Olympic Steel Annual Report 2015

FY2015 Annual Report · Olympic Steel

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2015 Annual Report

About the Company

Olympic Steel Inc., (Nasdaq: ZEUS) is a leading metals service center that operates in three reportable segments; carbon flat

products, specialty metals flat products and tubular and pipe products. The carbon flat products segment and the specialty

metals flat products segment are at times consolidated and referred to as the flat products segments. Some of the flat products

segments’ assets and resources are shared by the carbon and specialty metals segments and both segments’ products

are stored in the shared facilities and processed on the shared equipment. We provide metals processing and distribution

services for a wide range of customers. Our carbon flat products segment’s focus is on the direct sale and distribution of large

volumes of processed carbon and coated flat-rolled sheet, coil and plate products, and fabricated parts. Our specialty metals

flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and

coil products, flat bar products and fabricated parts. Through our Chicago Tube and Iron subsidiary, or 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. 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.

Financial Information

In thousands, except per-share and ratio data

2015

2014

2013

For the Year

Net sales

Goodwill and intangible asset 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

$ 1,175,543) $ 1,436,270

$ 1,263,331

(24,951)

(27,779)

(26,777)

(2.39)

11,192)

7,317)

(23,836)

(9,208)

(19,064)

(1.71)

11,120

7,834

19,655

7,647

0.69

11,074

16,098

$ 206,645)

$ 311,108

$ 286,371

92,877)

513,470)

148,490)

254,695)

23.25)

123,804

700,748

247,620

280,781

25.55

115,288

697,349

199,269

298,616

27.24

0.58 to 1)

0.88 to 1

0.67 to 1

2015 Letter to Shareholders

Dear Fellow Shareholders:

Entering 2015, Olympic Steel’s management team was prepared for a challenging market environment. We recognized

the global dynamics taking shape in the second half of 2014 and promptly responded with our ongoing profit improvement

program. This initiative was launched at the beginning of 2015 and mitigated the impact external developments had on our

business during the year.

This program includes many sustainable improvements that will endure long after our markets stabilize. Improvements include:

permanent operating expense reductions, margin enhancement initiatives, a sharp focus on controlling working capital and

continued growth in strategic areas. I’m pleased to report that we made strides in each of these areas in 2015:

● Operating expenses were reduced by more than 8%, or $24 million, during the year. We lowered the cost of inbound

freight by optimizing our purchasing process. Distribution expenses were reduced by expanding our proprietary truck

fleet and by negotiating new carrier contracts. In addition, we lowered operating costs by consolidating warehouse

space and centralizing certain administrative functions.

● Gross profit margin in 2015 expanded to 19.8%, compared with 19.2% in the prior year. Margins benefited from a larger

proportion of tubular and pipe products, relative to flat products. Also, our strong balance sheet allowed us to deploy

capital to earn quick-pay discounts from certain suppliers, which lowered raw material costs and elevated average

gross margin.

● We reduced inventory by 34%, or more than $100 million, through disciplined management, aligning inventory with

existing customer demand. Proceeds from inventory reductions were used to lower debt. Debt declined by 40% during

the year, or by approximately $100 million.

● We also pursued and won new business, meeting our strategic objective to capitalize on our value-added processing

capabilities. The new stretcher leveler line commissioned in June at our Georgia facility has already helped us earn new

business with prime OEMs in the Southeast requiring precision quality.

Excess capacity and oversupply has persisted in the global steel market. A strengthening U.S. dollar enticed record volumes

of imported steel during the year, much of which was produced by state-sponsored and subsidized foreign mills. This illegal

dumping, combined with lower raw material costs and sluggish demand, resulted in substantial downward pressure on metal

prices. By December, prices of hot rolled coil had declined more than 40%, or by $240 per ton, since the beginning of the year,

according to the CRU index. These were prices we had not seen since 2004.

Despite the many internal accomplishments at Olympic Steel in 2015, the rapid and consistent drop in metal pricing throughout

the year led to consolidated net sales declining to $1.2 billion, down from the record $1.4 billion posted the previous year.

