Olympic Steel Annual Report 2014

FY2014 Annual Report · Olympic Steel

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2014 Annual Report

About the Company

Olympic Steel, Inc. (Nasdaq: ZEUS) is a leading U.S. metals service center that specializes in the direct sale and distribution

of large volumes of processed carbon, coated, aluminum and stainless flat-rolled sheet, coil and plate metal products. The

Company also distributes metal tubing, pipe, bar, valves and fittings and highly engineered fabricated pressure parts to

various industrial markets. These products are purchased from domestic and international metal producers, processed and

inventoried by the Company and delivered just-in-time to a diverse customer base. Olympic Steel serves customers in metal

consuming industries, including manufacturers and fabricators of transportation and material handling equipment, construction

and farm machinery, storage tanks, environmental and energy generation equipment, automobiles, food service and electrical

equipment, military vehicles and equipment, as well as general and plate fabricators and metals service centers.

Olympic Steel offers a variety of processing services, including both traditional service center processes of cutting-to-

length, slitting and shearing and higher value-added processes of blanking, tempering, plate burning, laser cutting, precision

machining, welding, fabricating, bending and painting to process metal to specified lengths, widths and shapes pursuant to

specific customer needs.

Financial Information

In thousands, except per-share and ratio data

2014

2013

2012

For the Year

Net sales

Goodwill impairment

Operating income (loss)

Net income (loss)

Net income (loss) per diluted share

Weighted average diluted shares outstanding

Capital expenditures

At Year End

Inventories

Accounts receivable, net

Total assets

Total debt

Shareholders’ equity

Shareholders’ equity per share

Debt-to-equity ratio

$ 1,436,270

$ 1,263,331

$ 1,383,701

(23,836)

(9,208)

(19,064)

(1.71)

11,120

7,834

19,655

7,647

0.69

11,074

16,098

(6,583)

18,449

2,277

0.21

10,995

23,373

$ 311,108

$ 286,371

$ 290,023

123,804

700,748

247,620

280,781

25.55

115,288

697,349

199,269

298,616

27.24

112,841

705,994

241,711

289,857

26.54

0.88 to 1

0.67 to 1

0.83 to 1

2014 Letter to Shareholders

YEAR IN REVIEW

Last year our mission was to increase sales volume and grow into the strategic capital investments we made during the

previous five years. In 2014, we grew sales of flat carbon steel, tubular and pipe products, as well as flat stainless steel and

aluminum products. According to data from the Metals Service Centers Institute, we gained market share in each of these

product categories, resulting in Olympic Steel reaching a new high of $1.4 billion in net sales — up 14% from the prior year.

Global factors caused metal prices to decline sharply during 2014’s second half, which negatively impacted profitability.

Earnings were also restricted by a compulsory impairment charge recorded in the final quarter of the year to write off a portion

of goodwill from our balance sheet. This $23.8 million non-cash charge, reduced net income by $2.14 per share, and resulted

in a reported net loss of $19.1 million or $1.71 per share in 2014.

To counter the effects of falling market prices, variable expenses were swiftly lowered and other actions were taken to enhance

our financial condition. We strengthened our balance sheet in the fourth quarter of the year by reducing inventory levels and

paying down more than $25 million in debt. Similar reductions are anticipated for the first half of 2015.

In 2014 we also lowered borrowing costs with an amendment to our asset-based credit facility. The amendment provides us

with a $365 million revolving line of credit and extends the facility through June 30, 2019. In addition to lowering our interest

rate, the terms are more favorable and Company-owned real estate was removed from the collateral base, providing us

with greater financial flexibility. At yearend, we were in compliance with all covenants and had approximately $100 million in

available credit.

OUR INDUSTRY

End-user demand is much stronger today than it was during the global financial crisis of 2008-2009 when steel prices

deteriorated in a similar fashion. This is particularly encouraging because housing and non-residential construction activity

levels remain well below pre-recession levels. Historically, non-residential construction consumed approximately one-third of

the steel in the U.S. market. Industry analysts have estimated this amount currently stands closer to 25%. Potential recovery

in this sector would drive demand for steel even higher.

Of course, the second determinant of market price is supply. The global steel market is currently in a state of excess capacity

and oversupply, and the appreciating U.S. dollar is causing more foreign entities to export steel to the U.S. Surging imports,

combined with lower raw material costs continue to apply downward pressure on prices. How long this will last is unpredictable,

and we are actively addressing variable components of our business.

Increasing steel consumption in the U.S. has also attracted foreign steel exporters. In addition to a recovering economy,

U.S. manufacturing costs have become more globally competitive due to productivity gains and lower energy prices. This

fundamental shift should result in more industrial activity and support higher future consumption. If elected officials and policy

makers stop hindering U.S. business activity, more reshoring of manufacturing activity would be underway.

The Keystone XL Oil Pipeline is one example where bipartisan support and the will of the American people are being impeded

by special interest agendas. Rather than blocking progress, our government’s executive branch should support infrastructure

projects that can become engines for long-term economic expansion. Sectors of the economy where goods are produced

have an exponential benefit to society relative to other sectors. Increasing industrial activity will benefit our standard of living

by creating more good jobs and prosperity.

2014 Letter to Shareholders

Our country’s highways, bridges, electrical grid, water and sewer systems have been undercapitalized for more than a

generation. American manufacturers are capable of competing and thriving in a global economy provided sufficient resources

are allocated to developing and maintaining our country’s infrastructure.

OUR PEOPLE

We instill and reinforce a culture of continuous improvement at Olympic Steel. This extends beyond operational enhancements

to also include corporate governance and management structure. This year we adopted a new board-level governance

configuration with the appointment of Ralph M. Della Ratta Jr. to the newly created position of Lead Independent Director.

Mr. Della Ratta currently serves on the Board’s Audit and Compliance, and Compensation Committees. Previously, he chaired

the Compensation Committee and served as a member and Chairman of the Nominating Committee.

Several key management promotions were also made during the year to support future growth. At the corporate level,

Stephen Reyes was promoted to Vice President, Sales and Marketing–Flat Rolled. In this role, he is responsible for the

planning and execution of Olympic Steel’s flat-rolled sales and marketing strategies.

Andrew Markowitz was promoted to the newly created position of Vice President Sales and Marketing—Specialty Metals.

In 2005, Andy founded Integrity Stainless, which Olympic Steel acquired in 2010. Since the acquisition, our specialty metals

group has grown substantially by increasing flat bar and strip coil product capabilities. Starting in 2015, we will begin reporting

specialty metals as a standalone segment. Led by President of Specialty Metals Andrew Greiff, this business, which also

includes flat aluminum products, reached net sales of $207 million in 2014, an increase of 700% compared with 2008.

2015 PROFIT IMPROVEMENT INITIATIVE

Our mission in 2015 is clear. In January of this year, we launched a multi-pronged profit improvement program to cut operating

expenses, reduce debt and enhance margins. This plan includes improving underperforming divisions, lowering distribution costs,

better managing variable labor and personnel expenses, as well as initiatives to enhance transportation and purchasing efficiencies.

Demand appears steady in the majority of our markets; however, entering 2015, domestic steel prices remain under pressure

from elevated import volume and low input costs. The volume of future steel imports will continue to be dictated by economic

activity in other steel consuming regions around the world, as well as manipulation and normal market fluctuations in currency

rates and commodity prices. We have discipline in place to manage factors within our control in this low-price environment.

In closing, I would like to thank our customers, employees and shareholders. As we execute our strategy to increase

shareholder value your continued support of Olympic Steel is appreciated. While we cannot predict the future, we are excited

by the challenges we face and are eager to move forward toward greater success.

Sincerely,

Michael D. Siegal

March 09, 2015

UNITED STATES 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 Year Ended December 31, 2014

( )

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

For The Transition Period From _______________ To _______________

Commission File Number 0-23320

OLYMPIC STEEL, INC.
(Exact name of registrant as specified in its charter)

Ohio
(State or other jurisdiction of incorporation or organization)

34-1245650
(I.R.S. Employer Identification Number)

22901 Millcreek Boulevard, Suite 650, Highland Hills, OH
(Address of principal executive offices)

44122
(Zip Code)

Registrant's telephone number, including area code (216) 292-3800

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class
Common Stock, without par value

Name of each Exchange on which registered
The NASDAQ Stock Market LLC

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ( ) No (X)

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ( ) No (X)

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 whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). 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)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one:)
Large accelerated filer ( )
Non-accelerated filed ( )
(Do not check if a smaller reporting company)

Accelerated filer (X)
Small reporting company ( )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ( ) No (X)

As of June 30, 2014, the aggregate market value of voting stock held by nonaffiliates of the registrant based on the closing price at which
such stock was sold on the Nasdaq Global Select Market on such date approximated $225,236,063.

The number of shares of common stock outstanding as of February 26, 2015 was 10,991,276.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file with the Securities and Exchange Commission a definitive Proxy Statement pursuant to Regulation 14A of
the Securities Exchange Act of 1934 within 120 days of the close of its fiscal year ended December 31, 2014, portions of which document
shall be deemed to be incorporated by reference in Part III of this Annual Report on Form 10-K from the date such document is filed.

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TABLE OF CONTENTS

Part I

Item 1. Business .....................................................................................................................................................
Item 1A. Risk Factors ...............................................................................................................................................
Item 1B. Unresolved Staff Comments ......................................................................................................................
Item 2.
Properties ...................................................................................................................................................
Item 3. Legal Proceedings .....................................................................................................................................
Item 4. Mine Safety Disclosures ............................................................................................................................
Executive Officers of the Registrant .........................................................................................................

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities ...................................................................................................................................................
Item 6.
Selected Financial Data .............................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...................................................................
Item 8.
Financial Statements and Supplementary Data .........................................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................
Item 9A. Controls and Procedures ............................................................................................................................
Item 9B. Other Information ......................................................................................................................................

Part III

Item 10. Directors, Executive Officers and Corporate Governance ........................................................................
Item 11. Executive Compensation ...........................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..
Item 13. Certain Relationships and Related Transactions, and Director Independence ..........................................
Item 14. Principal Accountant Fees and Services ...................................................................................................

Part IV

Item 15. Exhibits and Financial Statement Schedules .............................................................................................
Signatures ..................................................................................................................................................
Index to Exhibits ......................................................................................................................................

Page

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PART I

ITEM 1. BUSINESS

The Company

Products that require more value-added processing generally have a higher gross profit. Accordingly, our overall gross profit
is affected by, among other things, product mix, the amount of processing performed, the demand for and availability of
metals, and volatility in selling prices and material purchase costs. We also perform toll processing of customer-owned
metals. We sell certain products internationally, primarily in Canada, Puerto Rico and Mexico. International sales are
immaterial to our consolidated financial results and to the individual segments’ results.

Segment reporting information is contained in Note 15 of Notes to Consolidated Financial Statements, which can be found
in Part II, Item 8 of this Annual Report on Form 10-K and which is incorporated herein by reference.

We are incorporated under the laws of the State of Ohio. Our executive offices are located at 22901 Millcreek Boulevard,
Suite 650, Highland Hills, Ohio 44122. Our telephone number is (216) 292-3800, and our website address is
www.olysteel.com. We are not including the information on our website as a part of, or incorporating it by reference into,
this Annual Report on Form 10-K.

Industry Overview

The metals industry is comprised of three types of entities: metals producers, intermediate metals processors and metals
service centers. Metals producers have historically emphasized the sale of metals to volume purchasers and have generally
viewed intermediate metals processors and metals service centers as part of their customer base. However, all three types of
entities can compete for certain customers who purchase large quantities of metals. Intermediate metals processors tend to
serve as processors in large quantities for metals producers and major industrial consumers of processed metals, including
automobile and appliance manufacturers.

Services provided by metals service centers can range from storage and distribution of unprocessed metal products to
complex, precision value-added metals processing. Metals service centers respond directly to customer needs and emphasize
value-added processing of metals pursuant to specific customer demands, such as cutting-to-length, slitting, shearing, roll
forming, shape correction and surface improvement, blanking, tempering, plate burning and stamping. These processes
produce metals to specified lengths, widths, shapes and surface characteristics through the use of specialized equipment.
Metals service centers typically have lower cost structures than, and provide services and value-added processing not
otherwise available from, metals producers.

End product manufacturers and other metals users seek to purchase metals on shorter lead times and with more frequent and
reliable deliveries than can normally be provided by metals producers. Metals service centers generally have lower labor
costs than metals producers and consequently process metals on a more cost-effective basis. In addition, due to this lower
cost structure, metals service centers are able to handle orders in quantities smaller than would be economical for metals
producers. The benefits to customers purchasing products from metals service centers include lower inventory levels, lower
overall cost of raw materials, more timely response and decreased manufacturing time and expense. Customers also benefit
from a lower investment in buildings and equipment, which allows them to focus on the engineering, assembly and marketing
of their products. We believe that customers’ demands for just-in-time delivery have made the value-added inventory,
processing and delivery functions performed by metals service centers increasingly important.

Corporate History

Our company was founded in 1954 by the Siegal family as a general steel service center. Michael Siegal, the son of one of
the founders, began his career with us in the early 1970s and has served as our Chief Executive Officer since 1984, and as
our Chairman of the Board of Directors since 1994. David Wolfort, our President and Chief Operating Officer, joined us as
General Manager in 1984. In the late 1980s, our business strategy changed from a focus on warehousing and distributing
steel from a single facility with no major processing equipment to a focus on growth, geographic and customer diversity and
value-added processing. An integral part of our growth has been the acquisition and start-up of processing and sales
operations, and the investment in processing equipment. In 1994, we completed an initial public offering and, in 1996, we
completed a follow-on offering of our common stock. In July 2011, we acquired CTI, a private leading distributor of tubing,
pipe, bar, valves, and fittings, which represents our tubular and pipe products segment.

Business Strategy and Objectives

We believe that the metals service center and processing industry is driven by four primary trends: (i) return of domestic
manufacturing processes by North American original equipment manufacturers; (ii) shift by customers to fewer suppliers
that are larger and financially strong; (iii) increased customer demand for more frequent, higher quality products and services;
and (iv) consolidation and globalization of metals industry participants.

In recognition of these industry trends, our focus has been on achieving profitable geographic and product growth through
the start-up and acquisition of service centers, processors, fabricators and related businesses, and investments in people,
information systems, higher value-added processing equipment and services, while continuing our commitment to expanding
and improving our operating efficiencies, sales and servicing efforts.

In 2015 we initiated a profit improvement program to reduce operating expenses and enhance margins. This plan includes
improving underperforming divisions, lowering distribution costs, lowering labor and personnel expenses, as well as
transportation and purchasing initiatives.

We are focusing on operational excellence initiatives in order to transform the order-to-delivery process and lower our costs
by improving three key sub-systems:

Operating system: Focused on continuously improving processes through waste and variation elimination using
Lean Six Sigma tools.

Cultural system: Focused on creating the environment to facilitate change and improve the way we work and create
value.

Management system: Focused on creating the measurements and governance structure to support continuous
improvement.

In addition, we are focused on specific operating objectives including: (i) growing our market share; (ii) investing in
automation and value-added processing equipment; (iii) managing inventory turnover; (iv) managing operating expenses; (v)
maintaining targeted cash turnover rates; (vi) investing in technology and business information systems; (vii) improving
safety awareness; and (viii) improving on-time delivery and quality performance for our customers.

These operating objectives are supported by:

● A set of core values, which are communicated, practiced and measured throughout the Company.
● Our “flawless execution” program (Fe), which is an internal program that empowers employees to achieve
profitable growth by delivering superior customer service and exceeding customer expectations and recognizes
them for their efforts.

● On-going business process enhancements and redesigns to improve efficiencies and reduce costs.
● New systems and key metric reporting to focus managers on achieving specific operating objectives.
● Alignment of compensation with the financial objectives and performance of the Company and the achievement

of specific financial and operating objectives.

We believe our depth of management, facilities, locations, processing capabilities, inventory, focus on safety, quality and
customer service, extensive and experienced sales force, and the strength of our customer and supplier relationships provide
a strong foundation for implementation of our strategy and achievement of our objectives. Certain elements of our strategy
are set forth in more detail below.

Investments and Acquisitions. Over the five year period from 2008 to 2012 we spent over $125 million on capital investments
for new facilities and processing equipment in support of our strategic growth initiatives. Since 2013, we have limited our
capital spending to be less than our annual depreciation expense (which was approximately $20 million in 2014). Within this
self-imposed limitation, we continue to invest in processing and automation equipment to support customer demand and to
respond to the growing trend among original equipment manufacturers (our customers) to outsource non-core production
processes, such as plate processing, machining, welding and fabrication, in order to concentrate on engineering, design and
assembly. When the results of sales and marketing efforts and our financial justifications indicate that there is sufficient
customer demand for a particular product, process or service, we may purchase equipment to satisfy that demand. We also
evaluate our existing equipment to ensure that it remains productive, and we upgrade, replace, redeploy or dispose of
equipment when necessary.

During 2014, we placed an order for a stretcher leveling line as well as other processing equipment for our expanded value-
added customer base in Winder, Georgia. The equipment is expected to be operational in 2015. In 2013, we opened a new
facility in Latrobe, Pennsylvania and added tube and pipe distribution capabilities from our Cleveland, Ohio and Monterey,
Mexico facilities. Our specialty metals facility in Streetsboro, Ohio became operational during the third quarter of 2012.
Other capital expenditures were attributable to additional processing equipment and building improvements at our existing
facilities.

Sales and Marketing. We believe that our commitments to quality, service, just-in-time delivery and field sales personnel
have enabled us to build and maintain strong customer relationships. We continuously analyze our customer base to ensure
that strategic customers are properly targeted and serviced, while focusing our efforts to supply and service our larger
customers on a national basis, where we successfully service multi-location customers from multi-location Olympic facilities.
We continue to service our customers with both flat and tubular and pipe products with cross-stocking of products in certain
facilities.

We offer business solutions to our customers through value-added and value-engineered services. We also provide inventory
stocking programs and in-plant Olympic Steel employees located at certain customer locations to help reduce customers’
costs. Our expanding owned truck fleet further enhances our just-in-time deliveries based on our customers’ requirements.

Our Fe program is a commitment to provide superior customer service while striving to exceed customer expectations. This
program includes tracking actual on-time delivery and quality performance against objectives, and recognition of employee
initiatives to improve efficiencies, streamline processes or reduce operating expenses at each operation.

We believe our sales force is among the largest and most experienced in the industry. Our sales force makes direct daily sales
calls to customers throughout the continental United States and in Mexico. The continuous interaction between our sales
force and active and prospective customers provides us with valuable market information and sales opportunities, including
opportunities for outsourcing, improving customer service and increased sales.

Our sales efforts are further supported by metallurgists, engineers, technical service personnel and product specialists who
have specific expertise in carbon and stainless steel, aluminum, alloy plate and steel fabrication as well as tubular and pipe
products. We have expanded our stainless steel and aluminum products and services, and added sales personnel to grow sales
in these areas. Our services for specific customers also include integration into our internal business systems to provide cost
efficiencies for both us and our customers.

Management. We believe one of our strengths is the depth, knowledge and experience of our management team. In addition
to our executive officers, members of our senior management team have a diversity of backgrounds within the metals
industry, including management positions at metals producers and other metals service centers. They average 29 years of
experience in the metals industry and 22 years with our company.

Products, Processing Services and Quality Standards

We maintain inventory of carbon, stainless and aluminum coil, plate and sheet products, and tubular and pipe products. Coil
is in the form of a continuous sheet, typically 36 to 96 inches wide, between 0.015 and 0.625 inches thick, and rolled into 10
to 30 ton coils. Because of the size and weight of these coils and the equipment required to move and process them into
smaller sizes, such coils do not meet the requirements, without further processing, of most customers. Plate is typically thicker
than coil and is processed by laser, plasma or oxygen burning.

Through our CTI subsidiary, we maintain inventory of round, square, and rectangular mechanical and structural tubing;
hydraulic and stainless tubing; boiler tubing; carbon, stainless, and aluminum pipe; and valves and fittings. Overall, CTI
maintains over 30,000 line items within its inventory. CTI provides a variety of value added services to its tube and pipe
product line, including saw cutting, laser cutting, threading and grooving. CTI also fabricates pressure components supplied
to various industrial markets.

Customer orders are entered or electronically transmitted into computerized order entry systems, and appropriate inventory
is selected and scheduled for processing in accordance with the customer’s specified delivery date. We attempt to maximize
yield and equipment efficiency through the use of computer software and by combining customer orders for processing each
coil, plate, tube or pipe to the fullest extent practicable.

Our services include both traditional service center processes of cutting-to-length, slitting, flattening, sawing and shearing
and higher value-added processes of blanking, tempering, plate burning, laser cutting, precision machining, welding,
fabricating, bending, polishing, kitting and painting to process metals to specified lengths, widths and shapes pursuant to
specific customer orders. Cutting-to-length involves cutting metal along the width of the coil. Slitting involves cutting metal
to specified widths along the length of the coil. Shearing is the process of cutting sheet metal. Blanking cuts the metal into
specific shapes with close tolerances. Tempering improves the uniformity of the thickness and flatness of the metals through
a cold rolling process. Plate and laser processing is the process of cutting metal into specific shapes and sizes. Our forming
activities include bending metal. Our machining activities include drilling, milling, tapping, boring and sawing. Tube
processing includes tube bending and end finishing. Finishing activities include shot blasting, grinding, edging and polishing.
Our fabrication activities include additional machining, welding, assembly and painting of component parts.

The following table sets forth, as of December 31, 2014, the major pieces of processing equipment in operation by segment:

Processing Equipment
Cutting-to-length
Slitting
Shearing
Blanking
Tempering
Plate processing
Laser processing
Forming
Machining
Painting
Tube processing
Finishing
Total

Flat Products

Tubular and
Pipe Products

Total

14
10
10
4
3
26
29
17
52
3
2
28
198

12
-
-
-
-
-
7
-
80
1
32
3
135

26
10
10
4
3
26
36
17
132
4
34
31
333

Our quality assurance system, led by certified specialists and engineers, establishes controls and procedures covering all
aspects of our products from the time the material is ordered through receipt, processing and shipment to the customer. These
controls and procedures encompass periodic supplier audits, customer satisfaction surveys, workshops with customers,
inspection equipment and criteria, preventative actions, traceability and certification. We have quality testing labs at several
of our facilities, as well as adjacent to our temper mill facilities in Cleveland, Ohio and Bettendorf, Iowa.

In addition, 25 of our facilities have earned International Organization for Standardization (ISO) 9001:2008 certifications.
Our Detroit operation is also TS-16949 certified. CTI has earned The American Society of Mechanical Engineers S
Certification and The National Board of Boiler & Pressure Vessel Inspectors R Certification. We have met the requirements
for ISO 14001 (environmental management) in most of our facilities. Our office building in Winder, Georgia has received
Leadership in Energy and Environmental Design (LEED) certification.

Customers and Distribution

We have a diverse customer and geographic base, which helps to reduce the inherent risk and cyclicality of our business. Net
sales to our top three customers, in the aggregate, approximated 11.1%, 11.1% and 10.4% of our consolidated net sales in
2014, 2013 and 2012, respectively. We serve customers in metals consuming industries, including manufacturers and
fabricators of transportation and material handling equipment, construction, mining and farm equipment, storage tanks,
environmental and energy generation equipment, automobiles, food service and electrical equipment, military vehicles and
equipment, as well as general and plate fabricators and metals service centers. The table below shows the percentage of our
consolidated net sales to the largest industries for the past three years.

Industry
Industrial machinery and equipment manufacturers and

their fabricators

Metals service centers
Residential and commercial construction
Automobile manufacturers and their suppliers
Transportation equipment manufacturers
All others <5%

2014

50.6%
9.1%
8.2%
7.9%
5.6%
18.6%

2013

50.2%
7.4%
8.2%
8.9%
4.6%
20.7%

2012

50.1%
7.6%
6.1%
8.4%
4.2%
23.6%

While we ship products throughout the United States, most of our customers are located in the midwestern, eastern and
southern regions of the United States. Most domestic customers are located within a 250-mile radius of one of our processing
facilities, thus enabling an efficient delivery system capable of handling a high frequency of short lead time orders. We
transport our products directly to customers via our in-house truck fleet, which further supports our just-in-time delivery
requirements imposed by our customers, and third-party trucking firms. Products sold to foreign customers, which have been
immaterial to our consolidated results, are shipped either directly from metals producers to the customer or to an intermediate
processor, and then to the customer by rail, truck or ocean carrier. With the addition of our facility in Monterrey, Mexico, we
are able to stock material and service our customers in that country with shorter lead times.

