<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, 2001

                                       OR

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

COMMISSION FILE NUMBER 1-7537

                           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             92821
         ----------------------------------------             -----
         (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, 2001 - 128 shares


<PAGE>

                                     PART I

ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS REPORT
ARE CONSIDERED FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS SUCH AS
FLUCTUATIONS IN SUPPLY, DEMAND AND PRICES OF STEEL AND ALUMINUM PRODUCTS,
CHANGES IN THE INDUSTRIES THAT PURCHASE METAL PRODUCTS FROM THE COMPANY, SUCH AS
OIL SERVICES, AGRICULTURAL EQUIPMENT AND AEROSPACE, AND CHANGES IN THE GENERAL
ECONOMY. CHANGES IN SUCH FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. SEE "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS." ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO BE CORRECT. THE COMPANY UNDERTAKES NO OBLIGATION
TO RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.

ITEM 1.  BUSINESS

         Earle M. Jorgensen Company, a Delaware corporation (the "Company" or
"EMJ") is one of the largest distributors of metal products in the United
States. The Company was formed on May 3, 1990, when Kelso & Companies Inc.
("Kelso") and its affiliates acquired control of and combined two leading metals
distributors, 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").

         EMJ carries over 30,000 different carbon, alloy, stainless and aluminum
bar, tubing and pipe, and plate and sheet metal products, and provides
pre-production processing, such as cutting to length, burning, sawing, honing,
shearing, grinding, polishing, and other similar value-added services, to most
of the metal products it sells. Our company conducts business through a network
of 32 service centers, including three in Canada, three plate processing
centers, one cutting center, and one tube honing facility that are supported by
a national merchandising office and four regional credit offices.

         We sell our products and value-added processing services to over
40,000 customers engaged 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. We accommodate
our customers' demands by offering a reliable source of metal products and
related services and by providing timely delivery of product, generally
within 24 hours from receipt of an order. When needed, we will also provide
our customers metals processing expertise and inventory management services.

INDUSTRY OVERVIEW AND COMPETITION

         We believe that metals service centers provide valuable services that
are needed by end users. Primary metals producers, which manufacture and sell
large volumes of steel, aluminum and specialty metals in standard sizes and
configurations, generally sell only to those large end users and metals service
centers who do not require processing of the products and who can order in large
quantities and tolerate relatively long lead times. Metals service centers,
which sell products in smaller quantities and offer services ranging from
pre-production processing in accordance with specific customer requirements to
storage and distribution of unprocessed metal products, function as
intermediaries between primary metals producers and end users.

         The current trend among primary metals producers is to focus on their
core competency of high-volume production of a limited number of standardized
metal products. This trend has been driven by the need to develop and improve
efficient, volume-driven production techniques in order to remain competitive.

         At the same time, most end users have recognized the economic
advantages associated with outsourcing their metal processing and inventory
management requirements. Outsourcing permits end users to reduce total
production cost by shifting the responsibility for pre-production processing
to metals service centers, whose higher efficiencies in performing these
processing services make the ownership and operation of the necessary
equipment a better investment. Inventory management and just-in-time delivery
services provided by metals service centers also enable end users to reduce
material costs, decrease capital required for inventory and equipment and
save time, labor and other expenses.

                                       1
<PAGE>

         As a result of these trends, metals service centers play an
increasingly important role in all segments of the metals industry. According to
industry sources, metals service centers purchase and distribute about 30% of
all carbon industrial products and nearly 45% of all stainless steel products
produced in the U.S. Metals service centers are the single largest customer
group of the U.S. domestic steel industry and serve the metal supply needs of
more than 300,000 manufacturers and fabricators through service center locations
nationwide. The metals distribution and processing industry generated an
estimated $45 billion in revenues in the U.S. in 1998. We believe that the
metals service center industry will continue to increase its role as a valuable
intermediary between primary metal producers and end users, primarily as a
result of (i) the metal producers efforts to increase sales to larger volume
purchasers in order to increase production efficiency and (ii) increased demand
by end users for outsourced metals processing, just-in-time inventory management
and the other value-added materials management services.

         The metals service center industry is highly fragmented, consisting of
a large number of small companies, which are limited as to product line, size of
inventory and customers located within a specific geographic area, and a few
relatively large companies. In addition, the industry includes both general-line
distributors, like EMJ, which handle a wide range of metal products, and
specialty distributors, which specialize in particular categories of metal
products. Geographic coverage by metals service centers is influenced by their
national, regional and local representation. Generally, the metals service
center industry competes on price and the ability to provide customers with
value-added services such as product availability, timely delivery, reliability,
quality and processing capability.

         There has been a trend toward consolidation in the industry in
recognition of the advantages of larger companies. According to industry
sources, the number of steel processors and metals service center companies in
the U.S. has been reduced from approximately 7,000 in 1980 to approximately
3,500. Some of our larger competitors are actively engaged in acquisition
activities as part of their overall growth strategies.

         The larger and more sophisticated companies, like EMJ, have certain
advantages over smaller companies, such as obtaining higher discounts associated
with volume purchases, the ability to service customers with operations in
multiple locations and the use of more sophisticated information systems.
Although EMJ is one of the largest distributors of metals in the U.S., some of
our competitors have greater financial resources and most of our competitors are
less leveraged than the Company.

OPERATING AND GROWTH STRATEGY

         During the past several years, we have realigned our operations and
core competencies, and have improved our cost structure and profitability. This
was accomplished through two restructuring programs implemented in fiscal 1996
and 1997, that included closing non-strategic domestic distribution centers,
consolidating or discontinuing certain processing centers, selling unprofitable
foreign operations, and reducing workforce. In addition, we wrote down or wrote
off non-performing or impaired assets.

         In fiscal 1998, we commenced several reengineering initiatives to focus
on improving customer service, process improvements and profitability. Such
initiatives included: (i) implementing direct sales capabilities, (ii) enhancing
sales of product and value-added services to new and existing customers
utilizing management information systems that provide improved customer and
market data, (iii) developing order management systems and redesigning warehouse
configurations to reduce inventory handling expenses and to improve on-time
delivery, (iv) developing logistics programs to reduce transportation and
freight costs, and (v) redeploying human resources to value-added activities.
Effective fiscal 1998, we also instituted a new management incentive
compensation plan to provide bonuses to branch and corporate managers based on
the achievement of certain branch operating and corporate financial objectives.
See "Item 11. Executive Compensation - Management Incentive Compensation Plan".

         In March 2001, we announced additional organizational changes including
the redeployment of key managers, elimination of certain administrative and
management functions and personnel and shutting down a non-strategic plate
processing center. These changes should allow us to better leverage our human
capital and to provide a more efficient cost and management structure.

         We believe that the restructuring programs, reengineering initiatives
and organization changes described above have substantially reduced costs since
their commencement and have resulted in, and will continue to contribute to, a
downward trend in operating expense ratios. See "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations - General".

                                       2
<PAGE>

         Our primary business goal is to increase market share, expand
services to customers and to improve operating profits and cash flows. Our
growth and operating strategies consist of the following elements:

         SATELLITE OPERATIONS AND EXPANSIONS. We believe a key aspect to growth
in our industry is having a physical presence in those markets requiring our
service. Accordingly, we have formalized a growth strategy to target those
geographic areas where we can justify opening a "satellite" location. These
locations will be run as small service center operations stocking only those
core commodities needed to support targeted industries and customers, with day
to day activities managed by only local warehouse and delivery personnel, and
marketed by outside salespeople. However, each satellite operation will be
supported by inventory, inside salespeople and general management of a core
district responsible for the satellite's results of operations. In fiscal 2000,
we opened our first satellite operation in Chattanooga, Tennessee; and during
fiscal 2001 opened additional satellite operations in Salt Lake City, Utah;
York, Pennsylvania; Roseville, Michigan and Brighton, New York. We have
identified other potential satellite locations but have not made any commitments
to pursue them in the foreseeable future.

         In addition, during fiscal 2001 we expanded our facilities in
Plainfield, Indiana and Eldridge, Iowa, relocated our Toronto, Canada operation
to a larger facility, and opened a new service center in Edmonton, Canada.

         LEVERAGING CORE COMMODITIES. We have historically been a major
purchaser and distributor of various "long" products, namely cold finished
carbon and alloy bars, mechanical tubing, stainless bars and shapes, aluminum
bars, shapes and tubes, and hot-rolled carbon and alloy bars. These specialty
core commodity products allow us to realize higher gross margins when compared
to gross margins from other commodity-like products, such as flat-rolled steel
and other sheet products. Although the Company continues to sell steel and
aluminum sheet products, it does so primarily in niche markets or as
complementary products to important customers that are significant purchasers of
other higher gross margin products.

         We believe we can significantly grow market share in our core
commodities by refocusing our efforts on aggressive procurement and marketing
strategies and inventory management. Leveraging our strength in core commodities
will establish competitive advantages in all of our local markets as well as
allow us to successfully compete for larger national programs with customers.

         FOCUS ON HIGHER GROSS MARGIN VALUE-ADDED PRODUCTS AND SERVICES. The
Company seeks to maintain its gross margins and to increase its market share by
(i) making sales from inventory with value-added services as often as possible,
since such sales generally generate higher gross margins, and (ii) providing
inventory management and timely delivery services. We believe customers will
continue to outsource certain pre-production and other processing activities,
including those involving plate, cutting and honing operations. Accordingly, we
will focus on increasing our efficiencies and capacities in these value-added
operations and in aggressively marketing these services. In addition, we
recognize the need by our customers to be assured of on-time delivery of high
quality products and services. Accordingly, we will focus on developing the
business systems and internal disciplines that will allow us to offer customers
"best in class" delivery service. We believe our focus on on-time delivery
service will immediately and significantly differentiate us and our service
capabilities from others in the industry who generally offer only "best efforts"
and less reliable delivery service.

         REALIZE EFFICIENCIES FROM MANAGEMENT INFORMATION SYSTEM INVESTMENTS.
The Company has made and will continue to make investments in its management
information systems to improve customer service, optimize inventory levels,
achieve greater operational efficiencies, and to assist management in
identifying additional areas for operational improvement. Planned improvements
in the Company's management information system include: (i) a customer
relationship management system to further improve customer satisfaction and
sales productivity, (ii) additional functionality of our electronic commerce
capabilities for sales and supply-chain activities, (iii) continued
implementation of warehouse management information systems, including
activity-based costing and management systems, and (iv) other system
improvements to improve productivity and efficiency.

         CONTINUE COST REDUCTIONS AND PRODUCTIVITY IMPROVEMENTS. The Company
will continue to identify and implement initiatives to realize cost savings and
to improve profitability and cash flows. The Company believes significant
opportunities remain in the areas of inventory handling, logistics, procurement
of goods and services, and customer service. The Company seeks to increase asset
and employee productivity and to further decrease unit costs through initiatives
intended to increase volume, thereby taking advantage of economies of scale. We
have already made significant progress in achieving these goals with development
and implementation of radio frequency and bar-coding capabilities, and automated
storage and retrieval systems.

                                       3
<PAGE>

PRODUCTS AND SUPPLIERS

         As a company, we have designated certain carbon and alloy, aluminum,
and stainless products as core product offerings under our bar, tubing and pipe,
plate, and sheet product lines. Each of our service centers stocks a broad range
of shapes and sizes of each of these products, as dictated by market demand, in
an effort to be a market leader in all of the core product lines in its
geographic area.

         Carbon steel bar products (hot-rolled and cold-finished) and carbon
plate and sheet 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 bar, plate and sheet are used widely in
the chemical, petrochemical, and oil refining and biomedical industries where
resistance to corrosion is important. Aluminum bar, plate and sheet are
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 tubing and pipe are used in general manufacturing.
Alloy tubing is used primarily in the manufacturing of oil field equipment and
farm equipment. Stainless steel tubing and pipe are used in applications
requiring a high resistance to corrosion, such as food processing. Aluminum
tubing and pipe are used in applications that put a premium on lightweight (such
as aerospace manufacturing).

         The majority of our procurement activities are handled by a centralized
merchandising office in our Schaumburg, Illinois facility where specialists in
major product lines make inventory purchases. The Company concentrates on
developing close working relationships with high-quality suppliers to ensure
quality and timely delivery.

         The vast majority of our inventory purchases are made by purchase
order, and we have no significant supply contracts with periods in excess of one
year. We are not dependent on any single supplier for any product or for a
significant portion of our purchases, and in fiscal year 2001 no single supplier
represented more than 10% of our total purchases. We purchased less than 10% of
our inventory requirements from foreign-based suppliers in fiscal 2001.

CUSTOMERS AND MARKETS

         Our company provides metal products and pre-production processing
services to over 40,000 active customers throughout the U.S. and Canada that do
business 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. We are not dependent on any single
customer or industry, and during fiscal 2001 no single customer accounted for
more than three percent of our total revenues.

         The vast majority of our sales originate from individual purchase
orders and are not subject to ongoing supply contracts; however, we sometimes
enter 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, but can have
a slightly lower gross margin than our ordinary sales. We believe such
contracts, in the aggregate, represented less than 15% of our total revenues in
fiscal 2001.

         Seasonal fluctuations in our business generally occur in the summer
months and in November and December, when many customers' plants and production
levels are impacted by retooling, vacations or holidays. Order backlog is not a
significant factor, as orders are generally filled within 24 hours.

         During fiscal 2001, we processed approximately 7,700 sales transactions
per business day generating an average revenue of approximately $545 per
transaction. Approximately 91% of our total revenues in fiscal 2001 were from
sales of stock inventory maintained by EMJ (referred to as "stock sales" and
mostly from core product offerings). The balance of revenues represents special
customer requirements that are met by arranging mill-direct sales and by making
buy-outs from other distributors of inventory items we do not maintain as stock
inventory. Such non-stock sales generally have lower gross margins than stock
sales, but provide a valuable customer service.

                                       4
<PAGE>

         The following table sets forth a percentage breakdown of revenues
generated from stock sales by product group for the fiscal years ended March 31,
2001, 2000, and 1999.

<TABLE>
<CAPTION>
                                                           Year Ended March 31,
                                                           ---------------------
                                                           2001    2000    1999
                                                           -----   -----   -----
<S>                                                        <C>     <C>     <C>
         BARS:
         Carbon and Alloy.................................  38.5%   39.7%   39.1%
         Stainless........................................  11.8    10.5    10.4
         Aluminum.........................................   8.1     7.2     5.9
                                                           -----   -----   -----
         Total............................................  58.4    57.4    55.4
                                                           -----   -----   -----
         TUBING AND PIPE:
         Carbon and Alloy.................................  26.0    27.1    28.3
         Stainless........................................   2.3     2.6     3.2
         Aluminum.........................................   3.2     3.6     3.2
                                                           -----   -----   -----
         Total............................................  31.5    33.3    34.7
                                                           -----   -----   -----
         PLATE:
         Carbon and Alloy.................................   4.0     4.7     5.5
         Stainless........................................   2.2     1.3     1.1
         Aluminum.........................................   3.0     2.5     2.3
                                                           -----   -----   -----
         Total............................................   9.2     8.5     8.9
                                                           -----   -----   -----
         SHEET:
         Carbon and Alloy.................................   0.3     0.3     0.4
         Stainless........................................   0.4     0.3     0.3
         Aluminum.........................................   0.2     0.2     0.2
                                                           -----   -----   -----
         Total............................................   0.9     0.8     0.9
                                                           -----   -----   -----
         Other............................................   0.0     0.0     0.1

                                                           100.0%  100.0%  100.0%
                                                           =====   =====   =====
         Revenues from stock sales as a percentage of
          total revenues..................................  90.6%   89.2%  88.0%
                                                           =====   =====   =====
</TABLE>

COMPETITIVE STRENGTHS

         We believe that the following factors contribute to our success in
the metals distribution industry:

         MARKET POSITION. We are among the largest distributors of metal
products in the U.S. and believe that our broad product offerings, with a
specialization in higher margin bar and tubing (as compared to flat-rolled
products), along with our value-added processing capabilities have enabled us to
maintain our position among the market leaders and achieve gross margins that
are among the highest for comparable publicly-traded metals distribution
companies. Because of our significant purchasing volume and long-term
relationships developed with numerous metals producers, we believe we can
realize economies of scale and have access to a wide variety of metals and new
product and service opportunities. Furthermore, we believe that our salesforce
is among the most experienced in the industry.