We reported a net loss of $26.8 million, or $2.39 per share, compared with the net loss of $19.1 million, or $1.71 per share,

reported in 2014. Both years’ results were impacted by impairments to goodwill and intangible assets totaling $25.0 million in

2015, and $23.8 million in 2014. As a result of these charges, we currently have no goodwill remaining on our balance sheet.

Our most recently added product categories outperformed carbon products in 2015. Our specialty metals market share grew

with sales volume approximately equal with last year. As a result of our deeper penetration in the auto sector, aluminum sales

increased 11% over 2014. However, nickel prices deteriorated in tandem with other metal prices, which negatively impacted

stainless steel pricing throughout the year.

2015 Letter to Shareholders

Our pipe and tubular products also fared better than carbon products during 2015. Before the non-cash impairment charge,

this business contributed positively to operating income and partially offset operating losses in other business segments.

We supported the filing of trade cases in 2015 to confront illegal dumping of foreign steel into the U.S. As a result of these

cases, in December 2015, the U.S. Department of Commerce issued affirmative preliminary anti-dumping duty determinations

on imports of corrosion-resistant products. This was followed in March 2016 with a preliminary determination placing duties

on imports of cold-rolled steel flat products. Final determinations are expected later in 2016. Import volume remained high;

however, these actions are a positive step toward leveling the playing field for the entire U.S.-based steel industry.

The domestic mills recently instituted three published price increases, elevating steel prices from the lows of 2015. A $40 per

ton increase was announced in December 2015, followed by increases of $20 per ton in January 2016 and $30 per ton in

February 2016. In addition, average lead times from the mills are starting to grow, and service center inventories are tighter,

which has us feeling more optimistic about pricing over the near term.

We were also pleased by the passage of a five-year infrastructure bill in December. Our country’s highways, bridges, electrical

grid, water systems and sewer lines remain utterly undercapitalized, creating pent up demand in certain industrial sectors. We

are well positioned with many equipment manufacturers that serve these markets. Signs of strengthening industrial production

are also encouraging. Industrial production increased more in January 2016, than in any month during calendar year 2015.

Looking back on 2015, I am most proud of the hard work and positive attitudes displayed by our employees. We could not have

responded to the macro economic challenges as swiftly, or as effectively, without the teamwork and accountability exhibited

throughout the Company.

Looking ahead to 2016 and beyond, we continue to pursue our long-term growth strategies while managing the Company to

withstand market volatility. As a result of our accomplishments during 2015, we are now more nimble and better equipped to

quickly adjust our business according to external conditions. Moreover, we intend to improve our financial performance and

increase market share regardless of what the market brings. The outlook for metal pricing has improved recently and with

faster turning inventory and disciplined credit policies, we are poised to benefit from any improvement in the market.

In closing, I would like to thank our customers, employees and shareholders. By managing the factors under our control,

we begin 2016 as a stronger and more efficient Company. As we execute our strategy to increase shareholder value, your

continued support of Olympic Steel is very much appreciated.

Sincerely,

Michael D. Siegal

March 7, 2016

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, 2015

( )

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 filer ( )
(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, 2015, 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 $158,339,063.

The number of shares of common stock outstanding as of February 25, 2016 was 10,955,046.

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, 2015, 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.

TABLE OF CONTENTS

Page

Part I

Item 1.
Business ...................................................................................................................................................
Item 1A. Risk Factors .............................................................................................................................................
Item 1B. Unresolved Staff Comments ....................................................................................................................
Properties .................................................................................................................................................
Item 2.
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 ................................................................................................................................

1
11
18
19
20
20
21

22
24
25
42
44
74
74
74

75
75
75
75
75

76
77
78

PART I

ITEM 1. BUSINESS

The Company

We are a leading metals service center that operates in three reportable segments; carbon flat products, specialty metals flat
products and tubular and pipe products. The carbon flat products segment and the specialty metals flat products segment are
at times consolidated and referred to as the flat products segments. Some of the flat products segments’ assets and resources
are shared by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and
processed on the shared equipment. We provide metals processing and distribution services for a wide range of customers.
Our carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and
coated flat-rolled sheet, coil and plate products, and fabricated parts. Our specialty metals flat products segment’s focus is on
the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and
fabricated parts. Through our Chicago Tube and Iron subsidiary, or 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. 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 production labor, 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 geographic and product growth, 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) 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 included
eliminating certain leased properties, lowering transportation, labor and personnel expenses, centralization of certain
administrative functions, as well as inventory and purchasing initiatives. We successfully executed on the initiatives of the
plan, which contributed to a $24.1 million year over year operating expense reduction.