We process our metals to specific customer orders as well as for stocking programs. Many of our larger customers commit
to purchase on a regular basis at agreed upon or indexed prices for periods ranging from three to twelve months. To help
mitigate price volatility risks, these price commitments are generally matched with corresponding supply arrangements, or
to a lesser, but increasing, degree by commodities hedging. Customers notify us of specific release dates as processed products
are required. Customers typically notify us of release dates anywhere from a just-in-time basis to one month before the release
date. Therefore, we are required to carry sufficient inventory to meet the short lead time and just-in-time delivery
requirements of our customers. CTI produces engineered products for the industrial boiler industry. These products typically
take several months to produce due to their size and complexity. Due to the time required for production, we may require
progress payments throughout the construction period.

The current global economic environment has resulted in increased vendor scrutiny by our customers and potential customers.
We believe our size, financial position, and our focus on quality and customer service are advantageous in maintaining our
customer base and in securing new customers.

Raw Materials

Our principal raw materials are carbon, coated and stainless steel and aluminum, in the forms of pipe and tube, flat rolled
sheet, coil and plate that we typically purchase from multiple primary metals producers. The metals industry as a whole is
cyclical and at times pricing and availability of material can be volatile due to numerous factors beyond our control, including
general domestic and global economic conditions, labor costs, sales levels, competition, consolidation of metals producers,
fluctuations in the costs of raw materials necessary to produce metals, import duties and tariffs and currency exchange rates.
This volatility can significantly affect the availability and cost of raw materials for us.

Inventory management is a key profitability driver in the metals service center industry. We, like many other metals service
centers, maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements
of our customers. Accordingly, we purchase metals in an effort to maintain our inventory at levels that we believe to be
appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, contracts with customers
and market conditions.

Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders.
During the past three years, we have entered into nickel and carbon swaps at the request of our customers in order to mitigate
our customers’ risk of volatility in the price of metals. In 2014, we entered into metals hedges to mitigate our risk of volatility
in the price of metals.

We have no long-term, fixed-price metals purchase contracts, except for commodity hedges. When metals prices increase,
competitive conditions will influence how much of the price increase we can pass on to our customers. When metals prices
decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices
and, consequently, lower gross profits and earnings as we use existing metals inventory.

Suppliers

We concentrate on developing supply relationships with high-quality domestic and international metals producers, using a
coordinated effort to be the customer of choice for business critical suppliers. We employ sourcing strategies that maximize
the quality, production lead times and transportation economies of a global supply base. We are an important customer of
flat-rolled coil and plate, pipe and tube for many of our principal suppliers, but we are not dependent on any one supplier.
We purchase in bulk from metals producers in quantities that are efficient for such producers. This enables us to maintain a
continued source of supply at what we believe to be competitive prices. We believe the access to our facilities and equipment,
and our high quality customer services and solutions, combined with our long-standing and continuous prompt pay practices,
will continue to be an important factor in maintaining strong relationships with metals suppliers.

The metals producing supply base has experienced significant consolidation, with a few suppliers accounting for a majority
of the domestic carbon steel market. We purchased approximately 43% and 42% of our total metals requirements from our
three largest suppliers in 2014 and 2013, respectively. Although we have no long-term supply commitments, we believe we
have good relationships with our metals suppliers. If, in the future, we are unable to obtain sufficient amounts of metals on a
timely basis, we may not be able to obtain metals from alternate sources at competitive prices. In addition, interruptions or
reductions in our supply of metals could make it difficult to satisfy our customers’ just-in-time delivery requirements, which
could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Competition

Our principal markets are highly competitive. We compete with other regional and national metals service centers, single
location service centers and, to a certain degree, metals producers and intermediate metals processors on a regional basis. We
have different competitors for each of our products and within each region. We compete on the basis of price, product
selection and availability, customer service, value-added capabilities, quality, financial strength and geographic proximity.
Certain of our competitors have greater financial and operating resources than we have.

With the exception of certain Canadian or Mexican operations, foreign-located metals service centers are generally not a
material competitive factor in our principal domestic markets.

Management Information Systems

Information systems are an important component of our strategy. We have invested in technologies and human resources as
a foundation for growth. We depend on our Enterprise Resource Planning (ERP) systems for financial reporting, management
decision-making, inventory management, order tracking and fulfillment and production optimization. We continue to upgrade
and consolidate our systems for optimal use of resources and to assure we are taking advantage of technology offerings.

Our information systems focus on the following core application areas:

Inventory Management. Our information systems track the status and cost of inventories by product, location and
process on a daily basis. This information is essential to optimize management of inventory.

Differentiated Services To Customers. Our information systems support value-added services to customers,
including quality control and on-time delivery monitoring and reporting, just-in-time inventory management and
shipping services.

E-Commerce and Advanced Customer Interaction. We are actively participating in electronic commerce initiatives
to reduce processing cost and time. In addition to full electronic data interchange (EDI) capabilities with our
customers and vendors, we also have implemented extranet sites for specific customers which are integrated with
our internal business systems.

System and Process Enhancements. We have completed development of business system alternatives to replace our
legacy information systems and have successfully implemented new ERP systems at most of our locations and have
decommissioned three legacy systems as of December 31, 2014. We continue to roll out these new systems to
provide standardized business processes, enhanced inventory management, production cost, and sales administrative
controls, and reduced technical support requirements. Our business analysts work with our ISO quality team to
identify opportunities for efficiency and improved customer service. We collaborate across the metal supply chain,
working with metal producers, service providers, customers, and industry-sponsored organizations to develop
industry processing standards to drive cost out of the supply chain.

Information security and continuous availability of information processing are of highest priority. Our information
professionals employ proven security and monitoring practices and tools. In case of physical emergency or threat, our new
ERP systems, accounting system, internet and communications systems are duplicated at a secure off-site computing facility,
with migration of our other systems now in progress.

Employees

At December 31, 2014, we employed approximately 1,810 people. Approximately 317 of the hourly plant personnel are
represented by nine separate collective bargaining units. The table below shows the expiration dates of the collective
bargaining agreements.

Facility
Locust, North Carolina
Romeoville, Illinois
Minneapolis, Minnesota (coil facility)
Indianapolis, Indiana
Minneapolis, Minnesota (plate facility)
Detroit, Michigan
Duluth, Minnesota
St. Paul, Minnesota
Milan, Illinois

Expiration date
March 4, 2015
May 31, 2015

September 30, 2015
January 29, 2016
March 31, 2017
August 31, 2017
December 21, 2017
May 25, 2018
August 12, 2018

We have never experienced a work stoppage and we believe that our relationship with employees is good. However, any
prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact
on our business, financial condition, results of operations and cash flows.

Service Marks, Trade Names and Patents

We conduct our business under the name “Olympic Steel.” A provision of federal law grants exclusive rights to the word
“Olympic” to the U.S. Olympic Committee. The U.S. Supreme Court has recognized, however, that certain users may
continue to use the word based on long-term and continuous use. We have used the name Olympic Steel since 1954, but are
prevented from registering the name “Olympic” and from being qualified to do business as a foreign corporation under that
name in certain states. In such states, we have registered under different names, including “Oly Steel” and “Olympia Steel.”
Our wholly-owned subsidiary, Olympic Steel Lafayette, Inc., does business in certain states under the names “Olympic Steel
7

Detroit,” “Lafayette Steel and Processing” and “Lafayette Steel.” Our wholly-owned subsidiary, Olympic Steel Iowa, Inc.
does business in certain states under the name “Oly Steel Iowa, Inc.”. Our North Carolina operation conducts business under
the name “Olympic Steel North Carolina.” Our Integrity Stainless operation conducts business under the name “Integrity
Stainless”. Our CTI North Carolina operation conducts business under the name “CTI Power.” Our operation in Monterrey,
Mexico operates under the name “Metales de Olympic S. de.R.L. de C.V.”

We also hold a trademark for our stainless steel sheet and plate product “OLY-FLATBRITE,” which has a unique
combination of surface finish and flatness.

Government Regulation

Our operations are governed by many laws and regulations, including those relating to workplace safety and worker health,
principally the Occupational Safety and Health Act and regulations thereunder. We believe that we are in material compliance
with these laws and regulations and do not believe that future compliance with such laws and regulations will have a material
adverse effect on our business, financial condition, results of operations and cash flows.

Environmental

Our facilities are subject to certain federal, state and local requirements relating to the protection of the environment. We
believe that we are in material compliance with all environmental laws, do not anticipate any material expenditures to meet
environmental requirements and do not believe that compliance with such laws and regulations will have a material adverse
effect on our business, financial condition, results of operations and cash flows.

Seasonality

Seasonal factors may cause demand fluctuations within the year which could impact our results of operations. Typically, the
first half of the year is stronger than the second half of the year, as it contains more ship days and is not impacted by the
seasonal shut-downs in July, November and December due to holidays.

Effects of Inflation

Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, processing
equipment, purchased metals, energy and borrowings under our credit facility. General inflation, excluding the price of metals
and increased distribution and fuel expense, has not had a material effect on our financial results during the past three years.

Backlog

Because we conduct our operations generally on the basis of short-term orders, we do not believe that backlog is a material
or meaningful indicator of future performance.

Available Information

We file annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Securities
Exchange Act of 1934. The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC. The public can obtain
any documents that are filed by the Company at http://www.sec.gov.

In addition, our annual reports on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K
and any amendments to all of the foregoing reports, are made available free of charge on or through the “Investor Relations”
section of our website at www.olysteel.com as soon as reasonably practicable after such reports are electronically filed with
or furnished to the SEC.

Information relating to our corporate governance at Olympic Steel, including our Business Ethics Policy, information
concerning our executive officers, directors and Board committees (including committee charters), and transactions in our
securities by directors and officers, is available free of charge on or through the “Investor Relations” section of our website
at www.olysteel.com. We are not including the information on our website as a part of, or incorporating it by reference into,
this Annual Report on Form 10-K.

Forward-Looking Information

This Annual Report on Form 10-K and other documents we file with the SEC contain various forward-looking statements
that are based on current expectations, estimates, forecasts and projections about our future performance, business, our beliefs
and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press
releases or written statements, or in our communications and discussions with investors and analysts in the normal course of
business through meetings, conferences, webcasts, phone calls and conference calls. Words such as “may,” “will,”
“anticipate,” “should,” “intend,” “expect,” “believe,” “estimate,” “project,” “plan,” “potential,” and “continue,” as well as
the negative of these terms or similar expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those
implied by such statements including, but not limited to, those set forth in Item 1A (Risk Factors) below and the following:

● general and global business, economic, financial and political conditions, including the ongoing effects of the global

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economic recovery;
competitive factors such as the availability, global production levels and pricing of metals, industry shipping and
inventory levels and rapid fluctuations in customer demand and metals pricing;
cyclicality and volatility within the metals industry;
the availability and costs of transportation and logistical services;
the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital
turnover and free cash flows, improve our customer service, and achieve cost savings, including our recently
launched internal program to improve earnings;

● our ability to generate free cash flow through operations and limited future capital expenditures, reduce inventory

and repay debt within anticipated time frames;
events or circumstances that could impair or adversely impact the carrying value of any of our assets;
risks and uncertainties associated with intangible assets, including additional goodwill impairment charges;
events or circumstances that could adversely impact the successful operation of our processing equipment and
operations;
the amounts, successes and our ability to continue our capital investments and strategic growth initiatives, including
the Winder, Georgia project, and our business information system implementations;
the successes of our operational excellence initiatives to improve our operating, cultural and management systems
and reduce our costs;
the ability to comply with the terms of our asset-based credit facility;
the ability of our customers and third parties to honor their agreements related to derivative instruments;
customer, supplier and competitor consolidation, bankruptcy or insolvency;
reduced production schedules, layoffs or work stoppages by our own, our suppliers’ or customers’ personnel;
the impacts of union organizing activities and the success of union contract renewals;
the timing and outcomes of inventory lower of cost or market adjustments;
the ability of our customers (especially those that may be highly leveraged, and those with inadequate liquidity) to
maintain their credit availability;
the inflation or deflation existing within the metals industry, as well as our product mix and inventory levels on hand,
which can impact our cost of materials sold as a result of the fluctuations in the last-in, first-out, or LIFO, inventory
reserve;
the adequacy of our existing information technology and business system software, including duplication and
security processes;
the adequacy of our efforts to mitigate cyber security threats;
access to capital and global credit markets;

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● our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;
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the enacted federal healthcare legislation’s impact on the healthcare benefits required to be provided by us and the
impact of such legislation on our compensation and administrative costs; and

● unanticipated developments that could occur with respect to contingencies such as litigation and environmental

matters, including any developments that would require any increase in our costs for such contingencies.

Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, intended, expected, believed, estimated, projected or planned. You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We
undertake no obligation to republish revised forward-looking statements to reflect the occurrence of unanticipated events or
circumstances after the date hereof, except as otherwise required by law.

ITEM 1A. RISK FACTORS

In addition to the other information in this Annual Report on Form 10-K and our other filings with the SEC, the following
risk factors should be carefully considered in evaluating us and our business before investing in our common stock. The risks
and uncertainties described below are not the only ones facing us. Additional risks and uncertainties, not presently known to
us or otherwise, may also impair our business. If any of the risks actually occur, our business, financial condition or results
of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline,
and investors may lose all or part of their investment.

Risks Related to our Business

Volatile metals prices can cause significant fluctuations in our operating results. Our sales and operating income
could decrease if metals prices decline or if we are unable to pass producer price increases on to our customers.

Our principal raw materials are carbon and stainless steel and aluminum flat rolled coil, sheet, plate, pipe and tube that we
typically purchase from multiple primary metals producers. The metals industry as a whole is cyclical and, at times, pricing
and availability of metals can be volatile due to numerous factors beyond our control, including general domestic and
international economic conditions, labor costs, sales levels, competition, levels of inventory held by other metals service
centers, consolidation of metals producers, higher raw material costs for the producers of metals, imports, import duties and
tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials for us.

We, like many other metals service centers, maintain substantial inventories of metals to accommodate the short lead times
and just-in-time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain our
inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic
buying practices, supply agreements with customers and market conditions. Our commitments to purchase metals are
generally at prevailing market prices in effect at the time we place our orders. During 2014, we entered into metals hedges,
which carry counterparty performance risk, in order to mitigate our risk of volatility in the price of metals. We have no long-
term, fixed-price metals purchase contracts, except for metals hedges. Declining metals prices have generally adversely
affected our net sales and net income, while increasing metals prices, have generally favorably affected our net sales and net
income. When metals prices increase, competitive conditions will influence how much of the price increase we can pass on
to our customers. To the extent we are unable to pass on future price increases in our raw materials to our customers, the net
sales and profitability of our business could be adversely affected. When metals prices decline, customer demands for lower
prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross
profits and potentially inventory lower of cost or market adjustments as we use existing inventory. Significant or rapid
declines in metals prices or reductions in sales volumes could adversely impact our ability to remain in compliance with
certain financial covenants in our revolving credit facility, as well as result in us incurring inventory or goodwill impairment
charges. Changing metals prices therefore could significantly impact our net sales, gross profit, operating income and net
income, and could impair or adversely impact the carrying value of any of our assets.

China is the world’s largest producer and consumer of metals and metals products. Its expansion of metals production has
significantly affected the global metals industry. The recent economic downturn in China, the slowing of its growth and
decreased metals consumption has led to an increased supply of metals in the United States, which result in lower prices for
our products. Actions by domestic and foreign producers, including metals companies in China, to further increase production
could result in an increased supply of metals in the United States, which could result in lower prices for our products. A
decline in metals prices could adversely affect our sales, gross profits and profitability.

We service industries that are highly cyclical, and any downturn in our customers’ demand could reduce our sales,
gross profits and profitability.

We sell our products in a variety of industries, including capital equipment manufacturers for industrial, agricultural and
construction use, the automotive industry, the utilities industry, and manufacturers of fabricated metals products. Our largest
category of customers is producers of industrial machinery and equipment. Numerous factors, such as general economic
conditions, government stimulus or regulation, availability of adequate credit and financing, consumer confidence, significant
business interruptions, labor shortages or work stoppages, energy prices, seasonality, customer inventory levels and other
factors beyond our control, may cause significant demand fluctuations from one or more of these industries. Any decrease in
demand within one or more of these industries may be significant and may last for a lengthy period of time. In periods of
economic slowdown or recession in the United States, excess customer or service center inventory or a decrease in the prices
that we can realize from sales of our products to customers in any of these industries could result in lower sales, gross profits
and profitability.

Approximately 7.9% of our 2014 consolidated net sales were to automotive manufacturers or manufacturers of automotive
components and parts, whom we refer to as automotive customers. Historically, due to the concentration of customers in the
automotive industry, our gross profits on these sales have generally been less than our gross profits on sales to customers in
other industries.

Our success is dependent upon our relationships with certain key customers.

We have derived and expect to continue to derive a significant portion of our revenues from a relatively limited number of
customers. Collectively, our top three customers accounted for approximately 11.1% of our consolidated net sales in 2014
and 2013. Many of our larger customers commit to purchase on a regular basis at agreed upon prices over periods from three
to twelve months. We generally do not have long-term contracts with our customers. As a result, the relationship, as well as
particular orders, can generally be terminated with relatively little advance notice. The loss of any one of our major customers
or decrease in demand by those customers or credit constraints placed on them could have a material adverse effect on our
business, our results of operations and our cash flows.

We may not achieve the expected results of our profit improvement plan or Operational Excellence initiative.

In addition, we are in the process of an Operational Excellence initiative, which is expected to improve our operating systems,
cultural systems and management systems, while lowering our costs. The initiative is focused on continuously improving
processes through waste and variation elimination using Lean Six Sigma tools. The risks associated with these initiatives
include, but are not limited to:

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a significant use of management and employee time;
the possibility that the initiatives do not meet expectations; and
the possibility that the initiatives do not provide the expected economic results.

Difficulties associated with our profit improvement plan and Operational Excellence initiative could adversely affect our
business, our customer service, our results of operations and our cash flows.

Impairment in the carrying value of goodwill or other intangibles could result in the incurrence of impairment charges
and negatively impact our results of operations.

As of December 31, 2014, we had goodwill of $17.0 million and other intangible assets of $33.6 million. The net carrying
value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the
acquisition date (or subsequent impairment date, if applicable). The net carrying value of other intangibles represents trade
names and customer relationships, net of accumulated amortization. Goodwill and the trade name are expected to contribute
indefinitely to our cash flows and are not amortized, but must be evaluated by management at least annually for impairment.
Amortized intangible assets are evaluated for impairment whenever events or changes in circumstance indicate that the
carrying amounts of these assets may not be recoverable. Impairments to goodwill and other intangible assets may be caused
by factors outside our control, such as increased competitive pricing pressures, lower than expected revenue and profit growth
rates, changes in industry EBITDA multiples, changes in discount rates based on changes in cost of capital (interest rates,
etc.), or the bankruptcy of a significant customer and could result in the incurrence of impairment charges and negatively
impact our results of operations.

During the fourth quarter of 2014, we concluded that the implied fair value of goodwill for the tubular and pipe products
segment was less than its carrying value and a goodwill impairment of $23.8 million was identified and recognized. The
determination of fair value of the reporting units used to perform the impairment test requires judgment and involves
significant estimates and assumptions about the expected future cash flows and the impact of market conditions on those
assumptions. Due to the inherent uncertainty associated with these estimates, actual results could differ materially from these
estimates. Although we believe the assumptions used in testing our reporting units’ goodwill for impairment are reasonable,
it is possible that market and economic conditions could deteriorate further or not improve as expected.

Following the goodwill impairment charge, the carrying value of goodwill in our tubular and pipe products segments is $16.5
million.

We depend on third parties for transportation services, and increases in costs or the availability of transportation
could adversely affect our business and operations.

We ship products throughout the United States via our in-house truck fleet or by third-party trucking firms. Products sold to
foreign customers, are shipped either directly from metals producers to the customer or to an intermediate processor, and
then to the customer by rail, truck or ocean carrier. Our business depends on the transportation of a large number of products.
We depend to a certain extent on third parties for transportation of our products as well as delivery of our raw materials.

If any of these providers were to fail to deliver raw materials to us in a timely manner, we may be unable to process and
deliver our products in response to customer demand. In addition, if any of these third parties were to cease operations or
cease doing business with us, we may be unable to replace them at a reasonable cost. In addition, such failure of a third-party
transportation provider could harm our reputation, negatively affect our customer relationships and have a material adverse
effect on our financial position and results of operations.

Expansions at our existing locations may be unable to achieve expected results, and events or circumstances that could
adversely impact the successful operation of new processing equipment and operations could have a material adverse
effect on our results of operations.

We have invested in new processing equipment to support customer demand. Although we have successfully installed new
processing equipment in the past, we can provide no assurance that the recent or future installations will be successful, or
achieve expected results. Risks associated with the installations include, but are not limited to:

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a significant use of management and employee time;
the possibility that the performance of new equipment does not meet expectations; and
the possibility that disruptions from the installations may make it difficult for us to maintain relationships with
our respective customers, employees or suppliers.

Difficulties associated with the installations of new processing equipment, including our 2015 equipment investments in
Winder, Georgia, could adversely affect our business, our customer service, our results of operations and our cash flows.

Our implementation of new information systems could adversely affect our results of operations and cash flows.

We are in the process of implementing new information systems and eliminating our legacy operating systems into the new
systems. The objective is to standardize and streamline business processes and improve support for our growing service
center and fabrication business. Risks associated with the phased implementation include, but are not limited to:

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a significant deployment of capital and a significant use of management and employee time;
the possibility that the software vendors may not be able to support the project as planned;
the possibility that the timelines, costs or complexities related to the new system implementations will be greater
than expected;
the possibility that the software, once fully implemented, does not work as planned;
the possibility that benefits from the new systems may be less or take longer to realize than expected;
the possibility that disruptions from the implementation may make it difficult for us to maintain relationships
with our respective customers, employees or suppliers; and
limitations on the availability and adequacy of proprietary software or consulting, training and project
management services, as well as our ability to retain key personnel.

Although we have successfully initiated use of the new systems at most of our locations, we can provide no assurance that
the rollout to the remaining locations will be successful or will occur as planned and without disruption to operations.
Difficulties associated with the design and implementation of new information systems could adversely affect our business,
our customer service, our results of operations and our cash flows.

The failure of our key computer-based systems could have a material adverse effect on our business.

Until our new systems implementations are completed, we maintain separate regional computer-based systems in the
operation of our business and we depend on these systems to a significant degree, particularly for inventory management.
These systems are vulnerable to, among other things, damage or interruption from fire, flood, tornado and other natural
disasters, power loss, computer system and network failures, operator negligence, physical and electronic loss of data or
security breaches and computer viruses. Although we have secure back-up systems off-site, the destruction or failure of any
one of our computer-based systems for any significant period of time could materially adversely affect our business, financial
condition, results of operations and cash flows.

Risks associated with our growth strategy may adversely impact our ability to sustain our growth.

Historically, we have grown internally by increasing sales and services to our existing customers, aggressively pursuing new
customers and services, building or purchasing new facilities and acquiring and upgrading processing equipment in order to
expand the range of customer services and products that we offer. In addition, we have grown through the acquisition of other
service centers and related businesses. We intend to actively pursue our growth strategy in the future.

We have completed a number of expansion projects in the past three years. These, or future expansion or construction
projects, could have adverse effects on our results of operations due to the impact of the associated start-up costs and the
potential for underutilization in the start-up phase of a facility. While we are pursuing potential acquisition targets, we are
unable to predict whether or when any prospective acquisition candidate will become available or the likelihood that any
acquisition will be completed. Moreover, in pursuing acquisition opportunities, we may compete for acquisition targets with
other companies with similar growth strategies that may be larger and have greater financial and other resources than we
have. Competition among potential acquirers could result in increased prices for acquisition targets. As a result, we may not
be able to consummate acquisitions on satisfactory terms to us, or at all.

The pursuit of acquisitions and other growth initiatives may divert management’s time and attention away from day-to-day
operations. In order to achieve growth through acquisitions, expansion of current facilities, greenfield construction or
otherwise, additional funding sources may be needed and we may not be able to obtain the additional capital necessary to
pursue our growth strategy on terms that are satisfactory to us, or at all.

We depend on our senior management team and the loss of any member could prevent us from implementing our
business strategy.

Our success is dependent upon the management and leadership skills of our senior management team. We have employment
agreements, which include non-competition provisions, with our Chief Executive Officer, our President and Chief Operating
Officer, the President of CTI, and our Chief Financial Officer that expire on January 1, 2018, January 1, 2016, July 1, 2016
and January 1, 2017, respectively. The loss of any member of our senior management team or the failure to attract and retain
additional qualified personnel could prevent us from implementing our business strategy.