         NETWORK OF STRATEGICALLY LOCATED FACILITIES. Our service centers and
processing operations are strategically located, generally within one day's
delivery time to almost all U.S. manufacturing centers, which thereby gives us
the capability of increasing sales to national customers that currently buy
metals from various suppliers in different locations. Through these facilities,
we serve more than 40,000 customers, with no single customer accounting for more
than three percent of our total revenues. Such diversification reduces our
vulnerability to the financial or economic weakness of particular customers,
industries or regions.

         SERVICE AND PRODUCT SELECTION. We specialize in higher gross margin
bar and tubing products that are not commonly sold directly by steel and
aluminum producers in small quantities. We serve the needs of our customers
by carrying a broad range of shapes and sizes in core products in large
quantities, which allows the Company to deliver orders to customers typically
within 24 hours from receipt of an order. Each of our service centers strives
to be a market leader in our core product lines in their geographic area. Our
company benefits from an excellent reputation for quality and service built over

                                       5
<PAGE>

its 80 years in operation and has received numerous quality and service
awards from its customers. EMJ was among the first in the metals distribution
industry to receive multi-site ISO 9002 certification and had the first
metals service center to receive QS 9000 certification established by the
automobile industry.

         MANAGEMENT INFORMATION SYSTEMS. We have invested and will continue
to invest significant resources to upgrade or enhance our management
information systems. Such information systems have been designed to be fully
integrated with various application programs and can provide comprehensive
databases and reporting capabilities to assist management in their efforts to
assess business conditions, monitor results of operations, purchase more
effectively, optimize inventory among different locations, allocate resources
and improve customer service through better order and product reference data.
We believe our information systems are among the best in our industry and
provide a competitive advantage.

         EXPERIENCED MANAGEMENT WITH EQUITY OWNERSHIP. Executives and other
members of our management group have substantial experience in the metals
industry. In addition, our employees directly, and indirectly through the
Jorgensen Employee Stock Ownership Plan (the "ESOP"), own in the aggregate
approximately 30.0% (21.6% on a diluted basis) of the outstanding Holding Common
Stock as of March 31, 2001.

         IMPROVED COST STRUCTURES. We believe that our efforts to realign
operations and core competencies, which included the closure or sale of
underperforming operations and assets and reductions in workforce, as well as
other restructuring and reengineering initiatives we have undertaken in recent
years have dramatically improved our cost structure and operating leverage. We
believe such initiatives and their impact on cost structures have enabled our
company to maintain historically high operating margins, greater than most of
our competitors, even during periods of general weakness in the metals industry
and specific weakness in key industries that we serve. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
General".

MANAGEMENT INFORMATION SYSTEMS

         Our management information systems are designed to provide a
competitive advantage in managing activities affecting vendors, products,
customers and value-added services and to assist management in identifying
additional areas for operational improvement. The systems enhance our ability to
utilize electronic commerce in dealing with customers and suppliers, including
the use of bar coding, document imaging and other tools that can result in
greater efficiencies and increased productivity for all users. Planned
improvements in our management information systems include (i) a customer
relationship management system to further improve customer satisfaction and
sales productivity, (ii) additional functionality of our electronic commerce
capabilities for sales and supply-chain activities, (iii) continued
implementation of warehouse management information systems, including
activity-based costing and management systems, and (iv) other system
improvements to improve productivity and efficiency.

EMPLOYEES

         As of March 31, 2001, EMJ employed approximately 2,010 persons, of whom
approximately 1,225 were employed in production or shipping, 415 were employed
in sales and 370 served in executive, administrative or district office
capacities. Three different unions represented approximately 740 of our
employees from 15 locations. Our collective bargaining agreements expire on
staggered dates between June 30, 2001 and November 30, 2004. We are currently
renegotiating one agreement that will expire in June 2001 and expect to have
such agreement signed by September 2001. We believe we have a good overall
relationship with our employees.

FOREIGN OPERATIONS

         Through our wholly-owned subsidiary, Earle M. Jorgensen (Canada) Inc.,
a Canadian limited liability company, we operate three service centers,
including our Edmonton facility that opened in September 2000. Revenues from our
Canadian operations totaled $42.8 million in fiscal 2001, $38.6 million in
fiscal 2000 and $31.1 million in fiscal 1999.

ENVIRONMENTAL MATTERS

         Our 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

                                       6
<PAGE>

disposal of hazardous substances and the remediation of environmental
contamination. As a result, we are from time to time involved in
administrative and judicial proceedings and inquiries relating to
environmental matters.

         During fiscal years 2001, 2000 and 1999, expenditures made in
connection with environmental matters totaled approximately $0.2 million, $0.3
million and $2.8 million, respectively, principally for settlement of claims,
and monitoring, remediation and investigation activities at sites with
contaminated soil and/or groundwater. As of March 31, 2001, there was no accrual
for future monitoring, investigation and remediation expenditures that could be
reasonably estimated for the following pending environmental matters.

         ALAMEDA STREET (LOS ANGELES). In February 1998, we were notified that
our company had potential responsibility for the lead and copper soil
contamination of an undeveloped parcel that is adjacent to our Alameda Street
property. In March 2000, we completed an approved remediation plan and received
a closure letter from the appropriate governmental agencies in July 2000.

         FORGE (SEATTLE/KENT, WA). We indemnified the purchasers of our former
Forge facility for remediation of certain conditions at the facility and at an
off-site disposal site existing or subsequently determined to be existing at the
date of sale. No such claims were made within the timetables allowed under the
indemnification agreement. In November 1998, we paid $2.2 million to the current
owner of the Forge property as a settlement for any and all remaining or future
liabilities related to the remediation of the facility. We continue to monitor
the disposal site for environmental conditions in accordance with a consent
decree issued by a local governmental agency. Annual costs associated with such
monitoring are not significant.

         UNION (NEW JERSEY). During fiscal 1994, we were notified by the current
owner that our company has potential responsibility for the environmental
contamination of this property formerly owned by a subsidiary and disposed of by
such subsidiary prior to its acquisition by EMJ. 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 us that it estimated the cost
of investigation and cleanup of the property at $0.9 million and requested
contribution to such costs from EMJ and the prior owner. We have contested
responsibility and commented on the proposed cleanup plan and have not received
any further demands or notifications. We do not have sufficient information to
determine what potential liability EMJ has, if any.

         TRI-COUNTY LANDFILL (ILLINOIS). In April 2001, we were served with a
complaint by the owner of this landfill (known as the Tri-County/Elgin Landfills
Superfund Site (the "Site)) alleging that EMJ, among others, was responsible for
certain contamination found at the Site, which resulted from alleged disposal of
waste transported from a predecessor of Kilsby prior to Kilsby's merger with
EMJ. The owner seeks reimbursement of costs incurred or to be incurred in
connection with the investigation and remediation activities required under
orders from the United States Environmental Protection Agency. We are
investigating the matter and cannot determine at this time, what liability, if
any, we may have.

         Although it is possible that new information or future developments
could require our company to reassess its potential exposure relating to all
pending environmental matters, we believe that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on our 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 Note 8 to Consolidated
Financial Statements.

INTELLECTUAL PROPERTY AND LICENSES

         EMJ(R) is a registered trademark and service mark in the U.S. and in
other countries where we do or expect to do business. We consider certain
information owned by us to be trade secrets, and we take measures to protect the
confidentiality and control the disclosure of such information. We believe that
these safeguards adequately protect our proprietary rights. While we consider
all of our intellectual property rights as a whole to be important, we do not
consider any single right to be essential to our operations.

ITEM 2.  PROPERTIES

         Our service centers and value-added processing operations conduct
business at various locations throughout North America. The Company's facilities
are in good condition and are equipped to provide efficient processing of
customer

                                       7
<PAGE>

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.

<TABLE>
<CAPTION>
COUNTRY/CITY/STATE                 OWNED/                   SIZE
                                   LEASED                 (SQ. FT.)
<S>                                <C>                    <C>
UNITED STATES:
 Phoenix, Arizona................. Owned                    72,200
 Little Rock, Arkansas............ Leased                   27,700
 Hayward, California.............. Leased                   91,000
 Los Angeles, California.......... Owned                   319,400
 Los Angeles, California (a).......Leased                   83,600
 Denver, Colorado................. Leased                   77,400
 Schaumburg, Illinois............. Owned                   473,300
 Plainfield, Indiana.............. Owned                   225,000
 Eldridge, Iowa................... Leased                  104,500
 Boston, Massachusetts............ Owned                    63,500
 Roseville, Michigan (b).......... Leased                   28,700
 Minneapolis, Minnesota........... Owned                   169,200
 Kansas City, Missouri............ Leased                  120,900
 St. Louis, Missouri.............. Leased                  108,100
 Brighton, New York (b)........... Leased                   31,500
 Charlotte, North Carolina........ Owned                   175,300
 Cincinnati, Ohio................. Leased                  125,200
 Cleveland, Ohio.................. Owned                   200,200
 Cleveland, Ohio.................. Owned                   137,800
 Tulsa, Oklahoma.................. Owned                   108,000
 Tulsa, Oklahoma.................. Owned                   137,900
 Portland, Oregon................. Leased                   33,800
 Philadelphia, Pennsylvania (c)... Leased                  223,800
 York, Pennsylvania (b)(d).........Leased                   28,800
 Chattanooga, Tennessee (b)....... Leased                   27,000
 Memphis, Tennessee............... Leased                   56,500
 Dallas, Texas.................... Owned                   132,800
 Houston, Texas................... Owned                   276,000
 Salt Lake City, Utah (b)......... Leased                   25,400
 Kent, Washington................. Leased                   83,600
CANADA:
 Toronto, Ontario ................ Leased                   61,800
 Montreal, Quebec................. Leased                   82,700
 Edmonton, Alberta................ Leased                   25,800
OTHER PROPERTIES:
 Brea, California (headquarters)...Leased                   35,300
</TABLE>
---------------

(a)  The operations of this facility will be consolidated with the other Los
     Angeles location by June 2001.
(b)  These locations are considered satellite operations.
(c)  Beginning June 2001, 156,000 square feet of this facility will be subleased
     under a long-term agreement.
(d)  This operation will be relocated to a new and larger leased facility
     during fiscal 2002.

ITEM 3.  LEGAL PROCEEDINGS

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

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

                                       8
<PAGE>

         None.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY

         We have 128 shares of common stock par value $.01 per share
outstanding, all of which are owned by Holding. For each of fiscal years ended
March 31, 2001, 2000 and 1999, we paid cash dividends totaling $5,514,000,
$13,372,000 and $17,701,000, respectively, to Holding in connection with the
repurchase of its capital stock from employees of EMJ whose employment had
terminated, as required by the terms of Holding's Stockholders Agreement and the
ESOP. In addition, in fiscal 1998, we paid cash dividends of $45,419,000 to
Holding in connection with a refinancing of the indebtedness of the Company and
Holding.

ITEM 6.  SELECTED FINANCIAL DATA

         All information contained in the following table was derived from the
audited consolidated financial statements of the Company and should be read in
conjunction with "Item 7. 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)
                                             2001            2000             1999             1998             1997
                                         -----------     -----------      -----------      -----------      -----------
<S>                                      <C>             <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
   Revenues                              $ 1,059,681     $   938,252      $   915,811      $ 1,050,005      $ 1,023,565
   Gross profit                              292,418         275,449          265,960          294,624          280,739
   Operating expenses exclusive of
     restructuring and other non-
     recurring charges                       223,222         208,058          198,751          225,019          245,826
   Restructuring and other non-
     recurring charges                         5,320              --               --            2,838           20,088
   Income from operations                     63,876          67,391           67,209           66,767           14,825
   Net interest expense                       44,855          41,595           41,181           41,059           40,880
   Extraordinary loss (1)                         --              --               --            9,075               --
   Net income (loss)                          17,798          23,987           24,493           15,760          (26,556)

BALANCE SHEET DATA:
   Working capital                       $   159,505     $   165,148      $   156,691      $   157,784      $   170,988
   Net property, plant & equipment            98,236          95,041          102,776          106,643          120,050
   Total assets                              484,264         464,374          426,867          443,821          454,882
   Long-term debt (including current
      portion)                               270,184         285,547          296,506          312,234          291,286
   Stockholder's equity                           45         (14,365)         (28,020)         (36,919)           1,927

</TABLE>
<TABLE>
<CAPTION>
                                                                           YEAR ENDED MARCH 31,
                                         ------------------------------------------------------------------------------
                                                                        (Dollars in thousands)
                                             2001            2000             1999             1998             1997
                                         -----------     -----------      -----------      -----------      -----------
<S>                                      <C>             <C>              <C>              <C>              <C>
OTHER SUPPLEMENTAL DATA:
   Depreciation and amortization (2)        $ 11,035         $ 9,951          $ 9,175          $ 9,475         $ 10,620
   Non-cash ESOP expense (3)                   3,196           2,638            2,994            2,788            3,102
   Net cash interest expense (4)              43,137          40,685           37,727           39,993           37,747
   Capital expenditures                       14,475           9,525            8,957            7,264            4,449
   Ratio of earnings to fixed charges (5)       1.36            1.54             1.55             1.54               --

                                       9
<PAGE>

   Dividends paid (6)                          5,514          13,372           17,701           56,888            5,552
</TABLE>
---------------
(1)  The extraordinary loss of $9,075 includes the write-off of deferred
     financing costs and payments of call premiums and other expenses in
     connection with early retirement of debt.

(2)  Depreciation and amortization excludes amortization of debt issue costs
     aggregating $1,482, $1,482, $1,481, $1,757 and $2,144 for the years ended
     March 31, 2001, 2000, 1999, 1998 and 1997, respectively, 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 funded in the form of Holding's equity
     securities.

(4)  Net cash interest expense represents net interest expense, including
     interest expense associated with borrowings against cash surrender value of
     life insurance policies maintained by the Company, 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 sufficient to cover fixed charges for
     the fiscal years ended March 31, 2001, 2000, 1999 and 1998. Earnings were
     insufficient to cover fixed charges for the fiscal year ended March 31,
     1997 by $26,055.

(6)  Dividends paid to Holding in connection with the repurchase of its capital
     stock from terminated employees. In fiscal 1998, the Company also paid a
     dividend to Holding of $45,419 that was used to repay a portion of Holding
     Notes and accrued interest.

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

         The Company was formed in May 1990 when Kelso and its affiliates
acquired control of and combined two leading metals distributors, EMJ (founded
in 1921) and Kilsby-Roberts Holding Co. (founded in 1915). Through our network
of 37 service centers and value-added processing operations strategically
located throughout North America, we distribute a broad line of bar, tubing and
pipe, and plate and sheet metal products to over 40,000 customers.

         During the past several years, our company has undergone substantial
changes. In fiscal 1996 and 1997, we implemented two restructuring programs
designed to realign our operations and core competencies and to improve
operating earnings and cash flows, which included selling two foreign
subsidiaries, closing four domestic distribution centers, discontinuing a
flat-rolled processing center, consolidating two honing operations, and reducing
workforce. In addition, fiscal 1997 included a write-off of certain costs
related to our management information and reporting system.

         In fiscal 1998, we commenced several reengineering initiatives to focus
on improving customer service, process improvements and profitability. Such
initiatives included: (i) implementing direct sales capabilities, (ii) enhancing
sales of product and value-added services to new and existing customers
utilizing management information systems that provide improved customer and
market data, (iii) developing order management systems and redesigning warehouse
configurations to reduce inventory handling expenses and to improve on-time
delivery, (iv) developing logistics programs to reduce transportation and
freight costs, and (v) eliminating non value-added activities.

         We also addressed operational efficiencies and improvements in customer
service by: (i) providing incentives for our service center managers and
salespersons based on branch operating achievements and corporate financial
objectives, and (ii) repositioning faster moving inventory from facilities
designated as depots to those service centers requiring such inventory.

                                      10
<PAGE>

         We believe that the above restructuring programs and the reengineering
initiatives have substantially reduced costs since their commencement and have
resulted in, and will continue to contribute to, a downward trend in operating
expense ratios. Our income from operations before restructuring and other
non-recurring charges was $69.2 million in fiscal 2001, $67.4 million in fiscal
2000 and $67.2 million in fiscal 1999. The number of employees decreased from
approximately 2,600 on December 31, 1996 to approximately 2,010 on March 31,
2001, including the elimination of a number of corporate managerial positions.

