr. Terry received payments of $50,000 in all years shown, and Mr. Haas
     received payments of $35,000 in all years shown, pursuant to a plan
     providing for fixed bonuses payable to employees of EMJ in lieu of a bonus
     payable to them pursuant to an incentive bonus plan terminated after the
     Acquisition.  Mr. Gallopo received a discretionary incentive bonus of
     $37,500 in fiscal 1995.

(2)  Holding has granted Mr. Nelson options to purchase shares of Holding Common
     Stock.  Holding has granted Mr. Gallopo 16,000 phantom stock units which
     will vest on the earlier of November 29, 1997, Mr. Gallopo's death or
     disability, and the occurrence of a terminating transaction involving
     Holding, provided Mr. Gallopo is employed by Holding on such date.  Each
     phantom stock unit when vested entitles the holder to receive an amount
     equal to the difference between the fair market value of a share of Holding
     Common Stock on the date of redemption and a base price, subject to
     adjustment, of $9.23.

(3)  Amounts shown include allocations to the accounts of each of the named
     officers of contributions made by the Company to the ESOP and to the
     Company's 401(a)(17) Supplemental Contribution Plan (401(a)(17) Plan") and
     of premiums paid by the Company for long-term disability and life insurance
     policies. The following allocations were made in fiscal 1997 to Messrs.
     Nelson, Hulsey, Terry, Gallopo, Ruck and Haas, respectively: (i) ESOP
     (estimated), $7,500 each, except Mr. Nelson (none); (ii) 401(a)(17)
     Plan, none, $14,717, $9,872, $6,559, $1,646 and $1,199; (iii) long term
     disability,none, $11,408, $9,308, $6,207, $3,599 and $3,679; and (iv) life
     insurance, none, $89,423, $25,830, $8,007, $11,790 and $11,223.  In fiscal
     1996, the following allocations were made to Messrs. Hulsey, Terry,
     Gallopo, Ruck and Haas, respectively: (i) ESOP ,$7,500 each; (ii)
     401(a)(17) Plan, $31,057, $17,425, $9,996, $5,262 and $4,698; (iii) long
     term disability, $13,990, $9,578, $6,351, $7,950 and $3,225; and (iv) life
     insurance, $100,833, $28,949, $8,550, $13,126 and $11,985.  In fiscal 1995,
     the following allocations were made to Messrs. Hulsey, Terry, Gallopo, Ruck
     and Haas, respectively: (i) ESOP, $16,500 each; (ii) 401(a)(17)
     Plan, $23,021, $12,652, $7,722, none and none; (iii) long term
     disability, $11,824, $8,835, $6,133, $7,950 and $3,225; and (iv) life
     insurance, $77,689, $21,915, $5,526, $10,413 and $9,056.  The amounts in
     respect of life insurance represent the estimated value of the premiums
     paid by the Company on certain disability and life insurance policies in
     respect of each executive. Some of the policies are managed on a split-
     dollar basis and the Company will receive the premiums it has paid from the
     proceeds of such insurance. In such cases the amount of the other
     compensation attributed to the executive was calculated by treating the
     premiums paid by the Company as a demand loan, and the amount of
     compensation is equal to the imputed interest expense on the cumulative
     outstanding premiums paid by the Company, assuming an interest rate equal
     to the short-term federal funds rate, from time to time.  Amounts shown
     also include severance paid or payable to Messrs. Terry and Ruck of 
     $433,653 and 108,640, respectively, upon their termination from The 
     Company on March 31, 1997; a discretionary payment to Mr. Nelson of 
     $150,000 in fiscal 1997; and payments of $65,871 and $19,752 to Messrs. 
     Terry and Haas, respectively, in fiscal 1995, as a lump sum distribution 
     in connection with the termination of the Supplemental Benefit Plan 
     established by EMJ effective January 1, 1986.

(4)  Mr. Nelson joined the Company on February 1, 1997 and his compensation in
     fiscal 1997 represents actual compensation for a period of two months.

(5)  Messrs. Terry and Ruck left the Company on March 31, 1997.

                                       19
<PAGE>

STOCK OPTION GRANTS TABLE

           The following table sets forth certain information concerning 
stock options granted during fiscal 1997 by Holding to the Chief Executive 
Officer and the next four most highly compensated executive officers of the 
Company.  In addition, there are shown hypothetical gains that could be 
realized for the respective options, based on assumed rates of annual 
compound price appreciation of 5% and 10% from the date the options are 
granted over the ten-year term of the options.  The actual gain, if any, 
realized upon exercise of the options will depend upon the market price of 
Holding's Common Stock relative to the exercise price of the option at the 
time the option is exercised.  There is no assurance that the amounts 
reflected in this table will be realized.

<TABLE>
<CAPTION>
                                            Options Granted in Last Fiscal Year

 
                                                       Individual Grants                   
                            -------------------------------------------------------------      Potential Realizable Value at
                                Number of                                                        Assumed Annual Rates of
                               Securities      % of Total                                       Stock Price Appreciation for
                               Underlying    Options Granted        Exercise                           Option Term
                            Options Granted  to Employees in        Price       Expiration   ----------------------------------
     Name                       (#) (1)        Fiscal Year         ($/Sh.)          Date             5% ($)          10%($)
     ----                      ---------       -----------         -------        -------            ------          ------
<S>                         <C>               <C>                  <C>          <C>                 <C>              <C>
Maurice S. Nelson, Jr.         1,320,000           100%             $5.41        1/30/2007          $4,491,062       $11,381,234
Neven C. Hulsey                   ---                0%              N/A            N/A               N/A             N/A
Lonnie R. Terry                   ---                0%              N/A            N/A               N/A             N/A
Charles P. Gallopo                ---                0%              N/A            N/A               N/A             N/A
Randal J. Haas                    ---                0%              N/A            N/A               N/A             N/A
John W. Ruck                      ---                0%              N/A            N/A               N/A             N/A
</TABLE>

_______________

(1)  Holding has not granted any stock appreciation rights.  Mr. Nelson's
     options become exercisable in installments of 50% each year on January 30,
     2000 and January 30, 2001.  All outstanding stock options shall become
     fully exercisable and shall be cancelled and exchanged for cash in an
     amount equal to the excess of the Change in Control Price (as defined in
     the Stock Option Plan as defined below) over the exercise price, in the
     event of any transaction or series of transactions, other than a public
     offering, where a person or a group, excluding Holding, any of its
     subsidiaries, Kelso and its affiliates, is or becomes the beneficial owner,
     directly or indirectly, of securities representing 35% or more of the
     voting power of Holding's then outstanding securities (a "Change of
     Control"), unless the Executive Committee determines prior to the
     occurrence of such Change of Control that such options shall be honored, or
     assumed or new rights (having substantially equivalent or better rights,
     terms and conditions and economic value) substituted therefor.

HOLDING STOCK OPTION PLAN

           Holding has adopted, subject to stockholder approval, the Earle M. 
Jorgensen Holding Company, Inc. Stock Option Plan (the "Stock Option Plan"). 
Option grants may be made by the Executive Committee under the Stock Option 
Plan.  Stock options may be granted at not less than 100% of the fair market 
vale of Holding Common Stock on the date of grant and are generally 
exercisable for a period not exceeding ten years.  Option grants or the 
vesting of options may be contingent upon terms and conditions, such as the 
achievement of performance measures or upon the passage of time, as the 
Executive Committee determines.  Grants and awards made by the Executive 
Committee under the Stock Option Plan are intended to provide executive 
officers not only with additional incentives for outstanding individual 
performance but also with the opportunity to acquire an ownership stake in 
the Company, thereby more closely aligning their interests with those of the 
stockholders.

           The Executive Committee has the right, subject to the consent of 
the holders of options, to grant replacement options which may contain terms 
more favorable than the options they replace, including, without limitation, 
a lower exercise price, and cancel the replaced options.

                                       20
<PAGE>

           The aggregate number of shares of Holding Common Stock available 
for grants or subject to outstanding options, and the respective prices 
and/or vesting criteria applicable to outstanding options shall be 
proportionately adjusted to reflect any stock dividend on the Holding Common 
Stock, or any recapitalization, reorganization, merger, consolidation, 
split-up, spin-off, combination, exchange of shares, warrants or rights 
offering to purchase the Holding Common Stock at a price substantially below 
its fair market value.  To the extent deemed appropriate by the Executive 
Committee, subject to any required action by the stockholders, in any merger, 
consolidation, reorganization, liquidation, dissolution, or other similar 
transaction, any option granted under the Stock Option Plan shall pertain to 
the securities and any other property to which a holder of the number of 
shares of Common Stock covered by the option would have been entitled to 
receive in connection with such event.

           Upon a Change of Control of Holding, with certain exceptions, the 
value of all outstanding stock options (whether or not then fully exercisable 
or vested) will be cashed out at specified prices as of the date of the 
Change of Control, except that any stock options outstanding for less than 
six months will not be cashed out until six months after the applicable date 
of grant.

           Generally, a participant who is granted a stock option will not be 
subject to federal income tax at the time of grant and the Company will not 
be entitled to a tax deduction by reason of such grant.  Upon exercise of a 
nonqualified option, generally the difference between the option price and 
the fair market value of the Holding Common Stock on the date of exercise 
will be considered ordinary income to the participant and generally the 
Company will be entitled to a corresponding tax deduction.

           Upon exercise of an incentive stock option, no taxable income will 
be recognized by the participant and the Company is not entitled to a tax 
deduction by reason of such exercise.  However, if Holding Common Stock 
purchased pursuant to the exercise of an incentive stock is sold within two 
years from the date of grant or within one year after the transfer of such 
Holding Common Stock to the participant, then the difference, with certain 
adjustments, between the fair market value of the Holding Common Stock at the 
date of exercise and the option price will be considered ordinary income to 
the participant and generally the Company will be entitled to a corresponding 
tax deduction.  If the participant disposes of the Holding Common Stock after 
such holding periods, any gain or loss upon such disposition will be treated 
as a capital gain or loss and the Company will not be entitled to a deduction.

           The maximum number of shares of Holding Common Stock reserved for 
issuance under the Stock Option Plan is 1,500,000, subject to adjustment as 
provided in the Stock Option Plan to reflect certain corporate transactions 
affecting the number or type of outstanding shares.

THE ESOP

           The Company maintains an employee stock ownership plan (ESOP) in 
respect of the Company's nonunion employees who meet certain service 
requirements.  The Company's annual contributions to the ESOP are a 
percentage (between 5% and 15% based on a formula rewarding the achievement 
of certain Company performance objectives) of total cash compensation (as 
defined in the ESOP) determined by the Board of Directors of Holding and may 
be made by the Company in cash or by Holding in shares of Holding capital 
stock.  Participants become 20% vested in their account balances after one 
year of continuous service. Participants vest an additional 20% for each year 
of service thereafter and become fully vested upon completion of five years 
of service, retirement, disability or death. Upon the occurrence of a 
participant's termination (as defined), retirement, disability, or death, the 
ESOP is required to either distribute the vested balance in stock or 
repurchase the vested balance. If stock is distributed, it is accompanied by 
a put option to Holding under terms defined in the ESOP.  At March 31, 1997, 
shares of Holding's Series A and Series B Preferred Stock and Holding Common 
Stock owned by the ESOP totaled 107,170, 24,444 and 3,511,701 shares, 
respectively. Contributions payable to the ESOP totaled $3,102,000, 
$3,401,000, $7,694,000, $6,005,000 and $5,919,000 as of March 31, 1997, 1996, 
1995, 1994 and 1993 respectively.  Contributions were made by Holding in the 
form of Series B Preferred Stock for fiscal 1992, a combination of cash 
($632,000) and Series B Preferred Stock ($5,287,000) for fiscal 1993, and 
Holding Common Stock for fiscal years 1994, 1995 and 1996. The contribution 
for fiscal 1997 will be made in the form of Holding Common Stock or cash.