Customer and third-party credit constraints and credit losses could have a material adverse effect on our results of
operations.

Some of our customers may experience difficulty obtaining and/or maintaining credit availability. In particular, certain
customers that are highly leveraged represent an increased credit risk. Some customers have reduced their purchases because
of these credit constraints. Moreover, our disciplined credit policies have, in some instances, resulted in lost sales. If we have
misjudged our credit estimations and they result in future credit losses, lost sales or lost customers, there could be a material
adverse effect on our business, financial condition, results of operations, cash flows and our allowance for doubtful accounts.

Although we expect to finance our future and in-process growth initiatives through borrowings under our credit
facility, we may have to find additional sources of funding, which could be difficult. Additionally, increased leverage
and borrowing rates could adversely impact our business and results of operations.

We expect to finance our future and in-process growth initiatives through borrowings under our credit facility, which matures
on June 30, 2019. However, our credit facility may not be sufficient or available to finance our growth initiatives, and we
may have to find additional sources of financing. It may be difficult for us in the future to obtain the necessary funds and
liquidity to run and expand our business.

Additionally, if we incur substantial additional debt, including under our credit facility, our leverage could increase as could
the risks associated with such leverage. A high degree of leverage could have important consequences to us. For example, it
could:

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increase our vulnerability to adverse economic and industry conditions;
require us to dedicate a substantial portion of cash from operations to the payment of debt service, thereby
reducing the availability of cash to fund working capital, capital expenditures, dividends and other general
corporate purposes;
limit our ability to obtain additional financing for working capital, capital expenditures, general corporate
purposes or acquisitions;

● place us at a disadvantage compared to our competitors that are less leveraged; and
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increase our costs and limit our flexibility in planning for, or reacting to, changes in our business.

The borrowings under our credit facility are primarily at variable interest rates. If interest rates in the future were to increase
100 basis points (1.0%) from December 31, 2014 rates and, assuming no change in total debt from December 31, 2014 levels,
the additional annual interest expense to us would be approximately $2.0 million.

Labor disruptions at any of our facilities or those of major customers could adversely affect our business, results of
operations and financial condition.

At December 31, 2014, we employed approximately 1,810 people. Approximately 317 of the hourly plant personnel are
represented by nine separate collective bargaining units. Any prolonged work stoppages by our personnel represented by
collective bargaining units could have a material adverse impact on our business, financial condition, results of operations
and cash flows.

In addition, many of our larger customers, including those in the automotive industry, have unionized workforces and some
have experienced significant labor disruptions in the past such as work stoppages, slow-downs and strikes. A labor disruption
at one or more of our major customers could interrupt production or sales by that customer and cause that customer to halt or

limit orders for our products. Any such reduction in the demand for our products could adversely affect our business, financial
condition, results of operations and cash flows.

An interruption in the sources of our metals supply could have a material adverse effect on our results of operations.

In recent years, the metals producing supply base has experienced significant consolidation with a few domestic producers
accounting for a majority of the domestic metals market. Collectively, we purchased approximately 43% and 42% of our
total metals requirements from our three largest suppliers in 2014 and 2013, respectively. The number of available suppliers
could be reduced in the future by factors such as further industry consolidation or bankruptcies affecting metals suppliers.
Additionally, fewer available suppliers increases the risk of supply disruption through both scheduled and unscheduled
supplier outages. We have no long-term supply commitments with our metals suppliers. If, in the future, we are unable to
obtain sufficient amounts of metals on a timely basis, we may not be able to obtain metals from alternate sources at
competitive prices. In addition, interruptions or reductions in our supply of metals could make it difficult to satisfy our
customers’ just-in-time delivery requirements, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

Conversely, the addition of new mill sources and decreased domestic demand could lead to domestic over capacity, which
could lead to a decrease in steel prices.

We may not be able to retain or expand our customer base if the U.S. manufacturing industry continues to erode or
if the U.S. dollar continues to strengthen.

Our customer base primarily includes manufacturing and industrial firms in the United States, some of which are, or have
considered, relocating production operations outside the United States or outsourcing particular functions outside the United
States. Some customers have closed because they were unable to compete successfully with foreign competitors. Our facilities
are primarily located in the United States and, therefore, to the extent that our customers relocate or move operations where
we do not have a presence, we could lose their business.

Some customers have been able to continue to manufacture items in the United States for export to foreign markets, due to
the relative strength of certain foreign currencies against the U.S. dollar. If the U.S. dollar continues to strengthen, products
made by U.S. manufacturers could become less attractive to foreign buyers. Fewer purchases by foreign buyers could reduce
our metals sales to those U.S. manufacturers.

Our business is highly competitive, and increased competition could reduce our market share and harm our financial
performance.

Our business is highly competitive. We compete with metals service centers and, to a certain degree, metals producers and
intermediate metals processors, on a regular basis, primarily on quality, price, inventory availability and the ability to meet
the delivery schedules and service requirements of our customers. We have different competitors for each of our products
and within each region. Certain of these competitors have financial and operating resources in excess of ours. Increased
competition could lower our gross profits or reduce our market share and have a material adverse effect on our financial
performance.

Increases in energy prices would increase our operating costs, and we may be unable to pass all these increases on to
our customers in the form of higher prices.

If our energy costs increase disproportionately to our revenues, our earnings could be reduced. We use energy to process and
transport our products. Our operating costs increase if energy costs, including electricity, diesel fuel and natural gas, rise.
During periods of higher energy costs, we may not be able to recover our operating cost increases through price increases
without reducing demand for our products. In addition, we generally do not hedge our exposure to higher prices via energy
futures contracts. Increases in energy and fuel prices will increase our operating costs and may reduce our profitability if we
are unable to pass all of the increases on to our customers.

Our information technology systems could be negatively affected by cyber security threats.

Increased global information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted
computer crime pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our
data. Despite our efforts to protect sensitive information and confidential and personal data, our facilities and systems and
those of our third-party service providers may be vulnerable to security breaches. This could lead to disclosure, modification
or destruction of proprietary and other key information, production downtimes and operational disruptions, which in turn
could adversely affect our results of operations. We may face greater risks in this area than our competitors as we implement
the ERP system because among other things, we must simultaneously protect both the ERP and legacy systems until the ERP
project is complete.

Participation in multiemployer pension plans carry withdrawal liability risks which could impact our results of
operations and financial condition.

Through our CTI subsidiary we contribute to one multiemployer pension plan. The risks of participating in the multiemployer
plan are different from a single-employer plan in that 1) assets contributed to the multiemployer plan by one employer may
be used to provide benefits to employees of other participating employers, 2) if a participating employer stops contributing
to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers, and 3) if CTI chooses
to stop participating in the multiemployer plan, CTI may be required to pay the plan an amount based on the unfunded status
of the plan, referred to as a withdrawal liability.

We are subject to significant environmental, health and safety laws and regulations and related compliance
expenditures and liabilities.

Our businesses are subject to many federal, state and local environmental, health and safety laws and regulations, particularly
with respect to the use, handling, treatment, and disposal of substances and waste used or generated in our manufacturing
processes. We have incurred and expect to continue to incur expenditures to comply with applicable environmental laws and
regulations. Our failure to comply with applicable environmental laws and regulations and permit requirements could result
in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing
operations or requiring corrective measures, installation of pollution control equipment or remedial actions.

We may in the future be required to incur costs relating to the investigation or remediation of property, and for addressing
environmental conditions. Some environmental laws and regulations impose liability and responsibility on present and former
owners, operators or users of facilities and sites for contamination at such facilities and sites without regard to causation or
knowledge of contamination. Consequently, we cannot assure you that existing or future circumstances, the development of
new facts or the failure of third parties to address contamination at current or former facilities or properties will not require
significant expenditures by us.

We expect to continue to be subject to environmental and health and safety laws and regulations. It is difficult to predict the
future interpretation and development of environmental and health and safety laws and regulations or their impact on our
future earnings and operations. We anticipate that compliance will continue to require increased capital expenditures and
operating costs. Any increase in these costs, or unanticipated liabilities arising for example out of discovery of previously
unknown conditions or more aggressive enforcement actions, could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

The market price for our common stock may be volatile.

Risks Related to Our Common Stock

Historically, there has been volatility in the market price for our common stock. Furthermore, the market price of our common
stock could fluctuate substantially in the future in response to a number of factors, including, but not limited to, the risk
factors described herein. Examples include:

changes in commodity prices, especially metals;
announcement of our quarterly operating results or the operating results of other metals service centers;
changes in financial estimates or recommendations by stock market analysts regarding us or our competitors;
the operating and stock performance of other companies that investors may deem comparable;

●
●
●
●
● developments affecting us, our customers or our suppliers;
● press releases, earnings releases or publicity relating to us or our competitors or relating to trends in the metals

service center industry;
inability to meet securities analysts’ and investors’ quarterly or annual estimates or targets of our performance;
sales of our common stock by large shareholders;
the amount of shares acquired for short-term investments;

●
●
●
● general domestic or international economic, market and political conditions;
changes in the legal or regulatory environment affecting our business; and
●
announcements by us or our competitors of significant acquisitions, dispositions or joint ventures, or other
●
material events impacting the domestic or global metals industry.

In the past, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons unrelated to their specific operating
performance. These factors may adversely affect the trading price of our common stock, regardless of actual operating
performance.

In addition, stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or
disproportionate to the operating performance of companies. In the past, some shareholders have brought securities class
action lawsuits against companies following periods of volatility in the market price of their securities. We may in the future
be the target of similar litigation. Securities litigation, regardless of whether our defense is ultimately successful, could result
in substantial costs and divert management’s attention and resources.

Our quarterly results may be volatile.

Our operating results have varied on a quarterly basis during our operating history and are likely to fluctuate significantly in
the future. Our operating results may be below the expectations of our investors or stock market analysts as a result of a
variety of factors, many of which are outside of our control. Factors that may affect our quarterly operating results include,
but are not limited to, the risk factors listed above.

Many factors could cause our revenues and operating results to vary significantly in the future. Accordingly, we believe that
quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Investors should not rely on the results
of one quarter as an indication of our future performance. Further, it is our practice not to provide forward-looking sales or
earnings guidance and not to endorse any analyst’s sales or earnings estimates. Nonetheless, if our results of operations in
any quarter do not meet analysts’ expectations, our stock price could materially decrease.

Certain provisions in our charter documents and Ohio law could delay or prevent a change in management or a
takeover attempt that you may consider to be in your best interest.

We are subject to Chapter 1704 of the Ohio Revised Code, which prohibits certain business combinations and transactions
between an “issuing public corporation” and an “Ohio law interested shareholder” for at least three years after the Ohio law
interested shareholder attains 10% ownership, unless the Board of Directors of the issuing public corporation approves the
transaction before the Ohio law interest shareholder attains 10% ownership. We are also subject to Section 1701.831 of the
Ohio Revised Code, which provides that certain notice and informational filings and special shareholder meeting and voting
procedures must be followed prior to consummation of a proposed “control share acquisition.” Assuming compliance with
the notice and information filings prescribed by the statute, a proposed control share acquisition may be made only if the
17

acquisition is approved by a majority of the voting power of the issuer represented at the meeting and at least a majority of
the voting power remaining after excluding the combined voting power of the “interested shares.”

Certain provisions contained in our Amended and Restated Articles of Incorporation and Amended and Restated Code of
Regulations and Ohio law could delay or prevent the removal of directors and other management and could make a merger,
tender offer or proxy contest involving us that you may consider to be in your best interest more difficult. For example, these
provisions:

●

●
●

allow our Board of Directors to issue preferred stock without shareholder approval;provide for our Board of
Directors to be divided into two classes of directors serving staggered terms;
limit who can call a special meeting of shareholders; and
establish advance notice requirements for nomination for election to the Board of Directors or for proposing
matters to be acted upon at shareholder meetings.

These provisions may discourage potential takeover attempts, discourage bids for our common stock at a premium over
market price or adversely affect the market price of, and the voting and other rights of the holders of our common stock.
These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect
directors other than the candidates nominated by our Board of Directors.

Principal shareholders who own a significant numbers of shares of our common stock may have interests that conflict
with yours.

Michael D. Siegal, our Chief Executive Officer and Chairman of the Board and one of our largest shareholders, owned
approximately 11.3% of our outstanding common stock as of December 31, 2014. Mr. Siegal may have the ability to
significantly influence matters requiring shareholder approval. In deciding how to vote on such matters, Mr. Siegal may be
influenced by interests that conflict with yours.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We believe that our properties are strategically situated relative to our domestic suppliers, our customers and each other,
allowing us to support customers from multiple locations. Product is shipped from the most advantageous facility, regardless
of where the customer order is taken. The facilities are located in the hubs of major metals consumption markets, and within
a 250-mile radius of most of our customers, a distance approximating the one-day driving and delivery limit for truck
shipments. During 2014, we ended the leases on our sales office in Jacksonville, Florida and our distribution center in Kansas
City, Missouri.

The following table sets forth certain information concerning our principal properties within our flat products and tubular
and pipe products segments:

Flat Products Segment Facilities

Square
Feet

Function

Owned or
Leased

127,000 Corporate offices, coil processing and distribution center

Owned

121,500

Coil and plate processing, distribution center for flat, tubular
and pipe products and offices

Owned

Operation

Cleveland

Location
Bedford Heights,
Ohio (1)
Bedford Heights,
Ohio (1)
Bedford Heights,
Ohio (1)
Dover, Ohio

Minneapolis Plymouth, Minnesota 196,800 Coil and plate processing, distribution center and offices

59,500 Plate processing, distribution center and offices
62,000 Plate processing, fabrication and distribution center

Leased (2)
Owned
Owned
Plymouth, Minnesota 112,200 Plate processing, fabrication, distribution center and offices Owned
Roseville, Minnesota 57,000 Distribution center for flat and tubular and pipe products
Leased (3)
Chambersburg,
Pennsylvania
Chambersburg,
Pennsylvania

157,000 Plate processing, distribution center and offices

150,000 Plate processing, fabrication, distribution center and offices Owned
Coil and plate processing, fabrication, distribution center
and offices

244,000

Owned

Chambersburg

Iowa

Winder

Detroit

Kentucky

Bettendorf, Iowa
Oklahoma City,
Oklahoma

Winder, Georgia
Winder, Georgia
Detroit, Michigan
Mt. Sterling,
Kentucky
Mt. Sterling,
Kentucky
Gary, Indiana

33,000 Distribution center

285,000

Coil and plate processing, fabrication, distribution center
and offices
31,800 Distribution center

256,000 Coil processing, distribution center and offices

Leased (4)

Owned
Leased (5)
Owned

100,000 Plate processing, fabrication and distribution center

Owned

Distribution center for flat and tubular and pipe products,
offices

107,000
183,000 Coil processing, distribution center and offices
Gary
Connecticut Milford, Connecticut 134,000 Coil processing, distribution center and offices
Chicago
North
Carolina
Streetsboro

Schaumburg, Illinois 80,500 Coil and sheet processing, distribution center and offices
Siler City, North
Carolina
Streetsboro, Ohio
Latrobe, Pennsylvania 43,200 Coil and sheet processing, distribution center
Moses Lake,
Washington

74,000 Plate processing, fabrication, distribution center and offices Owned
Owned
66,200 Coil and sheet processing, distribution center and offices
Leased (7)

Owned (6)
Owned
Owned
Owned

47,600 Distribution center

Washington

Leased (8)

Flat Products Segment Facilities

Location

Square
Feet

Function

Monterrey, Mexico

15,000 Distribution center for flat, tubular and pipe products

Operation
Mexico

Owned or
Leased
Leased (9)

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

(9)

The Bedford Heights facilities are all adjacent properties.
This facility is leased from a related party. The lease expires on December 31, 2018, with renewal options.
The lease on this facility expires on November 30, 2016, with renewal options.
The lease on this facility expires on July 7, 2017.
The lease on this facility expires on December 15, 2015, with a one-year renewal option.
50% of the facility is leased to an unrelated party whose lease expires on December 31, 2015.
The lease on this facility expires on May 1, 2016.
The Moses Lake location is comprised of five different facilities. The facilities are leased on a month-to-month
basis.
The lease on this facility expires on June 1, 2015.

Tubular and Pipe Products Segment Locations

Operation

Chicago
St. Paul

Charlotte

Location
Romeoville, Illinois
St. Paul, Minnesota
Locust, North
Carolina
Fond du Lac,
Wisconsin
Indianapolis, Indiana

Fond du Lac
Indianapolis
Quad Cities Milan, Illinois
Des Moines Ankeny, Iowa
Duluth
Owatonna
cutting

Proctor, Minnesota
Owatonna,
Minnesota

Square
Feet
363,000 Corporate offices, fabrication and distribution center
132,000 Distribution center and offices

Function

127,600 Fabrication and offices

117,000 Distribution center and offices
79,000 Distribution center and offices
57,600 Distribution center and offices
50,000 Distribution center and offices
45,202 Distribution center and offices

23,000 Production cutting center

Owned or
Leased
Owned
Owned

Owned

Owned
Owned
Owned
Owned
Leased (1)

Owned

(1)

The lease on this facility expires on April 30, 2019.

Our facilities in Cleveland, Ohio; Winder, Georgia; Mt. Sterling, Kentucky; Monterrey, Mexico and Fond du Lac, Wisconsin
offer both flat products and tubular and pipe products. In addition to the facilities listed above, our executive office is located
in Highland Hills, Ohio and we have sales offices located in Media, Pennsylvania; Miami, Florida; Houston, Texas; and
Monterrey, Mexico. Management believes we will be able to accommodate our capacity needs for the immediate future at
our existing facilities.

ITEM 3. LEGAL PROCEEDINGS

We are party to various legal actions that we believe are ordinary in nature and incidental to the operation of our business. In
the opinion of management, the outcome of the proceedings to which we are currently a party will not have a material adverse
effect upon our results of operations, financial condition or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

This information is included in this Annual Report on Form 10-K pursuant to Instruction 3 of Item 401(b) of Regulation S-
K. The following is a list of our executive officers and a brief description of their business experience. Each executive officer
will hold office until his successor is chosen and qualified.

Michael D. Siegal, age 62, has served as our Chief Executive Officer since 1984, and as Chairman of our Board of Directors
since 1994. From 1984 until January 2001, he also served as our President. He has been employed by us in a variety of
capacities since 1974. Mr. Siegal serves on the Board of Directors of Cliffs Natural Resources, Inc. He is the Chair of the
Board of Trustees of the Jewish Federations in North America. He is also the former Board Chair of the Jewish Federation
of Cleveland and is currently on the Board of the Development Corporation for Israel, and the Rock and Roll Hall of Fame
and Museum, in Cleveland, Ohio.

David A. Wolfort, age 62, has served as our President since January 2001 and Chief Operating Officer since 1995. He has
been a director since 1987. He previously served as Vice President Commercial from 1987 to 1995, after having joined us in
1984 as General Manager. Prior thereto, he spent eight years with a primary steel producer in a variety of sales assignments.
Mr. Wolfort is a past director of the Metals Service Center Institute and previously served as Chairman of its Political Action
Committee and Governmental Affairs Committee. He is a trustee of the Board of the Musical Arts Association (Cleveland
Orchestra) and of Ohio University and serves as the Vice-Chairman of The Board of Trustees and is a member of the
Executive Committee. He also serves as a member of the United States International Trade Committee for Steel (ITAC).

Richard T. Marabito, age 51, serves as our Chief Financial Officer. He joined us in 1994 as Corporate Controller and served
in this capacity until being named Chief Financial Officer in March 2000. He also served as Treasurer from 1994 through
2002 and again from 2010 through 2012. Prior to joining us, Mr. Marabito served as Corporate Controller for a publicly
traded wholesale distribution company and was employed by a national accounting firm in its audit department. Mr. Marabito
is a Governance board member and Treasurer of the Make-A-Wish Foundation of Ohio, Kentucky and Indiana and also
serves as the Chair of its Northeast Ohio regional board. He previously served as a board member for Hawk Corporation. Mr.
Marabito serves on the Board of Trustees and as Treasurer for Hawken School in Cleveland, Ohio. He is also a director and
Executive Committee member of the Metals Service Center Institute and is a past Chair of its Foundation for Education and
Research.

Richard A. Manson, age 46, has served as our Vice President and Treasurer since January 2013 and has been employed by
us since 1996. From March 2010 through December 2012, he served as our Vice President of Human Resources and
Administration. From January 2003 through March 2010, he served as our Treasurer and Corporate Controller. From 1996
through 2002, he served as our Director of Taxes and Risk Management. Prior to joining us, Mr. Manson was employed for
seven years by a national accounting firm in its tax department. Mr. Manson is a Board Member and the Treasurer of the
West Side Catholic Center. He also serves on the Board of Directors of the Boys and Girls Clubs of Cleveland and the
Cleveland Catholic Cemeteries Association. Mr. Manson is a certified public accountant and member of the Ohio Society of
Certified Public Accountants and the American Institute of Certified Public Accountants.

Donald McNeeley, age 60, has served as the President and Chief Executive Officer of CTI, a wholly owned subsidiary of
Olympic Steel, Inc., since the acquisition on July 1, 2011. He joined CTI in 1972 and has held several operational and
executive positions within the company. After serving as CTI’s Vice President of Operations and subsequently Executive
Vice President, in 1990, Dr. McNeeley was appointed President and Chief Operating Officer. He is a former Chairman of the
Metals Service Center Institute. Dr. McNeeley is an adjunct professor at Northwestern University where he teaches in the
graduate engineering program. He serves on the board of directors of Saulsbury Industries in Odessa, Texas, where he chairs
the Audit Committee. Dr. McNeeley also serves on the board of directors of Vail Rubber Industries in St. Joseph, Michigan,
and is a former director of The Committee for Monetary Research in Greenwich, Connecticut.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

Our common stock trades on the Nasdaq Global Select Market under the symbol “ZEUS.” The following table sets forth, for
each quarter in the two-year period ended December 31, 2014, the high and low sales prices of our common stock as reported
by the Nasdaq Global Select Market:

2014

2013

High

Low

High

Low

First quarter
Second quarter
Third quarter
Fourth quarter

30.95 $
29.58
25.83
21.39

25.84 $
20.88
20.57
15.75

25.39 $
26.83
29.48
31.68

18.52
19.54
24.46
24.56

Holders of Record

As of February 1, 2015, we estimate there were approximately 50 holders of record and 4,606 beneficial holders of our
common stock.

Dividends

During 2014, our Board of Directors approved regular quarterly dividends of $0.02 per share that were paid on March 17,
2014, June 16, 2014, September 16, 2014 and December 15, 2014.

During 2013, our Board of Directors approved regular quarterly dividends of $0.02 per share that were paid on March 15,
2013, June 17, 2013, September 16, 2013 and December 16, 2013.

We expect to make regular quarterly dividend distributions in the future, subject to the continuing determination by our Board
of Directors that the dividend remains in the best interest of our shareholders. The agreement governing our credit facility
restricts the amount of dividends that we can pay to $2.5 million annually. Any determinations by the Board of Directors to
pay cash dividends in the future will take into account various factors, including our financial condition, results of operations,
current and anticipated cash needs, plans for expansion and restrictions under our credit agreement and any agreements
governing our future debt. We cannot assure you that dividends will be paid in the future or that, if paid, the dividends will
be at the same amount or frequency.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended December 31, 2014.

Recent Sales of Unregistered Securities

We did not have any unregistered sales of equity securities during the quarter ended December 31, 2014.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial and other data of the Company for each of the five years in the period ended
December 31, 2014. The data presented should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial statements and notes thereto included
elsewhere in this Annual Report on Form 10-K.