         In order to maintain our competiveness, additional organizational
changes were approved by our Board in March 2001. These changes included the
redeployment of key managers, elimination of certain administrative and
management functions and personnel and shutting down a non-strategic plate
processing center. We believe these changes will allow us to better leverage our
human capital and to provide a more efficient cost and management structure
beginning in fiscal 2002.

         The metals service center industry has been historically cyclical (with
periods of strong demand and higher prices followed by periods of weaker demand
and lower prices), principally due to the nature of the industries in which the
largest consumers of metals operate. We believe our results have been less
sensitive to economic trends than some of our competitors due to our customer
base, product mix and the variety of industries served.

STATEMENT OF OPERATIONS INFORMATION

         The following table sets forth certain consolidated statement of
operations data for the Company. The historical consolidated financial data for
the fiscal years ended March 31, 2001, 2000 and 1999 are derived from the
historical consolidated financial statements included elsewhere herein.

<TABLE>
<CAPTION>
                                                    Year Ended March 31,
                                  ----------------------------------------------------
                                  2001      %        2000       %        1999        %
                                  ----      -        ----       -        ----        -
                                               (dollars in thousands)
<S>                           <C>         <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $1,059,681  100.0%    $938,252  100.0%    $915,811  100.0%
Gross profit.................    292,418   27.6      275,449   29.4      265,960   29.0
Operating expenses exclusive
 of restructuring and other
 non-recurring expenses......    223,222   21.1      208,058   22.2      198,751   21.7
  Warehouse and delivery
   expenses..................    136,752   12.9      123,566   13.2      120,687   13.2
  Selling expenses...........     36,391    3.5       34,147    3.6       33,918    3.7
  General and administrative
   expenses..................     50,079    4.7       50,345    5.4       44,146    4.8
Income from operations.......     63,876    6.0       67,391    7.2       67,209    7.3
Net interest expense.........     44,855    4.2       41,595    4.4       41,181    4.5
Net income...................     17,798    1.7       23,987    2.6       24,493    2.7
</TABLE>

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 2001 COMPARED TO YEAR ENDED
MARCH 31, 2000

         REVENUES. Revenues for fiscal 2001 increased 12.9% to $1,059.7 million,
compared to $938.3 million in fiscal 2000. Revenues from our domestic operations
increased 13.0% to $1,016.9 million in fiscal 2001, compared to $899.7 million
in fiscal 2000 and reflect a 12% increase in tonnage shipped and a 1% increase
in average selling prices (material costs increased 3%) when compared to fiscal
2000 levels. Our domestic operations benefited from higher levels of business in
core products and in key industries, such as oil services, transportation and
industrial tooling and machines, although weakened demand caused by a general
economic slowdown was experienced in the fourth quarter of fiscal 2001. Revenues
from our international operations increased 10.9% to $42.8 million compared to
$38.6 million in fiscal 2000 due to stronger local economic conditions and as
the result of the opening of a new service center in Edmonton, Canada in
September 2000.

         GROSS PROFIT. Gross profit increased 6.1% to $292.4 million in fiscal
2001, compared to $275.5 million in fiscal 2000. Gross margin declined to 27.6%
when compared to 29.4% in fiscal 2000. Fiscal 2001 included a LIFO charge of
$0.9 million compared to a corresponding LIFO credit of $9.0 million in fiscal
2000. Gross profit and gross margin from

                                      11
<PAGE>

foreign operations was $9.9 million and 23.1% in fiscal 2001, compared to
$8.7 million and 22.5% in fiscal 2000. Exclusive of foreign operations and
LIFO, gross margin was 27.9% in fiscal 2001, compared to 28.6% in fiscal 2000.

         EXPENSES. Total operating expenses in fiscal 2001 were $228.5 million,
including $5.3 million of non-recurring charges associated primarily with
workforce reductions and special compensation payable to our chief executive
officer. Excluding such non-recurring expenses, operating expenses were $223.2
million, or 21.1% of revenues, compared to $208.1 million, or 22.2% of revenues,
in fiscal 2000. The higher operating expenses generally reflect variable
expenses incurred to support increased tonnage shipped and costs associated with
new or expanded facilities, including our satellite operations.

         Warehouse and delivery expenses increased $13.2 million (10.7%) to
$136.8 million in fiscal 2001, compared to $123.6 million in fiscal 2000. As a
percent of revenues, warehouse and delivery expenses were 12.9% in fiscal 2001,
compared to 13.2% in fiscal 2000. The increase in these expenses was
attributable to higher payroll and benefits costs, and to higher lease,
depreciation, fuel, maintenance, utilities and other production and facility
expenses incurred to support added capacity and services, including those
related to facility expansions and satellite operations. As of March 31, 2001,
warehouse and delivery activities employed approximately 1,225 employees,
compared to 1,150 as of March 31, 2000.

         Selling expenses increased $2.2 million (6.4%) to $36.4 million in
fiscal 2001, compared to $34.2 million in fiscal 2000, and decreased as a
percent of revenues to 3.5% from 3.6% in fiscal 2000. The increase in selling
expenses was attributable to higher accruals for incentive compensation based on
revenue and gross profit levels.

         General and administrative expenses, excluding non-recurring charges
and gains or losses on sale of fixed assets, increased $2.1 million (4.4%) to
$50.1 million in fiscal 2001, compared to $48.0 million in fiscal 2000. As a
percentage of revenues, these expenses were 4.7% in fiscal year 2001 and 5.1% in
fiscal 2000. The increase in general and adminstrative expenses was attributable
to higher payroll and benefits costs, higher accruals for management incentives,
increased provisions for bad debt and lower purchase discounts offset by higher
income recognized in connection with life insurance policies. Our gains from
sale of fixed assets were not significant in fiscal 2001 compared to losses from
sale of fixed assets, including our Hawaiian operations, totaling $2.3 million
in fiscal 2000.

         NET INTEREST EXPENSE. Net interest expense was $44.9 million in fiscal
2001 and $41.6 million in fiscal 2000. Such amounts include interest on the
Revolving Credit Facility, Senior Notes, Term Loan, and borrowings against the
cash surrender value of certain life insurance policies, and the amortization of
debt issue costs ($1.5 million in fiscal 2001 and in fiscal 2000).

         During fiscal 2001 the average outstanding indebtedness (excluding
borrowings against the cash surrender value of certain life insurance policies)
was $325.4 million versus $313.5 million in fiscal 2000. The weighted-average
interest rate on such indebtedness during fiscal 2001 was 9.18% versus 8.54% in
fiscal 2000. The average borrowings under the Revolving Credit Facility
increased to $112.0 million from $98.1 million in fiscal 2000, and the average
interest rate increased to 8.48% in fiscal 2001 from 7.42% in fiscal 2000.

         The outstanding borrowings against the cash surrender value of life
insurance policies were $132.0 million at March 31, 2001 and $116.5 million at
March 31, 2000, and the total interest expense on such borrowings increased to
$14.4 million in fiscal 2001 compared to $12.6 million in fiscal 2000. Such
increases resulted from net borrowings of $15.5 million against the increased
cash surrender value of life insurance policies in November 2000 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 earned under the policies was $13.0 million in
fiscal 2001, $14.0 million in fiscal 2000 and $10.9 million in fiscal 1999 and
is reported as an offset to general and administrative expenses in the
consolidated statements of operations.

         The interest rates on the Senior Notes and on the life insurance policy
borrowings are fixed at 9.50% and 11.76%, respectively. The interest rates on
the Revolving Credit Facility and the Term Loan are floating rates (7.23% and
8.19%,

                                      12
<PAGE>

respectively, as of March 31, 2001). Pursuant to an interest rate swap
agreement we entered with Bankers Trust Company in June 1998, the interest
rate on the Term Loan was fixed at approximately 9.05% through June 2003 (the
"Fixed Rate"). Such agreement requires Bankers Trust Company to make payments
to our company each quarter in an amount equal to the product of the notional
amount of $95 million and the difference between the sum of the three month
London Interbank Offered Rate plus 3.25% ("Floating LIBOR") and the Fixed
Rate, if the Floating LIBOR is greater than the Fixed Rate, on a per diem
basis. If Floating LIBOR is lower than the Fixed Rate, we are required to pay
Bankers Trust Company an amount equal to the product of the notional amount
and the difference between the Fixed Rate and Floating LIBOR on a per diem
basis. During fiscal 2001, Bankers Trust Company paid us $0.7 million of
interest as calculated under the provisions described above. Since inception
of the interest rate swap agreement, Bankers Trust Company has paid us a net
amount of $0.2 million through March 31, 2001.

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 2000 COMPARED TO YEAR ENDED
MARCH 31, 1999

         REVENUES. Revenues for fiscal 2000 increased 2.5% to $938.3 million,
compared to $915.8 million in fiscal 1999. Revenues from our domestic operations
increased 1.7% to $899.7 million in fiscal 2000, compared to $884.7 million in
fiscal 1999 and reflect a 10% increase in tonnage shipped offset by an 8%
reduction in average selling prices (material costs declined 7%) when compared
to fiscal 1999 levels. Our domestic operations continued to be impacted by
weaker demand in certain core products and in key industries that we serve,
particularly agricultural equipment and aerospace, caused in part by global
economic conditions arising in connection with the Asian crisis in 1998.
Revenues from our international operations increased 24.1% to $38.6 million
compared to $31.1 million in fiscal 1999 as the result of strong local economic
conditions.

         GROSS PROFIT. Gross profit increased 3.6% to $275.5 million in fiscal
2000, compared to $266.0 million in fiscal 1999. Gross margin improved to 29.4%
when compared to 29.0% in fiscal 1999. Fiscal 2000 included a LIFO credit of
$9.0 million compared to a corresponding LIFO credit of $2.9 million in fiscal
1999. Gross profit and gross margin from foreign operations was $8.7 million and
22.5% in fiscal 2000, compared to $6.8 million and 22.0% in fiscal 1999.
Exclusive of foreign operations and LIFO, gross margin was 28.6% in fiscal 2000,
compared to 29.0% in fiscal 1999.

         EXPENSES. Total operating expenses in fiscal 2000 were $208.1 million
compared to $198.8 million in fiscal 1999. As a percent of revenues, total
operating expenses were 22.2% in fiscal 2000 and 21.7% in fiscal 1999.

         Warehouse and delivery expenses increased $2.9 million (2.4%) to $123.6
million in fiscal 2000, compared to $120.7 million in fiscal 1999. As a percent
of revenues, warehouse and delivery expenses were 13.2% in fiscal 2000,
unchanged from fiscal 1999. The increase in these expenses was attributable to
higher compensation, lease, depreciation and other production expenses caused by
the increase in tonnage shipped and from added capacity and services. In
addition, fiscal 2000 included approximately $1.0 million of expenses incurred
as the result of a two-week strike impacting our Schaumburg, Illinois facility
in March 2000.

         Selling, general and administrative expenses increased $6.4 million
(8.2%) to $84.5 million in fiscal 2000 compared to $78.1 million in fiscal 1999.
Selling expenses increased $0.3 million (0.9%) to $34.2 million in fiscal 2000,
compared to $33.9 million in fiscal 1999, and decreased as a percent of revenues
to 3.6% from 3.7% in fiscal 1999. General and administrative expenses, excluding
gains or losses from the sale of fixed assets, increased $1.4 million (3.0%) to
$48.0 million in fiscal 2000, compared to $46.6 million in fiscal 1999. As a
percentage of revenues, these expenses were 5.1% in fiscal years 2000 and 1999.
The increase in general and administrative expenses was primarily due to
increased incentive compensation, lower income earned on life insurance
redemptions, higher provisions for bad debt, and higher expenses related to
outsourced logistics services, partially offset by higher income recognized from
growth in cash surrender value of life insurance policies. Losses from sale of
fixed assets, including our Hawaiian operations, totaled $2.3 million in fiscal
2000, compared to gains of $2.4 million in fiscal 1999.

         NET INTEREST EXPENSE. Net interest expense was $41.6 million in fiscal
2000 and $41.2 million in fiscal 1999. Such amounts include interest on the
Revolving Credit Facility, Senior Notes, Term Loan, and borrowings against the
cash

                                       13
<PAGE>

surrender value of certain life insurance policies and the amortization of
debt issue costs ($1.5 million in fiscal 2000 and in fiscal 1999).

         During fiscal 2000 the average outstanding indebtedness (excluding
borrowings against the cash surrender value of certain life insurance policies)
was $313.5 million versus $331.7 million in fiscal 1999. The weighted-average
interest rate on such indebtedness during fiscal 2000 was 8.54% versus 8.61% in
fiscal 1999. The average borrowings under the Revolving Credit Facility
decreased to $98.1 million from $114.7 million in fiscal 1999, and the average
interest rate decreased to 7.42% in fiscal 2000 from 7.43% in fiscal 1999.

         The outstanding borrowings against the cash surrender value of life
insurance policies were $116.5 million at March 31, 2000 and $101.7 million at
March 31, 1999, and the total interest expense on such borrowings increased to
$12.6 million in fiscal 2000 compared to $10.9 million in fiscal 1999. Such
increases resulted from net borrowings of $14.8 million against the increased
cash surrender value of life insurance policies in November 1999 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 earned under the policies was $14.0 million in
fiscal 2000, $10.9 million in fiscal 1999 and $10.3 million in fiscal 1998 and
is reported as an offset to general and administrative expenses in the
consolidated statements of operations.

         The interest rates on the Senior Notes and on the life insurance policy
borrowings are fixed at 9.50% and 11.76%, respectively. The interest rates on
the Revolving Credit Facility and the Term Loan are floating rates (7.82% and
9.44%, respectively, as of March 31, 2000). Pursuant to an interest rate swap
agreement we entered with Bankers Trust Company in June 1998, the interest rate
on the Term Loan was fixed at approximately 9.05% through June 2003 (the "Fixed
Rate"). Such agreement requires Bankers Trust Company to make payments to our
company each quarter in an amount equal to the product of the notional amount of
$95 million and the difference between the sum of the three month London
Interbank Offered Rate plus 3.25% ("Floating LIBOR") and the Fixed Rate, if the
Floating LIBOR is greater than the Fixed Rate, on a per diem basis. If Floating
LIBOR is lower than the Fixed Rate, we are required to pay Bankers Trust Company
an amount equal to the product of the notional amount and the difference between
the Fixed Rate and Floating LIBOR on a per diem basis. During fiscal 2000, we
paid Bankers Trust Company $0.4 million and Bankers Trust Company paid us $0.1
million of interest as calculated under the provisions described above. Since
inception of the interest rate swap agreement, we have paid Bankers Trust
Company a net amount of $0.5 million through March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         Working capital decreased to $159.5 million at March 31, 2001 when
compared to $165.1 million at March 31, 2000. Primary sources of cash in fiscal
2001 consisted of funds provided by operations, $38.0 million. Primary uses of
cash in fiscal 2001 consisted of: (i) capital expenditures, $14.5 million; (ii)
payments under revolving loan agreements, $13.0 million; and (iii) dividends to
Holding, $5.5 million.

         Cash generated from operating activities was $38.0 million (3.6% of
revenues) in fiscal 2001 compared to $33.0 million (3.5% of revenues) in fiscal
2000 and $36.0 million (3.9% of revenues) in fiscal 1999.

         During fiscal 2001, we redeemed $5.5 million of our capital stock from
retiring and terminated employees, as required by the terms of our ESOP and by
Holding's Stockholders' Agreement. We expect that such redemptions for fiscal
2002 will be comparable to those paid in fiscal 2001, although the amount or
timing of such expenditures is not within our control and there can be no
assurance in this regard.

         Capital expenditures were $14.5 million in fiscal 2001, $9.5 million in
fiscal 2000 and $9.0 million in fiscal 1999. Capital expenditures in fiscal 2001
were primarily for routine replacement of machinery and equipment, facility
improvements and expansions, and the purchase of computer hardware and software.
For fiscal 2002, we have planned approximately $26.2 million of capital
expenditures to be financed from internally generated funds and borrowings under
our Revolving Credit Facility. Approximately $24.1 million is for facility
improvements and expansions and routine replacement of machinery and equipment,
and $2.1 million is for further additions and enhancements to our management
information systems.