           Although Holding has not expressed any intent to terminate the ESOP,
it has the right to do so at any time. In the event of such termination,
participants become fully vested to the extent of the balances in their separate
accounts and receive put options with respect to Holding stock allocated to
their accounts.


                                       21
<PAGE>

           In 1984, 1985 and 1986, K-R purchased life insurance policies to 
provide, among other things, a separate source for funds to repurchase 
capital stock, including capital stock distributed by the ESOP, from 
departing employees.  In 1997, 1996 and 1995, the Company borrowed $53.9 
million in aggregate against the cash surrender value of such policies 
(including $28.6 million for renewal premiums and accrued interest and $25.3 
million to reduce borrowings under its Revolving Credit Facility). The net 
cash surrender value of certain life insurance policies available for future 
borrowings as of March 31, 1997 was approximately $5.0 million.  Other 
resources of the Company, such as the Revolving Credit Facility, are 
available, subject to certain limitations, to satisfy stock repurchase 
obligations as they arise.

           The Internal Revenue Service (the "IRS") is currently conducting 
an audit of the Earle M. Jorgensen Employee Stock Ownership Plan for the 
years ended March 31, 1992 through March 31, 1996.  A preliminary report has 
been issued to the Company in which the IRS asserted that certain 
contributions of stock by Holding to the ESOP violated provisions of the 
Internal Revenue Code.  The Company believes that this assertion is incorrect 
and has responded to the IRS that it disagrees with the conclusions of this 
preliminary report.  The U.S. Department of Labor (the "DOL") has conducted 
an investigation of the same transactions involving the ESOP and has come to 
conclusions similar to those reached by the IRS.  The Company believes that 
the DOL's assertions are also incorrect and will respond accordingly to the 
DOL.

PENSION PLANS

           Prior to September 30, 1992, the Company maintained a salaried 
employees pension plan (the "Pension Plan") for the benefit of employees 
within the ormer Jorgensen Steel and Aluminum division, providing for 
benefits to retirees based upon length of service and average annual 
compensation over the term of employment. The Pension Plan was terminated on 
September 30, 1992. Upon such termination, retirees and participants who 
terminated employment prior to October 15, 1992 were given a deferred Group 
Annuity Contract purchased from Transamerica, Inc. Participants who had not 
terminated employment prior to October 15, 1992 were entitled to elect to 
take distribution of their accrued benefits in one of the following forms: 
(i) a deferred Group Annuity Contract from Transamerica, Inc., (ii) a 
transfer of the present value of their accrued benefits to the Company's 
401(k) plan, or (iii) a lump sum distribution of the present value of their 
accrued benefit.  Messrs. Terry and Haas each elected to have the present 
value of his accrued benefit ($234,429 and $112,682, respectively) 
transferred to the Company's 401(k) plan.

           In addition, a Supplemental Benefit Plan (the "Supplemental 
Pension Plan") was established by EMJ effective January 1, 1986. Under a 
change in law, applicable to the Pension Plan but not the Supplemental 
Pension Plan, effective January 1, 1989, participants could no longer accrue 
benefits with respect to compensation in excess of $200,000, as adjusted for 
inflation. Pursuant to an amendment to the Supplemental Pension Plan, any 
amount that would have been payable under the Pension Plan but for this 
limitation on includable compensation will be paid from the Supplemental 
Pension Plan. Amounts payable under the Supplemental Pension Plan were fixed 
(except for cost of living adjustments) upon termination of the Pension Plan.

           Under the Pension Plan, the compensation for the executive 
officers employed by EMJ prior to the Acquisition and named in the Cash 
Compensation Table was their total aggregate direct compensation at the time 
of termination of the Pension Plan.  Mr. Terry had 28 and Mr. Haas had 18 
years of credited service under the plan. The benefits payable to Messrs. 
Terry and Haas under the Supplemental Pension Plan were fixed (except for 
cost of living adjustment) at the time of termination of the Pension Plan.  
Assuming they retire at age 65, Mr. Terry will be entitled to a monthly 
benefit of $918.23, and Mr. Haas will be entitled to a monthly benefit of 
$377.39, in each case subject to an annual cost of living adjustment after 
such retirement. Such payments would be actuarially adjusted for payments 
beginning at other than age 65.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

           David M. Roderick, Frank Nickell and Maurice S. Nelson, Jr. are 
members of the Executive Committee, which succeeded the functions of the 
Management and Compensation Committee of Holding and the Company on January 
30, 1997.  Prior to January 30, 1997, Mr. Roderick, Mr. Schuchert and Mr. 
Hulsey were members of the Management and Compensation Committee.  Mr. Nelson 
is the President, Chief Executive Officer and Chief Operating Officer of 
Holding and the Company. During the time Mr. Hulsey was a member of the 
Management and Compensation Committee, he was also the President and Chief 
Executive Officer of the Company and Holding.

                                       22
<PAGE>

           Kelso affiliates beneficially own shares of the capital stock of 
Holding as described under "Security Ownership of Certain Beneficial Owners." 
Mr. Nickell and Mr. Schuchert are stockholders of Kelso and general partners 
of Kelso Partners I, L.P. ("KP I"), Kelso Partners III, L.P. ("KP III"), and 
Kelso Partners IV, L.P. ("KP IV"). KP I, KP III and KP IV are the general 
partners of Kelso Investment Associates, Limited Partnership ("KIA I"), KIA 
III-Earle M. Jorgensen, L.P. ("KIA III-EMJ") and Kelso Investment Associates 
IV, L.P. ("KIA IV"), respectively. Mr. Nickell and Mr. Schuchert are 
directors of Holding and the Company and share investment and voting power 
with respect to shares of the capital stock of Holding held by KIA I, KIA 
III-EMJ and KIA IV as described under "Security Ownership of Certain 
Beneficial Owners."

           In connection with the Acquisition, the Company agreed to pay 
Kelso an annual fee of $1,250,000 each year for financial advisory services 
and to reimburse it for out-of-pocket expenses incurred in connection with 
rendering such services.  Two principals of Kelso serve on the Boards of 
Directors of the Company and Holding.  For each of the fiscal years 1997, 
1996 and 1995, the Company paid Kelso the annual fee of $1,250,000 and 
reimbursed Kelso $393,000, $154,000 and $164,000, respectively, for 
out-of-pocket expenses.

           Holding has issued to KIA IV two warrants, each entitling KIA IV 
to purchase at a purchase price of $.01 per share, shares of Holding Common 
Stock representing 10% of the issued and outstanding Holding Common Stock on 
a fully diluted basis.

           In January 1996, the Company amended its agreement with Kelso 
Insurance Services, Inc. (an affiliate of Kelso) ("Kelso Insurance"), and 
American Telephone and Telegraph Company ("AT&T") pursuant to which the 
Company as well as certain other Kelso affiliated companies participates in a 
telecommunications network under which AT&T provides communications services 
to the group at a special tariff rate.  Pursuant to such agreement, as 
amended, the Company has guaranteed a minimum annual usage for communication 
services, and Kelso Insurance has guaranteed the Company's minimum usage to 
AT&T.  No fee was paid by the Company to Kelso Insurance in connection with 
this transaction.

           Mr. Hulsey is a general partner of two California partnerships: 
Kilsby-Roberts Group ("KRG"), and East 31st Street North ("31st St."), and 
has an interest in such partnerships of 3.704% and 3.279%, respectively.  
Through December 1996, KRG owned a facility leased to the Company and 
received approximately $41,000 of rent monthly from the Company during fiscal 
1997. The Company believes such rent was a market rent and is not higher than 
would otherwise be paid if such premises were leased from an independent 
third party. In January 1997, KRG sold the facility to an independent third 
party.  On April 18, 1995, the Company purchased the facility located in 
Tulsa, Oklahoma owned by "31st St." for approximately $2.1 million.  The 
Company believes, based on a current independent appraisal, that such 
purchase price was equal to the fair market value of the property and was not 
higher than would otherwise be paid if the property was purchased from an 
independent third party.  Prior to such purchase the Company leased the 
facility from 31st St. for a monthly rent of approximately $26,000.  The 
Company believes such rent was a market rent and was not higher than would 
otherwise be paid if the premises were leased from an independent third party.

           Mr. Roderick had a three-year incentive compensation agreement 
with Holding which expired on March 31, 1997. Pursuant to such agreement, Mr. 
Roderick was granted 50,000 shares of Holding Common Stock, 20,000 of which 
were vested upon issuance and all or a portion of the remainder were to be 
vested through fiscal 1997, if Holding achieved certain financial targets.  
As of March 31, 1997, a total of 34,000 shares were vested under the 
agreement.

                                       23
<PAGE>

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

COMMON STOCK OF THE COMPANY

           All of the issued and outstanding voting stock of the Company, 
consisting of 128 shares of common stock, is owned by Holding.

CAPITAL STOCK OF HOLDING

           The following table sets forth information with respect to the 
beneficial ownership of shares of Holding Common Stock and Series A Preferred 
Stock as of March 31, 1997, by all stockholders of Holding known to be 
beneficial owners of more than 5% of any such class, by each director, by 
each executive officer of the Company named in the Summary Compensation Table 
and by all directors and executive officers as a group as determined in 
accordance with Rule 13d-3(i) under the Securities Exchange Act of 1934, as 
amended (the "Exchange Act"). As of March 31, 1997, 26,213 shares of Series B 
Preferred Stock of Holding have been issued (and 997 shares have been accrued 
but not declared), of which 24,444 were owned by the ESOP and 1,766 were 
owned by Holding.

<TABLE>
<CAPTION>


                                                                                                Percentage of
                                                               Percentage of       Number of     Shares of Series
                                             Number of            Shares of        Shares           A Preferred
   Name and Address of                       Shares of          Common Stock      of Series A         Stock
    Beneficial Owner                       Common Stock        Outstanding(a)   Preferred Stock   Outstanding (b)
   -------------------                     ------------        --------------   ---------------  ----------------
<S>                                        <C>                   <C>              <C>              <C>
Kelso Investment Associates, IV, L.P. (c)   9,465,287  (d)          59.9%(d)              0            0.0%
KIA III - Earle M. Jorgensen, L.P. (c)      1,704,740               13.2%                 0            0.0%
Joseph S. Schuchert (c)                    11,167,215  (d)(e)       70.6%(d)(e)      24,519 (f)       15.2% (f)
Frank T. Nickell (c)                       11,187,714  (d)(e)       70.7%(d)(e)      24,519 (f)       15.2% (f)
Michael B. Goldberg (c)                    11,167,215  (d)(e)       70.6%(d)(e)           0            0.0%
George E. Matelich (c)                     11,172,215  (d)(e)       70.6%(d)(e)      24,519 (f)       15.2% (f)
Thomas R. Wall, IV (c)                     11,172,215  (d)(e)       70.6%(d)(e)      24,519 (f)       15.2% (f)
Frank K. Bynum (c)                         11,167,215  (d)(e)       70.6%(d)(e)           0            0.0%
David I. Wahrhaftig (c)                    11,167,215  (d)(e)       70.6%(d)(e)           0            0.0%
Earle M. Jorgensen (g)                        200,000                1.6%                 0            0.0%
Neven C. Hulsey (g)                           250,000                1.9%            24,519           15.2%
Maurice S. Nelson (g)                               0                0.0%                 0            0.0%
Lonnie R. Terry (g) (l)                        72,500                0.6%                 0            0.0%
Charles P. Gallopo (g)                         50,000                0.4%                 0            0.0%
Randal J. Haas (g)                             50,000                0.4%                 0            0.0%
John W. Ruck (g) (l)                           55,000                0.4%             2,942            1.8%
David M. Roderick (g)                          34,000                0.3%                 0            0.0%
John Rutledge (h)                               5,000                0.0%                 0            0.0%
William A. Marquard (c)                        10,000                0.1%                 0            0.0%
Earle M. Jorgensen Company Employee         
   Stock Ownership Plan (g)                 3,365,408  (i)          26.1%(i)         99,803 (i)       61.7% (i)   
All directors and executive officers of
    the Company as a group                    792,999  (j)           6.2%(j)         28,321 (k)       17.5% (k)
</TABLE>

---------------                                       
(a)  The percentage of shares of Holding Common Stock outstanding for KIA IV,
     and Messrs. Schuchert, Nickell, Goldberg, Matelich, Wall, Bynum and
     Wahrhaftig was calculated assuming the total outstanding shares of Holding
     Common Stock was 15,814,974, (i) including shares of Holding Common Stock
     which would be outstanding assuming KIA IV exercised the two Warrants
     referred to in note (d) below in succession and there had been no other
     dilution events prior to such exercise and (ii) excluding the 316,435
     shares of Holding Common Stock currently held in the Holding treasury.  The
     percentage of shares of Holding Common Stock outstanding for all other
     holders was calculated assuming the total outstanding shares of Holding
     Common Stock was 12,877,059, excluding shares issuable upon the exercise of
     the Warrants held by KIA IV and the 316,435 shares of Holding Common Stock
     held in the Holding treasury as of March 31, 1997.