2014

For the Years Ended December 31,
2013
2011
2012
(in thousands, except per share data)

2010

$ 1,436,270 $ 1,263,331 $ 1,383,701 $ 1,261,872 $
999,207 1,113,852 1,008,462
1,160,310
253,410
269,849
264,124
275,960
208,942
244,817
244,469
261,332
-
6,583
23,836
-
44,468
18,449
19,655
(9,208)
5,953
8,357
6,703
6,780
37,485
10,139
12,924
(16,114)
24,970 $
2,277 $
7,647 $
(19,064) $

805,043
650,398
154,645
148,543
-
6,102
2,305
3,797
2,132

(1.71) $
(1.71)
0.08 $

0.69 $
0.69
0.08 $

0.21 $
0.21
0.08 $

2.28 $
2.28
0.08 $

0.20
0.20
0.08

Income Statement Data:

Net sales
Cost of materials sold
Gross profit (a)
Operating expenses (b)
Goodwill impairment
Operating income (loss)
Interest and other expense on debt
Income (loss) before income taxes
Net income (loss)

Per Share Data:

Net income (loss) - basic (c)
Net income (loss) - diluted
Dividends declared

Shares Outstanding:

Weighted average shares - basic
Weighted average shares - diluted

11,120
11,120

11,065
11,074

10,989
10,995

10,937
10,951

10,905
10,918

Balance Sheet Data (as of December 31):

Current assets
Current liabilities
Working capital
Total assets
Total debt
Shareholders' equity

458,709 $
131,977
326,732
700,748
247,620
280,781 $

417,631 $
165,633
251,998
697,349
199,269
298,616 $

422,377 $
142,442
279,935
705,994
241,711
289,857 $

420,859 $
139,575
281,284
707,499
244,123
286,576 $

298,809
102,625
196,184
429,438
55,235
261,638

The data in the table above includes CTI information since the acquisition on July 1, 2011.

(a) Gross profit is calculated as net sales less the cost of materials sold (includes LIFO expense of $365 in 2014 and LIFO

income of $3,572 in 2013).

(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold. It does not include the

goodwill impairment shown separately below.

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

OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-
looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in
the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under
Item 1A, Risk Factors in this Annual Report on Form 10-K. The following section is qualified in its entirety by the more
detailed information, including our financial statements and the notes thereto, which appears elsewhere in this Annual
Report.

Overview

We are a leading metals service center that operates in two reportable segments; flat products and tubular and pipe products.
We provide metals processing and distribution services for a wide range of customers. Our primary flat products focus is on
the direct sale and distribution of large volumes of processed carbon, coated, aluminum and stainless flat-rolled sheet, coil
and plate products. In recent years, we have increased our participation in the stainless and aluminum markets, which we
refer to as specialty metals. As a result, based on how our chief operating decision maker, or CODM, is expected to make
decisions, assess performance and allocate resources in the future, we expect to disclose three reportable segments in 2015.
The segments will be flat products, tubular and pipe products and specialty metals. Through CTI, we distribute metal tubing,
pipe, bar, valves and fittings and fabricate pressure parts supplied to various industrial markets. Products that require more
value-added processing generally have a higher gross profit. In addition, tubular and pipe products segment gross profits are
generally higher than our traditional flat products segment gross profits. Accordingly, our overall gross profit is affected by,
among other things, product mix, the amount of processing performed, the demand for and availability of metals, and
volatility in selling prices and material purchase costs. We also perform toll processing of customer-owned metals. We sell
certain products internationally, primarily in North, Central and South America. International sales are immaterial to our
consolidated financial results and to the individual segments’ results.

Our results of operations are affected by numerous external factors including, but not limited to: general and global business,
economic, financial, banking and political conditions; competition; metals pricing, demand, global production levels and
availability; energy prices; pricing and availability of raw materials used in the production of metals; global supply and
inventory held in the supply chain; customers’ ability to manage their credit line availability; and layoffs or work stoppages
by our own, our suppliers’ or our customers’ personnel. The metals industry also continues to be affected by the global
consolidation of our suppliers, competitors and end-use customers.

Like other service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-
time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain our inventory at levels
that we believe to be appropriate to satisfy the anticipated needs of our customers based upon customer forecasts, historic
buying practices, supply agreements with customers and market conditions. Our commitments to purchase metals are
generally at prevailing market prices in effect at the time we place our orders. When metals prices increase, competitive
conditions will influence how much of the price increase we can pass on to our customers. To the extent we are unable to
pass on future price increases in our raw materials to our customers, the net sales and gross profits of our business could be
adversely affected. When metals prices decline, customer demands for lower prices and our competitors’ responses to those
demands could result in lower sale prices and, consequently, lower gross profits as we sell existing metals inventory.

Reportable Segments

We currently operate in two reportable segments; flat products and tubular and pipe products. In recent years, we have
increased our participation in the stainless and aluminum markets, which we refer to as specialty metals. As a result, based
on how our CODM is expected to make decisions, assess performance and allocate resources in the future, we expect to
disclose three reportable segments beginning in the first quarter of 2015. The segments will be flat products, tubular and pipe
products, and specialty metals. We follow the accounting guidance that requires the utilization of a “management approach”
to define and report the financial results of operating segments. The management approach defines operating segments along
the lines used by our CODM to assess performance and make operating and resource allocation decisions. Our CODM
evaluates performance and allocates resources based primarily on operating income (loss). Our operating segments are based
on internal management reporting.

Commencing with the first quarter of 2013, corporate expenses are reported as a separate line item in the segment reporting.
Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., both segments), including
payroll expenses for certain personnel, expenses related to being a publicly traded entity such as board of directors expenses,
audit expenses, and various other professional fees. Prior to 2013, these expenses were included in the flat products segment’s
operating results. The 2012 financial information has been revised to reflect the new reporting structure.

Flat products

The primary focus of our flat products segment is on the direct sale and distribution of large volumes of processed carbon,
coated, aluminum and stainless flat-rolled sheet, coil and plate products. We act as an intermediary between metals producers
and manufacturers that require processed metals for their operations. We serve customers in most metals consuming
industries, including manufacturers and fabricators of transportation and material handling equipment, construction and farm
machinery, storage tanks, environmental and energy generation equipment, automobiles, food service and electrical
equipment, military vehicles and equipment, as well as general and plate fabricators and metals service centers. We distribute
these products primarily through a direct sales force.

The flat products segment has 25 strategically-located processing and distribution facilities in the United States and one in
Monterrey, Mexico. This geographic footprint allows us to focus on regional customers and larger national and multi-national
accounts, primarily located throughout the midwestern, eastern and southern United States. The flat products segment
distributes these products primarily through a direct sales force.

Tubular and pipe products

The tubular and pipe products segment consists of the CTI business, acquired in 2011. Founded in 1914, CTI operates from
nine locations in the midwestern and southeastern United States and distributes tube and pipe products from some flat
products locations as well. The tubular and pipe products segment distributes its products primarily through a direct sales
force. Through our tubular and pipe products segment, we distribute metals tubing, pipe, bar, valve and fittings and fabricate
pressure parts supplied to various industrial markets.

Results of Operations

2014 Compared to 2013

The following table sets forth certain consolidated income statement data for the years ended December 31, 2014 and 2013
(dollars shown in thousands):

Net sales
Cost of materials sold (a)
Gross profit (b)
Operating expenses (c)
Operating income (loss)
Other income (loss), net
Interest and other expense on debt
Income (loss) before income taxes
Income taxes
Net income (loss)

2014

$
$ 1,436,270
1,160,310
275,960
285,168
(9,208)
(126)
6,780
(16,114)
2,950
(19,064)

% of net
sales

2013

% of net
sales

100.0 $ 1,263,331
999,207
80.8
264,124
19.2
244,469
19.8
19,655
(0.6)
(28)
(0.0)
6,703
0.5
12,924
(1.1)
5,277
0.2
7,647
(1.3) $

100.0
79.1
20.9
19.3
1.6
(0.0)
0.6
1.0
0.4
0.6

(a) Includes $365 of LIFO expense for 2014 and $3,572 of LIFO income for 2013 (inclusive of a $1,932 out-of-period LIFO

adjustment recorded in 2013).

(b) Gross profit is calculated as net sales less the cost of materials sold.
(c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. 2014 include a non-cash

goodwill impairment charge of $23,836 for the tubular and pipe products segment.

Net sales increased $173 million, or 13.7%, to $1.44 billion in 2014 from $1.26 billion in 2013. Flat products net sales
increased $165 million, or 16.1%, and were 83.0% of total net sales in 2014 compared to 81.3% in 2013. Tubular and pipe
products net sales increased $8 million, or 3.4%, and were 17.0% of total net sales in 2014 compared to 18.7% of total net
sales in 2013. The increase in sales for the year ended December 31, 2014 was due to a 13.3% increase in sales volume and
a 0.3% increase in average selling prices in 2014 compared to 2013.

Cost of materials sold increased $161 million, or 16.1%, to $1.16 billion in 2014 from $999 million in 2013. During 2014 we
recorded LIFO expense of $365 thousand compared to $3.6 million of LIFO income recorded in 2013. In the first quarter of
2013, we made an out-of-period adjustment to record previously unrecognized LIFO adjustments, which resulted in a 2013
decrease to cost of materials sold of $1.9 million. The increase in cost of materials sold in 2014 is primarily due to the
increased sales volume of 13.3%, increased metals costs of 2.1% during 2014 and the impact of LIFO expense during 2014
compared to LIFO income in 2013.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) decreased to 19.2% in 2014 from
20.9% in 2013. Gross profit as a percentage of net sales decreased in both segments. LIFO had no consolidated gross profit
impact in 2014 and increased gross profit by 0.3% of net sales in 2013. The decrease in gross profit as a percentage of net
sales during 2014 was primarily due to the cost of materials sold increasing more than selling prices in the flat rolled segment,
as well as the impact of LIFO expense in 2014 compared to LIFO income in 2013.

Operating expenses in 2014 increased $40.7 million, or 16.6%, from 2013. As a percentage of net sales, operating expenses
increased to 19.8% in 2014 from 19.3% in 2013. The increase in operating expenses resulted primarily from a $23.8 million
non-cash goodwill impairment charge related to the tubular and pipe products segment. The goodwill impairment charge
accounted for 58.6% of the operating expense increase. During 2014, distribution expense increased by $6.2 million, or
17.8%, due to the increased volume during 2014 as well as the inflationary dynamics in the transportation industry.
Warehouse and processing costs increased $7.8 million, or 9.3%, primarily due to increased payroll and warehouse
consumables expenses related to the 13.3% 2014 volume increase. Administrative costs increased by $3.7 million, or 5.4%,
primarily related to employee travel, education and training, non-income taxes and one-time costs related to the CTI
centennial celebration in 2014. Selling expenses decreased $0.1 million, or 0.4%, in 2014 compared to 2013 on a 13.7% sales
increase as a result of decreased variable compensation associated with fewer sales employees and decreased discretionary
spending, offset by $467 thousand of increased bad debt expense. Occupancy expense increased $657 thousand in 2014
compared to 2013 as a result of higher utility and snow removal costs during the harsh winter in the first quarter of 2014.
Depreciation expense decreased $1.5 million in 2014 as a result of certain assets becoming fully depreciated in 2014. In 2015
we initiated a profit improvement program to reduce operating expenses and enhance margins. This plan includes improving
underperforming divisions, lowering distribution costs, lowering labor and personnel expenses, as well as transportation and
purchasing initiatives.

Interest and other expense on debt totaled $6.8 million in 2014 compared to $6.7 million in 2013. Our effective borrowing
rate, exclusive of deferred financing fees and commitment fees, was 2.4% in 2014 compared to 2.3% in 2013. The increase
in interest and other expense on debt in 2014 was primarily attributable to the fixed interest rate hedge and higher average
borrowings, offset by lower rate premiums under our credit facility.

For 2014, loss before income taxes totaled $16.1 million compared to income before income taxes of $12.9 million in 2013.
2014 included a goodwill impairment charge of $23.8 million related to the tube and pipe segment and LIFO expense of $365
thousand. 2013 income before taxes included LIFO income of $3.6 million, inclusive of an out-of-period LIFO income
adjustment of $1.9 million recorded in the first quarter of 2013.

An income tax provision of (18.3%) was recorded for 2014, compared to an income tax provision of 40.8% in 2013. The
2014 effective income tax rate was unusual due to the non-deductibility of the goodwill impairment charge for the tubular
and pipe products segment. The income tax provision for 2014 prior to the goodwill impairment charge was 38.2%. We
expect our 2015 income tax rate to approximate 38%.

Net loss for 2014 totaled $19.1 million or $1.71 per basic and diluted share, compared to net income of $7.6 million or $0.69
per basic and diluted share for 2013. The goodwill impairment impacted earnings per share by $2.14 per basic and diluted
shares and the LIFO expense decreased earnings per share by $0.02 per basic and diluted share. The impact of LIFO income
in 2013 increased earnings per share by $0.19 per basic and diluted shares. The out-of-period LIFO income adjustment
accounted for $0.10 per basic and diluted share of the increase.

Segment Results of Operations

Flat products

The following table sets forth certain income statement data for the flat products segment for the years ended December 31,
2014 and 2013 (dollars shown in thousands, except per ton data):

Direct tons sold
Toll tons sold
Total tons sold

Net sales
Average selling price per ton
Cost of materials sold
Gross profit (a)
Operating expenses (b)
Operating income

2014

2013

% of net sales

1,132,325
106,771
1,239,096

1,191,731
962
986,559
205,172
192,757
12,415

1,007,511
81,226
1,088,737

1,026,769
943
834,994
191,775
179,669
12,106

100.0 $

82.8
17.2
16.2
1.0 $

100.0

81.3
18.7
17.5
1.2

(a) Gross profit is calculated as net sales less the cost of materials sold.
(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold.

Tons sold increased 13.8% to 1.24 million tons in 2014 from 1.09 million tons in 2013. The increase in tons sold was due to
increased customer demand and increased market share. Toll tons sold increased 31.4% to 107 thousand tons in 2014 from
81 thousand tons in 2013. The increase in toll tons sold was due to a shift by some customers from direct sales to toll sales
in 2014.

Net sales increased $165 million, or 16.1%, to $1.19 billion in 2014 from $1.03 billion in 2013. Average selling prices in
2014 increased to $962 per ton, compared to $943 per ton in 2013. The increase in sales was due to a 13.8% increase in sales
volume as well as a 2.0% increase in the average sell price during 2014. Market metals prices have declined in the fourth
quarter of 2014 and into 2015. As such, we expect market metals prices in the first quarter of 2015 to be lower than both the
first and fourth quarters of 2014.

Cost of materials sold increased $151.6 million, or 18.2%, to $986.6 million in 2014 from $835.0 million in 2013. The
increase in cost of materials sold was due to the volume increase of 13.8% as well as a 3.8% increase in the average cost of
materials sold per ton during 2014 compared to 2013.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) decreased to 17.2% in 2014 from
18.7% in 2013. The decrease in gross profit percentage in 2014 was primarily due to the cost of materials sold increasing
more than selling prices. The average gross profit per ton sold totaled $166 in 2014 and $176 in 2013. The decrease in gross
profit percentage in 2014 compared to 2013 was primarily due to the competitive market pressures associated with the growth
in shipments and a higher mix of toll sales and lower gross margin percentage stainless and aluminum sales versus carbon
sales.

Operating expenses in 2014 increased $13.1 million, or 7.3%, from 2013. As a percentage of net sales, operating expenses
decreased to 16.2% for 2014 from 17.5% in 2013. Freight and distribution expenses increased $5.3 million, or 20.2%, as a
result of increased volume as well as the inflationary dynamics in the transportation industry. Warehouse and processing
expenses increased $7.7 million, or 11.2%, as a result of higher sales volumes. Administrative and general expenses increased
$1.7 million, or 4.1%, primarily as a result of increased compensation expenses. Depreciation decreased $1.8 million, or
10.8%, as a result of fully depreciated assets. Occupancy expenses increased as a result of higher utility and snow removal
costs during the first quarter of 2014. In 2015 we initiated a profit improvement program to reduce operating expenses and
enhance margins. This plan includes improving underperforming divisions, lowering distribution costs, lowering labor and
personnel expenses, as well as transportation and purchasing initiatives.

Operating income for 2014 increased to $12.4 million, or 1.0% of net sales, from $12.1 million, or 1.2% of net sales in 2013.

Tubular and pipe products

The following table sets forth certain income statement data for the tubular and pipe products segment for 2014 and 2013
(dollars shown in thousands).

Net sales
Cost of materials sold (a)
Gross profit (b)
Operating expenses (c)
Operating income (loss)

2014

% of net sales
100.0 $
71.1
28.9
34.5
(5.6) $

244,539
173,751
70,788
84,439
(13,651)

2013

% of net sales
100.0
69.4
30.6
24.3
6.3

236,562
164,213
72,349
57,368
14,981

(a) Includes $365k of LIFO expense in 2014 and $3,572 of LIFO income in 2013 (inclusive of a $1,932 out-of-period

LIFO adjustment)

(b) Gross profit is calculated as net sales less the cost of materials sold.
(c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. 2014 include a non-cash

goodwill impairment charge of $23,836.

Net sales increased $8.0 million, or 3.4%, to $244.5 million in 2014 from $236.6 million in 2013. The increase in net sales
was due to a 6.2% increase in the sales volume offset by a 2.7% decrease in the average selling price during 2014.

Cost of materials sold increased $9.5 million, or 5.8%, to $173.8 million in 2014 from $164.2 million in 2013. The increase
in cost of materials sold was due to a 6.2% increase in sales volume and the impact of LIFO expense of $365 thousand in
2014 compared to LIFO income of $3.6 million in 2013, offset by a decrease in the average cost of materials sold of 2.7%.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) totaled 28.9% in 2014 compared to
30.6%, in 2013. The LIFO expense recorded in 2014 decreased gross profit by 0.2% of net sales and the LIFO income
recorded in 2013, increased gross profit by 1.5% of net sales, resulting in pre-LIFO gross margin as a percentage of net sales
remaining constant at 29.1% in both 2014 and 2013.

Operating expenses increased $27.1 million, or 47.2%, to $84.4 million, or 34.5% of net sales, in 2014 compared to $57.4
million, or 24.3%, of net sales in 2013. In 2014, we recorded a non-cash goodwill impairment charge of $23.8 million. The
impairment charge accounted for 88.0% of the operating expense increase. Distribution expense increased $913 thousand, or
10.5%, as a result of the increased sales volume as well as the inflationary dynamics in the transportation industry. Warehouse
and processing expense increased $132 thousand, or 0.8%, on a 6.2% increase in sales volume. Selling, administrative and
general expenses increased $1.7 million, or 6.5%, due to non-recurring costs related to CTI’s Centennial events in 2014 and
increased payroll costs. Depreciation expense increased $316 thousand, or 7.2%, as a result of the St. Paul facility expansion
in 2013 and new processing equipment. In 2015 we initiated a profit improvement program to reduce operating expenses and
enhance margins. This plan includes improving underperforming divisions, lowering distribution costs, lowering labor and
personnel expenses, as well as transportation and purchasing initiatives.

Operating loss for 2014 totaled $13.7 million, or (5.6%) of net sales, compared to operating income of $15.0 million, or 6.3%
of net sales, for 2013. The operating loss for 2014 was the result of the goodwill impairment of $23.8 million as well as LIFO
expense of $365 thousand. Operating income for 2013 included LIFO income of $3.6 million.

Corporate expenses

Corporate expenses increased $540 thousand, or 7.3%, to $8.0 million in 2014, compared to $7.4 million in 2013. The
increase in Corporate expenses in 2014 is mainly attributable to a full year of office rent and increased professional fees and
travel costs.

2013 Compared to 2012

The following table sets forth certain consolidated income statement data for the years ended December 31, 2013 and 2012
(dollars shown in thousands):

Net sales
Cost of materials sold (a)
Gross profit (b)
Operating expenses (c)
Operating income
Other income (loss), net
Interest and other expense on debt
Income before income taxes
Income taxes
Net income

2013

$
1,263,331
999,207
264,124
244,469
19,655
(28)
6,703
12,924
5,277
7,647

% of net sales
100.0 $
79.1
20.9
19.3
1.6
(0.0)
0.6
1.0
0.4
0.6 $

2012

$
1,383,701
1,113,852
269,849
251,400
18,449
47
8,357
10,139
7,862
2,277

% of net sales
100.0
80.5
19.5
18.2
1.3
0.0
0.6
0.7
0.5
0.2

(a) Includes $3,572 of LIFO income for 2013 (inclusive of a $1,932 out-of-period LIFO adjustment recorded in 2013)
(b) Gross profit is calculated as net sales less the cost of materials sold.
(c) Operating expenses are calculated as total costs and expenses less the cost of materials sold. 2012 operating expenses

include $6,583 of goodwill impairment charges related to the Company's flat-products segment.

Net sales decreased 8.7% to $1.26 billion in 2013 from $1.38 billion in 2012. Flat products net sales decreased 9.8%, or $111
million, and were 81.3% of total net sales in 2013 compared to 82.2% in 2012. Tubular and pipe products net sales declined
3.7%, or $9 million, and were 18.7% of total net sales in 2013 compared to 17.8% of total net sales in 2012. The decrease in
sales for the year ended December 31, 2013 was due to a 4.1% decline in consolidated sales volume as well as a 4.8% decline
in consolidated average selling prices in 2013 compared to 2012.

Cost of materials sold decreased 10.3% to $999 million in 2013 from $1.11 billion in 2012. The decrease in cost of materials
sold during 2013 was due to a 4.1% decline in consolidated sales volume as well as a 6.4% decline in consolidated cost of
materials sold in 2013 compared to 2012. In the first quarter of 2013, we made an out-of-period adjustment to record
previously unrecognized LIFO income, which resulted in a decrease to cost of materials sold of $1.9 million. The total impact
of LIFO income in 2013 was a $3.6 million decrease to cost of materials sold.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 20.9% in 2013 from
19.5% in 2012. Gross profit as a percentage of net sales increased in both segments. The impact of LIFO income increased
gross profit by 0.3% of net sales in 2013. The increase in gross profit during 2013 was primarily due to the cost of materials
sold decreasing more than selling prices, as well as the impact of LIFO income.

Operating expenses in 2013 decreased $6.9 million, or 2.8%, from 2012. As a percentage of net sales, operating expenses
increased to 19.3% in 2013 from 18.2% in 2012. The decrease in operating expenses resulted primarily from a $6.6 million
goodwill impairment charge related to the flat products segment’s Southern region that was included in operating expenses
in 2012. During 2013, expenses related to medical claims and workers compensation expenses increased $1.0 million over
2012. These expenses are included in “Warehouse and processing”, “Administrative and general” and “Selling” on the
accompanying Consolidated Statements of Comprehensive Income. Selling expenses decreased $2.7 million in 2013
compared to 2012 as a result of decreased variable compensation, decreased discretionary spending and decreased bad debt
expense. Depreciation and occupancy expense increased $2.1 million in 2013 as a result of capital spending on new facilities
and new processing equipment at existing facilities.

Interest and other expense on debt totaled $6.7 million in 2013 compared to $8.4 million in 2012. Our effective borrowing
rate, exclusive of deferred financing fees and commitment fees, was 2.3% in 2013 compared to 2.7% in 2012. The decrease
in interest and other expense on debt in 2013 was primarily attributable to lower average borrowings and lower rate premiums
under our credit facility.

For 2013, income before income taxes totaled $12.9 million compared to income before income taxes of $10.1 million in
2012. 2013 included LIFO income of $3.6 million, inclusive of an out-of-period LIFO income adjustment of $1.9 million
recorded in the first quarter of 2013.

An income tax provision of 40.8% was recorded for 2013, compared to an income tax provision of 77.5% in 2012. The 2012
effective income tax rate was unusually high due to the non-deductibility of the goodwill impairment charge and the impact
of permanent non-deductible tax items applied to a low pre-tax income level in 2012.

Net income for 2013 totaled $7.6 million or $0.69 per basic and diluted share, compared to net income of $2.3 million or
$0.21 per basic and diluted share for 2012. The impact of LIFO income in 2013 increased earnings per share by $0.19 per
basic and diluted shares. The out-of-period LIFO income adjustment accounted for $0.10 per basic and diluted share of the
increase.

Segment Results of Operations

Flat products

The following table sets forth certain income statement data for the flat products segment for the years ended December 31,
2013 and 2012 (dollars shown in thousands, except per ton data):

2013

2012

% of net sales

Direct tons sold
Toll tons sold
Total tons sold

Net sales
Average selling price per ton
Cost of materials sold
Gross profit (a)
Operating expenses (b)
Operating income

1,007,511
81,226
1,088,737

1,026,769
943
834,994
191,775
179,669
12,106

1,061,603
80,866
1,142,469

1,138,063
996
941,192
196,871
189,841
7,030

100.0 $

81.3
18.7
17.5
1.2 $

100.0

82.7
17.3
16.7
0.6

(a) Gross profit is calculated as net sales less the cost of materials sold.
(b) Operating expenses are calculated as total costs and expenses less the cost of materials sold. 2012 operating expenses

include a $6,583 goodwill impairment charge related to the Southern region.

Tons sold decreased 4.7% to 1.09 million tons in 2013 from 1.14 million tons in 2012. Toll tons sold was flat at approximately
81,000 tons in 2013 and 2012. The decrease in tons sold was due to decreased customer demand during 2013.