We are focused on specific operating objectives including: (i) managing inventory turnover; (ii) managing operating
expenses; (iii) maintaining targeted cash turnover rates; (iv) investing in automation and value-added processing equipment;
(v) growing our market share; (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 recognition program that rewards employees to
achieve profitable growth by delivering superior customer service and exceeding customer expectations and
recognizes them for their efforts.

● Operational excellence initiatives designed to improve efficiencies and reduce 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.

● New information 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. Historically, we have accelerated our growth through acquisitions and capital investments in
facilities and processing equipment. Over the five year period from 2008 to 2012, we spent approximately $160 million on
the CTI acquisition and over $125 million on capital investments for new facilities and processing equipment in support of
our strategic growth initiatives. Since that period of concentrated investments, we have limited our capital spending to less
than our annual depreciation expense (which was approximately $18 million in 2015). 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.

Our capital investments during the past three years have primarily consisted of a stretcher leveling line as well as other
processing equipment for our expanded value-added customer base in Winder, Georgia, a new specialty metals facility in
Latrobe, Pennsylvania, added tube and pipe distribution capabilities from our Cleveland, Ohio and Monterey, Mexico
facilities and additional processing equipment in our tubular and pipe products segment.

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 service certain customers with carbon and specialty metals flat products and tubular and pipe products through 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 flawless execution (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 large and experienced sales force provides strategic advantages. 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 and quality 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 certain 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 30 years of
experience in the metals industry and 23 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, beveling, 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, beveling, 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 machining, welding, assembly and painting of component parts.

The following table sets forth, as of December 31, 2015, the major pieces of processing equipment in operation by segment:

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

Consolidated
Flat
Products

Tubular and
Pipe
Products

Total

-
-
12
-
-
-
-
8
-
83
1
35
3
142

3
2
24
10
4
11
29
37
17
136
4
37
32
341

3
2
12
10
4
11
29
29
17
53
3
2
29
199

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 and customer audits, 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. 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 11.6%, 11.1% and 11.1% of our consolidated net sales in
2015, 2014 and 2013, respectively. We serve customers in metals consuming industries, including manufacturers and
fabricators of transportation and material handling lift 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

2015

2014

2013

fabricators

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

49.4 %
10.2 %
9.6 %
7.2 %
7.1 %
16.5 %

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

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

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 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 the just-in-time delivery requirements of
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. Through 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 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 pressure parts and other fabricated components primarily for industrial boiler applications
representing 9.7% of CTI sales. 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 supply chain scrutiny by our customers and potential
customers. We believe our size, geographic footprint, 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, domestic and global supply and demand imbalance,
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 pass through nickel and carbon swaps at the request of our customers in
order to mitigate our customers’ risk of volatility in the price of metals. The swaps are settled with the brokers at maturity
and the economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the
customer. During 2014, we entered into cash flow metals hedges to mitigate our risk of volatility in the price of metals. The
cash flow hedges are settled with the brokers at maturity and the economic benefit or loss arising from the changes in fair
value of the hedges is recorded to “Cost of Materials Sold” in the Consolidated Statements of Comprehensive Income. All of
the metals cash flow hedges settled during 2015, and we have no outstanding metals hedges as of December 31, 2015.

We have no long-term, fixed-price metals purchase contracts, except for commodity hedges. 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. When metals prices increase, competitive
conditions will influence how much of the price increase we can pass on to our customers.