                                       14
<PAGE>

         Ongoing debt service obligations primarily consist of interest payments
under our Revolving Credit Facility, interest and principal payments on the Term
Loan, interest payments on the 9 1/2% Senior Notes and principal and interest
payments on industrial revenue bonds. As of March 31, 2001, annual principal
payments required by our outstanding industrial revenue bonds indebtedness
amount to $1.4 million in fiscal years 2002 through 2004, $2.1 in fiscal year
2005, $1.2 in fiscal 2006 and $2.9 million in the aggregate thereafter through
2011. We will not be required to make any principal payments in respect of the 9
1/2% Senior Notes until 2005. The Revolving Credit Facility will mature in 2003
and the Term Loan will mature in 2004. The Term Loan requires principal payments
to be made in equal quarterly installments of $250,000. The final installment
due at maturity will repay in full all outstanding principal. The Revolving
Credit Facility, the Term Loan and 9 1/2% Senior Notes have covenants in respect
of maintenance of minimum working capital and a fixed charge coverage ratio; and
although compliance with such covenants in the future is largely dependent on
the future performance of our company and general economic conditions, for which
there can be no assurance, we expect to be in compliance with all of our debt
covenants for the foreseeable future.

         As of March 31, 2001, our primary sources of liquidity were available
borrowings of approximately $141.4 million under the Revolving Credit Facility,
available borrowings of approximately $7.3 million against certain life
insurance policies and internally generated funds. Borrowings under the
Revolving Credit Facility are secured by our domestic inventory and accounts
receivable, and future availability under the facility is determined by
prevailing levels of such accounts receivable and inventory. The Term Loan is
secured by a first priority lien on a substantial portion of our current and
future acquired unencumbered property, plant and equipment. The life insurance
policy loans are secured by the cash surrender value of the policies and are
non-recourse. The interest rate on the life insurance policy loans is 0.5%
greater than the dividend income rate on the policies. As of March 31, 2001,
there was approximately $25.1 million of cash surrender value in all life
insurance policies maintained, net of borrowings. In addition, our Canadian
subsidiary has available its own credit facilities of up to CND$13.8 million,
including a revolving credit facility of CND$6.0 million, a financial credit
facility of CND$7.0 million, to be used for hedging foreign currency and rate
fluctuations, and a special credit facility of CND$0.8 million for letters of
guarantee in connection with a lease for a newly constructed facility in
Toronto. As of March 31, 2001, CND$2.0 million (USD$1.2 million) was outstanding
under the revolving credit facility and a letter of guarantee for CND$0.7
million (USD$0.4 million) was issued. None of the financial credit facility was
used as of March 31, 2001.

         For fiscal 2001, EBITDA totaled $84.3 million (8.0% of revenues),
compared to $71.4 million (7.6% of revenues) in fiscal 2000. EBITDA, which
represents income from operations before non-recurring charges, net interest
expense, taxes, depreciation, amortization, LIFO adjustments, and certain other
non-cash expenses, including ESOP and post-retirement accruals, is provided as
an important measure of our ability to service debt. However, EBITDA should not
be considered in isolation or as a substitute for consolidated results of
operations and cash flows data presented in the accompanying consolidated
financial statements.

         We believe our sources of liquidity and capital resources are
sufficient to meet all currently anticipated operating cash requirements,
including debt service payments on the Revolving Credit Facility, the Term Loan
and the 9 1/2% Senior Notes prior to their maturities in 2003, 2004 and 2005,
respectively; however, we anticipate that it will be necessary to replace or to
refinance all or a portion of the Revolving Credit Facility, the Term Loan and
the 9 1/2% Senior Notes prior to their respective maturities, although there can
be no assurance on what terms, if any, our company would be able to obtain such
refinancing or additional financing. Our ability to make interest payments on
the Revolving Credit Facility and the 9 1/2% Senior Notes and principal and
interest payments on the Term Loan will be dependent on maintaining the level of
performance reflected in the fiscal 2001 results, which will be dependent on a
number of factors, many of which are beyond our control, and the continued
availability of revolving credit borrowings. Our earnings were sufficient to
cover fixed charges for fiscal years 2001, 2000 and 1999.

ENVIRONMENTAL CONTINGENCIES

                                       15
<PAGE>

         There are currently remediation and/or investigation activities at
several former facilities where soil and/or groundwater contamination is
present. As of March 31, 2001, there was no reserve to cover those future
environmental investigation and remediation costs that are known or can be
reasonably estimated. See Note 8 to Consolidated Financial Statements included
elsewhere herein for a more detailed discussion of specific environmental
contingencies.

         Our service centers are subject to many federal, state and local
requirements relating to the protection of the environment, including hazardous
waste disposal and underground storage tank regulations. We believe that we are
in material compliance with all applicable environmental laws and that our
products and processes do not present any unusual environmental concerns. We do
not anticipate any material expenditures or material recurring costs in the near
future in connection with pollution control.

         Some of our properties owned or leased are located in industrial areas
with histories of heavy industrial use. Although the location of these
properties may require us to incur expenditures and to establish environmental
liabilities for costs that arise from causes other than our operations, we do
not expect that any such liabilities will have a material adverse impact on our
results of operations, financial condition or liquidity. We do not carry
environmental insurance coverage.

         Our operations are also governed by laws and regulations relating to
workplace safety and worker health, principally the Occupational Safety and
Health Act and regulations thereunder, which, among other requirements,
establish noise, dust and safety standards. We believe that we are in material
compliance with applicable laws and regulations and do not anticipate that
future compliance with such laws and regulations will have a material adverse
effect on the results of operations or financial condition of our company.

         Although it is possible that new information or future developments
could require us to reassess our potential exposure relating to all pending
environmental matters, we believe that, based upon all currently available
information, the resolution of such environmental matters will not have a
material adverse effect on our 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 our 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 included in accumulated other
comprehensive income (loss) within stockholder's equity. We do not expect to
hedge our exposure to foreign currency fluctuations in the foreseeable future.
Net foreign currency transaction gains or losses have not been material in any
of the years presented.

INFLATION

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

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's exposure to market risk for changes in interest rates,
foreign currency exchange rates and commodity prices is not considered material
based on the nature and extent of its financial instruments, foreign operations
and related activities and normal business cycles. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operations -- Year ended March 31, 2001 compared to year ended March
31, 2000".

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.

                                      16
<PAGE>

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

         None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth the name, age (at March 31, 2001),
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.

         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."

         Prior to January 1, 1998, non-officer directors, other than Messrs.
Schuchert and Nickell, were paid an annual retainer of $25,000 plus $1,000 for
each board meeting attended. Effective January 1, 1998, January 1, 1999, January
1, 2000 and January 1, 2001, each of such non-officer directors was granted
options to purchase 10,000 shares of Holding Common Stock at their fair market
value as established by the most recent appraisal available at the date of
grant. Such options will vest in four equal increments at the end of each
calendar quarter. Effective April 1, 1997, April 1, 1998, April 1, 1999, April
1, 2000 and April 1, 2001, in consideration for his service as a director,
Chairman of the Executive Committee and Chairman of the Board, Mr. Roderick was
granted options to purchase 20,000 shares of Holding Common Stock, in each case
at their fair market value as established by the most recent appraisal available
at the date of the grant. Such options are fully vested. The Company expects to
continue the practice of paying director's fees with grants of stock options.

         In addition, all non-officer directors are reimbursed for all approved
out-of-pocket expenses related to meetings attended. 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.

<TABLE>
<CAPTION>
               NAME                        AGE                    POSITION
               ----                        ---                    --------
<S>                                        <C>    <C>
               David M. Roderick           77     Chairman of the Board and Chairman of the
                                                     Executive Committee and Director

               Maurice S. Nelson, Jr.      63     President, Chief Executive Officer and Chief Operating Officer,
                                                     Director and Member of the Executive Committee

               William S. Johnson          43     Vice President and Chief Financial Officer
                                                     (Principal Financial and Accounting Officer) and Secretary

               Frank D. Travetto           48     Vice President Merchandising

               Kenneth L. Henry            54     Vice President

               James D. Hoffman            42     Vice President

                                       17
<PAGE>

               R. Neil McCaffery           51     Executive Vice President

               Joseph S. Schuchert         72     Director

               William A. Marquard         81     Director and Chairman of the Audit Committee

               Frank T. Nickell            53     Director and Member of the Executive Committee and
                                                     the Audit Committee

               John Rutledge               52     Director and Member of the Audit Committee

               G. Robert Durham            72     Director and Member of the Audit Committee
</TABLE>

         DAVID M. RODERICK. Mr. Roderick became Chairman of the Board of the
Company and Holding on January 21, 1998. Mr. Roderick has also served as
Chairman of the Executive Committee of the Company and Holding since February 1,
1997. Mr. Roderick has been a director of the Company and Holding since January
1994. Mr. Roderick also serves as a director of American Standard Companies
Inc., Citation and Kelso & Companies, Inc. Previously, Mr. Roderick served as
Director, Chairman, and Chief Executive Officer 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 Chief Executive Officer and Chairman from 1979 to 1989.

         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. Before that, Mr. Nelson served as President,
Chief Executive Officer and Chief Operating Officer of Inland Steel Company from
1992 until April 1996. Before that, Mr. Nelson was the President of the
Aerospace and Commercial division of the Aluminum Company of America (Alcoa)
from 1987 to 1992.

         WILLIAM S. JOHNSON. Mr. Johnson has been the Company's Vice President
and Chief Financial Officer and Secretary since January 1999. Before that, Mr.
Johnson was the Company's Controller since February 1995 and was the Company's
Assistant Controller since February 1994. Prior to that, Mr. Johnson was the
Corporate Finance Manager for Severin Montres, Ltd. since 1991. Severin Montres,
Ltd., owned by Gucci Group N.V., is the manufacturer and distributor of Gucci
watches.

         FRANK D. TRAVETTO. Mr. Travetto has been the Company's Vice President
Merchandising since March 1997. Before 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.

         KENNETH L. HENRY. Mr. Henry has been the Company's Vice President and
has been responsible for operations of the Company's Chicago and Quad Cities
facilities since January 1998. Before that, Mr. Henry was the Company's Vice
President Central Region since October 1995. Before 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
since March 2001 and has been responsible for operations of the Company's
Cleveland, Indianapolis, and Cincinnati facilities since March 2001. Before
that, Mr. Hoffman was the Company's Vice President Eastern Region since July
1996. Before 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 Executive Vice
President since March 2001. Before that, Mr. McCaffery was the Company's Vice
President Western Region since March 1997 and the Company's Vice President
Southern Region since April 1996.

         JOSEPH S. SCHUCHERT. Mr. Schuchert has been Chairman and a director of
Kelso & Companies, Inc. since March 1989 and was Chief Executive Officer from
March 1989 to August 1997. Kelso & Companies, Inc. is the general partner of
Kelso, a Delaware limited partnership. Before the formation of Kelso &
Companies, Inc. in 1989, Mr. Schuchert was Managing General Partner of Kelso.
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 Kelso & Companies, Inc., Treadco, Inc. and
EarthShell Container Corporation.

                                      18
<PAGE>

         FRANK T. 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 and Chief Executive Officer of Kelso &
Companies, Inc. since September 1997. Kelso & Companies, Inc. is the general
partner of Kelso, a Delaware limited partnership. Before the formation of Kelso
& Companies, Inc., from 1984 to 1989, Mr. Nickell was a general partner of
Kelso. He is also a director of Peebles Inc., The Bear Stearns Companies and
BlackRock, Inc.

         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 Amerindo Investment Advisers,
Inc., Lazard Freres Funds, Strategic Optical Holdings, Inc. and StairMaster
Sports/Medical Products, Inc.

         G. ROBERT DURHAM. Mr. Durham has been a director of the Company and
Holding since January 1999. Mr. Durham retired from Walters Industries, Inc. in
May 1996, after serving as Chairman and Chief Executive Officer since October
1995, and President and Chief Executive Officer from June 1991. Mr. Durham also
serves as a director of Amphenol Corporation and The MONY Group Inc. and was
elected Chairman of the Board of The FINOVA Group Inc. in April 2001.

STOCKHOLDERS' AGREEMENT

         The Company's By-laws provide for one to ten directors. The Board of
Directors of the Company currently consists of seven 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 at least five directors shall be designated by Kelso. Mr. Nelson
has been designated by the Management Stockholders and the remaining directors
were designated by Kelso. The holders of Series A Preferred Stock of Holding are
entitled to designate one director pursuant to the terms of the Series A
Preferred Stock and they have designated Mr. Durham. The Stockholders' Agreement
also provides that in the event of termination of employment, under certain
circumstances, each Management Stockholder is entitled to sell, and Holding can
require such a Management Stockholder to sell, their shares of Holding Common
Stock to Holding at their appraised Fair Market Value (as defined therein). The
Board of Directors of the Company has approved an extension of the term of the
Stockholders' Agreement to March 24, 2008.

ITEM 11.  EXECUTIVE COMPENSATION

         Set forth below is information concerning the compensation levels for
certain executive officers of Holding and the Company serving as of March 31,
2001. 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, 2001 for the Chief Executive Officer and the
four most highly compensated executive officers of the Company as of March 31,
2001.

<TABLE>
<CAPTION>
                          SUMMARY OF COMPENSATION TABLE

                                                                                 LONG-TERM
                                                                            COMPENSATION AWARDS
                                                                           -----------------------
                                              ANNUAL COMPENSATION          SECURITIES UNDERLYING
NAME AND                               -------------------------------              STOCK            ALL OTHER
PRINCIPAL POSITION                     YEAR      SALARY      BONUS (1)        OPTIONS/SAR(#)(2)   COMPENSATION (3)
------------------                     ----      ------      ---------        -----------------   ----------------
<S>                                    <C>       <C>         <C>           <C>                    <C>
Maurice S. Nelson, Jr.                 2001      $555,844    $2,374,014                ---              $152,594
   President, Chief Executive Officer  2000       555,567       393,264                ---                53,166
   and Chief Operating Officer         1999       555,015       352,013                ---                53,180

Frank D. Travetto                      2001       229,051       133,011             15,000                25,001
   Vice President,                     2000       220,215       134,316             10,000                20,325

                                       19
<PAGE>

   Merchandising                       1999       211,274       115,920             25,000                17,789

Kenneth L. Henry                       2001       218,299       151,677             15,000                28,341
   Vice President                      2000       209,808       127,920             10,000                26,192
                                       1999       195,281       112,009             25,000                22,786

R. Neil McCaffery                      2001       206,352       120,343             15,000                19,515
   Executive Vice President            2000       198,571       121,524             10,000                16,850
                                       1999       185,243        76,003             25,000                14,146

James D. Hoffman                       2001       205,955       120,343             15,000                18,531
   Vice President                      2000       198,079       121,524             10,000                16,455
                                       1999       184,065       106,404             25,000                15,267
</TABLE>
--------------
(1)  Amounts reflect cash compensation earned by executive officers in each of
     the fiscal years presented, including amounts received after fiscal year
     end, or deferred at the election of those officers. Bonus amounts include a
     cash bonus payable pursuant to the Company's Management Incentive
     Compensation Plan, which became effective April 1, 1997. The following
     bonuses were paid to Messrs. Nelson, Travetto, Henry, McCaffery and
     Hoffman, under the Company's Management Incentive Compensation Plan (a) in
     fiscal 2001: $374,014, $133,011, $151,677, $120,343 and $120,343,
     respectively (b) in fiscal 2000: $393,264, $134,316, $127,920, $121,524 and
     $121,524, respectively, (c) in fiscal 1999: $352,013, $115,920, $112,009,
     $76,003 and $106,404, respectively. In addition, Mr. Nelson received a
     special bonus of $2,000,000 in fiscal 2001.

(2)  Holding has granted executive officers options to purchase shares of
     Holding Common Stock at their fair market value on the date of grant. Mr.
     Nelson's options have an exercise price of $5.41 per share; options granted
     to Messrs. Travetto, Henry, McCaffery and Hoffman in fiscal years 2001,
     2000 and 1999 have an exercise price of $7.31, $5.51, and $7.73 per share,
     respectively. See "Holding Stock Option Plan" and "Stock Option Grants
     Table" below for further information.