Net sales decreased 9.8% to $1.03 billion in 2013 from $1.14 billion in 2012. Average selling prices in 2013 decreased to
$943 per ton, compared to $996 per ton in 2012. The decrease in sales was due to a 4.7% decline in sales volume as well as
a 5.3% decline in the average sell price during 2013.

Cost of materials sold decreased 11.3% to $835.0 million in 2013 from $941.2 million in 2012. The decrease in cost of
materials sold was due to the volume decrease of 4.7% as well as a 6.9% decline in the average cost of materials sold per ton
during 2013 compared to 2012.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) increased to 18.7% in 2013 from
17.3% in 2012. The increase in gross profit percentage in 2013 was primarily due to the cost of materials sold decreasing
more than selling prices. The average gross profit per ton sold totaled $176 in 2013 and $172 in 2012. During 2013, we
increased the proportion of our product sales mix that contained more processing, which also contributed to the higher gross
profit percentage and gross profit per ton sold in the current year as compared to 2012.

Operating expenses in 2013 decreased $10.2 million, or 5.4%, from 2012. As a percentage of net sales, operating expenses
increased to 17.5% for 2013 from 16.7% in 2012. Variable operating expenses, such as distribution, warehouse and
processing, and selling expenses, decreased as a result of lower sales volume, net sales and gross profits. Depreciation and
occupancy expenses increased as a result of the recent investments in new facilities. 2012 operating expenses included a
goodwill impairment charge for the Southern region of $6.6 million.

Operating income for 2013 increased to $12.1 million, or 1.2% of net sales, from $7.0 million, or 0.6% of net sales in 2012.

Tubular and pipe products

The following table sets forth certain income statement data for the tubular and pipe products segment for 2013 and 2012
(dollars shown in thousands).

Net sales
Cost of materials sold (a)
Gross profit (b)
Operating expenses (c)
Operating income

2013

% of net sales
100.0 $
69.4
30.6
24.3
6.3 $

236,562
164,213
72,349
57,368
14,981

2012

% of net sales
100.0
70.3
29.7
22.4
7.3

245,638
172,660
72,978
54,981
17,997

(a) Includes $3,572 of LIFO income in 2013 (inclusive of a $1,932 out-of-period LIFO adjustment)
(b) Gross profit is calculated as net sales less the cost of materials sold.
(c) Operating expenses are calculated as total costs and expenses less the cost of materials sold.

Net sales decreased 3.7% to $236.6 million in 2013 from $245.6 million in 2012. The decrease in net sales was due to a 7.9%
decline in the average selling price offset by a 4.6% increase in sales volume during 2013.

Cost of materials sold decreased 4.9% to $164.2 million in 2013 from $172.7 million in 2012. The decrease in cost of
materials sold was due to a 9.1% decline in the average cost of materials sold per ton offset by a 4.6% increase in sales
volume during 2013 compared to 2012. In the first quarter of 2013, we made an out-of-period adjustment to record previously
unrecognized LIFO income, which resulted in a decrease to cost of materials sold of $1.9 million. Due to the continued
declining prices for metals in 2013, we recorded an additional $1.7 million of LIFO income during 2013. Total LIFO income
recorded in 2013 was $3.6 million.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) totaled 30.6% in 2013 compared to
29.7%, in 2012. The impact of LIFO income increased gross profit by 1.5% of sales in 2013, of which the out-of-period LIFO
income adjustment amounted to 0.8%.

Operating expenses increased $2.4 million to $57.4 million, or 24.3% of net sales, in 2013 compared to $55.0 million, or
22.4% of net sales in 2012. Variable operating expenses such as warehouse and processing, distribution and selling expenses
increased as a result of increased sales volume in 2013.

Operating income for 2013 totaled $15.0 million, or 6.3% of net sales, compared to $18.0 million, or 7.3% of net sales, for
2012. Operating income for 2013 included the impact of LIFO income of $3.6 million, inclusive of the $1.9 million out-of-
period LIFO income adjustment recorded in the first quarter of 2013.

Corporate expenses

Commencing with the first quarter of 2013, corporate expenses are reported as a separate line item in the segment reporting
and are disclosed separately to reconcile segment operating income to consolidated operating income on the Consolidated
Statements of Comprehensive Income. Corporate expenses include the unallocated expenses related to managing the entire
Company (i.e., both segments), including payroll expenses for certain personnel, expenses related to being a publicly traded
entity such as board of directors expenses, audit expenses, and various other professional fees. Prior to 2013, these expenses
were included in the flat products segment’s operating results.

Corporate expenses totaled $7.4 million in 2013 compared to $6.6 million for 2012. The increase in Corporate expenses in
2013 is attributable to higher variable incentive compensation, increased professional fees and the relocation of certain of the
Company’s executive offices from Bedford Heights, Ohio to Highland Hills, Ohio.

Liquidity, Capital Resources and Cash Flows

Our principal capital requirements include funding working capital needs, purchasing, upgrading and acquiring processing
equipment and facilities, making acquisitions and paying dividends. We use cash generated from operations, leasing
transactions and borrowings under our credit facility to fund these requirements.

We believe that funds available under our credit facility, lease arrangement proceeds and the sale of equity or debt securities,
together with funds generated from operations, will be sufficient to provide us with the liquidity necessary to fund anticipated
working capital requirements, capital expenditure requirements, our dividend payments and any business acquisitions over
at least the next 12 months. In the future, we may as part of our business strategy, acquire and dispose of assets or other
companies in the same or complementary lines of business, or enter into or exit strategic alliances and joint ventures.
Accordingly, the timing and size of our capital requirements are subject to change as business conditions warrant and
opportunities arise.

2014 Compared to 2013

Operating Activities

During 2014, we used $39.6 million of cash from operations, of which $25.4 million was generated from operating activities
and $65.0 million was used for working capital. During 2013, we generated $54.7 million of net cash from operations, of
which $29.1 million was generated from operating activities and $25.5 million was generated from working capital.

Net cash from operations totaled $25.4 million during 2014 and was primarily generated from depreciation and amortization
of $21.8 million and the non-cash goodwill impairment of $23.8 million, offset by the net loss of $19.1 million. Net cash
from operations totaled $29.1 million during 2013 and was primarily generated from net income of $7.6 million, and
depreciation and amortization of $23.6 million.

Working capital at December 31, 2014 totaled $326.7 million, a $74.7 million increase from December 31, 2013. The increase
was primarily attributable to a $24.7 million increase in inventory (a result of increased inventory tonnage related to increased
sales), an $8.5 million increase in accounts receivable (a result of increased sales), a $34.8 million decrease in accounts
payable (a result of less inventory purchases at the end of the year in 2014 compared to 2013), and a $7.6 million increase in
prepaid expenses and other, offset by a $10.7 million increase in accrued payroll and other accrued liabilities. The increase
in prepaid expenses and other and accrued payroll and other accrued liabilities is mainly related to the increase in metals
derivatives.

Investing Activities

Net cash used for investing activities was $7.8 million during 2014, compared to $16.1 million during 2013. In 2014, capital
expenditures were primarily attributable to additional processing equipment at our flat products and tube and pipe products
existing facilities. During 2015, we expect to limit our capital spending to less than our annual depreciation expense
(approximately $20 million in 2014).

Financing Activities

In 2014, $46.4 million of cash was generated from financing activities, which primarily consisted of $49.2 million of net
borrowings under our credit facility, including the payoff of our term loan of $48.9 million upon refinancing and subsequent
borrowings under our revolving credit facility, offset by $1.2 million of additional deferred financing fees incurred as part of
the June 30, 2014 amendment to the ABL Credit Facility (as defined below).

In February 2015, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which is payable on
March 16, 2015 to shareholders of record as of March 2, 2015. Our Board previously approved 2014 regular quarterly
dividends of $0.02 per share, which were paid on each of March 17, 2014, June 16, 2014, September 16, 2014 and December
15, 2014. Dividend distributions in the future are subject to the availability of cash, the $2.5 million annual limitation on cash
dividends under our ABL Credit Facility and continuing determination by our Board of Directors that the payment of
dividends remains in the best interest of our shareholders.

Debt Arrangements

On June 30, 2014, we amended our asset based credit facility (ABL Credit Facility). The amendment provides for, among
other things: (i) a reduction in the applicable margin for loans under the Company’s Loan and Security Agreement; (ii) a
consolidation of the previous $315.0 million revolver and then outstanding $44.5 million term loan into a $365 million
revolving credit facility; (iii) the removal of the Company’s real estate as collateral for borrowings; and (iv) the extension of
the maturity date until June 30, 2019. Revolver borrowings are limited to the lesser of a borrowing base, comprised of eligible
receivables and inventories, or $365 million in the aggregate. The ABL Credit Facility matures on June 30, 2019.

The ABL Credit Facility requires us to comply with various covenants, the most significant of which include: (i) until maturity
of the ABL Credit Facility, if any commitments or obligations are outstanding and our availability is less than the greater of
$30 million or 10.0% of the aggregate amount of revolver commitments ($36.5 million at December 31, 2014), then we must
maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00
for the most recent twelve fiscal month period; (ii) limitations on dividend payments; and (iii) restrictions on additional
indebtedness. We have the option to borrow under our revolver based on the agent’s base rate plus a premium ranging from
0.00% to 0.25% or the London Interbank Offered Rate (LIBOR) plus a premium ranging from 1.25% to 3.00%.

As of December 31, 2014, we were in compliance with our covenants and had approximately $98 million of availability
under the ABL Credit Facility.

As of December 31, 2014, $3.5 million of bank financing fees, including $1.2 million related to the ABL Credit Facility were
included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheets.
The financing fees are being amortized over the remaining term of the ABL Credit Facility and are included in “Interest and
other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

In June 2012, we entered into a forward starting fixed rate interest rate hedge that commenced in June 2013 in order to
eliminate the variability of cash interest payments on $53.2 million of the outstanding LIBOR-based borrowings under the
ABL Credit Facility. The hedge matures on June 1, 2016 and the notional amount is reduced monthly by the principal
payments on the term loan. The hedge balance as of December 31, 2014 was $40.1 million. The interest rate hedge fixed the
rate at 1.21% plus a premium ranging from 1.25% to 1.75%. Although we are exposed to credit loss in the event of
nonperformance by the other parties to the interest rate hedge agreement, we anticipate performance by the counterparties.

As part of the CTI acquisition, we assumed approximately $5.9 million of Industrial Revenue Bond (IRB) indebtedness
issued through the Stanly County, North Carolina Industrial Revenue and Pollution Control Authority. The bond matures in
April 2018, with the option to provide principal payments annually on April 1st. On April 1, 2014, we paid an optional
principal payment of $810 thousand. The IRB is remarketed annually and is included in “Current portion of long-term debt”
on the accompanying Consolidated Balance Sheets. Interest is payable monthly, with a variable rate that resets weekly. As a
security for payment of the bonds, the Company obtained a direct pay letter of credit issued by JPMorgan Chase Bank, N.A.
The letter of credit reduces annually by the principal reduction amount. The interest rate at December 31, 2014 was 0.16%
for the IRB debt.

We entered into an interest rate swap agreement to reduce the impact of changes in interest rates on the above IRB. At
December 31, 2014, the effect of the swap agreement on the bond was to fix the rate at 3.46%. The swap agreement matures
April 2018, but the notional amount is reduced annually by the amount of the optional principal payments on the bond.
Although we are exposed to credit loss in the event of nonperformance by the other party to the interest rate swap agreement,
we anticipate performance by the counterparty.

2013 Compared to 2012

Operating Activities

During 2013, we generated $54.7 million of net cash from operations, of which $29.1 million was generated from operating
activities and $25.5 million was generated from working capital. During 2012, we generated $27.7 million of net cash from
operations, of which $31.5 million was generated from operating activities and $3.7 million was used for working capital.

Net cash from operations totaled $29.1 million during 2013 and was generated from net income of $7.6 million, and
depreciation and amortization of $23.6 million. Net cash from operations totaled $31.5 million during 2012 and was generated

from net income of $2.3 million, depreciation and amortization of $22.2 million and $6.6 million from the non-cash goodwill
impairment in the Southern region.

Working capital at December 31, 2013 totaled $252.0 million, a $27.9 million decrease from December 31, 2012. The
decrease was primarily attributable to a $24.5 million increase in accounts payable, a $4.6 million decrease in cash and a $3.7
million decrease in inventory.

Investing Activities

Net cash used for investing activities was $16.1 million during 2013, compared to $22.9 million during 2012. In 2013, capital
expenditures were primarily attributable to the expansion of our tubular and pipe products segment’s St. Paul facility and
additional processing equipment at our flat products and tube and pipe products existing facilities.

Financing Activities

In 2013, we used $43.2 million for financing activities, which primarily consisted of $42.4 million of net repayments under
our credit facility, industrial revenue bond and capital lease obligations.

Our Board of Directors approved regular quarterly dividends of $0.02 per share, which were paid on each of March 15, 2013,
June 17, 2013, September 16, 2013 and December 16, 2013.

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2014:

Contractual Obligations
(amounts in thousands)
Long-term debt obligations
Interest obligations
Unrecognized tax positions
Other long-term liabilities
Operating leases

Total contractual obligations

(a)
(b)
(c)
(d)
(e)

Total
247,620 $
21,224
62
12,450
28,052
309,408 $

Less than
1 year

1-3 years 3-5 years

More than
5 years

840 $
5,030
26
805
5,874
12,575 $

1,760 $
9,360
36
1,189
10,325
22,670 $

245,020 $
6,834
-
-
6,617
258,471 $

-
-
-
10,456
5,236
15,692

(a) See Note 7 to the Consolidated Financial Statements.
(b) Future interest obligations are calculated using the debt balances and interest rates in effect on December 31, 2014.
(c) See Note 13 to the Consolidated Financial Statements. Classification is based on expected settlement dates and the

expiration of certain statutes of limitations.

(d) Primarily consists of accrued bonuses, retirement liabilities and deferred compensation payable in future years.
(e) See Note 12 to the Consolidated Financial Statements.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated entity under which a company
has (a) made guarantees, (b) a retained or a contingent interest in transferred assets, (c) any obligation under certain derivative
instruments or (d) any obligation under a material variable interest in an unconsolidated entity that provides financing,
liquidity, market risk or credit risk support to a company, or engages in leasing, hedging, or research and development services
within a company.

Other than operating leases, which are disclosed above, and derivative instruments discussed in Note 8 to the Consolidated
Financial Statements, as of December 31, 2014, we had no material off-balance sheet arrangements.

Effects of Inflation

Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, processing
equipment, purchased metals, energy and borrowings under our credit facility. General inflation, excluding increases in the
price of metals and increased distribution expense, has not had a material effect on our financial results during the past three
years.

Critical Accounting Policies

This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements,
which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation
of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the
financial statements. Actual results could differ from these estimates under different assumptions or conditions. On an on-
going basis, we monitor and evaluate our estimates and assumptions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation
of our consolidated financial statements:

Allowance for Doubtful Accounts Receivable

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make
required payments. The allowance is maintained at a level considered appropriate based on historical experience and specific
customer collection issues that we have identified. Estimations are based upon the application of a historical collection rate
to the outstanding accounts receivable balance, which remains fairly level from year to year, and judgments about the
probable effects of economic conditions on certain customers, which can fluctuate significantly from year to year. We cannot
be certain that the rate of future credit losses will be similar to past experience. We consider all available information when
assessing the adequacy of our allowance for doubtful accounts each quarter.

Inventory Valuation

Inventories are stated at the lower of cost or market and include the costs of the purchased metals, inbound freight, external
and internal processing and applicable labor and overhead costs. Costs of our flat product segment’s inventories, including
flat-rolled sheet, coil and plate products are determined using the specific identification method.

Certain of our tubular and pipe products inventory is stated under the LIFO method. At December 31, 2014, approximately
$46.6 million, or 15.0% of consolidated inventory, was reported under the LIFO method of accounting. The cost of the
remainder of CTI’s inventory is determined using a weighted average rolling first-in, first-out method.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired. We perform an annual
impairment test of goodwill for Integrity Stainless and our tubular and pipe products segment’s operations and indefinite-
lived intangible assets for our CTI operation in the fourth quarter, or more frequently if changes in circumstances or the
occurrence of events indicate potential impairment. Events or changes in circumstances that could trigger an impairment
review include significant nonperformance relative to the expected historical or projected future operating results, significant
changes in the manner of the use of the acquired assets or the strategy for the overall business or significant negative industry
or economic trends. Management uses its judgment to determine whether to use a qualitative analysis or a quantitative fair
value measurement for each of the Company’s reporting units that carry goodwill. During 2014, we used a quantitative
measurement (Step 1) for the annual goodwill impairment test for both Integrity Stainless and our tubular and pipe products
segment.

If a quantitative fair value measurement is used, the fair value of each indefinite-lived intangible asset is compared to its
carrying value and an impairment charge is recorded if the carrying value exceeds the fair value. Goodwill is tested by
comparing the fair value of each reporting unit with its carrying value. If the carrying value of the reporting unit exceeds its
fair value, the implied value of goodwill is compared to its carrying value and impairment is recognized to the extent that the
carrying value exceeds the implied fair value.

If a quantitative approach is utilized, we estimate the fair value of goodwill and other indefinite-lived intangible assets using
a discounted cash flow methodology, an income approach, and a publicly traded companies guideline method, a market
approach. Management’s assumptions used for the calculations are based on historical results, projected financial information
and recent economic events. Actual results could differ from these estimates under different assumptions or conditions which
could adversely affect the reported value of goodwill.

During the fourth quarter of 2014, we engaged an independent third party valuation expert to assist with the completion of
the annual goodwill impairment testing pursuant ASC Topic 350-20-35, “Goodwill – Subsequent measurement.” Due to
challenging market conditions, our recent financial performance and the decrease of our market capitalization, we decided to
perform the two-step quantitative impairment test by comparing the fair value of the Integrity Stainless and the tubular and
pipe products segment with its carrying value.

The first step of the goodwill impairment test showed that the fair value of the Integrity Stainless operations was in excess of
its carrying value and no goodwill impairment was identified. For the tubular and pipe products segment, it was determined
that the carrying value of the operations was in excess of the fair value and a potential goodwill impairment was identified.
Based on the second step of the impairment test, we concluded that the implied fair value of goodwill for the tubular and pipe
products segment was less than its carrying value and a goodwill impairment of $23.8 million was identified and recognized.

Long-Lived Assets

We evaluate the recoverability of long-lived assets and the related estimated remaining lives whenever events or
circumstances indicate that the carrying value of its depreciable long-lived assets may not be recoverable. Management uses
its judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for the analysis. If
circumstances are determined to exist where we will do a quantitative fair value analysis, an estimate of the undiscounted
future cash flows produced by the long-lived asset, or grouping of assets, is compared to the carrying value to determine
whether impairment exists. If an asset is determined to be impaired, a loss is recognized to the extent that carrying value
exceeds fair value. Fair value is measured based on quoted market prices in active markets, if available. If quoted market
prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of
estimated future cash flows.

Due to the impairment of the tubular and pipe products segment’s goodwill, a triggering event occurred for the long-lived
assets of the Company. We performed an undiscounted cash flow analysis these indicated that there were no indicators of
impairment of the long-lived assets of the Company.

Income Taxes

Deferred income taxes on the consolidated balance sheet include, as an offset to the estimated temporary differences between
the tax basis of assets and liabilities and the reported amounts on the consolidated balance sheets, the tax effect of operating
loss and tax credit carryforwards. If we determine that we will not be able to fully realize a deferred tax asset, we will record
a valuation allowance to reduce such deferred tax asset to its net realizable value.

Revenue Recognition

For both direct and toll shipments, revenue is recognized when title and risk of loss is transferred, which generally occurs
upon delivery to our customers. Given the proximity of our customers to our facilities, substantially all of our sales are
shipped and received within one day. Sales returns and allowances are treated as reductions to sales and are provided for
based on historical experience and current estimates and are immaterial to the consolidated financial statements.

The engineered products produced by CTI typically take several months to manufacture due to their size and complexity.
Substantially all projects are completed within six months. The Company may request advance payments from customers
during the production of these products. These payments are included in “Other accrued liabilities” on the Company’s
Consolidated Balance Sheets. Due to their short-term nature, the Company uses the units of delivery method to account for
these contracts. Revenue for the contracts is recognized when the product is shipped and title of the product transfers to the
customers. Revenues for these engineered products accounted for approximately 1.7%, 1.9% and 1.3% of our net sales during
2014, 2013 and 2012, respectively.

Impact of Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU No. 2014-09, “Revenue from Contracts with
Customers.” This ASU is a joint project initiated by the Financial Accounting Standards Board and the International
Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for
U.S. generally accepted accounting principles and International Financial Reporting Standards that will remove
inconsistencies and weaknesses in revenue requirements; provide a more robust framework for addressing revenue issues;
improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; provide
more useful information to users of financial statements through improved disclosure requirements; and simplify the
preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance is
effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting
period. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its
consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern”. This ASU
contains new guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern and to provide related footnote disclosures. Management must evaluate whether it is probable
that known conditions or events, considered in the aggregate, would raise substantial doubt about the entity’s ability to
continue as a going concern within one year after the date that the financial statements are issued. If such conditions or events
are identified, the standard requires management's mitigation plans to alleviate the doubt or a statement of the substantial
doubt about the entity’s ability to continue as a going concern to be disclosed in the financial statements. This ASU is effective
for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. The adoption of this
ASU is not expected to impact the Company’s consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our principal raw materials are carbon, coated and stainless steel, and aluminum, pipe and tube, flat rolled coil, sheet and
plate that we typically purchase from multiple primary metals producers. The metals industry as a whole is cyclical and, at
times, pricing and availability of metals can be volatile due to numerous factors beyond our control, including general
domestic and international economic conditions, labor costs, sales levels, competition, levels of inventory held by other
metals service centers, consolidation of metals producers, new global capacity by metals producers, volatility in raw material
costs for the producers of metals, import duties and tariffs and currency exchange rates. This volatility can significantly affect
the availability and cost of raw materials for us.

We, like many other metals service centers, maintain substantial inventories of metals to accommodate the short lead times
and just-in-time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain our
inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic
buying practices, supply agreements with customers and market conditions. Our commitments to purchase metals are
generally at prevailing market prices in effect at the time we place our orders. We have no long-term, fixed-price metals
purchase contracts, except for the metals hedges discussed in Note 8 to the Consolidated Financial Statements. When metals
prices increase, competitive conditions will influence how much of the price increase we can pass on to our customers. To
the extent we are unable to pass on future price increases in our raw materials to our customers, the net sales and profitability
of our business could be adversely affected. When metals prices decline, customer demands for lower prices and our
competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and inventory
lower of cost or market adjustments as we sell existing inventory. Significant or rapid declines in metals prices or reductions
in sales volumes could adversely impact our ability to remain in compliance with certain financial covenants in our credit
facility, as well as result in us incurring asset or goodwill impairment charges. Changing metals prices therefore could
significantly impact our net sales, gross profits, operating income and net income.

Rising prices result in higher working capital requirements for us and our customers. Some customers may not have sufficient
credit lines or liquidity to absorb significant increases in the price of metals. While we have generally been successful in the
past in passing on producers’ price increases and surcharges to our customers, there is no guarantee that we will be able to
pass on price increases to our customers in the future.

Declining metals prices have generally adversely affected our net sales and net income, while increasing metals prices, have
generally favorably affected our net sales and net income.

Approximately 7.9% of our consolidated net sales in 2014 were directly to automotive manufacturers or manufacturers of
automotive components and parts. Historically, due to the concentration of customers in the automotive industry, our gross
profits on these sales have generally been less than our gross profits on sales to customers in other industries.

Inflation generally affects us by increasing the cost of employee wages and benefits, transportation services, processing
equipment, energy and borrowings under our credit facility. General inflation, excluding increases in the price of steel and
increased distribution expense, has not had a material effect on our financial results during the past three years.

We are exposed to the impact of fluctuating metals prices and interest rate changes. During 2014, 2013 and 2012, we entered
into metals swaps at the request of customers. While these derivatives are intended to be effective in helping us manage risk,
they have not been designated as hedging instruments. For certain customers, we enter into contractual relationships that
entitle us to pass-through the economic effect of trading positions that we take with other third parties on our customers’
behalf. In 2014, we entered into carbon swaps in order to mitigate the volatility in the price of metals. The carbon swaps are
accounted for as cash flow hedges.