                                       24
<PAGE>

(b)  The percentage of shares of Series A Preferred Stock outstanding was
     calculated assuming the total outstanding shares of Series A Preferred
     Stock was 161,778, excluding 85,768 shares of Series A Preferred Stock held
     in the Holding treasury as of March 31, 1997.

(c)  The business address for such person(s) is c/o Kelso & Company, 320 Park
     Avenue, 24th Floor, New York, New York 10022. Kelso & Company is a private
     investment firm that engages in leveraged acquisitions.

(d)  Includes 2,937,915 shares of the Holding Common Stock that KIA IV is
     entitled to purchase pursuant to two Warrants issued to KIA IV, one of
     which was issued pursuant to the terms of the Subordinated Notes because
     the Subordinated Notes were not refinanced within one year of issuance and
     one of which was issued in connection with the exchange of the Subordinated
     Notes for the Holding Notes. Each warrant entitles the holder to purchase
     up to 10% of the Holding Common Stock on a fully diluted basis at an
     exercise price of $.01 per share.

(e)  Messrs. Schuchert, Nickell, Goldberg, Matelich, Wall, Bynum and Wahrhaftig
     may be deemed to share beneficial ownership of shares of Holding Common
     Stock owned of record by (i) KIA IV and an affiliated entity by virtue of
     their status as general partners of KP IV, the general partner of KIA IV,
     and such affiliate, and (ii) KIA III-EMJ by virtue of their status as
     general partners of KP III, the general partner of KIA III-EMJ.  Messrs.
     Schuchert, Nickell, Goldberg, Matelich, Wall, Bynum and Wahrhaftig share
     investment and voting power with respect to securities owned by the Kelso
     affiliates. Messrs. Schuchert, Nickell, Goldberg, Matelich, Wall, Bynum and
     Wahrhaftig disclaim beneficial ownership of the shares of Holding Common
     Stock owned by the Kelso affiliates.

(f)  Messrs. Schuchert, Nickell, Matelich and Wall may be deemed to share
     beneficial ownership of shares of Series A Preferred Stock owned of record
     by KIA I by virtue of their status as general partners of KP I, the general
     partner of KIA I. Messrs. Schuchert, Nickell, Matelich and Wall disclaim
     beneficial ownership of the shares of Series A Preferred Stock owned by KIA
     I.

(g)  The business address of such person(s) or entity is 3050 East Birch Street,
     Brea, California 92822.

(h)  The business address for Dr. Rutledge is One Greenwich Office Park,
     Greenwich, Connecticut 06831.

(i)  Excludes 146,293 shares of Holding Common Stock and 7,367 shares of Series
     A Preferred Stock held by the ESOP in directed accounts that may be deemed
     to be beneficially owned by any of the directors or executive officers or
     other employees of the Company.

(j)  Excludes (i) 11,181,643 shares of Holding Common Stock held by Kelso
     affiliates that may be deemed to be beneficially owned by Mr. Schuchert and
     Mr. Nickell, and (ii) shares held by the ESOP, except for shares held in
     directed accounts that may be deemed to be beneficially owned by any of the
     directors and executive officers of the Company.

(k)  Excludes (i) 24,519 shares of Series A Preferred Stock held by KIA I that
     may be deemed to be beneficially owned by Mr. Schuchert and Mr. Nickell,
     and (ii) shares held by the ESOP, except for shares held in directed
     accounts that may be deemed to be beneficially owned by any of the
     directors or executive officers of the Company.

(l)  Messrs. Terry and Ruck left the Company on March 31, 1997.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           Kelso affiliates beneficially own shares of the capital stock of 
Holding as described under "Item 12.  Security Ownership of Certain 
Beneficial Owners and Management."  Messrs. Schuchert, Nickell, Goldberg, 
Matelich, Wall, Bynum and Wahrhaftig are indirect stockholders of Kelso and 
general partners of Kelso KP I (other than Messrs. Goldberg, Bynum and 
Wahrhaftig), KP III and KP IV.  KP I, KP III and KP IV are the general 
partners of KIA I, KIA III-EMJ and KIA IV, respectively.  Messrs. Schuchert 
and Nickell are directors of Holding and the Company.  Although Messrs. 
Schuchert, Nickell, Matelich and Wall share investment and voting power with 
respect to securities of Holding owned by Kelso affiliates, they disclaim 
beneficial ownership of such shares.  See "Item 12. Security Ownership of 
Certain Beneficial Owners and Management."

                                       25
<PAGE>

           The Company, Holding and Kelso and its affiliates entered into 
certain agreements in connection with the Acquisition.  Such agreements and 
transactions are described under "Item 11. Executive Compensation -- 
Compensation Committee Interlocks and Insider Participation."

           KIA IV is the holder of two Holding warrants which are described 
under "Item 11. Executive Compensation -- Compensation Committee Interlocks 
and Insider Participation."

           In September 1995 the Company terminated its agreement with Dr. 
Rutledge pursuant to which Dr. Rutledge provided an ongoing business 
management program to the Company and its employees.  Dr. Rutledge was paid 
$50,000 under the agreement in fiscal 1996 prior to its termination and 
$100,000 in fiscal 1995. Dr. Rutledge continues to provide similar services 
to the Company for which he is reimbursed for his travel expenses.

           Mr. Gallopo has borrowed $403,000 from Holding by issuing two 
separate notes, one of which is non-recourse, each in the principal amount of 
$201,500, to Holding in payment for 50,000 shares of Holding Common Stock.  
The notes mature on March 31, 2001, bear interest at the rate of 6% per 
annum, and are secured by a pledge of Mr. Gallopo's Holding Common Stock.  
Mr. Gallopo has also received 16,000 phantom stock units.  Such award is 
described in the Summary Compensation Table under "Item 11.  Executive 
Compensation."

           Mr. Roderick had an incentive compensation agreement with Holding 
which expired on March 31, 1997.  Such agreement is described under "Item 11. 
Executive Compensation -- Compensation Committee Interlocks and Insider 
Participation."

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS.

          See "Index to Financial Statements" (page F-1).

(a)(2) FINANCIAL STATEMENT SCHEDULES.

          Schedule II - Valuation and Qualifying Accounts and Reserves

All other schedules have been omitted because the information is not applicable
or is not  material or because the information required is set forth in the
financial statements or the notes thereto.

(a)(3) EXHIBITS.

     See "Index to Exhibits" for listing of those exhibits included in this
filing.

Exhibit
Number                Description
-------               -----------

3.1*      Certificate of Incorporation of the Company.  Incorporated by
          reference to Exhibit 3.1 of the Company's Registration Statement on
          Form S-1 as filed on January 15, 1993 (Registration No. 33-57134) (the
          "Company's 1993 Registration Statement").

3.2*      By-laws of the Company.  Incorporated by reference to Exhibit 3.2 of
          the Company's 1993 Registration Statement.

4.1*      Form of Indenture with respect to the Notes.  Incorporated by
          reference to Exhibit 4.1 of Amendment No. 3 to the Company's 1993
          Registration Statement ("Amendment No. 3").

4.2*      Form of certificate for the Notes (included in Exhibit 4.1 to
          Amendment No. 3).


                                       26
<PAGE>

Exhibit
Number                Description
-------               -----------

4.3*      Credit Agreement ("Revolving Credit Facility"), as dated March 3, 1993
          among the Company, Holding, Various Financial Institutions, and BT
          Commercial Corporation and Chemical Bank, as Agents (the "Agents").
          Incorporated by reference to Exhibit 4.1 of the Company's Form 8-K as
          filed March 24, 1993 with the Commission (Registration No. 33-57134).

4.4*      Form of Restructuring Agreement among Holding, the Company and KIA IV.
          Incorporated by reference to Exhibit 4.25 of Amendment No. 3.

4.5*      Form of Security Agreement between the Company and BT Commercial
          Corporation, as Collateral Agent, Incorporated by Reference to Exhibit
          4.27 of Amendment No. 3.

10.1*     Stockholders Agreement, amended and restated as of September 14, 1990,
          among Holding, KIA III-EMJ, KIA IV, Kelso Equity Partners II, L.P. and
          the Management Stockholders and Other Investors named therein.
          Incorporated by reference to Exhibit 4.1 of Holding's Post-Effective
          Amendment No. 1 to the Form S-1 Registration Statement as filed with
          the Commission on October 12, 1990 (Registration No. 33-35022)
          ("Holding's Post-Effective Amendment No. 1 to the 1990 Form S-1").

10.2*     Amendment to the Stockholders Agreement, dated as of January 20, 1992.
          Incorporated by reference to Exhibit 10.2 of the Company's 1993
          Registration Statement.

10.3*     Management Stockholders Bonus Plan.  Incorporated by reference to
          Exhibit 4.7 of Holding's Post-Effective Amendment No. 1 to the 1990
          Form S-1.

10.5*     Services Agreement, between Acquisition and Kelso, dated March 19,
          1990.  Incorporated by reference to Exhibit 10.2 of Holding's
          Registration Statement on Form S-1 as filed May 30, 1990
          with the Commission (Registration No. 33-35022) ("Holding's 1990
          Registration Statement").

10.6*     Trust Agreement applicable to the EMJ Employee Stock Ownership and
          Capital Accumulation Plan, dated as of May 25, 1984, by and between
          Crocker National Bank ("Crocker"), as Trustee, and EMJ.  Incorporated
          by referenced to Exhibit 4.1 to Form 8 (Amendment No. 1 to EMJ's
          Annual Report on Form 10-K, Registration No. L-7537, for the fiscal
          year ended December 31, 1984)(the "Form 8").

10.7*     Amendment 1985-I to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan effective as of January 1985.  Incorporated by
          reference to Exhibit 4.1 to Post-Effective Amendment No. 1 to  EMJ's
          Registration Statement on Form S-8, Registration No. 2-87991, filed
          August 21, 1985.

10.8*     Amendment 1986-I to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan and Plan Trust Agreement executed December 1986
          between EMJ and Wells Fargo Bank, N.A., as Trustee (formerly Crocker).
          Incorporated by reference to Exhibit 4.2 to the Form 8.

10.9*     Amendment 1988-I to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan executed February 29, 1988.  Incorporated by
          reference to Exhibit (10)d to EMJ's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1987.

10.10*    Amendment 1988-II to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan executed June 22, 1988.  Incorporated by reference
          to Exhibit 8 to EMJ's Schedule 14D-9 filed on February 5, 1990 ("EMJ's
          1990 Schedule 14D-9").

10.11*    Amendment 1989-I to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan executed March 20, 1989.  Incorporated by reference
          to Exhibit 8 to EMJ's 1990 Schedule 14D-9.


                                       27
<PAGE>

Exhibit
Number                Description
-------               -----------

10.12*    EMJ Supplemental Benefit Plan 1989 Amendment in Toto.  Incorporated by
          reference to Exhibit (10)p to EMJ's 1989 Form 10-K.