(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 2001 for Messrs.
     Nelson, Travetto, Henry, McCaffery and Hoffman, respectively (i) ESOP
     --$8,500, $8,500, $8,500, $8,500, and $8,500; (ii) 401(a)(17) Plan
     --$137,719, $9,398, $9,796, $7,694 and $7,694; (iii) long term
     disability--$4,509, $3,745, $6,779, $2,133 and $1,623; (iv) life
     insurance--$1,866, $3,358, $3,266, $1,188 and $714. The following
     allocations were made in fiscal 2000 for Messrs. Nelson, Travetto, Henry,
     McCaffery and Hoffman, respectively (i) ESOP --$8,000, $8,000, $8,000,
     $8,000, and $8,000; (ii) 401(a)(17) Plan --$39,164, $9,531, $8,696, $7,861
     and $7,861; (iii) long term disability--$4,509, none, $6,779, none and
     none; (iv) life insurance--$1,493, $2,794, $2,717, $989 and $594. The
     following allocations were made in fiscal 1999 for Messrs. Nelson,
     Travetto, Henry, McCaffery and Hoffman, respectively (i) ESOP --$8,000,
     $8,000, $8,000, $8,000, and $8,000; (ii) 401(a)(17) Plan --$37,102, $8,171,
     $7,303, $5,572 and $6,923; (iii) long term disability--$7,285, none,
     $5,908, none and none; (iv) life insurance--$793, $1,618, $1,574, $573 and
     $344. 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 covering 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 a discretionary bonus of $10,000 paid to Mr. Henry in fiscal 2001.

HOLDING STOCK OPTION PLAN

         In fiscal 1998, Holding adopted the Earle M. Jorgensen Holding Company,
Inc. Stock Option Plan, as amended (the "Stock Option Plan"). The Executive
Committee of the Board of Directors is authorized to grant options under the
Stock Option Plan. Stock options may be granted at not less than 100% of the
fair market value 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 such terms and conditions, such as the
achievement of performance measures or upon the passage of time, as the
Executive Committee determines. The Executive Committee will make grants under
the Stock Option Plan to provide executive officers and certain other managers
of the Company with additional incentives for outstanding individual performance
and 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, if the holders of options agree,
to grant replacement options which may contain terms more favorable than the
options they replace, such as 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 will 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 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, 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 2,100,000, subject to adjustment as
provided in the Stock Option Plan to reflect certain corporate transactions
affecting the number or type of outstanding shares.

STOCK OPTION GRANTS TABLE

         The following table sets forth certain information concerning stock
options granted during fiscal 2001 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 STOCK
                             SECURITIES     % OF TOTAL OPTIONS                             PRICE APPRECIATION FOR OPTION
                             UNDERLYING         GRANTED TO       EXERCISE                              TERM
                          OPTIONS GRANTED      EMPLOYEES IN        PRICE     EXPIRATION   --------------------------------
NAME                          (#) (1)           FISCAL YEAR       ($/SH.)       DATE           5% ($)         10% ($)
----                          -------           -----------       -------       ----           ------         -------
<S>                       <C>               <C>                   <C>        <C>          <C>                 <C>
Maurice S. Nelson, Jr.          ---                   0%            N/A          N/A            N/A             N/A
Frank D. Travetto              15,000                9.2%         $7.31       7/31/2010        $68,958         $174,754
Kenneth L. Henry               15,000                9.2%          7.31       7/31/2010         68,958          174,754
R. Neil McCaffery              15,000                9.2%          7.31       7/31/2010         68,958          174,754
James D. Hoffman               15,000                9.2%          7.31       7/31/2010         68,958          174,754
</TABLE>
---------------

                                       21
<PAGE>

(1) Holding has not granted any stock appreciation rights. All the options shown
    above become exercisable on August 1, 2002. 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 and 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 (an "SOP Change of
    Control"), unless the Executive Committee determines prior to the occurrence
    of such SOP 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.

AGGREGATED STOCK OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUE TABLE

         The following table sets forth certain information concerning stock
options exercised during fiscal 2001 by the Chief Executive Officer and the next
four most highly compensated executive officers of the Company, and the value of
their unexercised stock options as of March 31, 2001.

<TABLE>
<CAPTION>
                             AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
                                             YEAR-END OPTION VALUES
                          ----------------------------------------------------------------
                                                                   NUMBER OF SECURITIES
                                                                  UNDERLYING UNEXERCISED     VALUE OF UNEXERCISED
                                                                        OPTIONS AT          IN-THE-MONEY OPTIONS AT
                                                                   FISCAL YEAR-END (#)      FISCAL YEAR-END ($) (1)
                                                                  ---------------------     -----------------------
                         SHARES ACQUIRED                              EXERCISABLE/               EXERCISABLE/
NAME                      ON EXERCISE (#)    VALUE REALIZED ($)       UNEXERCISABLE              UNEXERCISABLE
----                      ---------------    ------------------       -------------         ----------------------
<S>                      <C>                 <C>                      <C>                   <C>
Maurice S. Nelson, Jr.          ---                 ---               1,320,000/---             $2,508,000/$---
Frank D. Travetto               ---                 ---               50,000/20,000             $99,250/$18,000
Kenneth L. Henry                ---                 ---               50,000/20,000             $99,250/$18,000
R. Neil McCaffery               ---                 ---               50,000/20,000             $99,250/$18,000
James D. Hoffman                ---                 ---               50,000/20,000             $99,250/$18,000
</TABLE>

---------------
(1) Holding is a private company and its stock is not publicly traded. The fair
    market value of Holding's common stock underlying the options shown above is
    determined annually by a third party appraiser. The value of in-the-money
    options shown above was calculated using the most recent appraisal available
    which was as of March 31, 2000.

THE ESOP

         Our company maintains an employee stock ownership plan (the "ESOP") in
respect of nonunion employees who meet certain service requirements. The amount
of annual contributions to the ESOP are calculated as a percentage (as
determined by the Board of Directors based on the achievement of Company
performance objectives) of total cash compensation (as defined in the ESOP) 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 at age 65 or upon completion of five
years of service, retirement, disability or death. Following the occurrence of a
participant's termination of service (as defined in the ESOP), retirement,
disability, or death, the ESOP is required to either distribute the vested
balance in stock or cash. If stock is distributed, it is accompanied by a put
option to Holding under terms defined in the ESOP. At March 31, 2001, shares of
Holding's Series A and Series B Preferred Stock and Holding Common Stock owned
by the ESOP totaled 57,149, 27,053, 3,757,944 shares, respectively. For the
fiscal years ended March 31, 2001, 2000, and 1999, contributions payable to the

                                      22
<PAGE>

ESOP totaled $3,196,000, $2,638,000 and $2,994,000, respectively, and have been
or will be paid in the form of Holding Common Stock.

         Although Holding has not expressed any intent to terminate the ESOP, it
has the right to terminate or amend the provisions of the ESOP at any time. In
the event of any 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.

         In 1984, 1985 and 1986, Kilsby 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. Certain of these policies allow our company to borrow against the
cash surrender value of such policies. As of March 31, 2001, we have borrowed
$132.0 million against the cash surrender value of such policies to fund renewal
premiums, accrued interest on previous borrowings and working capital needs. The
net cash surrender value available for future borrowings was approximately $7.3
million as of March 31, 2001. Our Revolving Credit Facility and other resources
are also available, subject to certain limitations, to satisfy stock repurchase
obligations as they arise. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations---Liquidity and Capital
Resources".

         The Internal Revenue Service (the "IRS") conducted an audit of the ESOP
for the fiscal years ended March 31, 1992 through March 31, 1996 and issued a
preliminary report 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 U.S. Department of Labor (the "DOL") is investigating
the same transactions involving the ESOP and has come to conclusions similar to
those reached by the IRS. We believe the assertions of the IRS and the DOL are
incorrect and have responded accordingly. In its investigation, the DOL and its
advisors also reviewed the valuations of Holding's common and preferred stock
prepared for the ESOP for the fiscal years 1994 through 1997 and criticized the
methodology used in preparing the valuations. We have responded to the DOL with
an explanation of the basis for the determinations made by the Company's
appraiser. The DOL has indicated that it is reviewing valuations for the fiscal
years 1998 and 1999 as well. We believe that the methodology used in the
valuations is appropriate. We do not have sufficient information to estimate our
potential liability to the DOL; however, we believe that the DOL investigation
will be resolved in a manner that will not result in a material liability to the
Company.

         Holding has agreed to settle the IRS investigation for a payment of
$1.9 million, subject to the satisfactory completion of documentation. Holding
has not admitted that its actions violated the Internal Revenue Code or conceded
that the assertions made by the IRS are valid. This amount will be funded by EMJ
as a dividend to Holding in fiscal 2002.

SUPPLEMENTAL ESOP

         In fiscal 1996, our company adopted a supplemental ESOP contribution
plan ("Supplemental ESOP") for contributions not allowed under the ESOP pursuant
to limitations of Sections 401(a)(17) and 415 of the Internal Revenue Code of
1986, as amended. Participants in the Supplemental Plan include certain highly
compensated employees and other employees who are not eligible to participate in
the ESOP. Contributions payable, vesting and distributions under the
Supplemental Plan are comparable with those under the ESOP. Contributions under
the Supplemental Plan are made in cash and are held in an irrevocable trust. For
the fiscal years ended March 31, 2001, 2000, and 1999, contributions payable
totaled $191,000, $93,000 and $99,000, respectively.

MANAGEMENT INCENTIVE COMPENSATION PLAN

         Effective April 1, 1997, the Company adopted a new Management Incentive
Compensation Plan (the "Incentive Plan"). The Incentive Plan provides for
payment of cash bonuses to senior executives and other key management employees
based on the achievement of certain operating profit and cash flow objectives
determined by the Board of Directors or the Executive Committee. Bonuses awarded
are determined on a sliding scale based on the percentage of the objectives
achieved. No bonus is payable unless at least 80% of the objectives are
achieved, and the maximum bonus would be awarded for achievement of 150% or more
of the established objectives. In addition, the Company's Chief Executive
Officer may award bonuses from a discretionary pool for exemplary service. The
Board of Directors ratified bonuses pursuant to the Incentive Plan aggregating
$5.9 million in fiscal 2001, $5.4 million in fiscal 2000 and $4.6 million in
fiscal 1999.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

                                       23
<PAGE>

         David M. Roderick, Frank T. 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.

         Kelso affiliates beneficially own shares of the capital stock of
Holding as described under "Item 12. Security Ownership of Certain Beneficial
Owners and Management." 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 "Item 12. Security Ownership of
Certain Beneficial Owners and Management."

         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. The agreement for advisory services was amended in September 1997
to provide such services at an annual fee of $625,000 for each of the fiscal
years ended March 31, 1999 and 1998. There was no annual fee payable for fiscal
years 2001 and 2000. For each of the fiscal years 2001, 2000 and 1999, the
Company paid Kelso the annual fee, if any, and reimbursed Kelso $11,000, $13,000
and $43,000, respectively, for out-of-pocket expenses.

         Holding has issued to KIA IV two warrants, entitling KIA IV to purchase
2,937,915 shares of Holding Common Stock in the aggregate at a purchase price of
$.01 per share.

         In January 1996, the Company amended an 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
guaranteed a minimum annual usage for communication services, and Kelso
Insurance guaranteed the Company's minimum usage to AT&T. No fee was paid by the
Company to Kelso Insurance in connection with this transaction. In fiscal 2001,
this agreement was terminated.

         Beginning April 1, 1998, and on each subsequent April 1, in
consideration for his service as a director, Chairman of the Company's Executive
Committee and Chairman of the Board, the Company granted Mr. Roderick options to
purchase 20,000 shares of Holding Common Stock at a purchase price equal to the
fair market value as established by the most recent appraisal available at the
date of grant. For the grants issued April 1, 2001, 2000 and 1999, the grant
price has been $7.31 per share, $5.51 per share, and $7.73 per share,
respectively.

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, 2001, 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, 2001, 27,062 shares of Series B Preferred Stock
of Holding have been issued, of which 27,053 were owned by the ESOP.


                                      24
<PAGE>

<TABLE>
<CAPTION>

                                                                      PERCENTAGE OF       NUMBER OF        PERCENTAGE OF
                                                   NUMBER OF            SHARES OF           SHARES        SHARES OF SERIES
NAME AND ADDRESS OF                                SHARES OF          COMMON STOCK       OF SERIES A     A PREFERRED STOCK
BENEFICIAL OWNER                                 COMMON STOCK        OUTSTANDING (a)   PREFERRED STOCK    OUTSTANDING (b)
----------------                                 ------------        ---------------   ---------------    ---------------
<S>                                             <C>                  <C>               <C>                <C>
Kelso Investment Associates, IV, L.P. (c)       9,462,475 (d)          61.1% (d)                 0                 0.0%
KIA III - Earle M. Jorgensen, L.P. (c)          1,704,740              13.6%                     0                 0.0%
Joseph S. Schuchert (c)                        11,167,215 (d)(e)       72.1% (d)(e)         24,519  (f)           27.4% (f)
Frank T. Nickell (c)                           11,187,714 (d)(e)       72.3% (d)(e)         24,519  (f)           27.4% (f)
Michael B. Goldberg (c)                         9,462,475 (d)(e)       61.1% (d)(e)              0                 0.0%
George E. Matelich (c)                         11,172,215 (d)(e)       72.2% (d)(e)         24,519  (f)           27.4% (f)
Thomas R. Wall, IV (c)                         11,172,215 (d)(e)       72.2% (d)(e)         24,519  (f)           27.4% (f)
Frank K. Bynum (c)                             11,167,215 (d)(e)       72.1% (d)(e)              0                 0.0%
David I. Wahrhaftig (c)                        11,167,215 (d)(e)       72.1% (d)(e)              0                 0.0%
Philip E. Berney (c)                           11,167,215 (d)(e)       72.1% (d)(e)              0                 0.0%
Maurice S. Nelson (g) (l)                         660,000               5.3%                     0                 0.0%
Frank D. Travetto (g) (l)                          62,000               0.5%                     0                 0.0%
Kenneth L. Henry (g) (l)                           69,000               0.6%                   704                 0.8%
R. Neil McCaffery (g) (l)                          55,000               0.4%                     0                 0.0%
James D. Hoffman (g) (l)                           50,000               0.4%                     0                 0.0%
David M. Roderick (g) (l)                         114,000               0.9%                     0                 0.0%
John Rutledge (h) (l)                              37,500               0.3%                     0                 0.0%
William A. Marquard (c) (l)                        42,500               0.3%                     0                 0.0%
G. Robert Durham (g) (l)                           12,500               0.1%                     0                 0.0%
Earle M. Jorgensen Company Employee
   Stock Ownership Plan (g)                     3,731,648 (i)          29.7% (i)            56,171  (i)           62.8% (i)
All directors and executive officers of
   the Company as a group (l)                   1,782,999 (j)          14.2% (j)               704  (k)            0.8% (k)
</TABLE>
-------------
(a)  The percentage of shares of Holding Common Stock outstanding for KIA IV,
     and Messrs. Schuchert, Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum
     and Berney was calculated assuming the total outstanding shares of Holding
     Common Stock was 15,483,356, (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, (ii) excluding 1,677,500 shares
     subject to stock options referred to in note (l) below. 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 12,545,441, excluding shares subject to stock options and shares
     issuable upon the exercise of the Warrants held by KIA IV as of March 31,
     2001.

(b)  The percentage of shares of Series A Preferred Stock outstanding was
     calculated assuming the total outstanding shares of Series A Preferred
     Stock was 89,501, excluding 158,045 shares of Series A Preferred Stock held
     in the Holding treasury as of March 31, 2001.

(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.

(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. 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, Wall, Matelich, Goldberg, Wahrhaftig, Bynum and
     Berney 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) except Mr. Goldberg, KIA III-EMJ by
     virtue of their status as general partners of KP III, the general partner
     of KIA III-EMJ. Messrs. Schuchert, Nickell, Wall, Matelich, Goldberg,
     Wahrhaftig, Bynum and Berney share investment and voting power with respect
     to securities owned by the Kelso affiliates of which they are general
     partners. Messrs. Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum and
     Berney disclaim beneficial ownership of the shares of Holding Common Stock
     owned by the Kelso affiliates.

(f)  Messrs. Schuchert, Nickell, Wall and Matelich 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, Wall and Matelich 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, 92821.