Our primary interest rate risk exposure results from variable rate debt. If interest rates in the future were to increase 100 basis
points (1.0%) from December 31, 2014 rates and, assuming no change in total debt from December 31, 2014 levels, the
additional annual interest expense to us would be approximately $2.0 million. We have the option to enter into 30- to 180-
day fixed base rate LIBOR loans under the ABL Credit Facility. The Company assumed an interest rate swap agreement on
the $5.9 million of CTI IRB. The swap agreement matures in April 2018, but the notional amount may be reduced annually
by the amount of the optional principal payments on the IRB. In June 2012, the Company entered into a forward starting
fixed rate interest rate hedge commencing July 2013 in order to eliminate the variability of cash interest payments on
approximately $53.2 million of the then outstanding LIBOR-based borrowings under the ABL Credit Facility. The balance
as of December 31, 2014 was $40.1 million. The hedge matures on June 1, 2016 and the notional amount is reduced monthly
by $729 thousand. The fixed rate interest rate hedge is accounted for as a cash flow hedging instrument for accounting
purposes. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap
and fixed interest rate hedge agreements. However, the Company does not anticipate nonperformance by the counterparties.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Olympic Steel, Inc.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm ..............................................................................................
Management’s Report on Internal Control Over Financial Reporting ..............................................................................
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012 .............
Consolidated Balance Sheets as of December 31, 2014 and 2013 ....................................................................................
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012 .................................
Supplemental Disclosures of Cash Flow Information for the Years Ended December 31, 2014, 2013 and 2012 ............
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012 ..................
Notes to Consolidated Financial Statements for the Years Ended December 31, 2014, 2013 and 2012 ...........................

40
41
42
43
44
45
46
47

Page

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Olympic Steel, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects,
the financial position of Olympic Steel, Inc. and its subsidiaries at December 31, 2014 and 2013, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on
criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in 2013. The Company's management is responsible for these financial statements and
financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal
Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial
statement schedule and on the Company's internal control over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained
in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
February 26, 2015

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In
making this assessment, our management used the criteria established in Internal Control - Integrated Framework, issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our assessment, we
concluded that, as of December 31, 2014, our internal control over financial reporting was effective based on those criteria.

The effectiveness of our internal control over financial reporting as of December 31, 2014 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears
herein.

Olympic Steel, Inc.
Consolidated Statements of Comprehensive Income
For The Years Ended December 31,
(in thousands, except per share data)

Net sales
Costs and expenses

Cost of materials sold (excludes items shown separately below)
Warehouse and processing
Administrative and general
Distribution
Selling
Occupancy
Depreciation
Amortization
Goodwill impairment

Total costs and expenses

Operating income (loss)

Asset impairment charge of joint venture real estate
Other income (loss), net

Income (loss) before interest and income taxes

Interest and other expense on debt

Income (loss) before income taxes

Income tax provision
Net income (loss)

Net gain (loss) on interest rate hedge
Net loss on cash flow hedges
Tax effect of hedges

Total comprehensive income (loss)

Net income (loss) per share - basic
Weighted average shares outstanding - basic

Net income (loss) per share - diluted
Weighted average shares outstanding - diluted

2014

2013

2012

1,436,270 $

1,263,331 $

1,383,701

1,160,310
92,170
72,219
41,312
24,799
10,052
19,891
889
23,836
1,445,478
(9,208)
-
(126)
(9,334)
6,780
(16,114)
2,950
(19,064) $

324
(312)
(125)
(19,177) $

(1.71) $
11,120

999,207
84,332
68,520
35,076
24,905
9,395
21,352
889
-
1,243,676
19,655
-
(28 )
19,627
6,703
12,924
5,277
7,647 $

231
-
(89 )
7,789 $

0.69 $
11,065

0.69 $
11,074

1,113,852
84,389
68,253
35,009
27,635
8,671
19,971
889
6,583
1,365,252
18,449
(36)
83
18,496
8,357
10,139
7,862
2,277

(941)
-
362
1,698

0.21
10,989

0.21
10,995

The accompanying notes are an integral part of these statements.

Olympic Steel, Inc.
Consolidated Balance Sheets
As of December 31,
(in thousands)

Cash and cash equivalents
Accounts receivable, net
Inventories, net (includes LIFO debit of $3,207 and $3,572 as of December 31, 2014

Assets

and 2013, respectively)
Prepaid expenses and other
Assets held for sale

Total current assets
Property and equipment, at cost
Accumulated depreciation

Net property and equipment

Goodwill
Intangible assets, net
Other long-term assets

Total assets

Current portion of long-term debt
Accounts payable
Accrued payroll
Other accrued liabilities

Total current liabilities

Credit facility revolver
Long-term debt
Other long-term liabilities
Deferred income taxes
Total liabilities

Liabilities

Preferred stock, without par value, 5,000 shares authorized, no shares issued or

Shareholders' Equity

outstanding

Common stock, without par value, 20,000 shares authorized, 10,984 and 10,964 shares

issued and outstanding

Accumulated other comprehensive loss
Retained earnings

Total shareholders' equity
Total liabilities and shareholders' equity

2014

2013

2,238 $
123,804

3,186
115,288

311,108
20,434
1,125
458,709
366,989
(189,603 )
177,386
16,951
33,646
14,056
700,748 $

3,530 $
91,252
10,224
26,971
131,977
244,090
-
13,249
30,651
419,967

286,371
12,786
-
417,631
361,368
(170,484)
190,884
40,787
34,535
13,512
697,349

13,090
126,012
10,723
15,808
165,633
146,075
40,104
13,445
33,476
398,733

126,339
(549 )
154,991
280,781
700,748 $

124,118
(437)
174,935
298,616
697,349

The accompanying notes are an integral part of these balance sheets.

Olympic Steel, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31,
(in thousands)

Cash flows from (used for) operating activities:

Net income (loss)
Adjustments to reconcile net income (loss) to net cash from

operating activities -

Depreciation and amortization
Goodwill impairment
Asset impairment of joint venture real estate
(Gain) loss on disposition of property and equipment
Stock-based compensation
Other long-term assets
Other long-term liabilities

Changes in working capital:

Accounts receivable
Inventories
Prepaid expenses and other
Accounts payable
Change in outstanding checks
Accrued payroll and other accrued liabilities

Net cash from (used for) operating activities

Cash flows from (used for) investing activities:

Capital expenditures
Proceeds from disposition of property and equipment

Net cash used for investing activities

Cash flows from (used for) financing activities:

Credit facility revolver borrowings
Credit facility revolver repayments
Principal payments under capital lease obligations
Term loan repayments
Industrial revenue bond repayments
Credit facility fees and expenses
Proceeds from exercise of stock options (including tax benefits)

and employee stock purchases

Dividends paid

Net cash from (used for) financing activities

2014

2013

2012

(19,064) $

7,647 $

2,277

21,840
23,836
-
248
2,074
(386)
(3,134)
25,414

(8,516)
(24,737)
(7,648)
(24,090)
(10,670)
10,663
(64,998)
(39,584)

23,582
-
-
169
1,724
(3,771 )
(204 )
29,147

(2,447 )
3,652
(1,055 )
9,282
15,259
843
25,534
54,681

(7,834)
68
(7,766)

(16,098 )
20
(16,078 )

632,726
(534,711)
-
(48,854)
(810)
(1,218)

147
(878)
46,402

423,232
(454,732 )
(1,407 )
(8,750 )
(785 )
(3 )

122
(876 )
(43,199 )

22,156
6,583
36
(198)
2,342
(1,619)
(107)
31,470

9,738
(12,258)
1,345
(2,828)
(126)
400
(3,729)
27,741

(23,373)
486
(22,887)

535,360
(528,190)
(170)
(8,749)
(755)
(1,212)

114
(873)
(4,475)

Cash and cash equivalents:

Net change
Beginning balance
Ending balance

(948)
3,186
2,238 $

(4,596 )
7,782
3,186 $

379
7,403
7,782

The accompanying notes are an integral part of these statements.

Olympic Steel, Inc.
Supplemental Disclosures of Cash Flow Information
For The Years Ended December 31,
(in thousands)

Cash paid during the period

Interest paid
Income taxes paid

2014

2013

2012

$
$

5,793 $
4,658 $

5,537 $
7,556 $

7,295
6,940

The accompanying notes are an integral part of these statements

Olympic Steel, Inc.
Consolidated Statements of Shareholders’ Equity
For The Years Ended December 31,
(in thousands)

Accumulated
Other

Common Retained Comprehensive

Stock

Earnings

Loss

Total
Equity

Balance at December 31, 2011

$ 119,816 $

166,760 $

- $

286,576

Net income
Payment of dividends
Exercise of stock options and employee stock purchases (36

shares)

Stock-based compensation
Change in fair value of interest rate hedge

- $
-

2,277 $
(873)

114
2,342
-

-
-
-

- $
-

-
-
(579)

2,277
(873)

114
2,342
(579)

Balance at December 31, 2012

$ 122,272 $

168,164 $

(579) $

289,857

Net income
Payment of dividends
Exercise of stock options and employee stock purchases (12
shares)
Stock-based compensation
Change in fair value of interest rate hedge

- $
-

7,647 $
(876)

122
1,724
-

-
-
-

- $
-

-
-
142

7,647
(876)

122
1,724
142

Balance at December 31, 2013

$ 124,118 $

174,935 $

(437) $

298,616

Net income (loss)
Payment of dividends
Exercise of stock options and employee stock purchases (7

shares)

Stock-based compensation
Changes in fair value of hedges
Other

- $
-

(19,064) $
(878)

147
2,074
-
-

-
-
(2)

- $
-

-
(113)
1

(19,064)
(878)

147
2,074
(113)
(1)

Balance at December 31, 2014

$ 126,339 $

154,991 $

(549) $

280,781

The accompanying notes are an integral part of these statements.

Olympic Steel, Inc.
Notes to Consolidated Financial Statements
For The Years Ended December 31, 2014, 2013 and 2012

1. Summary of Significant Accounting Policies:

Nature of Business

The Company is a leading U.S. metals service center specializing in the processing and distribution of large volumes of
carbon, coated, aluminum and stainless steel, flat-rolled coil, sheet and plate products and tubular and pipe products from
facilities throughout the United States. The Company operates in two reportable segments; flat products and tubular and pipe
products. In recent years the Company has increased its participation in the stainless and aluminum markets, which the
Company refers to as specialty metals. As a result, based on how the chief operating decision maker, or CODM, is expected
to make decisions, assess performance and allocate resources in the future, the Company expects to disclose three reportable
segments beginning in the first quarter of 2015. The segments will be flat products, tubular and pipe products, and specialty
metals. Through its flat products segment, the Company sells and distributes large volumes of processed carbon, coated,
aluminum and stainless flat-rolled sheet, coil and plate products. Through its tubular and pipe products segment, the Company
distributes metals tubing, pipe, bar, valve and fittings and the fabrication of pressure parts supplied to various industrial
markets.

Principles of Consolidation and Basis of presentation

The accompanying consolidated financial statements include the accounts of Olympic Steel, Inc. and its wholly-owned
subsidiaries (collectively, the Company or Olympic), after elimination of intercompany accounts and transactions.

Accounting Estimates

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

Concentration Risks

The Company is a major customer of flat-rolled coil and plate and tubular and pipe steel for many of its principal suppliers,
but is not dependent on any one supplier. The Company purchased approximately 43%, 42%, and 44% of its total steel
requirements from its three largest suppliers in 2014, 2013 and 2012, respectively.

The Company has a diversified customer and geographic base, which reduces the inherent risk and cyclicality of its business.
The concentration of net sales to the Company’s top 20 customers approximated 29%, 30% and 31% of consolidated net
sales in 2014, 2013 and 2012, respectively. In addition, the Company’s largest customer accounted for approximately 6%,
5% and 4% of consolidated net sales in 2014, 2013 and 2012, respectively. Sales to industrial machinery and equipment
manufacturers and their fabricators accounted for 51%, 50% and 50% of consolidated net sales in 2014, 2013 and 2012,
respectively.

Cash and Cash Equivalents

Cash equivalents consist of short-term highly liquid investments, with a three month or less maturity, which are readily
convertible into cash.

Fair Market Value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or
most advantageous market for the liability in an orderly transaction between market participants on the measurement
date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. To
measure fair value, the Company applies a fair value hierarchy that is based on three levels of inputs, of which the first two
are considered observable and the last unobservable, as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar
assets or liabilities; quoted prices that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets or liabilities.

Financial instruments, such as cash and cash equivalents, accounts receivable, accounts payable and the credit facility
revolver, are stated at their carrying value, which is a reasonable estimate of fair value. The fair value of marketable securities
is based on quoted market prices.

Accounts Receivable

The Company’s allowance for doubtful accounts is maintained at a level considered appropriate based on historical
experience and specific customer collection issues that the Company has identified. Estimations are based upon a calculated
percentage of accounts receivable, which remains fairly level from year to year, and judgments about the probable effects of
economic conditions on certain customers, which can fluctuate significantly from year to year. The Company cannot
guarantee that the rate of future credit losses will be similar to past experience.

Inventories

Inventories are stated at the lower of cost or market and include the costs of purchased metals, inbound freight, external
processing and applicable labor and overhead costs. Costs of our flat products segment’s inventories, including flat-rolled
sheet, coil and plate products are determined using the specific identification method.

Certain of the Company’s tubular and pipe products inventory is stated under the last-in, first-out (LIFO) method. At
December 31, 2014 and December 31, 2013, approximately $46.6 million, or 15.0% of consolidated inventory, and $43.9
million, or 15.3% of consolidated inventory, respectively, was reported under the LIFO method of accounting. The cost of
the remainder of tubular and pipe product segment’s inventory is determined using a weighted average rolling first-in, first-
out (FIFO) method.

On the Consolidated Statements of Comprehensive Income, “Cost of materials sold (exclusive of items shown separately
below)” consists of the cost of purchased metals, inbound and internal transfer freight, external processing costs, and LIFO
income or expense.

Property and Equipment, and Depreciation

Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful
lives of the assets ranging from two to 30 years. The Company capitalizes the costs of obtaining or developing internal-use
software, including directly related payroll costs. The Company amortizes those costs over five years, beginning when the
software is ready for its intended use.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired. The Company
performs an annual impairment test of goodwill for our Integrity Stainless and tubular and pipe products segment and
indefinite-lived intangible assets for the tubular and pipe products segment in the fourth quarter, or more frequently if changes
in circumstances or the occurrence of events indicate potential impairment. Events or changes in circumstances that could
trigger an impairment review include significant nonperformance relative to the expected historical or projected future
48

operating results, significant changes in the manner of the use of the acquired assets or the strategy for the overall business
or significant negative industry or economic trends. Management uses judgment to determine whether to use a qualitative
analysis or a quantitative fair value measurement for each of the Company’s reporting units that carry goodwill.

The Company estimates the fair value of goodwill and other indefinite-lived intangible assets using a discounted cash flow
methodology, an income approach, and a publicly traded companies guideline method, a market approach. Management’s
assumptions used for the calculations are based on historical results, projected financial information and recent economic
events. Actual results could differ from these estimates under different assumptions or conditions which could adversely
affect the reported value of goodwill.

During the fourth quarter of 2014, the Company engaged an independent third party valuation expert to assist with the
completion of the annual goodwill impairment testing pursuant ASC Topic 350-20-35, “Goodwill – Subsequent
measurement.” Due to challenging market conditions, the Company’s recent financial performance and the decrease of the
Company’s market capitalization, the Company decided to perform the two-step quantitative impairment test by comparing
the fair value of the Integrity Stainless and tubular and pipe products segment with its carrying value.

The first step of the goodwill impairment test showed that the fair value of the Integrity Stainless operations was in excess of
its carrying value and no goodwill impairment was identified. For the Company’s tubular and pipe products segment, it was
determined that the carrying value of the operations was in excess of the fair value and a potential goodwill impairment was
identified. Based on the second step of the impairment test, the Company concluded that the implied fair value of goodwill
for the tubular and pipe products segment was less than its carrying value and a goodwill impairment of $23.8 million was
identified and recognized.

Income Taxes

The Company, on its consolidated balance sheets, records as an offset to the estimated effect of temporary differences
between the tax basis of assets and liabilities and the reported amounts in its consolidated balance sheets, the tax effect of
operating loss and tax credit carryforwards. If the Company determines that it will not be able to fully realize a deferred tax
asset, it will record a valuation allowance to reduce such deferred tax asset to its realizable value. The Company recognizes
interest accrued related to unrecognized tax benefits in income tax expense. Penalties, if incurred, would be recognized as a
component of administrative and general expense.

Revenue Recognition

For both direct and toll shipments, revenue is recognized when title and risk of loss is transferred, which generally occurs
upon delivery to our customers. Given the proximity of the Company’s customers to its facilities, substantially all of the
Company’s sales are shipped and received within one day. Sales returns and allowances are treated as reductions to sales and
are provided for based on historical experience and current estimates and are immaterial to the consolidated financial
statements.

The engineered products produced by Chicago Tube and Iron Company (CTI) typically take several months to produce due
to their size and complexity. Substantially all projects are completed within six months. The Company may request advance
payments from customers during the production of these products. These payments are included in current short-term
liabilities on the Company’s Consolidated Balance Sheet. Due to their short-term nature, the Company uses the units of
delivery method to account for these contracts. Revenue for the contracts is recognized when the product is shipped and title
of the product transfers to the customers. Revenues for these engineered products accounted for approximately 1.7%, 1.9%
and 1.3% of our net sales during 2014, 2013 and 2012, respectively.

Shipping and Handling Fees and Costs

Amounts charged to customers for shipping and other transportation services are included in net sales. The distribution
expense line on the accompanying Consolidated Statements of Comprehensive Income is entirely comprised of all shipping
and other transportation costs incurred by the Company in shipping goods to its customers.

Recoverability of Long-lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. Events or changes in circumstances that
could trigger an impairment review include significant underperformance relative to the expected historical or projected
future operating results, significant changes in the manner of the use of the acquired assets or the strategy for the overall
business or significant negative industry or economic trends. The Company records an impairment or change in useful life
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has
changed.

Due to the impairment of the tubular and pipe products segment’s goodwill, a triggering event occurred for the Company’s
long-lived assets. We performed an undiscounted cash flow analysis which indicated that there were no indicators of
impairment of the long-lived assets of the Company.

Stock-Based Compensation

The Company records compensation expense for stock options issued to employees and directors. The Company has elected
to use the modified prospective transition method where compensation expense is recorded prospectively. For additional
information, see Note 11, Equity Plans.

Impact of Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, “Revenue from Contracts with
Customers.” This ASU is a joint project initiated by the Financial Accounting Standards Board and the International
Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for
U.S. generally accepted accounting principles and International Financial Reporting Standards that will remove
inconsistencies and weaknesses in revenue requirements; provide a more robust framework for addressing revenue issues;
improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; provide
more useful information to users of financial statements through improved disclosure requirements; and simplify the
preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance is
effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting
period. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its
consolidated financial statements.

2. Accounts Receivable:

Accounts receivable are presented net of allowances for doubtful accounts and unissued credits of $2.9 million and $3.2
million as of December 31, 2014 and 2013, respectively. Bad debt expense totaled $467 thousand in 2014, $83 thousand in
2013 and $322 thousand in 2012.

3. Inventories:

Inventories consisted of the following:

(in thousands)
Unprocessed
Processed and finished

Totals

As of December 31, As of December 31,

2014

2013

238,226 $
72,882
311,108 $

219,401
66,970
286,371

During 2014, the Company recorded $365 thousand of LIFO expense as a result of increased metals pricing during 2014.
The LIFO expense decreased the Company’s inventory balance and increased its cost of materials sold.

During 2013, the Company recorded $3.6 million of LIFO income as a result of the continued decline of metals pricing in
2013. The LIFO income increased the Company’s inventory balance and decreased its cost of materials sold. In the first
quarter of 2013, the Company made an out-of-period adjustment to record previously unrecognized LIFO income of $1.9
million, which resulted in an increase to after-tax income of $1.2 million. The Company determined that this adjustment was
not material to its 2013 or prior period consolidated financial statements.

If the FIFO method had been in use, inventories would have been $3.2 million and $3.6 million lower than reported at
December 31, 2014 and 2013, respectively.

4. Property and Equipment:

Property and equipment consists of the following:

(in thousands)

Land
Land improvements
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Computer software and equipment
Vehicles
Construction in progress

Less accumulated depreciation
Net property and equipment

Depreciable
Lives

December 31,
2014

December 31,
2013

- $
5-10
7-30
2-15
3-7
2-5
2-5
-

16,001 $
2,764
131,107
181,378
6,550
26,842
1,247
1,100
366,989
(189,603)
177,386 $

16,193
2,650
132,299
172,671
6,422
25,844
1,220
4,069
361,368
(170,484)
190,884

Leasehold improvements are included with buildings and improvements and are depreciated over the life of the lease or seven
years, whichever is less.

Construction in progress, as of December 31, 2014, primarily consisted of payments for additional processing equipment at
our existing facilities that was not yet placed into service.

5. Intangible Assets:

Intangible assets, net, consisted of the following as of December 31, 2014 and 2013:

(in thousands)

December 31, 2014

Gross
Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Customer relationships - subject to amortization $
Trade name - not subject to amortization

13,332 $
23,425
36,757 $

(3,111) $
-
(3,111) $

10,221
23,425
33,646

(in thousands)

December 31, 2013

Gross
Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Customer relationships - subject to amortization $
Trade name - not subject to amortization

13,332 $
23,425
36,757 $

(2,222) $
-
(2,222) $

11,110
23,425
34,535

All of the Company’s intangible assets were recorded in connection with its July 1, 2011 acquisition of CTI. The intangible
assets noted above were evaluated on the premise of highest and best use to a market participant, primarily utilizing the
income approach valuation methodology. The useful life of the CTI trade name was determined to be indefinite primarily
due to its history and reputation in the marketplace, the Company’s expectation that the CTI trade name will continue to be
used throughout the life of CTI, and the conclusion that there are currently no other factors identified that would limit its
useful life. The useful life of the CTI customer relationships was determined to be fifteen years, based primarily on the
consistent and predictable revenue source associated with the existing CTI customer base, the present value of which extends
through the fifteen year amortization period. The Company will continue to evaluate the useful life assigned to our
amortizable customer relationships in future periods.

Due to the impairment of the tubular and pipe segment’s goodwill, a triggering event occurred for the intangible assets subject
to amortization and an impairment test was completed. Additionally, the indefinite lived intangible asset was subject to the
Company’s annual impairment test. These tests revealed no impairment to the Company’s intangible assets.

The Company estimates that amortization expense for its intangible assets subject to amortization will be $0.9 million per
year in each of the next five years.

6. Goodwill:

In accordance with the Accounting Standards Codification (ASC), on an annual basis, an impairment test of goodwill is
performed in the fourth quarter or more frequently if changes in circumstances or the occurrence of events indicate potential
impairment. Events or changes in circumstances that could trigger an impairment review include significant nonperformance
relative to the expected historical or projected future operating results, significant changes in the manner of the use of the
acquired assets or the strategy for the overall business or significant negative industry or economic trends.

During the fourth quarter of 2014, the Company engaged an independent third party valuation expert to assist with the
completion of the annual goodwill impairment testing pursuant ASC Topic 350-20-35, “Goodwill – Subsequent
measurement.” Due to challenging fourth quarter market conditions, the Company’s recent financial performance and the
decrease of the Company’s market capitalization, the Company decided to perform the two-step quantitative impairment test
by comparing the fair value of the Integrity Stainless and tubular and pipe products segment with its carrying value.

The first step of the goodwill impairment test showed that the fair value of the Integrity Stainless operations was in excess of
its carrying value and no goodwill impairment was identified. For the Company’s tubular and pipe products segment, it was
determined that the carrying value of the operations was in excess of the fair value and a potential goodwill impairment was
identified. Based on the second step of the impairment test, the Company concluded that the implied fair value of goodwill

for the tubular and pipe products segment was less than its carrying value and a goodwill impairment of $23.8 million was
recorded.

The determination of fair value of the reporting units used to perform the first step of the impairment test requires judgment
and involves significant estimates and assumptions about the expected future cash flows and the impact of market conditions
on those assumptions. Due to the inherent uncertainty associated with these estimates, actual results could differ materially
from these estimates. Although management believes the assumptions used in testing the Company’s reporting units’
goodwill for impairment are reasonable, it is possible that market and economic conditions could deteriorate further or not
improve as expected. Additional declines in or a lack of recovery in market conditions from current levels, weaker than
anticipated Company financial performance, or an increase in the market-based weighted average cost of capital, among
other factors, could significantly impact the impairment analysis and may result in further goodwill impairment charges that,
if incurred, could have a material adverse effect on the Company’s financial condition and results of operations. A 1% change
to the weighted average cost of capital would impact the goodwill impairment by $16 million to $20 million and a 1% change
in the terminal growth rate would impact the goodwill impairment by $10 million to $13 million.