10.13*    Amendment 1989-II to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan executed December 29, 1989. Incorporated by
          reference to Exhibit (10)q to EMJ's 1989 Form 10-K.

10.14*    Amendment 1990-I to the EMJ Employee Stock Ownership and Capital
          Accumulation Plan Trust Agreement executed March 19, 1990.
          Incorporated by reference to Exhibit (10)r to EMJ's Annual Report on
          Form 10-K for fiscal year ended December 31, 1989.

10.15*    C. A. Roberts Pension Plan, amended and restated as of January 1,
          1986, with amendments thereto.  Incorporated by reference to Exhibit
          10.22 of Holding's 1990 Registration Statement.

10.16*    Kilsby Executive Life Insurance Plan.  Incorporated by reference to
          Exhibit 10.25 of Holding's 1990 Registration Statement.

10.17*    Kilsby Executive Long-Term Disability Plan.  Incorporated by reference
          to Exhibit 10.26 of Holding's 1990 Registration Statement.

10.18*    Holding's ESOP.  Incorporated by reference to Exhibit 10.31 of
          Holding's Annual Report on Form 10-K for the year ended March 31, 1991
          (Registration No. 33-35022) ("Holding's Form 10-K").

10.19*    Amendment No. 1 to Holding's ESOP, dated October 21, 1991.
          Incorporated by reference to Exhibit 10.24 of the Company's 1993
          Registration Statement.

10.20*    Amendment No. 2 to Holding's ESOP, dated October 21, 1991.
          Incorporated by reference to Exhibit 10.25 of the Company's 1993
          Registration Statement.

10.21*    Amendment No. 3 to Holding's ESOP, dated February 18, 1992.
          Incorporated by reference to Exhibit 10.26 of the Company's 1993
          Registration Statement.

10.22*    Amendment No. 4 to Holding's ESOP, dated January 25, 1993.
          Incorporated by reference to Exhibit No. 10.21 to Holding's
          Registration Statement on Form S-1 as filed October 19, 1994 with the
          Commission (Registration No. 33-85364) ("Holding's 1994 Registration
          Statement").

10.23*    Amendment No. 5 to Holding's ESOP, dated January 25, 1993.
          Incorporated by reference to Exhibit No. 10.22 to Holding's 1994
          Registration Statement.

10.24*    Amendment No. 6 to Holding's ESOP, dated January 25, 1993.
          Incorporated by reference to Exhibit No. 10.23 to Holding's 1994
          Registration Statement.

10.25*    Amendment No. 7 to Holding's ESOP, dated January 25, 1993.
          Incorporated by reference to Exhibit No. 10.24 to Holding's 1994
          Registration Statement.

10.26*    Amendment No. 8 to Holding's ESOP, dated July 27, 1993.  Incorporated
          by reference to Exhibit No. 10.25 to Holding's 1994 Registration
          Statement.

10.27*    Amendment No. 9 to Holding's ESOP, dated October 7, 1994.
          Incorporated by reference to Exhibit No. 10.26  to Holding's 1994
          Registration Statement.

10.28*    Holding's ESOP Trust Agreement.  Incorporated by reference to Exhibit
          10.32 of Holding's Form 10-K.


                                       28
<PAGE>

Exhibit
Number                Description
-------               -----------

10.29*    Jorgensen Compensation Policy, dated as of April 1, 1991, including
          description of Return on Net Operating Assets Incentive Plan.
          Incorporated by reference to Exhibit 10.34 of Holding's 1991
          Form 10-K.

10.30*    Lease and Agreement, dated as of August 1, 1991, between Advantage
          Corporate Income Fund L.P. and the Company, relating to the sale and
          lease-back of K-R's Kansas City, Missouri property.  Incorporated by
          reference to Exhibit 10.30 of the Company's 1993 Registration
          Statement.

10.31*    Lease and Agreement, dated as of September 1, 1991, between Advantage
          Corporate Income Fund L.P. and the Company, relating to the sale and
          lease-back of the Cincinnati, Ohio property.  Incorporated by
          reference to Exhibit 10.31 of the Company's 1993 Registration
          Statement.

10.32*    Industrial Building Lease, dated as of October 16, 1991, between Ira
          Houston Jones and Helen Mansfield Jones, Roderick M. Jones and
          Cherilyn Jones, Roger G. Jones and Norma Jean Jones, Robert M. Jones
          and Olga F. Jones and the Company, relating to the sale and lease-back
          of the Alameda Street property in Lynwood, California.  Incorporated
          by reference to Exhibit 10.32 of the Company's 1993 Registration
          Statement.

10.33*    Stock Purchase Agreement, dated as of January 21, 1992, between
          McJunkin Corporation and the Company, relating to the sale of the
          Company's Republic Supply division.  Incorporated by reference to
          Exhibit 10.33 of the Company's 1993 Registration Statement.

10.34*    Contract of Sale, dated as of January 21, 1992, between the Company
          and Hansford Associates Limited Partnership, relating to the sale of
          the warehouse properties and the sale of the Company's Republic Supply
          division.  Incorporated by reference to Exhibit 10.34 of the Company's
          1993 Registration Statement.

10.35*    Stock Purchase Agreement, dated as of June 30, 1992, among Forge
          Acquisition Corporation, The Jorgensen Forge Corporation and the
          Company, relating to the sale of the Company's Forge division.
          Incorporated by reference to Exhibit 10.35 of the Company's 1993
          Registration Statement.

10.36*    Industrial Real Estate Lease, dated June 25, 1992, between Paul
          Nadzikewycz and the Company, relating to the sale and lease-back of
          JSA's Denver, Colorado property.  Incorporated by reference to Exhibit
          10.36 of the Company's 1993 Registration Statement.

10.37*    Industrial Real Estate Lease, dated October 19, 1992, between Fiorito
          Enterprises, Inc. and the Company, relating to the sale and lease-back
          of the Portland, Oregon facility.  Incorporated by reference to
          Exhibit 10.27 of the Company's 1993 Registration Statement.

10.38*    Truck Lease and Service Agreement, dated as of November 1, 1984,
          between Ryder Truck Rental, Inc. ("Ryder") and EMJ and all amendments
          thereto, between Ryder and the Company (amendments dated January 1,
          1992, January 30, 1992 and undated (executed by the Company)).
          Incorporated by reference to Exhibit 10.38 of the Company's 1993
          Registration Statement.

10.39*    Lease, dated July 30, 1982, between Republic Bank, Dallas N.A., as
          Ancillary Trustee of the Fluor Employees' Trust Fund and Kilsby-
          Roberts Co., relating to K-R's Houston, Texas property (the "Houston
          Lease").  Incorporated by reference to Exhibit 10.42 of the Company's
          1993 Registration Statement.

10.40*    Amendment No. 1 to the Houston Lease, dated as of December 31, 1986,
          among Barclays Bank of California, as Trustee for Republic Bank,
          Dallas, N.A., as Ancillary Trustee of the Fluor Employees' Trust Fund,
          KRG and Kilsby-Roberts Co.  Incorporated by reference to Exhibit 10.43
          of the Company's 1993 Registration Statement.


                                       29
<PAGE>

Exhibit
Number                Description
-------               -----------

10.41*    Form of Management Agreement between the Company and Holding.
          Incorporated by reference to Exhibit 10.46 of Amendment No. 2 to the
          Company's 1993 Registration Statement.

10.42*    Form of Tax Allocation Agreement between the Company and Holding.
          Incorporated by reference to Exhibit 10.47 of Amendment No. 3.

10.43*    Second Amendment dated as  January 26,  1994 to the revolving credit
          facility among the Company, Holding, certain financial institutions
          named therein and BT Commercial Corporation and Chemical Bank, as
          agents.  Incorporated by reference to the Company's  quarterly report
          on Form 10-Q, Commission File No. 5-10065 for the fiscal quarter ended
          January 3, 1994.

10.44*    Third Amendment dated as of February 25,  1994 to the revolving credit
          facility among the Company, Holding, certain financial institutions
          named therein and BT Commercial Corporation and Chemical Bank, as
          agents.  Incorporated by reference to Exhibit 10.42 to the Company's
          Annual Report on Form 10-K, Commission No. 5-10065 for the fiscal year
          ended March 31, 1994 (the "Company's 1994 Form 10-K").

10.45*    Fourth Amendment dated as of  May 4, 1994 to the revolving credit
          facility among the  Company, Holding, certain financial institutions
          named therein and BT Commercial Corporation and Chemical Bank, as
          agents.  Incorporated by reference to Exhibit 10.43 to the Company's
          1994 Form 10-K.

10.46*    Earle M. Jorgensen Holding Company, Inc. Phantom Stock Plan adopted
          January 11, 1995.  Incorporated by reference to Exhibit 10.39 to
          Amendment No.1 to Holding's 1994 Registration Statement as filed with
          the commission on January 19, 1995 (Registration No. 33-85364)
          ("Amendment No. 1 to Holding's 1994 Registration Statement").

10.47*    Industrial Real Estate Lease, dated July 15, 1993, between Jorgensen
          and 58 Cabot L.P., relating to the Langhorne, Pennsylvania facility.
          Incorporated by reference to Exhibit 10.27 to Holding's 1994
          Registration Statement.

10.48*    Amendment to the Stockholders Agreement, dated as of September 30,
          1994.  Incorporated by reference to Exhibit 10.41 to Amendment No. 1
          to Holding's 1994 Registration Statement.

10.49*    Stock Compensation Agreement, dated as of December 13, 1994, between
          Holding and David M. Roderick.  Incorporated by reference to Exhibit
          10.42  to Amendment No. 1 to Holding's 1994 Registration Statement.

10.50*    Holding's Key Employee Incentive Compensation Plan, effective April 1,
          1994.  Incorporated by reference to Exhibit 10.53 to the Company's
          Annual Report on Form 10-K, Commission File No. 5-10065 for the fiscal
          year ended March 31, 1995 (the "Company's 1995 Form 10-K").

10.51*    Holding's 401(a)(17) Supplemental Contribution Plan, effective April
          1, 1994.   Incorporated by reference to Exhibit 10.54 to the Company's
          1995 Form 10-K.

10.52*    Holding's Deferred Compensation Plan, effective April 1, 1994.
          Incorporated by reference to Exhibit 10.55 to the Company's 1995 Form
          10-K.

10.53*    Fifth Amendment dated as of August 17, 1995 to the revolving credit
          facility among the Company, Holding, certain financial institutions
          named therein and BT Commercial Corporation and Chemical Bank, as
          agents.  Incorporated by reference to the Company's Quarterly Report
          on Form 10-Q, Commission File No. 5-10065 for the fiscal quarter ended
          September 29, 1995.


                                       30
<PAGE>

Exhibit
Number                Description
-------               -----------

10.54*    Form of Sixth Amendment dated as of January 30, 1996 to the revolving
          credit facility among the Company, Holding, certain financial
          institutions named therein and BT Commercial Corporation and Chemical
          Bank, as agents. Incorporated by reference to the Company's Quarterly
          Report on Form 10-Q, Commission File No. 5-10065 for the fiscal
          quarter ended January 3, 1996.

10.55*    Form of Seventh Amendment dated as of June 20, 1996 to the revolving
          credit facility among the Company, Holding, certain financial
          institutions named therein and BT Commercial Corporation and Chemical
          Bank, as agents.  Incorporated by reference to Exhibit 10.58 to the
          Company's Annual Report on Form 10-K, Commission No. 5-10065 for the
          fiscal year ended March 31, 1996 (the "Company's 1996 Form 10-K").

10.56**   Amendment No. 2 to the Earle M. Jorgensen Company Capital Accumulation
          Plan and Trust dated as of May 3, 1996.

10.57**   Earle M. Jorgensen Holding Company, Inc. Stock Option Plan effective
          January 30, 1997.