                                       25
<PAGE>

(h)  The business address for Dr. Rutledge is 15 Locust Avenue, New Canaan,
     Connecticut, 06840.

(i)  Excludes 26,296 shares of Holding Common Stock and 978 shares of Series A
     Preferred Stock held by the ESOP in directed accounts that are deemed to be
     beneficially owned by any of the directors or executive officers or other
     employees of the Company.

(j)  Excludes (i) 11,167,215 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)  Includes shares subject to stock options vested and exercisable as of March
     31, 2001.

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, Wall, Matelich, Goldberg,
Wahrhaftig, Bynum and Berney are indirect stockholders of Kelso and general
partners of KP I (other than Messrs. Goldberg, Bynum, Wahrhaftig and Berney), KP
III (other than Mr. Goldberg) 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. See "Item 12. Security
Ownership of Certain Beneficial Owners and Management."

         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."

         On each April 1, from 1998 through 2001, in consideration for his
service as a director, Chairman of the Company's Executive Committee and
Chairman of the Board, the Company granted Mr. Roderick options to purchase
20,000 shares of Holding Common Stock at their fair market value as established
by the most recent appraisal available at the date of grant.

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.

<TABLE>
<CAPTION>
Exhibit
Number                                      Description
--------                                    -----------
<S>      <C>
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").

                                       26
<PAGE>

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 Company's 91/2% Senior Notes.

4.2(a)*  Form of Certificate for the Company's 9 1/2% Senior Notes, Series A,
         $100,000,000.

4.2(b)*  Form of Certificate for the Company's 91/2% Senior Notes,  $4,350,000.

4.2(c)*  Form of Certificate for the Company's 9 1/2% Senior Notes, Series A,
         $650,000.

4.3*     Purchase Agreement, dated as of March 19, 1998, among the Company,
         Donaldson, Lufkin & Jenrette Securities Corporation and BT Alex, Brown
         Incorporated, for an aggregate of $105,000,000 in principal amount of
         the Company's 9 1/2% Senior Notes due 2005.

4.4*     Registration Rights Agreement, dated as of March 24, 1998, among the
         Company, Donaldson, Lufkin & Jenrette Securities Corporation and BT
         Alex, Brown Incorporated.

4.5*     Amended and Restated Credit Agreement dated as of March 3, 1993,
         amended and restated as of March 24, 1998 (the "Credit Agreement"),
         among the Company, Holding, Various Financial Institutions, and BT
         Commercial Corporation, as Agents (the "Agent").

4.6*     Term Loan Agreement ("Term Loan Agreement"), dated as of March 24, 1998
         among the Company, Various Financial Institutions, as the Lender, DLJ
         Capital Funding, Inc., as the Syndication Agent for the Lenders,
         Bankers Trust Company, as the Documentation Agent for the Lenders and
         Fleet National Bank, as the Administrative Agent ("Administrative
         Agent") for the Lenders.

4.7*     Form of Restructuring Agreement among Holding, the Company and KIA IV.
         Incorporated by reference to Exhibit 4.25 of Amendment No. 3 to the
         Company's 1993 Registration Statement ("Amendment No. 3").

4.8*     Amendment to Restructuring Agreement, dated as of March 3, 1993, by and
         between Holding and KIA IV, amended as of March 24, 1998.

4.9*     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.

4.10*    Form of Acknowledgement, Consent and Amendment, dated as of March 24,
         1998, between the Company and the Administrative Agent.

4.11*    Form of Security Agreement, dated as of March 24, 1998 by the Company,
         in favor of the Administrative Agent.

4.12*    Form of Mortgage, dated as of March 24, 1998, made by the Company in
         favor of the Administrative Agent.

4.13*    Intercreditor Agreement, dated as of March 24, 1998, by and among Fleet
         National Bank, as the Adminstrative Agent and BT Commercial
         Corporation.

4.14**   First Amendment to Credit Agreement dated as of April 1, 2001.

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.

                                       27
<PAGE>

10.4*    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").

10.5*    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
         reference 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").

10.6*    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.

10.7*    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.

10.8*    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.

10.9*    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").

10.10*   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.

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

10.12*   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.

10.13*   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.

10.14*   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.

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

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

10.17*   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").

10.18*   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.

10.19*   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.

                                       28
<PAGE>

10.20*   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.

10.21*   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").

10.22*   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.

10.23*   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.

10.24*   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.

10.25*   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.

10.26*   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.

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

10.28*   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.

10.29*   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 Kilsby's Kansas City, Missouri property. Incorporated by
         reference to Exhibit 10.30 of the Company's 1993 Registration
         Statement.

10.30*   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.

10.31*   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.

10.32*   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.

10.33*   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.

10.34*   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.

10.35*   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.

                                      29
<PAGE>

10.36*   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.

10.37*   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.

10.38*   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 Kilsby's Houston, Texas property (the "Houston
         Lease"). Incorporated by reference to Exhibit 10.42 of the Company's
         1993 Registration Statement.

10.39*   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.

10.40*   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.

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

10.42*   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").

10.43*   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.

10.44*   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.

10.45*   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.

10.46*   Holding's 401(a)(17) Supplemental Contribution Plan, effective April 1,
         1994. Incorporated by reference to Exhibit 10.54 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").

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

10.48*   Amendment No. 2 to the Earle M. Jorgensen Company Capital Accumulation
         Plan and Trust dated as of May 3, 1996. Incorporated by reference to
         Exhibit 10.55 to the Company's Annual Report on Form 10-K, Commission
         File No. 5-10065 for the fiscal year ended March 31, 1996 (the
         "Company's 1996 Form 10-K").

10.49*   Earle M. Jorgensen Holding Company, Inc. Stock Option Plan effective
         January 30, 1997. Incorporated by reference to Exhibit 10.57 to the
         Company's Annual Report on Form 10-K, Commission File No. 5-10065 for
         the fiscal year ended March 31, 1997 (the "Company's 1997 Form 10-K").

10.50*   Form of Holding Incentive and Non-Qualified Stock Option Agreement.
         Incorporated by reference to Exhibit 10.58 to the Company's 1997 Form
         10-K.

10.51*   Earle M. Jorgensen Holding Company, Inc. Stock Option Plan, as amended
         July 21, 1997. Incorporated by reference to Exhibit 10.61 to the
         Company's Quarterly Report on Form 10-Q, Commission File No. 5-10065
         for the fiscal quarter ended September 29, 1997.

                                       30
<PAGE>

10.52*   Earle M. Jorgensen Company Management Incentive Compensation Plan.
         Incorporated by reference to Exhibit 10.62 to the Company's Quarterly
         Report on Form 10-Q, Commission File No. 5-10065 for the fiscal quarter
         ended December 31, 1997.

10.53*   Earle M. Jorgensen Company Employee Stock Ownership Plan, as amended
         and restated effective as of April 1, 1999.

10.54**  Earle M. Jorgensen Company Capital Accumulation Plan and Trust, as
         amended effective April 1, 2000.

10.55**  Earle M. Jorgensen Hourly Employees Pension Plan, as amended and
         effective January 1, 2001.

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

21**     Listing of the Company's subsidiaries.
</TABLE>
--------------
*        Previously filed.
**       Included in this filing.


(b)      Reports on Form 8-K.

         None

                                      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 of June, 2001.

                                EARLE M. JORGENSEN COMPANY

                                By  /s/ William S. Johnson
                                    -------------------------------------------
                                    William S. Johnson
                                    Vice President and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)
                                    and Secretary

         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>
            /s/David M. Roderick                  Chairman of the Board and Chairman           June 26, 2001
            ------------------------------------  of the Executive Committee and
            David M. Roderick                     Director

            /s/Maurice S. Nelson, Jr.             President, Chief Executive Officer and       June 26, 2001
            ------------------------------------  Chief Operating Officer and Director
            Maurice S. Nelson, Jr.

            /s/William S. Johnson                 Vice President and Chief Financial           June 26, 2001
            ------------------------------------  Officer (Principal Financial and
            William S. Johnson                    Accounting Officer) and Secretary

            /s/Joseph S. Schuchert                Director                                     June 26, 2001
            ------------------------------------
            Joseph S. Schuchert

            /s/William A. Marquard                Director                                     June 26, 2001
            ------------------------------------
            William A. Marquard

            /s/Frank T. Nickell                   Director                                     June 26, 2001
            ------------------------------------
            Frank T. Nickell

            /s/John Rutledge                      Director                                     June 26, 2001
            ------------------------------------
            Dr. John Rutledge

            /s/G. Robert Durham                   Director                                     June 26, 2001
            ------------------------------------
            G. Robert Durham

</TABLE>
                                       32


<PAGE>

                              FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                       Page
                                                                       ----
<S>                                                                    <C>
EARLE M. JORGENSEN COMPANY:

Report of Independent Auditors                                         F-2

Consolidated Balance Sheets at March 31, 2001 and 2000                 F-3

Consolidated Statements of Operations and Comprehensive Income
for the years ended March 31, 2001, 2000 and 1999                      F-4

Consolidated Statements of Stockholder's Equity for the
years ended March 31, 2001, 2000 and 1999                              F-5

Consolidated Statements of Cash Flows for the years ended
March 31, 2001, 2000 and 1999                                          F-6

Notes to Consolidated Financial Statements                             F-8
</TABLE>

                                       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, 2001 and 2000, and the related consolidated
statements of operations and comprehensive income, stockholder's equity, and
cash flows for each of the three years in the period ended March 31, 2001. 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 auditing standards generally accepted
in the United States. 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, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
March 31, 2001 in conformity with accounting principles generally accepted in
the United States. 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
April 27, 2001

                                     F-2
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                       MARCH 31,
                                                                           --------------------------------
                                                                                 2001           2000
                                                                           --------------------------------
<S>                                                                        <C>                <C>
ASSETS
Current assets:
   Cash                                                                      $  23,758        $  21,660
   Accounts receivable, less allowance for doubtful accounts                   107,223          108,247
   Inventories                                                                 218,580          205,016
   Other current assets                                                          7,540            5,622
                                                                           --------------------------------
     Total current assets                                                      357,101          340,545
                                                                           --------------------------------

Net property, plant and equipment, at cost                                      98,236           95,041

Cash surrender value of life insurance policies                                 25,114           22,894
Debt issue costs, net of accumulated amortization                                3,292            4,773
Other assets                                                                       521            1,121
                                                                           --------------------------------
        Total assets                                                         $ 484,264        $ 464,374
                                                                           ================================

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
   Accounts payable                                                          $ 137,328        $ 119,499
   Accrued employee compensation and related taxes                              14,113           12,411
   Accrued employee benefits                                                     8,007            8,927
   Accrued interest                                                              7,275            7,031
   Other accrued liabilities                                                     8,324            5,939
   Deferred income taxes                                                        18,904           18,986
   Current portion of long-term debt                                             3,645            2,604
                                                                           --------------------------------
     Total current liabilities                                                 197,596          175,397
                                                                           --------------------------------

Long-term debt                                                                 266,539          282,943
Deferred income taxes                                                           16,482           16,400
Other long-term liabilities                                                      3,602            3,999

Commitments and contingencies                                                       --               --

Stockholder's equity
   Preferred stock, $.01 par value; 200 shares authorized and unissued              --               --
   Common stock, $.01 par value; 2,800 shares authorized; 128 shares
     issued and outstanding                                                         --               --
   Capital in excess of par value                                               89,030           91,348
   Accumulated other comprehensive loss                                         (1,833)            (763)
   Accumulated deficit                                                         (87,152)        (104,950)
                                                                           --------------------------------
     Total stockholder's equity                                                     45          (14,365)
                                                                           --------------------------------
        Total liabilities and stockholder's equity                           $ 484,264        $ 464,374
                                                                           ================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-3
<PAGE>

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

<TABLE>
<CAPTION>

                                                                            YEAR ENDED MARCH 31,
                                                               ------------------------------------------------
                                                                   2001               2000             1999
                                                               ------------------------------------------------
<S>                                                            <C>                <C>               <C>
Revenues                                                       $ 1,059,681        $   938,252       $   915,811

Cost of sales                                                      767,263            662,803           649,851
                                                               ------------------------------------------------
   Gross profit                                                    292,418            275,449           265,960

Expenses:
    Warehouse and delivery                                         136,752            123,566           120,687
    Selling                                                         36,391             34,147            33,918
    General and administrative                                      55,399             50,345            44,146
                                                               ------------------------------------------------
       Total expenses                                              228,542            208,058           198,751
                                                               ------------------------------------------------
Income from operations                                              63,876             67,391            67,209

Interest expense, net                                               44,855             41,595            41,181
                                                               ------------------------------------------------
Income before income taxes                                          19,021             25,796            26,028

Income tax provision                                                 1,223              1,809             1,535
                                                               ------------------------------------------------
Net income                                                          17,798             23,987            24,493

Other comprehensive income (loss):
   Foreign currency translation adjustment and write-off            (1,047)               358              (585)
   Minimum pension liability                                           (23)                44              (302)
                                                               ------------------------------------------------
Comprehensive income                                           $    16,728        $    24,389       $    23,606
                                                               ================================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-4
<PAGE>

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

<TABLE>
<CAPTION>


                                    COMMON STOCK        CAPITAL        ACCUMULATED OTHER
                               ---------------------   IN EXCESS        COMPREHENSIVE     ACCUMULATED
                                  SHARES    AMOUNT    OF PAR VALUE       INCOME (LOSS)       DEFICIT        TOTAL
                               ---------    --------  -------------    -----------------  -----------    -----------
<S>                            <C>          <C>       <C>              <C>                <C>            <C>
Balance at March 31, 1998            128     $   --     $ 116,789      $    (278)         $(153,430)     $ (36,919)
   Dividend to Parent                 --         --       (17,701)            --                 --        (17,701)
   Capitalization of ESOP
     contribution, net                --         --         2,994             --                 --          2,994
   Foreign currency translation
     adjustment                       --         --            --           (585)                --           (585)
   Additional minimum pension
     liability                        --         --            --           (302)                --           (302)
Net income                            --         --            --             --             24,493         24,493
                               ---------    --------  -------------    -----------------  -----------    -----------
Balance at March 31, 1999            128         --       102,082         (1,165)          (128,937)       (28,020)
   Dividend to Parent                 --         --       (13,372)            --                 --        (13,372)
   Capitalization of ESOP
     contribution, net                --         --         2,638             --                 --          2,638
   Foreign currency translation
     adjustment                       --         --            --            358                 --            358
   Additional minimum pension
     liability                        --         --            --             44                 --             44
   Net income                         --         --            --             --             23,987         23,987
                               ---------    --------  -------------    -----------------  -----------    -----------
Balance at March 31, 2000            128         --        91,348           (763)          (104,950)       (14,365)
   Dividend to Parent                 --         --        (5,514)            --                 --         (5,514)
   Capitalization of ESOP
     contribution, net                --         --         3,196             --                 --          3,196
   Foreign currency translation
     adjustment                       --         --            --         (1,047)                --         (1,047)
   Additional minimum pension
     liability                        --         --            --            (23)                --            (23)
   Net income                         --         --            --             --             17,798         17,798
                               ---------    --------  -------------    -----------------  -----------    -----------
BALANCE AT MARCH 31, 2001            128     $   --     $  89,030      $  (1,833)         $ (87,152)     $      45
                               =========    ========  =============    =================  ===========    ===========
</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,
                                                               ---------------------------------------------
                                                                      2001          2000          1999
                                                               ---------------------------------------------
<S>                                                            <C>                  <C>          <C>
OPERATING ACTIVITIES:
Net income                                                           $17,798        $23,987      $24,493
Adjustments to reconcile net income to net cash provided by
    operating activities:
    Depreciation and amortization                                     11,035          9,951        9,175
    Amortization of debt issue costs and discount on senior
      notes included in interest expense                               1,482          1,482        1,481
    Accrued postretirement benefits                                       11            224           30
    ESOP expense contributed to capital                                3,196          2,638        2,994
    Deferred income taxes                                                ---            194          520
    Loss (gain) on sale of property, plant and equipment                 (44)         2,294       (2,422)
    Provision for bad debts                                            1,651          1,201          549
    Increase in cash surrender value of life insurance over
      premiums paid                                                   (1,529)        (2,399)      (1,338)
    Changes in operating assets and liabilities:
        Decrease (increase) in accounts receivable                      (627)       (18,092)      13,398
        Increase in inventories                                      (13,564)       (22,221)      (3,565)
        Decrease (increase) in other current assets                   (1,918)          (732)          73
        Increase (decrease) in accounts payable and
          accrued liabilities and expenses                            21,218         34,219       (9,617)
        (Increase) decrease in non-trade receivable                     (575)           718          ---
    Other                                                               (108)          (480)         264
                                                               ---------------------------------------------
   Net cash provided by operating activities                          38,026         32,984       36,035
                                                               ---------------------------------------------