Goodwill, by reportable segment, was as follows as of December 31, 2014 and 2013:

(in thousands)
Balance as of December 31, 2012

Acquisitions
Impairments

Balance as of December 31, 2013

Acquisitions
Impairments

Balance as of December 31, 2014

Flat Products

Tubular and Pipe
Products

Total

500 $
-
-
500 $
-
-
500 $

40,287 $
-
-
40,287 $
-
(23,836)
16,451 $

40,787
-
-
40,787
-
(23,836)
16,951

The goodwill is not deductible for income tax purposes. The goodwill represents the excess of cost over the fair value of net
tangible and intangible assets acquired. The Company paid goodwill in conjunction with the acquisitions, as they enhance
the Company’s commercial opportunities by adding new product offerings to an expanded customer base and by increasing
the Company’s distribution footprint.

7. Debt:

The Company’s debt is comprised of the following components:

(in thousands)
Asset-based revolving credit facility due June 30, 2019
Asset-based revolving credit facility due June 30, 2016
Term loan due June 30, 2016
Industrial revenue bond due April 1, 2018
Total debt

Less current amount

Total long-term debt

As of

December 31,

2014

2013

244,090 $
-
-
3,530
247,620
(3,530)
244,090 $

-
146,075
48,854
4,340
199,269
(13,090)
186,179

On June 30, 2014, the Company amended its existing asset-based credit facility (ABL Credit Facility). The ABL Credit
Facility amendment provides for, among other things: (i) a reduction in the applicable margin for loans under the Company’s
Loan and Security Agreement; (ii) a consolidation of the previous $315.0 million revolver and then outstanding $44.5 million
term loan into a $365 million revolving credit facility; (iii) the removal of the Company’s real estate as collateral for
borrowings; and (iv) the extension of the maturity date until June 30, 2019. Revolver borrowings are limited to the lesser of
a borrowing base, comprised of eligible receivables and inventories, or $365 million in the aggregate. The ABL Credit Facility
matures on June 30, 2019.

The ABL Credit Facility requires the Company to comply with various covenants, the most significant of which include: (i)
until maturity of the ABL Credit Facility, if any commitments or obligations are outstanding and the Company’s availability
is less than the greater of $30 million or 10.0% of the aggregate amount of revolver commitments ($36.5 million at December
31, 2014) then the Company must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed
charges of at least 1.00 to 1.00 for the most recent twelve fiscal month period; (ii) limitations on dividend payments; and (iii)
restrictions on additional indebtedness. The Company has the option to borrow under its revolver based on the agent’s base
rate plus a premium ranging from 0.00% to 0.25% or the London Interbank Offered Rate (LIBOR) plus a premium ranging
from 1.25% to 3.00%.

As of December 31, 2014, the Company was in compliance with its covenants and had approximately $98 million of
availability under the ABL Credit Facility.

As of December 31, 2014, $3.5 million of bank financing fees, including $1.2 million related to the amendment of the ABL
Credit Facility, were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying
Consolidated Balance Sheets. The financing fees are being amortized over the five-year term of the ABL Credit facility and
are included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive
Income.

In June 2012, the Company entered into a forward starting fixed rate interest rate hedge that commenced June 2013, in order
to eliminate the variability of cash interest payments on $53.2 million of then outstanding LIBOR-based borrowings under
the ABL Credit Facility. The hedge matures on June 1, 2016 and the notional amount is reduced monthly by $729 thousand.
The hedged balance as of December 31, 2014 was $40.1 million. The interest rate hedge fixed the rate at 1.21% plus a
premium ranging from 1.75% to 2.25%. Although the Company is exposed to credit loss in the event of nonperformance by
the other parties to the interest rate hedge agreement, the Company anticipates performance by the counterparties.

As part of CTI acquisition in July 2011, the Company assumed approximately $5.9 million of Industrial Revenue Bond (IRB)
indebtedness issued through the Stanly County, North Carolina Industrial Revenue and Pollution Control Authority. The
bond matures in April 2018, with the option to provide principal payments annually on April 1st. On April 1, 2014, the
Company paid an optional principal payment of $810 thousand. Since the IRB is remarketed annually, it is included in
“Current portion of long-term debt” on the accompanying Consolidated Balance Sheets. Interest is payable monthly, with a
variable rate that resets weekly. As a security for payment of the bonds, the Company obtained a direct pay letter of credit
issued by JPMorgan Chase Bank, N.A. The letter of credit reduces annually by the principal reduction amount. The interest
rate at December 31, 2014 was 0.16% for the IRB debt.

CTI entered into an interest rate swap agreement to reduce the impact of changes in interest rates on the above IRB. At
December 31, 2014, the effect of the swap agreement on the bond was to fix the rate at 3.46%. The swap agreement matures
in April 2018, and is reduced annually by the amount of the optional principal payments on the bond. The Company is
exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreement. However, the
Company does not anticipate nonperformance by the counterparties.

Scheduled Debt Maturities, Interest, Debt Carrying Values

The Company’s principal payments over the next five years and thereafter are detailed in the table below:

(in thousands)
Revolver
Industrial revenue bond
Total principal payments

2015
$

2016

2017

- $
865
865 $

- $
895
895 $

2018

2019
- $ 244,090 $
930
-
930 $ 244,090 $

- $
840
840 $

Thereafter Total

- $ 244,090
-
3,530
- $ 247,620

The overall effective interest rate for all debt, exclusive of deferred financing fees and deferred commitment fees, amounted
to 2.4%, 2.3% and 2.7% in 2014, 2013 and 2012, respectively. Interest paid totaled $5.8 million, $5.5 million and $7.3 million
for the years ended December 31, 2014, 2013 and 2012, respectively. Average total debt outstanding was $234.7 million,
$219.2 million and $254.2 million in 2014, 2013 and 2012, respectively.

8. Derivative Instruments:

Metals swaps

During 2014, 2013 and 2012, the Company entered into nickel swaps indexed to the London Metal Exchange (LME) price
of nickel with third-party brokers. In 2014, the Company entered into carbon swaps indexed to the New York Mercantile
Exchange (NYMEX) price of U.S. Midwest Domestic Hot-Rolled Coil Steel with third-party brokers. The nickel and carbon
swaps are treated as derivatives for accounting purposes. The Company entered into the swaps to mitigate its customers’ risk
of volatility in the price of metals. The outstanding nickel swaps have one to seventeen months remaining and the outstanding
carbon swaps have one to twelve months remaining. The swaps are settled with the brokers at maturity. The economic benefit
or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. The primary risk
associated with the metals swaps is the ability of customers or third-party brokers to honor their agreements with the Company
related to derivative instruments. If the customer or third-party brokers are unable to honor their agreements, the Company’s
risk of loss is the fair value of the metals swaps.

While these derivatives are intended to help the Company manage risk, they have not been designated as hedging instruments.
The periodic changes in fair value of the metals and embedded customer derivative instruments are included in “Cost of
materials sold” in the Consolidated Statements of Comprehensive Income. The Company recognizes derivative positions
with both the customer and the third party for the derivatives and classifies cash settlement amounts associated with them as
part of “Cost of materials sold” in the Consolidated Statements of Comprehensive Income. The cumulative change in fair
value of the metals swaps that have not yet settled are included in “Other accrued liabilities”, and the embedded customer
derivatives are included in “Accounts receivable, net” on the Consolidated Balance Sheets at December 31, 2014 and 2013.

In 2014, the Company entered into carbon swaps to mitigate its risk of volatility in the price of metals. The swaps are indexed
to the NYMEX price of U.S. Midwest Domestic Hot-Rolled Coil Steel with third-party brokers. The outstanding carbon
swaps have four to twelve months remaining. The metals swaps are accounted for as cash flow hedges and are included in
“Other accrued liabilities” and “Prepaid expenses and other” on the Consolidated Balance Sheet at December 31, 2014. The
periodic change in fair value of the metals hedges are included in “Accumulated other comprehensive loss” on the
Consolidated Balance Sheet at December 31, 2014.

Interest rate swap

CTI entered into an interest rate swap to reduce the impact of changes in interest rates on its IRB. The swap agreement
matures April 2018, the same time as the IRB, but the notional amount is reduced annually by the optional principal payments
on the IRB. Although the Company is exposed to credit loss in the event of nonperformance by the other parties to the interest
rate swap agreement, the Company anticipates performance by the counterparties. The interest rate swap is not treated as a
hedging instrument for accounting purposes.

The periodic changes in fair value of the interest rate swap and cash settlement amounts associated with the interest rate swap
are included in “Interest and other expense on debt” in the Consolidated Statements of Comprehensive Income.

Fixed rate interest rate hedge

In June 2012, the Company entered into a forward starting fixed rate interest rate hedge that commenced June 2013 in order
to eliminate the variability of cash interest payments on $53.2 million of the outstanding LIBOR-based borrowings under the
ABL Credit Facility. The balance as of December 31, 2014 was $40.1 million. The hedge matures on June 1, 2016 and the
notional amount is reduced monthly by $729 thousand. The interest rate hedge fixed the rate at 1.21% plus a premium ranging
from 1.25% to 1.75%. Although the Company is exposed to credit loss in the event of nonperformance by the other parties
to the interest rate hedge agreement, the Company anticipates performance by the counterparties. The fixed interest rate hedge
is accounted for as a cash flow hedging instrument for accounting purposes.

The table below shows the total net gain or (loss) recognized in the Company’s Consolidated Statements of Comprehensive
Income of the derivatives for the years ended December 31, 2014, 2013 and 2012.

(in thousands)
Interest rate swap (CTI)
Fixed interest rate swap (ABL)
Metals swaps
Embedded customer derivatives
Total gain (loss)

Net Gain (Loss) Recognized
2013

2012

2014

(100) $
(472)
622
(934)
(884) $

(167) $
(309)
(1,037)
1,037
(476) $

(46)
-
(113)
113
(46)

9. Fair Value of Assets and Liabilities:

The Company’s financial instruments include cash and cash equivalents, short-term trade receivables, derivative instruments,
accounts payable and debt instruments. For short-term instruments, other than those required to be reported at fair value on
a recurring basis and for which additional disclosures are included below, management concluded the historical carrying
value is a reasonable estimate of fair value because of the short period of time between the origination of such instruments
and their expected realization.

During 2014 and 2013, there were no transfers of financial assets between Levels 1, 2 or 3 fair value measurements. There
have been no changes in the methodologies used at December 31, 2014 and December 31, 2013. Following is a description
of the valuation methodologies used for assets and liabilities measured at fair value as of December 31, 2014 and
December 31, 2013:

Metals swaps and embedded customer derivatives – Determined by using Level 2 inputs that include the price of
nickel indexed to the LME and the price of Hot Rolled Coil Steel indexed to the NYMEX. The fair value is
determined based on quoted market prices and reflects the estimated amounts the Company would pay or receive to
terminate the nickel swaps.

Interest rate swap – Based on the present value of the expected future cash flows, considering the risks involved,
and using discount rates appropriate for the maturity date. Market observable Level 2 inputs are used to determine
the present value of future cash flows.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a
recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

(in thousands)
Assets:
Embedded customer derivatives
Total assets at fair value

Liabilities:
Metals swaps
Interest rate swap (CTI)
Fixed interest rate swap (ABL)
Total liabilities recorded at fair value

(in thousands)
Liabilities:
IRB
ABL Credit Facility
Total liabilities not recorded at fair value

Value of Items Recorded at Fair Value
As of December 31, 2014

Level 1

Level 2

Level 3

Total

$
$

- $
- $

- $
-
-
- $

487 $
487 $

487 $
178
386
1,051 $

- $
- $

- $
-
-
- $

487
487

487
178
386
1,051

Value of Items Not Recorded at Fair Value
As of December 31, 2014

Level 1

Level 2

Level 3

Total

3,530 $
-
3,530 $

- $
244,090
244,090 $

3,530
- $
-
244,090
- $ 247,620

The value of the items not recorded at fair value represent the carrying value of the liabilities.

(in thousands)
Assets:
Embedded customer derivatives
Total assets at fair value

Liabilities:
Metals swaps
Interest rate swap (CTI)
Fixed interest rate swap (ABL)
Total liabilities recorded at fair value

(in thousands)
Liabilities:
IRB
Term loan
ABL Credit Facility
Total liabilities not recorded at fair value

Value of Items Recorded at Fair Value
As of December 31, 2013

Level 1

Level 2

Level 3

Total

$
$

- $
- $

- $
-
-
- $

614 $
614 $

614 $
279
710
1,603 $

- $
- $

- $
-
-
- $

614
614

614
279
710
1,603

Value of Items Not Recorded at Fair Value
As of December 31, 2013

Level 1

Level 2

Level 3

Total

4,340 $
-
-
4,340 $

- $
48,854
146,075
194,929 $

- $
-
-
- $

4,340
48,854
146,075
199,269

The value of the items not recorded at fair value represent the carrying value of the liabilities.

The fair value of the IRB is determined using Level 1 inputs. The carrying value and the fair value of the IRB that qualify as
financial instruments were $3.5 million and $4.3 million, respectively, at December 31, 2014 and 2013.

The fair values of the revolver and term loan are determined using Level 2 inputs. The carrying value of the revolver was
$244.1 million at December 31, 2014. The carrying values of the revolver and the term loan were $146.1 million and $48.9
million, respectively, at December 31, 2013. The Level 2 fair value of the Company's long-term debt was estimated using
prevailing market interest rates on debt with similar creditworthiness, terms and maturities.

Assets Measured at Fair Value on a Nonreccuring Basis

12/31/2014 Level 1 Level 2 Level 3

Total Gain/
(Loss)

Goodwill (tubular and pipe products segment)

16,451 $

Total

16,451 $

- $

16,451 $

(23,836)

- $

16,451 $

(23,836)

The fair value of Goodwill is using level 3 inputs. See note 6 for the key assumptions in determining fair value.

10. Accumulated Other Comprehensive Loss:

In June 2012, the Company entered into a forward starting fixed rate interest rate hedge commencing July 2013 in order to
eliminate the variability of cash interest payments on $53.2 million of the outstanding LIBOR-based borrowings under the
ABL Credit Facility. The hedge matures on June 1, 2016 and the notional amount is reduced monthly by $729 thousand. The
balance as of December 31, 2014 was $40.1 million. The fixed rate interest rate hedge is accounted for as a cash flow hedging
instrument for accounting purposes. The fair value of the interest rate hedge is included in “Accumulated other comprehensive
loss” on the Consolidated Balance Sheets.

During 2014, the Company entered into carbon swaps indexed to the NYMEX price of U.S. Midwest Domestic Hot-Rolled
Coil Steel with third party brokers. The Company entered into the carbon swaps in order to mitigate the volatility in the price
of metals. The carbon swaps are accounted for as cash flow hedges and are included in “Other current assets” and “Other

current liabilities” on the Company’s Consolidated Balance Sheets at December 31, 2014. The change in the fair value of the
carbon swaps is included in “Accumulated other comprehensive loss” on the Consolidated Balance Sheets.

11. Equity Plans:

Stock Options

The following table summarizes stock-based award activity during the year ended December 31, 2014:

Number of Weighted Average Contractual Term
Options

Exercise Price

(in years)

Aggregate Intrinsic
Value
(in thousands)

Weighted Average
Remaining

Outstanding at December 31, 2013
Granted
Exercised
Canceled
Outstanding at December 31, 2014
Exercisable at December 31, 2014

27,170 $
-
(7,000)
-
20,170 $
20,170 $

27.40
-
12.32
-
32.63
32.63

2.3 $
2.3 $

-
-

There were 7,000, 11,667 and 4,168 stock options exercised during 2014, 2013 and 2012, respectively. The total intrinsic
value of stock options exercised during the years ended December 31, 2014, 2013 and 2012 was $103 thousand, $218
thousand and $56 thousand, respectively. Net cash proceeds from the exercise of stock options, exclusive of income tax
benefits, were $86 thousand, $86 thousand and $34 thousand for the years ended December 31, 2014, 2013 and 2012,
respectively. Income tax benefits of $40 thousand, $83 thousand and $21 thousand were realized from stock option exercises
during the years ended December 31, 2014, 2013 and 2012, respectively.

Restricted Stock Units

Pursuant to the Olympic Steel 2007 Omnibus Incentive Plan (Plan), the Company may grant stock options, stock appreciation
rights, restricted shares, restricted share units, performance shares, and other stock- and cash-based awards to employees and
Directors of, and consultants to, the Company and its affiliates. Under the Plan, 500,000 shares of common stock are available
for equity grants.

On March 1, 2014, the Compensation Committee of the Company’s Board of Directors approved the grant of 2,544 restricted
stock units (RSUs) to each non-employee Director. In addition, on each of January 2, 2013 and January 3, 2012, the grant of
1,800 RSUs to each non-employee Director was approved. Subject to the terms of the Plan and the RSU agreement, the RSUs
vest after one year of service (from the date of grant). The RSUs are not converted into shares of common stock until the
Director either resigns or is terminated from the Board of Directors.

The fair value of each RSU was estimated to be the closing price of the Company’s common stock on the date of the grant,
which was $27.51, $23.41 and $25.55 for the grants on March 1, 2014, January 2, 2013 and January 3, 2012, respectively.

The Company’s Senior Management Compensation Program includes an equity component in order to encourage more
ownership of common stock by the senior management. The Senior Management Compensation Program imposes stock
ownership requirements upon the participants. Each participant is required to own at least 750 shares of common stock for
each year that the participant participates in the Senior Management Compensation Program. Any participant that fails to
meet the stock ownership requirements will be ineligible to receive any equity awards under the Company’s equity
compensation plans, including the Plan, until the participant satisfies the ownership requirements. To assist participants in
meeting the stock ownership requirements, on an annual basis, if a participant purchases 500 shares of common stock on the
open market, the Company will award that participant 250 shares of common stock. During 2014, 2013 and 2012, the
Company matched 9,875, 8,500 and 7,250 shares, respectively. Additionally, any participant who continues to comply with
the stock ownership requirements as of the five-year, 10-year, 15-year, 20-year and 25-year anniversaries of the participant’s
participation in the Senior Management Compensation Program will receive a restricted stock unit award with a dollar value
of $25 thousand, $50 thousand, $75 thousand, $100 thousand and $100 thousand, respectively. Restricted stock unit awards
will convert into the right to receive shares of common stock upon a participant’s retirement, or earlier upon the executive’s
death or disability or upon a change in control of the Company.

In recognition of their performance and dedicated years of service, on December 31, 2011, the Compensation Committee of
the Board of Directors granted 81,475 RSUs to Messrs. Siegal, Wolfort and Marabito. The RSUs have a vesting period of
five years and will be fully vested on December 31, 2016. Except in limited circumstances, the RSUs will not convert into
shares of common stock until the retirements of Messrs. Siegal, Wolfort and Marabito, respectively. These RSUs are not a
part of the 2011 Senior Management Compensation Program discussed above. The fair value of each RSU was estimated to
be the closing price of the common stock on the date of the grant, which was $23.32 on December 31, 2011.

Stock-based compensation expense recognized on RSUs is summarized in the following table:

(in thousands)
RSU expense before taxes
RSU expense after taxes
Impact per basic share
Impact per diluted share

$
$
$
$

For the years ended December 31,
2013

2012

2014

1,252 $
774 $
0.07 $
0.07 $

936 $
554 $
0.05 $
0.05 $

1,238
278
0.03
0.03

All pre-tax charges related to RSUs were included in the caption “Administrative and general” on the accompanying
Consolidated Statements of Comprehensive Income.

The following table summarizes the activity related to RSUs for the twelve months ended December 31, 2014:

Outstanding at December 31, 2013
Granted
Converted into shares
Forfeited
Outstanding at December 31, 2014
Vested at December 31, 2014

Number of
Shares

Weighted
Average Exercise
Price

Aggregate
Intrinsic Value
(in thousands)

209,389 $
35,939 $
(6,805) $
(500) $
238,023 $
227,002 $

24.58
27.13
19.55
22.27
25.11 $
26.01 $

3
3

Of the RSUs granted in 2014, 2013 and 2012, 21,506, 28,341 and 31,243, respectively, were used to fund supplemental
executive retirement plan contributions. There was no intrinsic value for the RSUs that were converted into shares in 2014
and 2012. There were no RSUs converted into shares during 2013.

All pre-tax charges related to RSUs were included in the caption “Administrative and general” on the accompanying
Consolidated Statements of Comprehensive Income.

12. Commitments and Contingencies:

Operating Leases

The Company leases certain warehouses, sales offices, machinery and equipment and vehicles under long-term operating
lease agreements. The leases expire at various dates through 2023. In some cases the leases include options to extend. Rent
and lease expense was $8.2 million, $7.5 million and $7.7 million for the years ended December 31, 2014, 2013 and 2012,
respectively.

The future annual minimum lease payments as of December 31, 2014 are as follows:

Lease payments

5,874 $

5,616 $

4,709 $

3,805 $

2,812 $

5,236 $

28,052

2015

2016

2017

2018

2019

Thereafter

Total

Commitments and Contingencies

The Company is party to various legal actions that it believes are ordinary in nature and incidental to the operation of its
business. In the opinion of management, the outcome of the proceedings to which the Company is currently a party will not
have a material adverse effect upon its results of operations, financial condition or cash flows.

In the normal course of business, the Company periodically enters into agreements that incorporate indemnification
provisions. While the maximum amount to which the Company may be exposed under such agreements cannot be estimated,
it is the opinion of management that these indemnifications are not expected to have a material adverse effect on the
Company’s results of operations or financial condition.

At December 31, 2014, approximately 317 of the hourly plant personnel are represented by nine separate collective bargaining
units. The table below shows the expiration dates of the collective bargaining agreements.

Expiration date
March 4, 2015
May 31, 2015
September 30, 2015
January 29, 2016
March 31, 2017
August 31, 2017
December 21, 2017
May 25, 2018
August 12, 2018

13. Income Taxes:

The components of the Company’s provision (benefit) for income taxes from continuing operations were as follows:

(in thousands)
Current:

Federal
State and local

Deferred
Income tax provision

2014

As of December 31,
2013

2012

4,859 $
657
5,516
(2,566)
2,950 $

6,207 $
1,265
7,472
(2,195)
5,277 $

8,058
1,021
9,079
(1,217)
7,862

The components of the Company’s short and long-term deferred income taxes at December 31 are as follows:

(in thousands)
Deferred tax assets:

Inventory (excluding LIFO reserve)
Net operating loss and tax credit carryforwards
Allowance for doubtful accounts
Accrued expenses
Other

Valuation reserve
Total deferred tax assets

Deferred tax liabilities:

LIFO reserve
Property and equipment
Intangibles
Other

Total deferred tax liabilities
Deferred tax liabilities, net

2014

2013

2,881 $
2,971
519
7,642
83
14,096
(1,381 )
12,715

(6,049 )
(22,684 )
(14,930 )
24
(43,639 )
(30,924 ) $

2,588
3,044
585
7,459
83
13,759
(1,298)
12,461

(6,213)
(24,339)
(15,259)
(24)
(45,835)
(33,374)

The deferred tax liability decreased by $125 thousand related to the interest rate swap.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

(in thousands)

2014

2013

2012

Balance as of January 1
Decreases related to prior year tax positions
Increases related to current year tax positions
Decreases related to lapsing of statute of limitations
Balance as of December 31

75 $
(17)
13
(13)
58 $

112 $
(37)
25
(25)
75 $

75
-
61
(24)
112

It is expected that the amount of unrecognized tax benefits will not materially change in the next twelve months. The tax
years 2011 through 2013 remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in income tax expense. As of December 31, 2014 and
December 31, 2013, the Company had approximately $4 thousand of gross accrued interest related to uncertain tax positions,
respectively.

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

U.S. federal statutory rate
State and local taxes, net of federal benefit
Goodwill impairment
Valuation allowance
Change in unrecognized tax benefits
All other, net
Effective income tax rate

2014

2013

2012

35.0%
(1.6%)
(52.0%)
-
(0.1%)
0.4%
(18.3%)

35.0 %
3.0 %
-
-
(0.2 %)
3.0 %
40.8 %

35.0%
6.9%
22.7%
8.5%
-
4.4%
77.5%

Income taxes paid in 2014, 2013 and 2012 totaled $4.7 million, $7.6 million and $6.9 million, respectively. Some subsidiaries
of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss
carryforwards expiring over the next seven to 20 years. A valuation allowance is recorded to reduce certain deferred tax
assets to the amount that is more likely than not to be realized.