10.58**   Form of Holding Incentive and Non-Qualified Stock Option Agreement.

10.59**   Form of Eighth Amendment dated as of March 19, 1997 to the revolving 
          credit facility among the Company, Holding, certain financial 
          institutions named therein and BT Commercial Corporation and Chemical 
          Bank, as agents.

10.60**   Form of Ninth Amendment and Waiver dated as of June 4, 1997 to the 
          revolving credit facility among the Company, Holding, certain 
          financial institutions named therein and BT Commercial Corporation and
          Chemical Bank, as agents.

12.1**    Statement of Computation of Number of Times Fixed Charges Earned.

22.1**    Listing of the Company's subsidiaries.

27**      Financial Data Schedule


(b)       Reports on Form 8-K.

          None

_______________

 *        Previously filed.
**        Included in this filing.


                                       31
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Brea, State of
California, on the 26th day of June, 1997.


                                        EARLE M. JORGENSEN COMPANY


                                        By  /s/ Charles P. Gallopo
                                            ------------------------
                                             Charles P. Gallopo
                                             Vice President and Chief
                                                  Financial Officer


     Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Report  has been signed below by the following persons in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>

         Signatures                            Title                             Date
         ----------                            -----                             -----
     <S>                          <C>                                        <C>
                                  Director and Chairman Emeritus
     -------------------------
     Earle M. Jorgensen                                                      

     /s/David M. Roderick         Director and Chairman of the Executive
     --------------------------   Committee                                  
     David M. Roderick                                                       June 26, 1997

     /s/Neven C. Hulsey           Chairman and Director
     --------------------------
     Neven C. Hulsey                                                         June 26, 1997

     /s/Maurice S. Nelson         President, Chief Executive Officer and
     --------------------------   Chief Operating Officer and Director      
     Maurice S. Nelson                                                       June 26, 1997

     /s/Charles P. Gallopo        Vice President and Chief Financial
     --------------------------   Officer (Principal Financial and           
     Charles P. Gallopo           Accounting Officer)                        June 26, 1997

     /s/Joseph S. Schuchert       Director
     --------------------------
     Joseph S. Schuchert                                                     June 26, 1997

     /s/Frank Nickell             Director
     --------------------------
     Frank Nickell                                                           June 26, 1997

     /s/William A. Marquard       Director
     --------------------------
     William A. Marquard                                                     June 26, 1997

     /s/John Rutledge             Director
     --------------------------
     Dr. John Rutledge                                                       June 26, 1997

</TABLE>


                                       32
<PAGE>






                      [THIS PAGE INTENTIONALLY LEFT BLANK]






                                       33
<PAGE>

                              FINANCIAL STATEMENTS


                                                                          Page
                                                                          ----

EARLE M. JORGENSEN COMPANY:

Report of Independent Auditors                                             F-2

Consolidated Balance Sheets at March 31, 1997 and 1996                     F-3

Consolidated Statements of Operations for the years ended
March 31, 1997, 1996 and 1995                                              F-4

Consolidated Statements of Stockholder's Equity for the
years ended March 31, 1997, 1996 and 1995                                  F-5

Consolidated Statements of Cash Flows for the years ended
March 31, 1997, 1996, 1995                                                 F-6

Notes to Consolidated Financial Statements                                 F-8



                                       F-1

                                       

<PAGE>

                         Report of Independent Auditors

The Board of Directors and Stockholder
Earle M. Jorgensen Company

We have audited the accompanying consolidated balance sheets of Earle M. 
Jorgensen Company as of March 31, 1997 and 1996, and the related consolidated 
statements of operations, stockholder's equity, and cash flows for each of 
the three years in the period ended March 31, 1997. Our audits also included 
the financial statement schedule listed in the index at item 14(a)(2).  These 
financial statements and schedule are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these financial 
statements and schedule 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 Earle M. Jorgensen
Company at March 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
March 31, 1997 in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.




                                        /s/ERNST & YOUNG LLP

Orange County, California
May 19, 1997, except for Note 6-Credit Agreement
as to which the date is June 4, 1997




                                       F-2
<PAGE>


                           Earle M. Jorgensen Company
                          Consolidated Balance Sheets
                 (dollars in thousands, except  per  share data)

<TABLE>
<CAPTION>

                                                                                           MARCH 31,
                                                                              --------------------------------
                                                                                    1997                1996
                                                                              --------------------------------
<S>                                                                           <C>                  <C>
ASSETS
Current assets:
  Cash                                                                          $   21,477           $  22,823
  Accounts receivable, less allowance for doubtful accounts                        113,544             113,664
  Inventories                                                                      174,045             188,452
  Other current assets                                                               3,915               4,513
                                                                              --------------------------------
     Total current assets                                                          312,981             329,452
                                                                              --------------------------------
Net property, plant and equipment, at cost                                         120,050             134,259

Cash surrender value of life insurance policies                                     14,258              11,599
Debt issue costs, net of accumulated amortization                                    4,806               6,127
Other assets                                                                         2,787               3,474
                                                                              --------------------------------
     Total assets                                                               $  454,882           $ 484,911
                                                                              --------------------------------

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable                                                              $   87,519           $ 112,551
  Accrued restructuring expenses                                                    10,632                 783
  Other accrued liabilities                                                         25,973              30,219

  Deferred income taxes                                                              7,270              18,362
  Current portion of long-term debt                                                    950                 950
                                                                              --------------------------------
     Total current liabilities                                                     132,344             162,865
                                                                              --------------------------------

Long-term debt                                                                     290,336             279,002
Deferred income taxes                                                               26,742              14,448
Other long-term liabilities                                                          3,533               3,455
Commitments and contingencies

Stockholder's equity
  Preferred stock, $.01 par value; 200 shares authorized and unissued                  ---                 ---
  Common stock, $.01 par value; 2,800 share authorized; 128 shares
    issued and outstanding                                                             ---                 ---
  Capital in excess of par value                                                   171,073             173,523
  Foreign currency translation adjustment                                               44              (5,748)
  Accumulated deficit                                                             (169,190)           (142,634)
                                                                              --------------------------------
    Total stockholder's equity                                                       1,927              25,141
                                                                              --------------------------------
      Total liabilities and stockholder's equity                                $  454,882           $ 484,911
                                                                              --------------------------------
                                                                              --------------------------------
</TABLE>

SEE ACCOMPANYING NOTES.


                                       F-3
<PAGE>


                           Earle M. Jorgensen Company
                      Consolidated Statements of Operations
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                       YEAR ENDED MARCH 31,
                                                            ----------------------------------------
                                                               1997           1996           1995
                                                            ----------------------------------------
<S>                                                         <C>            <C>            <C>
Revenues                                                    $1,023,565     $1,025,659     $1,022,884

Cost of sales, before inventory adjustment                     742,826        737,756        716,975
                                                            ----------------------------------------
                                                               280,739        287,903        305,909
Inventory adjustment                                               ---        (26,882)           ---
                                                            ----------------------------------------
   Gross profit                                                280,739        261,021        305,909

Expenses:
   Warehouse and delivery                                      135,287        129,966        125,683
   Selling                                                      40,791         41,794         44,627
   General and administrative                                   69,748         73,859         76,874
   Restructuring and consolidation expenses                     15,638          3,571            715
   Other non-recurring charges                                   4,450          9,205            ---
                                                            ----------------------------------------
     Total expenses                                            265,914        258,395        247,899
                                                            ----------------------------------------
Income from operations                                          14,825          2,626         58,010

Interest expense, net                                           40,880         40,874         34,604
                                                            ----------------------------------------
Income (loss) before income taxes                              (26,055)       (38,248)        23,406

Income tax provision (benefit)                                     501         (8,937)         3,487
                                                            ----------------------------------------
Net income (loss)                                            $ (26,556)     $ (29,311)    $   19,919
                                                            ----------------------------------------
                                                            ----------------------------------------
</TABLE>


SEE ACCOMPANYING NOTES.


                                       F-4
<PAGE>

                           Earle M. Jorgensen Company
                 Consolidated Statements of Stockholder's Equity
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                           FOREIGN
                                                      COMMON STOCK           CAPITAL       CURRENCY
                                                  ---------------------     IN EXCESS     TRANSLATION   ACCUMULATED
                                                   SHARES       AMOUNT     OF PAR VALUE    ADJUSTMENT     DEFICIT           TOTAL
                                                 ---------------------------------------------------------------------------------
<S>                                              <C>         <C>             <C>           <C>           <C>             <C>
Balance at March 31, 1994                           128        $   ---       $188,371      $    (421)     $(133,242)     $  54,708
   Dividend to parent                               ---            ---         (3,654)           ---            ---         (3,654)
   Capitalization of ESOP
     contribution, net                              ---            ---          7,694            ---            ---          7,694
   Foreign currency translation
     adjustment                                     ---            ---            ---         (2,267)           ---         (2,267)
   Net income                                       ---            ---            ---            ---         19,919         19,919
                                                 ---------------------------------------------------------------------------------
Balance at March 31, 1995                           128            ---        192,411         (2,688)      (113,323)        76,400

   Dividend to parent                               ---            ---        (22,289)           ---            ---        (22,289)
   Capitalization of ESOP
     contribution, net                              ---            ---          3,401            ---            ---          3,401
   Foreign currency translation
     adjustment                                     ---            ---            ---         (3,060)           ---         (3,060)
   Net loss                                         ---            ---            ---            ---        (29,311)       (29,311)
                                                 ---------------------------------------------------------------------------------
Balance at March 31, 1996                           128            ---        173,523         (5,748)      (142,634)        25,141

   Dividend to parent                               ---            ---         (5,552)           ---            ---         (5,552)
   Capitalization of ESOP
     contribution, net                              ---            ---          3,102            ---            ---          3,102
   Foreign currency translation
     adjustment and writeoff                        ---            ---            ---          5,792            ---          5,792
   Net loss                                         ---            ---            ---            ---        (26,556)       (26,556)
                                                 ---------------------------------------------------------------------------------
Balance at March 31, 1997                           128        $   ---       $171,073      $      44      $(169,190)     $   1,927
                                                 ---------------------------------------------------------------------------------
                                                 ---------------------------------------------------------------------------------

</TABLE>


SEE ACCOMPANYING NOTES.


                                       F-5
<PAGE>

                           Earle M. Jorgensen Company
                      Consolidated Statements of Cash Flows
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                      YEAR ENDED MARCH 31,
                                                                      --------------------------------------------------
                                                                          1997                1996                 1995
                                                                      --------------------------------------------------
<S>                                                                   <C>                  <C>                  <C>
OPERATING ACTIVITIES:
Net income (loss)                                                       $(26,556)           $(29,311)           $ 19,919
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
  Inventory adjustment                                                       ---              26,882                 ---
  Write-off of foreign currency translation losses                         5,345                 ---                 ---
  Asset write-downs                                                        4,450               9,205                 ---
  Depreciation and amortization                                           10,620              12,022              14,135
  Amortization of debt issue costs and discount on senior
     notes included in interest expense                                    2,279               2,279               2,253
  Accrued postretirement benefits                                            280                (256)               (360)
  ESOP expense contributed to capital                                      3,102               3,401               7,694
  Deferred income taxes                                                    1,202              (9,650)              2,060
  Gain on sale of property, plant and equipment                           (1,079)               (559)               (665)
  Debt forgiveness charge from pre-payment
     of note receivable                                                      ---                 ---                  51
  Provision for bad debts                                                  1,817               1,362               1,456
  Increase in cash surrender value of life insurance
    over premiums paid                                                    (1,798)             (1,894)             (1,381)
  Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable                            (1,697)             40,065             (42,384)
    Decrease (increase) in inventories, excluding
     the inventory adjustment above                                       14,407              (5,245)            (27,524)
    Decrease (increase) in other current assets                              635               2,921              (2,489)
    Increase (decrease) in accounts payable and accrued
      liabilities and expenses                                           (19,428)             19,241              14,360
Other                                                                        917              (3,405)             (2,326)
                                                                        ------------------------------------------------
Net cash provided by (used in) operating activities                       (5,504)             67,058             (15,201)
                                                                        ------------------------------------------------
INVESTING ACTIVITIES:
Additions to property, plant and equipment                                (4,449)            (16,658)            (16,177)
Proceeds from the sale of property, plant and equipment                    4,630               1,158               3,851
Proceeds from  note receivable                                               ---                 ---               1,695
Premiums paid on life insurance policies                                  (2,345)             (1,530)             (2,661)
Proceeds from redemption of life insurance policies                        1,484                 925               2,940
                                                                        ------------------------------------------------
    Net cash used in investing activities                                   (680)            (16,105)            (10,352)
                                                                        ------------------------------------------------
</TABLE>


SEE ACCOMPANYING NOTES.