INVESTING ACTIVITIES:
Additions to property, plant and equipment                           (14,475)        (9,525)      (8,957)
Proceeds from the sale of property, plant and equipment                  118          6,633        6,044
Premiums paid on life insurance policies                              (1,364)        (1,954)      (1,576)
Proceeds from redemption of life insurance policies                      673            ---          843
                                                               ---------------------------------------------
   Net cash used in investing activities                             (15,048)        (4,846)      (3,646)
                                                               ---------------------------------------------
</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,
                                                               ---------------------------------------------
                                                                      2001          2000          1999
                                                               ---------------------------------------------
<S>                                                            <C>                 <C>          <C>
FINANCING ACTIVITIES:
Net payments under revolving loan agreements                       $ (12,963)      $ (9,459)    $(14,228)
Other debt payments, net                                              (2,400)        (1,500)      (1,500)
Increase in debt issue costs                                             ---            ---       (1,846)
Cash dividend to Parent                                               (5,514)       (13,372)     (17,701)
                                                               ---------------------------------------------
   Net cash used in financing activities                             (20,877)       (24,331)     (35,275)
                                                               ---------------------------------------------

Effect of exchange rate changes on cash                                   (3)            (7)         (17)
Net increase (decrease) in cash                                        2,098          3,800       (2,903)
Cash at beginning of year                                             21,660         17,860       20,763
                                                               ---------------------------------------------

Cash at end of year                                                  $23,758        $21,660      $17,860
                                                               =============================================

</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-7
<PAGE>

                           Earle M. Jorgensen Company
                   Notes to Consolidated Financial Statements

                                 March 31, 2001

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 Earle M. Jorgensen (Canada)
Inc. (EMJ (Canada)) and Stainless Insurance Ltd., a captive insurance subsidiary
(EMJ (Bermuda)). In fiscal 2001, 2000 and 1999, EMJ (Canada) generated net
income (loss) of $(605,400), $574,500 and $4,600, respectively. In fiscal 2001,
2000 and 1999, EMJ (Bermuda) generated net income of $431,200, $333,300 and
$602,000, respectively, 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
2001 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.

CONCENTRATION OF CREDIT RISK---The Company sells the majority of its products
throughout the United States and Canada. 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, 2001 and 2000 was
$427,000 and $416,000, respectively. Management believes there are no
significant concentrations of credit risk as of March 31, 2001.

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 three to 20
years for machinery and equipment. Leasehold improvements are amortized over the
terms of the respective leases.

The Company reviews its long-lived assets pursuant to 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 2001, 2000, and 1999.

In fiscal 1999, the Company adopted SOP-98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which requires
certain costs incurred during the development of software to be capitalized and
amortized over the estimated useful lives. Accordingly, the Company capitalized
$735,000, $945,000 and $876,000 of such costs in fiscal 2001, 2000 and 1999,
respectively.

                                       F-8
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION---Stock options granted to directors, consultants,
officers and other key employees of the Company under the Parent's stock option
plan adopted in January 1997 are accounted for in accordance with APB No. 25.
Accordingly, no compensation cost has been recognized by the Company for the
fiscal years ended March 31, 2001, 2000 and 1999. Had compensation cost for
stock options granted been determined in accordance with SFAS No. 123, the
Company's net income for fiscal years 2001, 2000 and 1999 would have been
$17,285,000, $23,401,000 and $23,978,000, respectively.

DEBT ISSUE COSTS---Debt issue costs are deferred and amortized to interest
expense over the life of the underlying indebtedness. For the fiscal years ended
March 31, 2001, 2000 and 1999, amortization of debt issue costs aggregated
$1,482,000, $1,482,000, $1,481,000, respectively. Accumulated amortization of
debt issue costs was $4,500,000 and $3,018,000 at March 31, 2001 and 2000,
respectively.

INCOME TAXES--- The Company is included in the consolidated tax returns of
Holding and calculates its tax provision as though it files on a separate basis.
The consolidated tax liability of the Company and Parent is allocated to each of
these entities pursuant to a Tax Allocation Agreement between the Company and
Parent ("Tax Allocation Agreement"). Under the Tax Allocation Agreement, Parent
pays all taxes and is reimbursed by the Company for the lesser of (i) the
Company's allocated portion of the taxes due, or (ii) the tax that would be
payable if the Company filed its own returns.

The Company records deferred taxes based upon differences between the financial
statement and tax basis of assets and liabilities pursuant to SFAS No. 109,
"Accounting for Income Taxes", as though it files on a separate basis. Any
differences in deferred taxes determined on a separate basis and the actual
payments made or received under the Tax Allocation Agreement are accounted for
as an equity adjustment between the Company and Parent. There were no such
differences in fiscal 2001. Deferred taxes are also recorded for the future
benefit of Federal and state tax losses and tax credit carryforwards. Consistent
with SFAS No. 109, a valuation allowance has been recognized for certain
deferred tax assets, which management believes are not likely to be realized.

FOREIGN CURRENCY TRANSLATION---The financial statements of foreign subsidiaries
have been translated in U.S. dollars in accordance with SFAS No. 52, "Foreign
Currency Translation". All balance sheet accounts have been translated into U.S.
dollars using the year-end exchange rates. Income statement amounts have been
translated at average exchange rates for each year. Adjustments resulting from
translation of foreign currency financial statements are included in accumulated
other comprehensive income in stockholder's equity. Exchange gains and losses
from foreign currency transactions are included in the consolidated statements
of 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 and cash and cash equivalents held by EMJ (Bermuda) in
connection with providing insurance to the Company totaling $6,638,000 and
$6,990,000 as of March 31, 2001 and 2000, respectively. The Company considers
all highly liquid investments purchased with a maturity of three months or less
to be cash equivalents.

For the years ended March 31, 2001, 2000 and 1999 cash paid for interest on
borrowings was $43,137,000, $40,685,000 and $37,727,000, and cash paid for
income taxes was $1,676,000, $1,247,000 and $141,000, respectively.

COMPREHENSIVE INCOME---Effective April 1, 1998, the Company adopted SFAS No.
130, "Reporting Comprehensive Income", which establishes rules for the reporting
and disclosure of comprehensive income and its components. Components of the
Company's comprehensive income include foreign currency translation adjustments
and additional minimum pension liability. Prior to the adoption of SFAS No. 130,
the Company's foreign currency translation adjustments were reported separately
in stockholder's equity. The adoption of SFAS No. 130 had no impact on the
Company's net income or stockholder's equity.

                                       F-9
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEGMENT INFORMATION---The Company has adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information". The Company has determined
it currently operates in one reportable segment - the metals service center
industry. The Company carries over 30,000 different carbon, alloy, stainless and
aluminum bar, tubing and pipe, and plate and sheet metal products, and provides
pre-production processing, such as cutting to length, burning, sawing, honing,
shearing, grinding, polishing, and other similar value-added services, to most
of the metal products it sells through a network of 29 service centers in the
United States and three service centers in Canada. It also operates three plate
processing centers, one cutting center, and one tube honing facility.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", as amended by
SFAS Nos. 137 and 138, effective for the fiscal years beginning after June 15,
2000. The statement requires the Company to recognize all derivatives on the
balance sheet at fair value. The change in fair value of derivatives that are
not hedges must be recognized through income. If the derivative is a hedge, then
depending on the nature of the hedge, any changes in fair value will be either
offset against changes in the fair value of the hedged item, or recognized in
other comprehensive income until the hedged item is recognized in earnings. The
Company will adopt this standard effective April 1, 2001 and believes that the
only material impact on the consolidated financial statements will be from the
accounting of an interest rate swap agreement described in Note 5 as a cash flow
hedge instrument. As of March 31, 2001, the interest rate swap agreement
represented a liability with a fair market value of $2,087,000, as calculated
under the provisions of SFAS No. 133, as amended.

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 lower by $9,022,000
and $9,909,000 at March 31, 2001 and March 31, 2000, respectively.

In fiscal 1999, 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 years 2001 and 2000.

3.  NET PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and accumulated depreciation at March 31, 2001 and
2000 consisted of the following:

<TABLE>
<CAPTION>
                                                   2001             2000
                                             ---------------- ----------------
<S>                                          <C>              <C>
      Land                                    $ 20,798,000     $ 20,699,000
      Buildings and improvements                32,602,000       27,896,000
      Machinery and equipment                  110,274,000      103,097,000
                                             ---------------- ----------------
                                               163,674,000      151,692,000
      Less accumulated depreciation             65,438,000       56,651,000
                                             ---------------- ----------------
         Net property, plant and equipment    $ 98,236,000     $ 95,041,000
                                             ================ ================
</TABLE>

                                      F-10
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

4. 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. Cash surrender value of the life insurance policies increase by a
portion of the amount of premiums paid and by dividend income earned under the
policies. Dividend income earned under the policies totaled $13,010,000 in
fiscal 2001, $14,029,000 in fiscal 2000 and $10,878,000 in fiscal 1999 and is
recorded as an offset to general and administrative expense in the accompanying
statements of operations.

The Company has borrowed against 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. Interest rates on borrowings under the life insurance
policies are fixed at 11.76%. As of March 31, 2001, approximately $7,284,000 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, 2001                   $157,143,000   $132,029,000     $25,114,000
    Balance at March 31, 2000                    139,379,000    116,485,000      22,894,000
</TABLE>

Interest on cash surrender value borrowings totaled $14,398,000, $12,645,000 and
$10,905,000 in fiscal 2001, 2000 and 1999, respectively, and is included in net
interest expense in the accompanying statements of operations.

5. LONG-TERM DEBT

Long-term debt at March 31, 2001 and 2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                    2001             2000
                                                              -----------------------------------
<S>                                                           <C>                <C>
    Revolving Loans (including $1,245,000 and $204,000 at
       March 31, 2001 and 2000, respectively, related to a
       Canadian facility)                                        $ 57,784,000    $ 70,747,000
    Variable Rate Term Loan due March 24, 2004                     97,000,000      98,000,000
    9-1/2% Senior Notes due April 1, 2005                         105,000,000     105,000,000
    Industrial Development Revenue Bonds:
       Payable in annual installments of $500,000
          commencing June 1, 1998, interest at 9%                   2,500,000       3,000,000
       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%          3,600,000       4,500,000
                                                              -----------------------------------
                                                                  270,184,000     285,547,000
    Less current portion                                            3,645,000       2,604,000
                                                              -----------------------------------
                                                                 $266,539,000    $282,943,000
                                                              ===================================
</TABLE>

Aggregate maturities of long-term debt are as follows: $3,645,000 in 2002;
$58,939,000 in 2003; $96,400,000 in fiscal 2004; $2,115,000 in fiscal 2005,
$106,215,000 in fiscal 2006 and $2,870,000 thereafter.

                                      F-11
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

5. LONG-TERM DEBT (CONTINUED)

The fair value of the Company's Senior Notes and Term Loans at March 31, 2001
was $92,663,000 and $93,120,000, respectively, based on the quoted market prices
as of that date. The carrying values of all other long-term debt and other
financial instruments at March 31, 2001 approximate fair value.

CREDIT AGREEMENTS

Effective March 24, 1998, the Company entered into an amended and restated
revolving credit facility ("Credit Agreement"), which allows maximum borrowings
of $220 million, including letters of credit ($200,000 outstanding at March 31,
2001). Borrowings under the Credit Agreement bear interest at a base rate
(generally defined as the bank's prime lending rate plus 0.5% or LIBOR plus
1.75%). At March 31, 2001, the bank's prime lending rate was 8.00% and LIBOR was
5.08%. In addition, borrowings under the revolving loans are limited to an
amount equal to 85% of eligible trade receivables plus 55% of eligible
inventories (as defined). Unused available borrowings under the revolving loans
totaled $141,442,000 at March 31, 2001. The revolving loans mature on March 24,
2003 and 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 3/8%, payable quarterly in arrears, and
letter of credit fees of 1 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 $423,000 in fiscal 2001, $478,000 in fiscal 2000, and $314,000 in
1999.

The Credit Agreement contains financial covenants in respect of maintenance of
minimum working capital and a 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 November 16, 1999, the Company's Canadian subsidiary entered into a one year
renewable credit facility (the "Canadian Facility") totaling CND$11,750,000,
including (i) a revolving credit facility of CND$6,000,000, (ii) a financial
credit facility of CND$5,000,000 for hedging foreign currency and rate
fluctuations (unused as of March 31, 2000), and (iii) a special credit facility
for the issuance of a letter of guarantee up to CND$750,000 in connection with a
lease for a newly constructed facility in Toronto. In fiscal 2001 the credit
facility was renewed and increased to CND$13,750,000 including (i) a revolving
credit facility of CND$7,000,000, (ii) a financial credit facility of
CND$6,000,000 for hedging foreign currency and rate fluctuations (unused as of
March 31, 2001), and (iii) a special credit facility for the issuance of a
letter of guarantee up to CND$750,000 in connection with the lease for the
Toronto facility. Borrowings under the revolving credit facility are limited to
an amount equal to 80% of eligible trade receivables plus 40% of eligible
inventories (as defined) and are repayable on demand. Borrowings under the
revolving credit facility bear interest at the bank's annual prime lending rate
plus 0.50%. At March 31, 2001, the interest rate on the revolving credit
facility was 7.25%. The revolving credit facility contains financial covenants
in respect of maintenance of minimum equity and a debt-to-equity ratio (as
defined) and has other restrictions similar to those under the Credit Agreement,
as described above. On June 18, 2001, the Company's Canadian subsidiary received
a waiver for the 2001 debt-to-equity ratio.

9 1/2% SENIOR NOTES AND VARIABLE RATE TERM LOAN

On March 24, 1998, the Company refinanced $155 million of 10 3/4% Senior Notes
by issuing $105 million of 9 1/2% Senior Notes and borrowing $100 million under
a variable rate Term Loan. The 9 1/2% Senior Notes were issued at par and
interest is payable each April 1 and October 1, commencing October 1, 1998. The
9 1/2% Senior Notes are unsecured obligations of the Company and may be redeemed
by the Company under certain conditions and with certain restrictions at varying
redemption prices. The Indenture to the 9 1/2% Senior Notes contains certain
covenants which limit, among other things, the incurrence of liens and other
indebtedness, mergers, consolidations, the sale of assets, investments and
loans, dividends and other distributions, and certain transactions with
affiliates. The Term Loan bears interest at either an Alternative Base Rate (as
defined) plus 2.0% or at LIBOR plus 3.25%.

                                      F-12
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

5. LONG-TERM DEBT (CONTINUED)

9 1/2% SENIOR NOTES AND VARIABLE RATE TERM LOAN (CONTINUED)

In June 1998, the Company entered into an interest rate swap agreement with
Bankers Trust Company that effectively fixed the interest rate on the Term Loan
at approximately 9.05% through June 2003 (the "Fixed Rate"). Such agreement
requires Bankers Trust Company to make payments to the Company each quarter in
an amount equal to the product of the notional amount of $95 million and the
difference between the three month London Interbank Offered Rate and 3.25%
("Floating LIBOR") and the Fixed Rate, if the Floating LIBOR is greater than the
Fixed Rate on a per diem basis. If Floating LIBOR is lower than the Fixed Rate,
the Company is required to pay Bankers Trust Company an amount equal to the
product of the notional amount and the difference between the Fixed Rate and
Floating LIBOR on a per diem basis. Under the provisions described above, we
received $721,000 from Bankers Trust Company during fiscal 2001 and made
payments of $331,000 to Bankers Trust Company in fiscal 2000.