14. Shares Outstanding and Earnings Per Share:

Earnings per share have been calculated based on the weighted average number of shares outstanding as set forth below:

(in thousands, except per share data)

For the years ended December 31,
2013

2012

2014

Weighted average basic shares outstanding
Assumed exercise of stock options and issuance of stock

awards

Weighted average diluted shares outstanding

11,120

11,065

-
11,120

9
11,074

10,989

6
10,995

Net income (loss)

Basic earnings (loss) per share
Diluted earnings (loss) per share

$
$

(19,064) $

7,647 $

2,277

(1.71) $
(1.71) $

0.69 $
0.69 $

Anti-dilutive securities outstanding

201

0.21
0.21

194

15. Segment Information:

The Company follows the accounting guidance that requires the utilization of a “management approach” to define and report
the financial results of operating segments. The management approach defines operating segments along the lines used by
the Company’s CODM to assess performance and make operating and resource allocation decisions. The Company’s CODM
evaluates performance and allocates resources based primarily on operating income (loss). The Company’s operating
segments are based on internal management reporting.

The Company operates in two reportable segments: flat products and tubular and pipe products. Through its flat products
segment, the Company sells and distributes large volumes of processed carbon, coated, aluminum and stainless flat-rolled
sheet, coil and plate products. Through its tubular and pipe products segment, the Company distributes metal tubing, pipe,
bar, valve and fittings and fabricates pressure parts supplied to various industrial markets. In recent years, the Company has
increased its participation in the stainless and aluminum markets, which the Company refers to as specialty metals. As a
result, based on how the CODM is expected to make decisions, assess performance and allocate resources in the future, the
Company is expect to disclose three reportable segments beginning in the first quarter of 2015. The segments will be flat
products, tubular and pipe products, and specialty metals.

Commencing with the first quarter of 2013, corporate expenses are reported as a separate line item in the segment reporting.
Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., both segments), including
payroll expenses for certain personnel, expenses related to being a publicly traded entity such as board of directors expenses,
audit expenses, and various other professional fees. Prior to 2013, these expenses were included in the flat products segment’s
operating results. The 2012 financial information below has been revised to reflect the new reporting structure.

The following table provides financial information by segment and reconciles the Company’s operating income by segment
to the consolidated income before income taxes for the years ended December 31, 2014, 2013 and 2012. The Company
assesses the performance of the segments based on operating income.

(in thousands)
Net sales

Flat products
Tubular and pipe products

Total net sales

Depreciation and amortization

Flat products
Tubular and pipe products
Corporate

Total depreciation and amortization

Operating income
Flat products
Tubular and pipe products
Corporate
Goodwill impairment (a)
Total operating income (loss)

Asset impairment charge of joint venture real estate
Other income (loss), net

Income (loss) before interest and income taxes

Interest and other expense on debt

Income (loss) before income taxes

For the Year Ended
December 31,
2013

2012

2014

1,191,731 $
244,539
1,436,270 $

1,026,769 $
236,562
1,263,331 $

1,138,063
245,638
1,383,701

15,055 $
5,624
101
20,780 $

12,415 $
10,185
(7,972)
(23,836)
(9,208) $
-
(126)
(9,334)
6,780
(16,114) $

16,883 $
5,308
50
22,241 $

12,106 $
14,981
(7,432)
-
19,655 $
-
(28)
19,627
6,703
12,924 $

16,065
4,795
-
20,860

13,613
17,997
(6,578)
(6,583)
18,449
(36)
83
18,496
8,357
10,139

(a) The goodwill impairment in 2014 related to the tubular and pipe products segment. The goodwill impairment in 2012

related the to flat products segment's Southern region.

(in thousands)
Capital expenditures

Flat products
Tubular and pipe products
Corporate

Total capital expenditures

Goodwill

Flat products
Tubular and pipe products

Total goodwill

Assets

Flat products
Tubular and pipe products
Corporate
Total assets

2014

2013

2012

17,004
6,369
-
23,373

4,540 $
3,273
21
7,834 $

500 $
16,451
16,951 $

3,794 $
11,616
688
16,098 $

500
40,287
40,787

496,253 $
203,937
558
700,748 $

473,397
223,314
638
697,349

There were no material revenue transactions between the flat products and tubular and pipe products segments for the years
ended December 31, 2014, 2013 and 2012.

The Company sells certain products internationally, primarily in Canada, Puerto Rico and Mexico. International sales have
been immaterial to the consolidated financial results and to the individual segment’s results.

16. Retirement Plans:

The Company’s retirement plans consist of two 401(k) plans covering certain non-union employees, two separate 401(k)
plans covering all union employees, two profit sharing plans, a multi-employer pension plan covering certain CTI employees
and a supplemental executive retirement plan (SERP) covering certain executive officers of the Company.

The 401(k) retirement plans allow eligible employees to contribute up to the statutory maximum. The Company’s non-union
401(k) matching contribution is determined annually by the Board of Directors and is based on a percentage of eligible
employees’ earnings and contributions. For the non-union flat rolled segment’s 401(k) retirement plan, the Company matched
one-half of each eligible employee’s contribution, limited to the first 6% of eligible compensation.

For the 401(k) retirement plan at our CTI locations, the Company matched one-half of each eligible employee’s first 3% of
eligible compensation and 20% of the next 3% of eligible compensation.

All union employees now participate in the profit-sharing plan on a discretionary basis, like all non-union employees.
Company contributions to the non-union profit-sharing plan are discretionary amounts as determined annually by the Board
of Directors.

In 2005, the Board of Directors adopted the SERP. Contributions to the SERP are based on: (i) a portion of the participants’
compensation multiplied by 13%; and (ii) for certain participants a portion of the participants’ compensation multiplied by a
factor which is contingent upon the Company’s return on invested capital. Benefits are subject to a vesting schedule of up to
five years.

The Company, through its CTI subsidiary, contributes to one multiemployer pension plan – the Plumbing and Heating
Wholesalers Retirement Income Plan for the Benefit of the Shopmen’s Division of Pipe Fitters’ Association Local Union
597, EIN 36-6511016, Plan Number 001 (the Multiemployer Plan). The risks of participating in the Multiemployer Plan are
different from a single-employer plan in that 1) assets contributed to the multiemployer plan by one employer may be used
to provide benefits to employees of other participating employers, 2) if a participating employer stops contributing to the
plan, the unfunded obligations of the plan may be borne by the remaining participating employers, and 3) if CTI chooses to
stop participating in the Multiemployer Plan, CTI may be required to pay the plan an amount based on the unfunded status
of the plan, referred to as a withdrawal liability.

The most recent Pension Protection Act zone status available is for the plan year beginning January 1, 2013, and the
Multiemployer Plan’s actuary has certified that the Multiemployer Plan is neither in critical status nor endangered status and
that it is in the green zone. The zone status is based on information that CTI received from the Multiemployer Plan and is
certified by the Multiemployer Plan’s actuary. Among other factors, plans in the green zone are at least 80 percent funded.

CTI contributes to the Multiemployer Plan under the terms of a collective bargaining agreement that covers certain of its
union employees, and which expires May 31, 2015. CTI contributions to the Multiemployer Plan were immaterial for the
years ended December 31, 2014 and 2013.

Retirement plan expense, which includes all Company 401(k), profit-sharing, SERP defined contributions and the
Multiemployer Plan, amounted to $2.2 million, $2.2 million and $2.1 million for the years ended December 31, 2014, 2013
and 2012, respectively.

17. Related-Party Transactions:

The Company’s Chief Executive Officer owns 50% of an entity that owns one of the Cleveland warehouses and leases it to
the Company at a fair market value annual rental of $204 thousand. The lease expires on December 31, 2018 with four five-
year renewal options.

Schedule II – Valuation and Qualifying Accounts
(in thousands)

Description
Year Ended December 31, 2012

Allowance for doubtful accounts
Tax valuation reserve

Year Ended December 31, 2013

Allowance for doubtful accounts
Tax valuation reserve

Year Ended December 31, 2014

Allowance for doubtful accounts
Tax valuation reserve

Additions

Balance at
Beginning of
Period

Charged to
Costs and
Expenses

Charged to
Other
Accounts

Deductions

Balance at
End of
Period

$
$

1,727 $
401 $

322 $
799 $

1,597 $
1,200 $

83 $
98 $

1,519 $
1,298 $

467 $
83 $

- $
- $

(452) $
- $

1,597
1,200

(161) $
- $

1,519
1,298

(638) $
- $

1,348
1,381

SUPPLEMENTAL FINANCIAL INFORMATION

Unaudited Quarterly Results of Operations
(in thousands, except per share amounts)

2014

1st

2nd

3rd

4th

Year

Net sales
Operating income (loss) (a)
Income (loss) before income taxes
Net income (loss)

Basic net income (loss) per share
Weighted average shares outstanding - basic
$
Diluted net income (loss) per share
Weighted average shares outstanding - diluted

346,913 $
6,229
4,477
2,777 $
0.25 $
11,089
0.25 $
11,090

386,047 $
7,108
5,325
3,494 $
0.32 $
11,089
0.32 $
11,089

376,617 $
4,117
2,495
1,556 $
0.14 $
11,120
0.14 $
11,120

326,693 $ 1,436,270
(9,208)
(26,662)
(16,114)
(28,411)
(19,064)
(26,891) $
(1.71)
(2.42) $
11,120
11,127
(1.71)
(2.42) $
11,120
11,127

Market price of common stock: (b)

High
Low

2013

Net sales
Operating income (loss) (a)
Income (loss) before income taxes
Net income (loss)

Basic net income (loss) per share
Weighted average shares outstanding - basic
Diluted net income (loss) per share
$
Weighted average shares outstanding - diluted

30.95 $
25.84

29.58 $
20.88

25.83 $
20.57

21.39 $
15.75

30.95
15.75

1st

2nd

3rd

4th

Year

338,064 $
9,581
7,906
5,163 $
0.47 $
11,034
0.47 $
11,042

330,804 $
6,024
4,315
2,525 $
0.23 $
11,062
0.23 $
11,072

303,990 $
4,174
2,484
1,340 $
0.12 $
11,066
0.12 $
11,077

290,473 $ 1,263,331
19,655
12,924
7,647
0.69
11,065
0.69
11,074

(124)
(1,781)
(1,381) $
(0.12) $
11,075
(0.12) $
11,075

$
$

Market price of common stock: (b)

High
Low

25.39 $
18.52

26.83 $
19.54

29.48 $
24.46

31.68 $
24.56

31.68
18.52

(a) Operating income includes $365 of LIFO expense in 2014 and $3,572 of LIFO income in 2013 and a $23,836 goodwill

impairment charge related to the Company's tubular and pipe products segment in the forth quarter of 2014.
(b) Represents the high and low sales prices of our common stock as reported by the Nasdaq Global Select Market.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluations required by Rule 13a-15 of the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered
by this Annual Report have been carried out under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer. Based upon such evaluations, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2014 in providing
reasonable assurance that information required to be disclosed by us in reports filed under the Exchange Act is recorded,
processed, summarized and reported within time periods specified in the rules and forms of the SEC.

Management’s Report on Internal Control Over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting is set forth in Part II, Item 8 of this Annual Report on
Form 10-K and is incorporated herein. PricewaterhouseCoopers LLP, the Company’s independent registered public
accounting firm, has issued an attestation report on our internal control over financial reporting that is set forth in Part II,
Item 8 of this Annual Report and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2014 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE

Information required by Item 10 as to the executive officers is provided in Part I of this Annual Report on Form 10-K and is
incorporated by reference into this section. Other information required by Item 10 will be incorporated herein by reference
to the information set forth in our definitive proxy statement for our 2015 Annual Meeting of Shareholders.

ITEM 11. EXECUTIVE COMPENSATION

Information required by Item 11 will be incorporated herein by reference to the information set forth in our definitive proxy
statement for our 2015 Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

Information required by Item 12 will be incorporated herein by reference to the information set forth in our definitive proxy
statement for our 2015 Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

Information required by Item 13 will be incorporated herein by reference to the information set forth in our definitive proxy
statement for our 2015 Annual Meeting of Shareholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by Item 14 will be incorporated herein by reference to the information set forth in our definitive proxy
statement for our 2015 Annual Meeting of Shareholders.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

PART IV

(a)(1) The following financial statements are included in Part II, Item 8:

Report of Independent Registered Public Accounting Firm

Management’s Report on Internal Control Over Financial Reporting

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012

Consolidated Balance Sheets as of December 31, 2014 and 2013

Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012

Supplemental Disclosures of Cash Flow Information for the Years Ended December 31, 2014, 2013 and 2012

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2014, 2013 and 2012

Notes to Consolidated Financial Statements for the Years Ended December 31, 2014, 2013 and 2012

(a)(2) Financial Statement Schedules.
Schedule II – Valuation and Qualifying Accounts

(a)(3) Exhibits. The Exhibits filed herewith are set forth on the Index to Exhibits filed as part of this Annual Report
and incorporated herein by reference.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

February 26, 2015

OLYMPIC STEEL, INC.

By: /s/ Richard T. Marabito
Richard T. Marabito,
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons in the capacities indicated and on the dates indicated.

February 26, 2015

/s/ Michael D. Siegal*

Michael D. Siegal

Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)

/s/ David A. Wolfort*

David A. Wolfort

President, Chief Operating Officer and Director

/s/ Richard T. Marabito*
Richard T. Marabito
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

/s/ Donald R. McNeeley *

Donald R. McNeeley

President of Chicago Tube and Iron and Director

/s/ Ralph M. Della Ratta, Jr. *
Ralph M. Della Ratta, Jr., Lead Director

/s/ Arthur F. Anton *
Arthur F. Anton, Director

/s/ Dirk A. Kempthorne *
Dirk A. Kempthorne, Director

/s/ James B. Meathe *
James B. Meathe, Director

/s/ Howard L. Goldstein *
Howard L. Goldstein, Director

* The undersigned, by signing his name hereto, does sign and execute this Annual Report on Form 10-K pursuant to the
Powers of Attorney executed by the above-named officers and directors of the Company and filed with the Securities and
Exchange Commission on behalf of such officers and directors.

By: /s/ Richard T. Marabito

Richard T. Marabito, Attorney-in-Fact

February 26, 2015

Exhibit

2.2

OLYMPIC STEEL, INC.
INDEX TO EXHIBITS

Description

Reference

Agreement and Plan of Merger, dated May 18, 2011,
by and among OLYAC II, Inc., Olympic Steel, Inc.,
Chicago Tube and Iron Company, the Stockholders of
Chicago Tube and Iron Company listed on Schedule I,
and Dr. Donald McNeeley, as the Representative of the
Stockholders.

Incorporated by reference to Exhibit 2.2 to Company’s
Form 8-K filed with the Commission on May 20, 2011
(Commission File No. 0-23320).

3.1(i)

Amended and Restated Articles of Incorporation

3.1(ii) Amended and Restated Code of Regulations

4.22

4.23

4.24

4.25

Amended and Restated Loan and Security Agreement,
dated as of July 1, 2011, by and among the Registrant,
the financial institutions from time to time party
thereto, Bank of America, N.A., as administrative
agent, and the other agents from time to time party
thereto.

First Amendment to Amended and Restated Loan and
Security Agreement, dated as of March 16, 2012, by
and among the Registrant, the financial institutions
from time to time party thereto, Bank of America,
N.A., as administrative agent, and the other agents from
time to time party thereto.

Second Amendment to Amended and Restated Loan
and Security Agreement, dated as of March 22, 2013,
by and among Olympic Steel, Inc. and certain
subsidiaries thereof, the financial institutions from time
to time party thereto, Bank of America, N.A., as
administrative agent, and the other agents from time to
time party thereto.

Second Amended and Restated Loan and Security
Agreement, dated as of June 30, 2014, by and among
the Registrant, the financial institutions from time to
time party thereto, Bank of America, N.A., as
administrative agent, and the other agents from time to
time party thereto.

10.1 * Olympic Steel, Inc. Stock Option Plan

10.8 *

Form of Management Retention Agreement for Senior
Executive Officers of the Company

10.9 *

Form of Management Retention Agreement for Other
Officers of the Company

Incorporated by reference to Exhibit 3.1(i) to the
Registration Statement on Form S-1 (Registration No.
33-73992) filed with the Commission on January 12,
1994.

Incorporated by reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-8 (Registration No.
333-1439001) filed with the Commission on June 20,
2007.

Incorporated by reference to Exhibit 4.21 to
Registrant’s Form 8-K filed with the Commission on
July 8, 2011 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 4.23 to
Registrant’s Form 8-K filed with the Commission on
March 21, 2012 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 4.24 to
Registrant’s Form 10-Q filed with the Commission on
May 3, 2013 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 4.25 to
Registrant’s Form 8-K filed with the Commission on
July 3, 2014 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.1 to the
Registration Statement on Form S-1 (Registration No.
33-73992) filed with the Commission on January 12,
1994.

Incorporated by reference to Exhibit 10.8 to
Registrant's Form 10-Q filed with the Commission on
August 7, 2000 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.9 to
Registrant's Form 10-Q filed with the Commission on
August 7, 2000 (Commission File No. 0-23320).

Exhibit

Description

Reference

10.14 * Olympic Steel, Inc. Executive Deferred Compensation

Plan dated December 15, 2004

10.15 * Form of Non-Solicitation Agreements

10.16 * Form of Management Retention Agreement

10.17 * Supplemental Executive Retirement Plan Term Sheet

10.20 * Olympic Steel, Inc. Supplemental Executive

Retirement Plan

10.21 * Olympic Steel, Inc. 2007 Omnibus Incentive Plan

Incorporated by reference to Exhibit 10.14 to
Registrant’s Form 10-K filed with the Commission on
March 14, 2005 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.15 to
Registrant’s Form 8-K filed with the Commission on
March 4, 2005 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.16 to
Registrant’s Form 10-Q filed with the Commission on
August 8, 2005 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 99.1 to
Registrant’s Form 8-K filed with the Commission on
January 5, 2006 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.20 to
Registrant’s Form 8-K filed with the Commission on
April 28, 2006 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.21 to
Registrant’s Form 8-K filed with the Commission on
May 3, 2007 (Commission File No. 0-23320).

10.27* Form of Performance-Earned Restricted Stock Unit
(PERS Unit) Agreement for Messrs. Siegal, Wolfort
and Marabito.

Incorporated by reference to Exhibit 10.27 to
Registrant’s Form 10-Q filed with the Commission on
May 5, 2009 (Commission File No. 0-23320).

10.28* Form of Performance-Earned Restricted Stock Unit

(PERS Unit) Agreement for Mr. Manson and Ms.
Potash.

Incorporated by reference to Exhibit 10.28 to
Registrant’s Form 10-Q filed with the Commission on
May 5, 2009 (Commission File No. 0-23320).

10.30 * Olympic Steel, Inc. Senior Manager Compensation

Plan

10.31 * David A. Wolfort Employment Agreement effective as

of January 1, 2011

10.32 * Donald McNeeley Employment Agreement effective as

of July 1, 2011

10.33 * Richard T. Marabito Employment Agreement effective

as of November 23, 2011

Incorporated by reference to Exhibit 10.30 to
Registrant’s Form 10-Q filed with the Commission on
May 6, 2011 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.31 to
Registrant’s Form 10-Q filed with the Commission on
May 6, 2011 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.32 to
Registrant’s Form 10-Q filed with the Commission on
November 4, 2011 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.33 to
Registrant’s Form 8-K filed with the Commission on
November 23, 2011 (Commission File No. 0-23320).

Exhibit

Description

Reference

10.34 * Form of RSU Agreements for Messrs. Siegal, Wolfort

and Marabito.

10.35 * Michael D. Siegal Employment Agreement effective as

of December 1, 2012

Incorporated by reference to Exhibit 10.34 to
Registrant’s Form 10-K filed with the Commission on
February 23, 2012 (Commission File No. 0-23320).

Incorporated by reference to Exhibit 10.35 to
Registrant’s Form 8-K filed with the Commission on
November 21, 2012 (Commission File No. 0-23320).

10.36 * Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

Incorporated by reference to Exhibit 10.36 to
Registrant’s Form 8-K filed with the Commission on
December 30, 2014 (Commission File No. 0-23320).

31.1

31.2

32.1

32.2

List of Subsidiaries

Consent of Independent Registered Public Accounting
Firm

Directors and Officers Powers of Attorney

Certification of the Principal Executive Officer of the
Company, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Certification of the Principal Financial Officer of the
Company, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Written Statement of Michael D. Siegal, Chairman and
Chief Executive Officer of the Company pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002

Written Statement of Richard T. Marabito, Chief
Financial Officer of the Company pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002

Filed herewith

Furnished herewith

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase

Document

101.DEF XBRL Taxonomy Extension Definition

101.LAB XBRL Taxonomy Extension Label Linkbase

Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase

Document

* This exhibit is a management contract or compensatory plan or arrangement.

Comparison of 5 Year Cumulative Total Return

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100 through December 2014

250.00

200.00

150.00

100.00

50.00

0.00

2009

2010

2011

2012

2013

2014

Olympic Steel Inc.

NASDAQ Composite-Total Returns

New Peer Group

Old Peer Group

The old peer group includes Worthington Industries, Shiloh Industries, Inc., A.M. Castle & Co., and Reliance Steel
& Aluminum Co. The new peer group consists of the old peer group plus Ryerson Holding Corporation (which went
public and began trading on Aug. 13, 2014).

Directors & Officers

BOARD OF DIRECTORS

Michael D. Siegal, 62
Chairman of the Board and Chief Executive Officer,
Olympic Steel

CORPORATE OFFICERS

Michael D. Siegal
Chief Executive Officer

David A. Wolfort
President and Chief Operating Officer

Richard T. Marabito
Chief Financial Officer

Donald R. McNeeley
President and Chief Operating Officer,
Chicago Tube & Iron, a subsidiary of Olympic Steel

Richard A. Manson
Vice President and Treasurer

Esther M. Potash
Chief Information Officer

Christopher M. Kelly
Secretary, Olympic Steel
Partner-in-Charge, Cleveland Office, Jones Day

David A. Wolfort, 62
President and Chief Operating Officer,
Olympic Steel

Arthur F. Anton, 57
President and Chief Executive Officer,
Swagelok Company

Ralph M. Della Ratta, 61
Founder and Managing Director,
Western Reserve Partners LLC

Howard L. Goldstein, CPA, 62
Partner,
Appelrouth, Farah & Co. P.A.

The Honorable Dirk A. Kempthorne, 63
President and Chief Executive Officer,
The American Council of Life Insurers

James B. Meathe, 59
Managing Partner,
Walloon Ventures

Donald R. McNeeley, 60
President and Chief Operating Officer,
Chicago Tube & Iron, a subsidiary of Olympic Steel

Shareholder Information

Corporate Headquarters
Olympic Steel, Inc.
22901 Millcreek Boulevard, Suite 650
Highland Hills, OH 44122
Phone: (216) 292-3800
Fax: (216) 682-4065
www.olysteel.com

Stock Listing
The Company’s common stock trades on the NASDAQ
Global Select Stock Market under the symbol “ZEUS.”

Transfer Agent and Registrar
Computershare
P.O. Box 30170
College Station, TX 77842-3170
(800) 446-2617

2015 Annual Meeting
The annual meeting of shareholders will be held:

Friday, May 1, 2015
10:00 a.m. Eastern Time
Olympic Steel, Inc.
5096 Richmond Road
Bedford Heights, OH 44146

For information and directions to the annual meeting and to
vote in person, contact ir@olysteel.com.

Independent Auditors
PricewaterhouseCoopers LLP
BP Tower, 18th Floor
200 Public Square
Cleveland, OH 44114

Legal Counsel
Jones Day
North Point
901 Lakeside Avenue
Cleveland, OH 44114

Investor Information
Shareholders and prospective investors are welcome
to call or write with questions or requests for additional
information. Inquiries should be directed to:

Matthew J. Dennis, CFA
Olympic Steel Investor Relations
Clear Perspective Group, LLC
Phone: (216) 672-0522
Email: ir@olysteel.com
www.olysteel.com

Form 10-K
Shareholders who wish to obtain, without charge, a
copy of Olympic Steel’s annual report on Form 10-K,
filed with the Securities and Exchange Commission
for the fiscal year ended Dec. 31, 2014, may do so
by writing to Investor Relations at the Company’s
Corporate Headquarters (address indicated above).

This product
is made from
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