                                       F-6
<PAGE>

                           Earle M. Jorgensen Company
                Consolidated Statements of Cash Flows (continued)
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                       YEAR ENDED MARCH 31,
                                                                         -----------------------------------------------
                                                                           1997               1996                1995
                                                                         -----------------------------------------------
<S>                                                                      <C>               <C>                  <C>
FINANCING ACTIVITIES:
Net borrowings (payments) under revolving loan agreements                $12,149           $(19,747)             $(4,309)
Borrowings on cash surrender value of life insurance policies                ---                 ---              25,331
Proceeds from issuance of industrial revenue bonds                           ---                 ---               4,500
Other borrowings (payments), net                                            (949)              3,291               1,811
Increase in debt issue costs                                                (810)                ---                (295)
Cash dividend to Parent                                                   (5,552)            (22,289)             (3,654)
                                                                         -----------------------------------------------
  Net cash provided by (used in) financing activities                      4,838             (38,745)             23,384
                                                                         -----------------------------------------------
Net increase (decrease) in cash                                           (1,346)             12,208              (2,169)
Cash at beginning of year                                                 22,823              10,615              12,784
                                                                         -----------------------------------------------
Cash at end of year                                                      $21,477           $  22,823             $10,615
                                                                         -----------------------------------------------
                                                                         -----------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES.


                                       F-7
<PAGE>

                           Earle M. Jorgensen Company

                   Notes to Consolidated Financial Statements

                                 March 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION---The Company became a wholly-owned
subsidiary of Earle M. Jorgensen Holding Company, Inc. (the Parent) as the
result of a series of business combinations and mergers effective April 1, 1990.

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries including Kilsby Jorgensen Steel and
Aluminium Ltd. (EMJ (UK)) (formerly Kilsby-Roberts Ltd.), Kilsby Jorgensen Steel
& Aluminum S.A. de C.V. (EMJ (Mexico)), and Earle M. Jorgensen (Canada) Inc.
(EMJ (Canada)) (formerly Kilsby Jorgensen Steel and Aluminum Inc.) and Stainless
Insurance Ltd., a captive insurance subsidiary (EMJ (Bermuda)) operating in the
United Kingdom, Mexico, Canada and Bermuda, respectively.   Excluding EMJ
(Bermuda), net losses from foreign operations totaled $3,516,000 and $114,000 in
1997 and 1995, respectively.  In fiscal 1996, such foreign operations generated
$357,000 of net income.  In fiscal 1997, EMJ (Bermuda) generated $436,000 of net
income from investment income and intercompany fees.  All significant
intercompany accounts and transactions have been eliminated.

Certain amounts reported in prior years have been reclassified to conform to the
1997 presentation.

USE OF ESTIMATES---The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes.  Actual results could differ from those estimates.

REVENUE RECOGNITION---The Company recognizes revenue when products are shipped.

RESTRUCTURING AND CONSOLIDATIONS---In March 1997, the Company approved a plan 
to restructure its operations.  The plan's major actions included selling 
certain foreign operations (see Note 4), closing four domestic distribution 
centers whose sales territories are now serviced from other nearby 
facilities, and reducing the Company's workforce by approximately 10%.  As a 
result, a restructuring charge of $15,638,000 was recorded to cover 
provisions for loss on sale of foreign operations ($7,027,000, including the 
write-off of cumulative translation adjustments of $5,345,000); costs of 
severance and other termination benefits and related expenses associated with 
the reduction in workforce ($6,537,000); and costs directly related to the 
closure of facilities for which there is no future economic value 
($2,074,000).

Management expects a significant portion of the costs related to the
restructuring plan will be incurred by July 1, 1997.  The domestic facilities
that were closed are owned by the Company and are being held for sale.  It is
expected the sale of these facilities and of the foreign operations will be
completed during fiscal 1998.

In September 1995, the Company implemented a plan designed to enhance operating
productivity and efficiencies.  As a result, a restructuring charge of
$3,571,000 was recorded to cover the costs associated with a 7% reduction in the
Company's workforce.  In addition, the Company recorded a non-recurring charge
of $9,205,000 for write-downs and write-offs of certain property, plant and
equipment, a portion of which ($3,330,000) was the excess purchase price or
"step-up" allocated to the net book values of such assets at the time of the
Company's merger in 1990.

Commencing in fiscal 1993,  the Company implemented a consolidation program to
combine certain service centers serving the same market.  The Company recorded
charges of $715,000 during fiscal 1995 related to the physical relocation of
employees, equipment, inventory, severance costs and costs to dispose of
facilities.


                                       F-8
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements  (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT---Property, plant and equipment is recorded at
cost.  Additions, renewals and betterments are capitalized; maintenance and
repairs which do not extend useful lives are expensed as incurred.  Gains or
losses from disposals are reflected in income and the related costs and
accumulated depreciation are removed from the accounts. Depreciation and
amortization is computed using the straight-line method over the estimated
useful lives of 10 to 40 years for buildings and improvements and 3 to 20 years
for machinery and equipment.  Leasehold improvements are amortized over the
terms of the respective leases.

Effective July 1, 1995, the Company extended the useful lives for the step-up of
property, plant and equipment resulting from the 1990 merger through fiscal
2008.  As a result, amortization expense in fiscal 1996 and 1997 was reduced
approximately $3.3 million and $1.8 million, respectively, on a comparative
basis, and such reduced amortization will continue through each of the fiscal
years ending 1998 through 2000.

CONCENTRATION OF CREDIT RISK---The Company sells the majority of its products
throughout the United States, Canada, Mexico and Europe.  Sales to the Company's
recurring customers are generally made on open account terms while sales to
occasional customers are made on a C.O.D. basis.  The Company performs periodic
credit evaluations of its ongoing customers and generally does not require
collateral.  The Company establishes an allowance for potential credit losses
based upon factors surrounding the credit risk for specific customers,
historical trends and other information; such losses have been within
management's expectations.   The Company's allowance for doubtful accounts at
March 31, 1997 and 1996 was $963,000 and $1,017,000, respectively.  Management
believes there are no significant concentrations of credit risk as of March 31,
1997.

DEBT ISSUE COST---Debt issue costs are deferred and amortized to interest
expense over the life of the underlying indebtedness.  The amortization of debt
issue costs aggregated $2,144,000, $2,144,000 and $2,117,000 for the years ended
March 31, 1997, 1996 and 1995, respectively.  Accumulated amortization of debt
issue costs was $8,612,000 and $6,468,000 at March 31, 1997 and 1996,
respectively.

FOREIGN CURRENCY TRANSLATION---The assets and liabilities of the foreign
subsidiaries have been translated into U.S. dollars using the year-end exchange
rates.  Revenues, costs and expenses have been translated at average exchange
rates for each year.  Adjustments resulting from translation of foreign currency
financial statements are reflected as a separate component of stockholder's
equity. Exchange gains and losses from foreign currency transactions are
included in operations in the period in which they occur.

CASH AND STATEMENTS OF CASH FLOWS---Cash includes disbursements and deposits not
yet funded by or applied to the Company's Revolving Credit Facility as of a
balance sheet date.  The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents.

For the years ended March 31, 1997, 1996 and 1995 cash paid for interest on
borrowings was $37,747,000, $37,310,000 and $31,592,000, and cash paid for
income taxes was $403,000, $677,000 and $1,056,000, respectively.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In fiscal 1996, the Company adopted SFAS No. 121, "Accounting for the 
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", 
which requires impairment losses to be recorded on long-lived assets used in 
operations or are expected to be disposed of, when indicators of impairment 
are present and the undiscounted cash flows estimated to be generated by 
those assets are less than the assets.  There were no impairment losses 
recorded in fiscal 1996 as the result of adopting SFAS No. 121.  In fiscal 
1997, the Company evaluated certain applications of its management 
information and financial reporting system and determined that such 
applications would not be used in the future.  Accordingly, the Company 
recorded a non-recurring charge of $4,450,000 for the write-off of costs 
related to these applications.

                                       F-9
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

2. INVENTORIES

Substantially all inventories are held for sale at the Company's service 
center locations and are valued at the lower of cost (using the last-in, 
first-out (LIFO) method) or market. If the Company had used the first-in, 
first-out (FIFO) method of inventory valuation, inventories would have been 
higher by $1,697,000 at March 31, 1997 and $5,187,000 at March 31, 1996.

In fiscal years 1997 and 1995, a reduction of LIFO inventory quantities 
carried at costs lower or higher than costs prevailing in prior years 
occurred but did not have a significant impact on the Company's gross profit. 
 There were no such reductions in fiscal 1996.

In February 1995, the Company began the implementation of a new enhanced
inventory and management information system.  To ensure the accuracy of the
conversion of the perpetual inventory records, the Company performed physical
inventory counts and other procedures at all of its locations during the second,
third and fourth quarters of fiscal 1996.  The Company identified a difference
between the perpetual inventory records and the general ledger amounting to
$26.9 million and, accordingly, recorded a charge to cost of sales for this
difference in the fourth quarter of fiscal 1996.

3.  NET PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and accumulated depreciation at March 31, 1997 and
1996 consisted of the following:


                                                    1997                 1996
                                               --------------------------------
     Land                                      $  32,583,000      $  34,178,000
     Buildings and improvements                   43,943,000         51,895,000
     Machinery and equipment                      97,940,000        103,012,000
                                               --------------------------------
                                                 174,466,000        189,085,000
     Less accumulated depreciation                54,416,000         54,826,000
                                               --------------------------------
        Net property, plant and equipment       $120,050,000       $134,259,000
                                               --------------------------------
                                               --------------------------------

4.  FOREIGN OPERATIONS HELD FOR SALE

In March 1997, the Company approved a plan to sell its foreign operations in the
United Kingdom and Mexico.  The net assets of such operations at March 31, 1997
and 1996 consisted of the following:

                                                     1997               1996
                                               --------------------------------
     Current assets                              $17,210,000        $20,133,000
     Property, plant and equipment, net              758,000            810,000
     Other assets                                     12,000             54,000
                                               --------------------------------
       Total assets                               17,980,000         20,997,000

     Current liabilities, including a reserve
      of $7,027,000 for estimated loss            13,126,000          5,397,000
                                               --------------------------------
       Net assets                               $  4,854,000        $15,600,000
                                               --------------------------------
                                               --------------------------------

For the fiscal years ended March 31, 1997, 1996 and 1995, combined revenues from
these foreign operations were $35,193,000, $36,629,000 and $29,974,000; and
income (loss) from operations was ($2,935,000), $80,000 and ($534,000),
respectively.


                                       F-10
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

5. CASH SURRENDER VALUE OF LIFE INSURANCE

The Company is the owner and beneficiary of life insurance policies on all
former nonunion employees of a predecessor company including certain current
employees of the Company and its Parent.  The Company is also the owner and
beneficiary of key man life insurance policies on  certain current and former
executives of the Company and predecessor companies.  These policies are
designed to provide cash to the Company to repurchase shares held by employees
in the ESOP and shares held individually by employees upon the termination of
their employment.