Excluding the effects of the interest rate swap agreement, the effective
interest rate under the Term Loan was 8.19% as of March 31, 2001. Amounts
outstanding under the Term Loan are secured by a first priority lien on
substantially all the existing and future acquired unencumbered property, plant
and equipment of the Company. Principal payments are required to be paid
quarterly in amounts equal to $250,000, commencing on June 30, 1998. The Term
Loan may be prepaid, subject to declining call premiums through fiscal 2001 and
is subject to prepayments at the option of the holder upon a Change in Control
(as defined) and with 100% of net proceeds from asset sales, as permitted.
Covenants under the Term Loan are similar to those under the 9 1/2% Senior
Notes.

OTHER

The Company's industrial revenue development bonds were issued in connection
with significant facility improvements or construction projects.

6. INCOME TAXES

Significant components of the provision for income taxes attributable to
continuing operations for the years ended March 31, 2001, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                         2001             2000            1999
                                     -----------      ------------    ------------
<S>                                  <C>              <C>             <C>
      Current:
            Federal                  $   774,000      $   601,000      $   562,000
            State                        692,000          674,000          453,000
            Foreign                     (243,000)         340,000               --
                                     -----------      -----------      -----------
            Total current              1,223,000        1,615,000        1,015,000
                                     -----------      -----------      -----------
      Deferred:
            Federal                    1,910,000        3,061,000        6,784,000
            State                        (60,000)         466,000          842,000
            Valuation allowances      (1,850,000)      (3,333,000)      (7,106,000)
                                     -----------      -----------      -----------
            Total deferred                    --          194,000          520,000
                                     -----------      -----------      -----------
                                     $ 1,223,000      $ 1,809,000      $ 1,535,000
                                     ===========      ===========      ===========
</TABLE>

                                      F-13
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

6. INCOME TAXES (CONTINUED)

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

<TABLE>
<CAPTION>

                                                                           2001              2000                1999
                                                                      ---------------- ----------------- -------------------
<S>                                                                   <C>              <C>
      Expected tax at Federal statutory rate                             $ 6,571,000      $ 8,642,000       $ 8,876,000
      State franchise tax expense and capital taxes, net of Federal
      taxes                                                                  450,000          438,000           295,000
      Net increase in cash surrender values of  life insurance            (4,554,000)      (4,910,000)       (3,654,000)
      Change in valuation allowance                                       (1,850,000)      (3,333,000)       (7,106,000)
      Other                                                                  606,000          972,000         3,124,000
                                                                      ---------------- ----------------- -------------------
           Income tax provision                                          $ 1,223,000      $ 1,809,000       $ 1,535,000
                                                                      ================ ================= ===================
</TABLE>

The change of $1,850,000 in the valuation allowance for deferred tax assets as
of March 31, 2001 was due primarily to the utilization of the tax loss
carryforward.

Income before taxes consists primarily of income from the Company's domestic
operations and also includes pre-tax income (loss) of $(849,000), $1,248,000 and
$619,000 from the Company's foreign operations for fiscal 2001, 2000 and 1999,
respectively.

Significant components of the Company's deferred income tax assets and
liabilities at March 31, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                             2001                  2000
                                                     --------------------- --------------------
<S>                                                  <C>                   <C>
      Deferred tax liabilities:
         Tax over book depreciation                       $ 9,066,000           $ 7,653,000
         Purchase price adjustments                        37,515,000            38,151,000
                                                     --------------------- --------------------
      Total deferred tax liabilities                       46,581,000            45,804,000
                                                     --------------------- --------------------
      Deferred tax assets:
         Net operating loss carryforwards                  11,155,000            14,285,000
         Capital loss carryforward                          6,048,000             5,153,000
         Other                                             10,926,000             9,764,000
         Valuation allowance for deferred tax assets      (16,934,000)          (18,784,000)
                                                     --------------------- --------------------
      Net deferred tax assets                              11,195,000            10,418,000
                                                     --------------------- --------------------
      Net deferred tax liabilities                        $35,386,000           $35,386,000
                                                     ===================== ====================
</TABLE>

At March 31, 2001, the Company had net operating loss carryforwards of
$29,383,000 for Federal income tax purposes and $16,755,000 for State income tax
purposes. The Federal carryforwards resulted from the Company's losses during
1993 and 1996, and expire in years 2008 and 2011, respectively, while the State
carryforwards were generated in various states over various years. The ultimate
realization of the benefits of these loss carryforwards is dependent on future
profitable operations. In addition, use of the Company's net operating 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.

                                      F-14
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

7. 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 Board of
Directors. 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 at age 65 or
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 to repurchase the vested balance for cash (as determined by the
Benefits 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 57,149, 27,053 and
3,757,944 at March 31, 2001, respectively. For fiscal years ended March 31,
2001, 2000 and 1999, contributions payable to the ESOT totaled $3,196,000,
$2,638,000 and $2,994,000, which represented 5% of eligible compensation for
each of the respective years. Such contributions have been or will be paid in
the form of Holding's common stock. The Company recognizes the cost of the ESOP
as compensation expense with a corresponding amount reflected in its capital for
the value of Holding's common stock contributed to the ESOT by the Parent, or as
a dividend to Parent if the contribution is paid in cash.

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

PENSION PLANS

The Company maintains a noncontributory defined benefit pension plan covering
substantially all hourly union employees (the "Hourly Plan"). Benefits under the
Hourly Plan are vested after five years and are determined based on years of
service and a benefit rate that is negotiated with each union. The assets of the
Hourly Plan for participants are held in trust and consist of bonds, equity
securities and insurance contracts. The Company contributes at least the minimum
required annually under ERISA. The Company also maintains an unfunded
supplemental pension plan, which provides benefits to highly compensated
employees; this plan has been frozen to include only existing participants (the
"Supplemental Plan").

Components of net pension benefit cost associated with the Company's pension
plans for fiscal years 2001, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                          2001                  2000             1999
                                                     ---------------    --------------     ---------------
<S>                                                  <C>                <C>                <C>
Service cost of benefits earned during the period    $    357,000          $ 438,000          $ 604,000
Interest cost on projected benefit obligation             760,000            739,000            796,000
Expected return on plan assets                         (1,093,000)          (999,000)          (812,000)
Amortization of prior service cost                       (111,000)          (111,000)            33,000
Recognized net (gain) loss                               (230,000)           (84,000)            20,000
                                                     ---------------    --------------     ---------------
                                                     $   (317,000)         $ (17,000)         $ 641,000
                                                     ===============    ==============     ===============
</TABLE>

                                      F-15
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

PENSION PLANS (CONTINUED)

The following provides a reconciliation of the changes in the benefit obligation
and fair value of plan assets, and the funded (unfunded) status of the pension
plans for the years ended March 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                             2001                2000
                                                        ---------------    ---------------
<S>                                                     <C>                <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year                  $10,254,000         $11,335,000
Service cost                                                 357,000             438,000
Interest cost                                                760,000             739,000
Plan amendments                                                  ---                 ---
Change in assumptions                                        787,000          (1,603,000)
Amendments                                                   198,000                 ---
Benefit payments                                            (657,000)           (514,000)
Actuarial gains                                             (163,000)           (141,000)
                                                        ---------------    ---------------
Benefit obligation at end of year                         11,536,000          10,254,000
                                                        ---------------    ---------------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year            14,004,000          13,216,000
Actual return on assets                                      182,000           1,280,000
Benefit payments                                            (657,000)           (514,000)
Company contributions                                         96,000              95,000
Fees                                                         (29,000)            (73,000)
                                                        ---------------    ---------------
Fair value of plan assets at end of year                  13,596,000          14,004,000
                                                        ---------------    ---------------

Funded                                                     2,060,000           3,750,000
Unrecognized prior service cost                             (960,000)         (1,270,000)
Unrecognized net actuarial gain                           (2,209,000)         (4,002,000)
                                                        ---------------    ---------------
Net amount recognized                                    $(1,109,000)        $(1,522,000)
                                                        ===============    ===============

Amounts recognized in balance sheets consist of:
Prepaid cost                                             $       ---         $       ---
Accrued benefit liability                                 (1,390,000)         (1,780,000)
Accumulated comprehensive loss - additional
minimum liability                                            281,000             258,000
                                                        ---------------    ---------------
Net amount recognized                                    $(1,109,000)        $(1,522,000)
                                                        ===============    ===============

WEIGHTED-AVERAGE ASSUMPTIONS AS OF MARCH 31:
Discount rate                                                   7.25%               7.75%
Expected return on assets                                       8.25%               8.00%
Rate of compensation increase                                    ---                ---

</TABLE>

In accordance with union agreements, the Company also contributes to
multi-employer defined benefit retirement plans covering substantially all union
employees of the Company. Expenses incurred in connection with these plans
totaled $692,000, $941,000 and$1,633,000 in fiscal years 2001, 2000 and 1999,
respectively.

                                      F-16
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

POSTRETIREMENT BENEFIT 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 and their dependents (the
"Postretirement Plan"). The Postretirement Plan is fully insured, with retirees
paying a percentage of the annual premium. Such premiums are adjusted annually
based on age and length of service of active and retired participants. The
Postretirement Plan contains other cost-sharing features such as deductibles and
coinsurance. The Company recognizes the cost of future benefits earned by
participants during their working careers, as determined using actuarial
assumptions. Gains and losses realized from the remeasurement of the plan's
benefit obligation are amortized to income over three years.

Components of the net benefit cost associated with the Company's Postretirement
Plan for fiscal years 2001, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                             2001               2000             1999
                                                        ---------------    ---------------    ------------
<S>                                                     <C>                <C>                <C>
Service cost of benefits earned during the period           $174,000           $203,000          $203,000
Interest cost on projected benefit obligation                194,000            189,000           193,000
Recognized net gain                                         (357,000)          (168,000)         (366,000)
                                                        ---------------    ---------------    ------------
                                                            $ 11,000           $224,000          $ 30,000
                                                        ===============    ===============    ============
</TABLE>

The following tables provide a reconciliation of the changes in the benefit
obligation and the unfunded status of the Postretirement Plan for the years
ended March 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                             2001               2000
                                                        ---------------    ---------------
<S>                                                     <C>                <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year                   $2,732,000         $3,148,000
Service cost                                                 174,000            203,000
Interest cost                                                194,000            189,000
Change in assumptions                                       (145,000)          (351,000)
Benefit payments                                            (114,000)          (114,000)
Actuarial gains                                              131,000           (343,000)
                                                        ---------------    ---------------
Benefit obligation at end of year                          2,972,000          2,732,000
                                                        ---------------    ---------------

Unfunded                                                  (2,972,000)        (2,732,000)
Unrecognized prior service cost                                  ---                ---
Unrecognized net actuarial gain                             (580,000)          (923,000)
                                                        ---------------    ---------------
Accrued benefit cost                                     $(3,552,000)       $(3,655,000)
                                                        ===============    ===============

WEIGHTED-AVERAGE ASSUMPTIONS AS OF MARCH 31:
Discount rate                                                  7.25%              7.75%
Healthcare cost trend rate                                     7.00%              7.50%

</TABLE>

The healthcare cost trend rate of 7.0% used in the calculation of net benefit
cost of the Postretirement Plan is assumed to decrease gradually to 6.0% by
March 2003.

                                      F-17
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

POSTRETIREMENT BENEFIT PLAN (CONTINUED)

Assumed healthcare trend rates have a significant effect on the amounts reported
for the Company's Postretirement Plan. A one-percentage-point change in assumed
healthcare cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                         1-Percentage-Point             1-Percentage-Point
                                                              Increase                       Decrease
                                                        ---------------------          ---------------------
<S>                                                     <C>                            <C>
Effect on total service and interest cost components          $57,000                       $(48,000)
Effect on postretirement benefit obligation                   400,000                       (341,000)
</TABLE>

8. 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
$19,803,000, $16,572,000 and $16,142,000 for the years ended March 31, 2001,
2000 and 1999, respectively. Minimum rentals of certain leases escalate from
time to time based on certain indices.

At March 31, 2001 the Company was obligated under noncancellable operating
leases for future minimum rentals as follows:

<TABLE>
<CAPTION>
            Fiscal year:
<S>                                         <C>
               2002                              $17,546,000
               2003                               15,223,000
               2004                               13,822,000
               2005                               11,821,000
               2006                                8,025,000
               Thereafter                         45,034,000
                                            -----------------
                 Total                          $111,471,000
                                            =================
</TABLE>

OTHER COMMITMENTS

In connection with the 1990 merger, the Company agreed to pay Kelso & Companies,
Inc. (Kelso), affiliates of which own the majority of Parent's common stock, 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. The Company also agreed to indemnify Kelso and its affiliates
against certain claims, losses, damages, liabilities, and expenses that may
arise in connection with the merger. The agreement for advisory services was
amended in September 1997 to provide such services at an annual fee of $625,000
for each of the fiscal years ending March 31, 1998 and 1999. There was no annual
fee payable for fiscal years 2001 and 2000. Fees and expenses paid to Kelso in
connection with these agreements totaled $11,000, $13,000 and $668,000 during
the years ended March 31, 2001, 2000 and 1999, respectively.

ENVIRONMENTAL CONTINGENCIES

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.

                                      F-18
<PAGE>

                           Earle M. Jorgensen Company
             Notes to Consolidated Financial Statements (continued)

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)

ENVIRONMENTAL CONTINGENCIES (CONTINUED)

During fiscal years 2001, 2000 and 1999, expenditures made in connection with
environmental matters totaled $207,000, $295,000 and $2,799,000, respectively,
principally for settlement of claims, and monitoring, remediation and
investigation activities at sites with contaminated soil and/or groundwater,
including the sites discussed below. As of March 31, 2001, the Company had no
accrual for future investigation and remediation expenditures that could be
reasonably estimated related to the following pending environmental matters.

         ALAMEDA STREET (LOS ANGELES). In February 1998, we were notified that
our company had potential responsibility for the lead and copper soil
contamination of an undeveloped parcel that is adjacent to our Alameda Street
property. In March 2000, we completed an approved remediation plan and received
a closure letter from the appropriate governmental agencies in July 2000.

         FORGE (SEATTLE/KENT, WA). We indemnified the purchasers of our former
Forge facility for remediation of certain conditions at the facility and at an
off-site disposal site existing or subsequently determined to be existing at the
date of sale. No such claims were made within the timetables allowed under the
indemnification agreement. In November 1998, we paid $2,250,000 to the current
owner of the Forge property as a settlement for any and all remaining or future
liabilities related to the remediation of the facility. We continue to monitor
the disposal site for environmental conditions in accordance with a consent
decree issued by a local governmental agency. Annual costs associated with such
monitoring are not significant.

         UNION (NEW JERSEY). During fiscal 1994, we were 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 and requested contribution
to such costs from the Company and the prior owner. The Company has contested
responsibility and commented on the cleanup plan and has not received any
further demands or notifications. The Company does not have sufficient
information to determine what potential liability it has, if any.

         TRI-COUNTY LANDFILL (ILLINOIS). In April 2001, we were served with a
complaint by the owner of this landfill (known as the Tri-County/Elgin Landfills
Superfund Site (the "Site)) alleging that EMJ, among others, was responsible for
certain contamination found at the Site, which resulted from alleged disposal of
waste transported from a predecessor of Kilsby-Roberts prior to its merger with
EMJ. The owner seeks reimbursement of costs incurred or to be incurred in
connection with the investigation and remediation activities required under
orders from the United States Environmental Protection Agency. We are
investigating the matter and cannot determine at this time, what liability, if
any, we may have.

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.

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-19
<PAGE>

                     INDEX TO FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
  Schedule                                                                                 Sequentially
   Number                        Description of Schedules*                                 Numbered Page
   ------                        -------------------------                                 -------------
<S>                              <C>                                                       <C>
EARLE M. JORGENSEN COMPANY:

Schedule II                Valuation and Qualifying Accounts and Reserves                        S-2
</TABLE>
---------------
*  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
                                             BEGINNING OF       COSTS AND         OFF (NET OF     END OF PERIOD
              DESCRIPTION                       PERIOD          EXPENSES          RECOVERIES)
----------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>             <C>                <C>
YEAR ENDED MARCH 31, 2001
     Allowance for doubtful accounts.....         $416,000        $1,651,000        $(1,640,000)     $427,000

Year ended March 31, 2000
     Allowance for doubtful accounts.....         $335,000        $1,201,000        $(1,120,000)     $416,000

Year ended March 31, 1999
     Allowance for doubtful accounts.....         $406,000          $549,000          $(620,000)     $335,000
</TABLE>

                                      S-2