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 51% and 43% of our total metals requirements from our
three largest suppliers in 2015 and 2014, 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, 2015. We continue to implement 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 metals 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, 2015, we employed approximately 1,740 people. Approximately 305 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
Minneapolis plate, Minnesota
Detroit, Michigan
Duluth, Minnesota
St. Paul, Minnesota
Milan, Illinois
Locust, North Carolina
Romeoville, Illinois
Minneapolis coil, Minnesota
Indianapolis, Indiana

Expiration date
March 31, 2017
August 31, 2017
December 21, 2017
May 25, 2018
August 12, 2018
March 4, 2020
May 31, 2020
September 30, 2020
January 29, 2021

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
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 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 strengthening of the U.S. dollar and the related impact on foreign steel pricing, U.S. exports, and foreign imports
to the United States;
the increased levels of imported steel in the United States;
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 internal program
to improve earnings;

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

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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 impairment charges related to indefinite
lived intangible assets;
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
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;
9

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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, especially during periods of declining
market pricing;
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
valuation;
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 risks and 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;
● our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; 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. 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, customer demand 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 asset impairment charges. 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. 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, strengthening of the US dollar, 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 9.6% of our 2015 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.

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 historically manufactured products in the United States for export to foreign markets. As the U.S.
dollar has strengthened, products made by U.S. manufacturers have become less attractive to foreign buyers. Fewer purchases
by foreign buyers reduces our metals sales to those U.S. manufacturers and adversely affects our sales and results of
operations.

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 11.6% and 11.1% of our consolidated net sales
in 2015 and 2014, respectively. 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.

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 51% and 43% of our
total metals requirements from our three largest suppliers in 2015 and 2014, 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 depend, in part, 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. 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 software and implementation vendors may not be able to support the project as planned;
the possibility that the timelines, costs or complexities related to the new system implementation 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 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.

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

In addition, our operational excellence initiatives are designed to improve efficiencies and lower our costs. The initiatives are
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 executing our profit improvement plan and Operational Excellence initiatives could adversely
affect our business, our customer service, our results of operations and our 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 since 2010. 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, 2020, 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 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 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.

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, 2015 rates and, assuming no change in total debt from December 31, 2015 levels,
the additional annual interest expense to us would be approximately $1.1 million.

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.

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, 2015, we employed approximately 1,740 people. Approximately 305 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.

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.

Impairment in the carrying value of intangible assets could result in the incurrence of impairment charges and
negatively impact our results of operations.

The net carrying value of intangibles represents trade names and customer relationships, net of accumulated amortization,
related to our tubular and pipe products segment. Indefinitely lived assets are evaluated for impairment annually or whenever
events or changes in circumstance indicate that the carrying amounts of these assets may not be recoverable. Amortizable
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 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 discount rates
based on changes in the 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.

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;
●
●
●

fluctuations in the value of the US dollar;
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
17

the notice and information filings prescribed by the statute, a proposed control share acquisition may be made only if the
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 our largest shareholders, owned
approximately 11.3% of our outstanding common stock as of December 31, 2015. 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 2015, we terminated leases on certain warehouse facilities in Moses Lake, Washington and Winder,
Georgia.

The following table sets forth certain information concerning our principal properties including which segment’s products
are serviced out of each location:

Function

Owned or
Leased

Carbon

Segment

Specialty
Metals

Pipe
and
Tube

Operation

Location

Cleveland

Bedford Heights,
Ohio (1)
Bedford Heights,
Ohio (1)
Bedford Heights,
Ohio (1)

Dover, Ohio

Minneapolis

Plymouth, Minnesota

Roseville, Minnesota
Chambersburg,
Pennsylvania
Chambersburg,
Pennsylvania

Bettendorf, Iowa
Oklahoma City,
Oklahoma

Winder, Georgia

Chambersburg

Iowa

Winder

Detroit

Detroit, Michigan

256,000

Kentucky

Mt. Sterling, Kentucky

100,000

Mt. Sterling, Kentucky

107,000

Gary

Gary, Indiana

183,000

Connecticut

Milford, Connecticut

Chicago

North Carolina

Schaumburg, Illinois
Siler City,
North Carolina

Streetsboro

Streetsboro, Ohio

Washington

Latrobe, Pennsylvania
Moses Lake,
Washington

Mexico

Monterrey, Mexico

33,000 Distribution center

Leased (4)

Owned

Leased (2)

Owned

Leased (3)

Owned

Owned (5)

Owned

Leased (6)

Leased (7)

Leased (8)