The Company uses borrowings from the cash surrender value of certain policies to
pay a portion of the premiums and accrued interest on those policies and to
fund working capital needs.  As of March 31, 1997, approximately $5,000,000 was
available for future borrowings.

<TABLE>
<CAPTION>

                                 Surrender value        Loans            Net cash
                                   before loans       outstanding     surrender value
                                   --------------------------------------------------
    <S>                            <C>                <C>               <C>
    Balance at March 31, 1997      $90,805,000        $76,547,000       $14,258,000
    Balance at March 31, 1996      $77,527,000        $65,928,000       $11,599,000
</TABLE>

Interest expense on outstanding loans in fiscal 1997, 1996 and 1995 totaled
$8,621,000, $7,173,000 and $4,709,000, respectively.

6. LONG-TERM DEBT

Long-term debt at March 31, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>


                                                              1997                1996
                                                          --------------------------------
  <S>                                                     <C>                 <C>
  Revolving loans due September 9, 1999                   $118,011,000        $105,862,000

  10-3/4% Senior Notes due March 1, 2000                   154,607,000         154,473,000

  Industrial Development Revenue Bonds:
    Payable in annual installments of $500,000
     commencing June 1, 1998, interest at 9%                 4,000,000           4,000,000
    Payable in annual installments of $715,000
     commencing December 1, 2004, interest at 5.25%          4,300,000           4,300,000
    Payable in annual installments of $900,000
     commencing September 1, 2000, interest at 8.5%          4,500,000           4,500,000
  Purchase money financing, payable in monthly
     installments of principal of $79,000 plus interest
     through July, 2003; interest at one month
     LIBOR plus 3.25%                                        5,868,000           6,817,000
                                                          ------------        ------------
                                                           291,286,000         279,952,000
  Less current portion                                         950,000             950,000
                                                          ------------        ------------
                                                          $290,336,000        $279,002,000
                                                          ------------        ------------
                                                          ------------        ------------
</TABLE>


Aggregate maturities of long-term debt are as follows: $950,000 in 1998; 
$1,450,000 in 1999; $274,068,000 in 2000; $2,350,000 in 2001; $2,350,000 in 
2002; and $10,118,000 thereafter. The fair value of the Company's Senior 
Notes at March 31, 1997 was $150,350,000 based on the quoted market price as 
of that date.  The carrying values of all other long-term debt and other 
financial instruments at March 31, 1997 approximate fair value.

                                      F-11
<PAGE>
                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements  (continued)

6. LONG-TERM DEBT (CONTINUED)

10-3/4% SENIOR NOTES

In March 1993, the Company refinanced its revolving and term loans by issuing
$155 million of 10-3/4% Senior Notes and entering into a new $175 million
revolving credit facility (Credit Agreement).  The 10-3/4% Senior Notes were
sold at 99.392% of face value resulting in a discount of $942,000 and an
effective yield to maturity of 10-7/8%.

CREDIT AGREEMENT

The revolving loans, which allow maximum borrowings of $175 million, including
letters of credit ($1.6 million outstanding at March 31, 1997), bear interest at
a base rate (generally defined as the bank's prime lending rate plus 1-1/2% or
LIBOR plus 2.75%).   At March 31, 1997, the bank's prime lending rate was 8.50%
and  LIBOR was 5.69%.  In addition, borrowings under the revolving loans are
limited to an amount equal to 85% of eligible trade receivables plus 43.5% of
eligible inventories (as defined).  Unused available borrowings under the
revolving loans totaled $44.3 million at March 31, 1997.  The revolving loans
mature on September 9, 1999.  Borrowings under the revolving loans are secured
by a lien on all domestic inventory and accounts receivable of the Company.

Under the Credit Agreement the Company is obligated to pay certain fees
including an unused commitment fee of 0.5%, payable quarterly in arrears, and
letter of credit fees of 2-3/4% per annum of the maximum amount available to be
drawn under each letter of credit, payable quarterly in arrears, plus issuance,
fronting, amendment and other standard fees.  The Company paid loan commitment
fees totaling $305,000 in 1997, $218,000 in 1996 and $193,000 in 1995.

The Credit Agreement contains financial covenants in respect of maintenance of
minimum consolidated net worth, working capital and fixed charge coverage ratio
(as defined). The Credit Agreement also limits, among other things, the
incurrence of liens and other indebtedness, mergers, consolidations, the sale of
assets, annual capital expenditures, advances, investments and loans by the
Company and its subsidiaries, dividends and other restricted payments by the
Company and its subsidiaries in respect to their capital stock, and certain
transactions with affiliates.  On June 4, 1997, the Company received a waiver to
fiscal 1997 financial covenants relating to consolidated net worth and fixed
charge ratio and received amendments to other financial covenants for future
periods.

OTHER

The Company issues industrial revenue bonds in connection with significant
facility improvements or construction projects.  The purchase money financing of
$5,868,000 represents the net borrowings under a loan agreement entered into on
March 27, 1995 which provided up to $7,500,000 for the expansion or acquisition
of facilities and purchase of equipment.  These obligations are secured by the
underlying assets acquired or constructed.

7. INCOME TAXES

The Company is included in the consolidated tax returns of the Parent.  Pursuant
to an agreement with the Parent, the Company calculates its tax provision as
though it filed separate returns.

The Company records deferred taxes based upon differences between the 
financial statement and tax basis of assets and liabilities.  Deferred taxes 
are also recorded for the future benefit of Federal and state tax losses and 
tax credit carryforwards. Deferred tax assets have not been recognized for 
the loss carryforwards of the Company's foreign subsidiaries. Consistent with 
SFAS No. 109, "Accounting for Income Taxes" a valuation allowance has been 
recognized for certain deferred tax assets, which management believes are not 
likely to be realized.

                                      F-12
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

7. INCOME TAXES (CONTINUED)

At March 31, 1997, the Company has net operating loss carryforwards of
$70,000,000 for Federal income tax purposes.  These carryforwards resulted from
the Company's losses during 1993 and 1996, and expire in years 2009 and 2011,
respectively.  The ultimate realization of the benefits of these loss
carryforwards is dependent on future profitable operations.  In addition, use of
the Company's net operation loss carryforwards and other tax attributes may be
substantially limited if a cumulative change in ownership of more than 50%
occurs within any three year period subsequent to a loss year.

The Company's federal income tax returns for the years ended 1993 and 1994 are
currently under examination by the Internal Revenue Service.

Significant components of the Company's deferred income tax assets and
liabilities at March 31, 1997 and 1996 were as follows:

                                                         1997           1996
                                                     --------------------------
     Deferred tax liabilities:
       Tax over book depreciation                    $10,267,000    $12,970,000
       Purchase price adjustments                     43,324,000     45,380,000
                                                     -----------    -----------
     Total deferred tax liabilities                   53,591,000     58,350,000
                                                     -----------    -----------
     Deferred tax assets:
       Net operating loss carryforwards               25,747,000     27,550,000
       Other                                          16,538,000      7,990,000
       Valuation allowance for deferred tax assets   (22,706,000)   (10,000,000)
                                                     -----------    -----------
     Net deferred tax assets                          19,579,000     25,540,000
                                                     -----------    -----------
     Net deferred tax liabilities                    $34,012,000    $32,810,000
                                                     -----------    -----------
                                                     -----------    -----------

Income before taxes consists primarily of income (loss) from the Company's
domestic operations and also includes pre-tax income (loss) of $(3,080,000),
$359,000 and $(114,000) from the Company's foreign operations for fiscal 1997,
1996 and 1995, respectively.

Significant components of the provision for income taxes attributable to
continuing operations for the years ended March 31, 1997, 1996 and 1995 were as
follows:

<TABLE>
<CAPTION>

                                                1997                     1996                 1995
                                          ----------------------------------------------------------
    <S>                                   <C>                     <C>                    <C>
    Current:
       Federal                            $         ---           $          ---       $     516,000
       State                                    403,000                  676,000             991,000
       Foreign                                      ---                      ---                 ---
                                          -------------           --------------       -------------
       Total current                            403,000                  676,000           1,507,000
                                          -------------           --------------       -------------
    Deferred:
       Federal                             (10,111,000)             (12,240,000)           3,079,000
       State                                (2,497,000)              (3,235,000)           1,101,000
       Foreign                                      ---                      ---                 ---
       Valuation allowances                  12,706,000                5,862,000         (2,200,000)
                                          -------------           --------------       -------------
       Total deferred                            98,000              (9,613,000)           1,980,000
                                          -------------           --------------       -------------
                                          $     501,000           $  (8,937,000)       $   3,487,000
                                          -------------           --------------       -------------
                                          -------------           --------------       -------------
</TABLE>


                                      F-13
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

7. INCOME TAXES (CONTINUED)

The reconciliation of the income tax provision (benefit) differs from that which
would result from applying the U.S. statutory rate as follows:

<TABLE>
<CAPTION>

                                                                   1997                1996                 1995
                                                               ----------------------------------------------------
   <S>                                                         <C>                <C>                  <C>
   Expected tax (benefit) at Federal statutory rates           $(9,119,000)       $(13,387,000)        $  8,192,000
   State tax expense (benefit), net of Federal taxes            (1,207,000)         (1,876,000)             942,000
   Net increase in cash surrender values of life insurance      (2,797,000)         (1,607,000)          (1,306,000)
   State franchise and capital taxes                                403,000             423,000             421,000
   Effect of Internal Revenue Service examination                       ---             792,000                 ---
   Foreign loss carryforward (with) without tax benefit           1,078,000           (126,000)                 ---
   Tax benefit of credit carryovers and carrybacks                 (800,000)               ---             (846,000)
   Change in valuation allowance                                 12,706,000           5,862,000          (2,200,000
   Other                                                            237,000             982,000          (1,716,000)
                                                               ------------       ------------         ------------
     Income tax (benefit) expense                              $    501,000       $ (8,937,000)        $  3,487,000
                                                               ------------       ------------         ------------
                                                               ------------       ------------         ------------
</TABLE>

The change of $12,706,000 in the valuation allowance for deferred tax assets was
due to the uncertainty of realizing the benefit during the tax loss carryforward
period.

8. EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN

The Company and its Parent have an Employee Stock Ownership Plan (ESOP) which
covers nonunion employees of the Company who meet certain service requirements.
The cost of the ESOP is borne by the Company through annual contributions to an
Employee Stock Ownership Trust (ESOT) in amounts determined by the Plan
Administrative Committee (the Committee).  Contributions may be made in cash or
shares of the Parent's stock as the Parent's Board of Directors may from time to
time determine.  Participants vest at a rate of 20% per year of service and
become fully vested upon retirement, disability or death. Upon the occurrence
of a participant's termination (as defined), retirement, disability, or death,
the ESOP is required, by the terms of the ESOP, to either distribute the vested
balance in stock or repurchase the vested balance (as determined by the
Committee).  If stock is distributed, it is accompanied by a put option to the
Parent under terms defined in the ESOP.  Shares of the Parent's Series A and B
preferred and common stock owned by the ESOP totaled 107,170, 24,444 and
3,511,701 at March 31, 1997, respectively.  Contributions payable to the ESOT
totaled $3,102,000, $3,401,000 and $7,694,000 in 1997, 1996 and 1995, which
represents 5% of eligible compensation in 1997 and 1996 and 11% in 1995.  The
contribution for fiscal 1997 will be in the form of common stock or cash.  The
contribution for fiscal 1996 and 1995 was made in the form of common stock.

Although the Parent has not expressed any intent to terminate the plan, it has
the right to do so at any time. In the event of such termination, participants
become fully vested to the extent of the balances in their separate accounts and
come under the put options as previously discussed.


                                       F-14
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

8. EMPLOYEE BENEFIT PLANS (CONTINUED)

PENSION AND POSTRETIREMENT BENEFIT PLANS

The Company historically maintained noncontributory defined benefit pension
plans covering substantially all former employees of a predecessor company not
covered by union plans.  The Hourly Plan and Salaried Plan provide benefits on
years of service and the employee's compensation during the last ten years of
employment. Net pension expense for the Hourly Plan for the years ended March 31
1997, 1996 and 1995 was $420,000, $500,000 and $286,000, respectively.  There
was no pension expense or income for the Salaried Plan for the years ended March
31, 1997, 1996 and 1995.

In September 1991, the Company's Board of Directors (Board) approved a
restructuring of the Company's benefit package.  In March 1992, the Salaried
Plan was amended to set the benefits obligation equal to the overfunded value of
the plan assets and in November 1992, such benefits were distributed to
participants in settlement of the Salaried Plan obligations.  In June 1993, the
Company transferred the obligations and assets related to the non-union
participants of the Hourly Plan to a newly created plan and amended the Plan's
provisions to set the benefit obligation equal to the overfunded value of the
plan assets. In November 1993, benefits totaling $7.2 million were paid to
participants in settlement of these obligations.  The assets of the Hourly Plan
for union participants are held in trust and consist of bonds, equity securities
and insurance contracts and the Company contributes at least the minimum
required annually under ERISA.

The Company maintains an unfunded Supplemental Plan which provides benefits to
highly compensated employees whose basic pension plan benefit is limited by the
Internal Revenue Code.  Net pension expense for the Supplemental Plan for the
years ended March 31, 1997, 1996 and 1995 was $67,000, $67,000 and $228,000,
respectively. This plan is being dissolved since its benefits related to those
provided by the Salaried Plan.

In addition to the Company's defined benefit pension plans, the Company sponsors
a defined benefit health care plan that provides postretirement medical and
dental benefits to eligible full time employees.  The plan is contributory, with
retiree contributions adjusted annually, and contains other cost-sharing
features such as deductibles and coinsurance.  The accounting for the plan
anticipates future cost-sharing changes to the written plan that are consistent
with the Company's expressed intent to increase the retiree contribution rate
annually to compensate for the expected health care trend rate.  The Company's
policy is to fund the cost of medical benefits under this plan as they are
submitted for reimbursement.  Gains and losses realized from the remeasurement
of the plan's liability are amortized to income over 3 years.

Information as of March 31, 1997, regarding the Hourly Plan, Supplemental Plan,
and Postretirement Benefit Plan follows:

<TABLE>
<CAPTION>

                                                                      Supplemental      Postretirement
                                                   Hourly Plan            Plan               Plan
                                                   ------------       ------------      --------------
   <S>                                             <C>                <C>               <C>
   Projected benefit obligation                    $(8,049,000)       $(788,000)        $(3,108,000)
   Fair value of plan assets                         8,714,000              ---                 ---
   Prepaid (accrued) pension costs                    (176,000)        (500,000)         (3,519,000)
   Discount rate                                          7.50%            7.50%               7.50%
   Expected long-term rate of return on assets            8.00%             ---                 ---
   Rate of increase in compensation levels                5.00%            5.00%                ---

</TABLE>

The discount rate, expected long-term rate of return on assets, and rate of
increase in compensation levels used to calculate the expense under these plans
for fiscal 1997, 1996 and 1995 were 7.25%, 8.00% and 5.00%; 8.25%, 8.00% and
5.00% and 7.25%, 8.00% and 5.00%, respectively.


                                      F-15
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

8. EMPLOYEE BENEFIT PLANS (CONTINUED)

PENSION AND POSTRETIREMENT BENEFIT PLANS (CONTINUED)

The health care cost trend rate used in the calculation of cost (income) related
to the postretirement health care plans was 9.0% grading down ratably to 5.5% by
March 2004.  A 1% increase in the assumed health care cost trend rate would have
increased postretirement costs in fiscal 1997 by $189,000.

The health care cost trend rate used to calculate the accumulated postretirement
benefit obligation was 9.5% for 1996, grading down ratably to 5.5% by March
2004.  The health care cost trend rate assumption can have a significant effect
on the amounts reported.  A 1% increase in the assumed health care cost trend
rate in each year would increase the projected benefit obligation as of March
31, 1997 by $418,000.

In accordance with union agreements, the Company also contributes to
multiemployer defined benefit retirement plans covering substantially all union
employees of the Company.  Expenses incurred in connection with these plans
totaled $1,753,000, $1,771,000 and $1,496,000 in 1997, 1996 and 1995,
respectively.

9. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company leases, under several agreements with varying terms, certain office
and warehouse facilities, equipment and vehicles.  Rent expense totaled
$16,789,000, $17,844,000 and $16,636,000 for the years ended March 31, 1997,
1996 and 1995, respectively.  The portion of rent expense paid to related
parties totaled $367,000, $443,000 and $762,000 for the years ended March 31,
1997, 1996 and 1995, respectively.  As of March 31, 1997, there were no future
lease obligations with related parties.  Minimum rentals of certain leases
escalate from time to time based on certain indices.  At March 31, 1997 the
Company was obligated under noncancellable operating leases for future minimum
rentals as follows:

               Fiscal year:
               1998                          $13,594,000
               1999                           11,587,000
               2000                            9,915,000
               2001                            7,741,000
               2002                            5,454,000
               Thereafter                     18,340,000
                                             -----------
                    Total                    $66,631,000
                                             -----------
                                             -----------

OTHER COMMITMENTS

In connection with the 1990 merger, the Company agreed to pay Kelso & 
Company, Inc. (Kelso), affiliates of which own the majority of Parent's 
common stock, an annual fee of $1.25 million each year for financial advisory 
services and to reimburse it for out-of-pocket expenses incurred in 
connection with rendering such services.  The Company also agreed to 
indemnify Kelso and its affiliates against certain claims, losses, damages 
and liabilities and expenses that may arise in connection with the merger.  
Fees and expenses paid to Kelso in connection with these agreements totaled 
$1,643,000, $1,404,000 and $1,414,000 during the years ended March 31, 1997, 
1996 and 1995, respectively.

                                      F-16
<PAGE>

                           Earle M. Jorgensen Company

             Notes to Consolidated Financial Statements (continued)

9. COMMITMENTS AND CONTINGENCIES (CONTINUED)

ENVIRONMENTAL  CONTINGENCIES

The Company is currently involved with investigation and/or remediation
activities at several current and formerly-owned  facilities where soil and/or
groundwater contamination is present or alleged.  As of March 31, 1997, reserves
totaling $1.4 million have been established to cover those future environmental
costs which are known or can be reasonably estimated based on findings and
recommendations from independent environmental consultants.  In addition to the
matters specified below, the Company is involved with several smaller clean up
efforts for which it has reserved $25,000.

ALAMEDA STREET (LOS ANGELES). Remediation was completed in fiscal 1996 and the
Company has received final approval from the County of Los Angeles authorities.
Total costs incurred by the Company in connection with this project were $3.4
million, of which $1.7 million has been capitalized to the property.  The
Company was reimbursed $1.5 million of such costs by the lessee in accordance
with a cost sharing agreement.

BRISTOL (PENNSYLVANIA).  A remedial action plan submitted and approved by the
Pennsylvania regulatory agency has been substantially completed.  As of March
31, 1997, the project's cost has totaled $4.3 million, of which $3.2 million has
been paid by the Company and $1.1 million was paid by the former owner of the
property pursuant to a cost sharing agreement.  Estimated remaining costs to be
incurred by the Company approximate $45,000, which amount has been reserved at
March 31, 1997. The Company sold the facility in July 1996.

FORGE (SEATTLE/KENT, WA).  The Company has indemnified the purchasers of its
former Forge facility for remediation of certain conditions at the facility and
at an off-site disposal site existing at the date of purchase.  In addition, the
Company indemnified such purchasers for up to $2.5 million of remediation and
investigation costs associated with or related to the environmental conditions
existing at the time of sale and discovered after the closing and for which
claims were made prior to July 2, 1995.   No such claims were made.  As of
March 31, 1997, the remediation and investigation costs of the Forge facility
have totaled $2.3 million and the Company has reserved an additional $1,315,000
for estimated remaining costs.  As of March 31, 1997, remediation and
investigation costs at the disposal site have totaled $475,000.  Monitoring of
the disposal site is expected to continue and the related costs will be expensed
as incurred.

UNION (NEW JERSEY).  During fiscal 1994, the Company was notified by the current
owner that it has potential responsibility for the environmental contamination
of a property formerly owned by a subsidiary and disposed of by such subsidiary
prior to its acquisition by the Company.  The prior owner of such subsidiary has
also been notified of its potential responsibility.  On March 27, 1997, the
current owner of the property informed the Company that it estimated the cost of
investigation and cleanup of the property at $875,000.  The costs of
investigation and cleanup may be higher or lower than such estimate and the
Company does not have sufficient information to determine what potential
liability it has, if any.  Accordingly, no reserves have been specifically
established for this matter as of March 31, 1997.

Although it is possible that new information or future developments could
require the Company to reassess its potential exposure relating to all pending
environmental matters, management believes that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on the Company's financial condition, results of
operations or liquidity.  The possibility exists, however, that new
environmental legislation and/or environmental regulations may be adopted, or
other environmental conditions may be found to exist, that many require
expenditures not currently anticipated and that may be material.

OTHER

The Company is involved in litigation in the normal course of business.  In the
opinion of management, these matters will be resolved without a material impact
on the Company's financial position or results of operations.


                                      F-17
<PAGE>

                     INDEX TO FINANCIAL STATEMENT SCHEDULES


  Schedule                                                        Sequentially
   Number                Description of Schedules*               Numbered Page
  --------               -------------------------               -------------

EARLE M. JORGENSEN COMPANY:

Schedule II      Valuation and Qualifying Accounts and Reserves       S-2


_______________

*    All other schedules are omitted as the required information is inapplicable
     or the information is presented in the financial statements or related
     notes.


                                       S-1


<PAGE>

                            EARLE M. JORGENSEN COMPANY

          SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<TABLE>
<CAPTION>


       COLUMN A                               COLUMN B                COLUMN C               COLUMN D             COLUMN E
---------------------------------------- -------------------    ------------------     -----------------------   -------------
                                             BALANCE AT             CHARGES TO            BAD DEBTS CHARGED       BALANCE AT
      DESCRIPTION                        BEGINNING OF PERIOD    COSTS AND EXPENSES     OFF (NET OF RECOVERIES)   END OF PERIOD
------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                    <C>                    <C>                       <C>
Year ended March 31, 1997
   Allowance for doubtful accounts ....      $1,017,000               $1,817,000              $(1,871,000)           $963,000

Year ended March 31, 1996
   Allowance for doubtful accounts ....       1,146,000                1,362,000               (1,491,000)          1,017,000

Year ended March 31, 1995
   Allowance for doubtful accounts ....         972,000                1,456,000               (1,282,000)          1,146,000

</TABLE>


                                       S-2
<PAGE>

                                INDEX TO EXHIBITS

Exhibit                                                           Sequentially
Number                    Description of Exhibit                 Numbered Page


EARLE M. JORGENSEN COMPANY:

10.56     Amendment No. 2 to the Earle M. Jorgensen Company Employee Capital
          Accumulation Plan and Trust dated as of May 3, 1996.

10.57     Earle M. Jorgensen Holding Company, Inc. Stock Option Plan effective
          January 30, 1997.

10.58     Form of Holding Incentive and Non-Qualified Stock Option Agreement.

10.59     Form of Eighth Amendment dated as of March 19, 1997 to the revolving 
          credit facility among the Company, Holding, certain financial 
          institutions named therein and BT Commercial Corporation and 
          Chemical Bank, as agents.

10.60     Form of Ninth Amendment and Waiver dated as of June 4, 1997 to the 
          revolving credit facility among the Company, Holding, certain 
          financial institutions named therein and BT Commercial Corporation and
          Chemical Bank, as agents.

12.1      Statement of Computation of Number of Times Fixed Charges Earned.

22.1      Listing of the Company's Subsidiaries

27        Financial Data Schedule