Square
Feet

127,000

121,500

59,500

62,000

196,800

112,200

57,000

157,000

150,000

244,000

285,000

134,000

80,500

74,000

66,200

43,200

Corporate offices, coil processing and
distribution center
Coil and plate processing, distribution
center and offices
Plate processing, distribution center
and offices
Plate processing, fabrication and
distribution center
Coil and plate processing, distribution
center and offices
Plate processing, fabrication,
distribution center and offices
Distribution center for flat and
tubular and pipe products
Plate processing, distribution center
and offices
Plate processing, fabrication,
distribution center and offices
Coil and plate processing, fabrication,
distribution center and offices

Coil and plate processing, fabrication,
distribution center and offices
Coil processing, distribution center
and offices
Plate processing, fabrication and
distribution center
Distribution center for flat and
tubular and pipe products, offices
Coil processing, distribution center
and offices
Coil processing, distribution center
and offices
Coil and sheet processing,
distribution center and offices
Plate processing, fabrication,
distribution center and offices
Coil and sheet processing,
distribution center and offices
Coil and sheet processing,
distribution center

16,500 Distribution center

Distribution center for flat, tubular
and pipe products

15,000

✓

Operation

Location

Square
Feet

Function

Owned or
Leased

Carbon

Chicago
St. Paul
Charlotte

Fond du Lac
Indianapolis

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

Corporate offices, fabrication and distribution
center

363,000
132,000 Distribution center and offices
127,600 Fabrication and offices

117,000 Distribution center and offices
79,000 Distribution center and offices

Quad Cities

Milan, Illinois

57,600 Distribution center and offices

Des Moines
Duluth
Owatonna

Ankeny, Iowa
Proctor, Minnesota
Owatonna, Minnesota

50,000 Distribution center and offices
45,202 Distribution center and offices
23,000 Production cutting center

✓

Owned
Owned
Owned

Owned
Owned

Owned

Owned
Leased (9)
Owned

Segment

Specialty
Metals

Pipe
and
Tube

✓
✓
✓

✓
✓

✓

✓
✓
✓

(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.
50% of the facility is leased to an unrelated party whose lease expires on December 31, 2017.
The lease on this facility expires on May 1, 2016.
The Moses Lake location is comprised of two different facilities located in Moses Lake and Quincy, Washington. The facilities
are leased on a month-to-month basis.
The lease on this facility expires on June 1, 2016.
The lease on this facility expires on April 30, 2019.

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; 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 63, 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 also the immediate
past Board Chair of the Jewish Federations of North America and is currently on the Board of the Development Corporation
for Israel.

David A. Wolfort, age 63, 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 where he 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 52, 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 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 and audit committee chair 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 47, 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 61, has served as the President and Chief Operating 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, 2015, the high and low sales prices of our common stock as reported
by the Nasdaq Global Select Market:

2015

2014

High

Low

High

Low

First quarter
Second quarter
Third quarter
Fourth quarter

18.57 $
20.93
17.92
12.60

12.86 $
10.44
6.40
8.98

30.95 $
29.58
25.83
21.39

25.84
20.88
20.57
15.75

Holders of Record

As of February 1, 2016, we estimate there were approximately 46 holders of record and 3,609 beneficial holders of our
common stock.

Dividends

During 2015, our Board of Directors approved regular quarterly dividends of $0.02 per share that were paid on March 16,
2015, June 15, 2015, September 15, 2015 and December 15, 2015.

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.

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. Our asset-based credit facility (the ABL Credit
Facility) restricts the aggregate amount of dividends and common stock repurchases 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

Total number
of shares
purchased

Average price
paid per share

Total number
of shares
purchased as
part of publicly
announced
plans or
programs

Maximum
number of
shares that may
yet be
purchased
under the plans
or programs

10/01/15 thru 10/31/15
11/01/15 thru 11/30/15
12/01/15 thru 12/31/15
Total

- $
64,827
456
65,283 $

-
10.72
9.99
10.71

-
64,827
456
65,283

550,000
485,173
484,717

On October 2, 2015, we announced that our Board of Directors authorized a stock repurchase program of up to 550,000
shares of the Company’s issued and outstanding common stock, which could include open market repurchases, negotiated
block transactions, accelerated stock repurchases or open market solicitations for shares, all or some of which may be effected
through Rule 10b5-1 plans. Any of the repurchased shares will be held in our treasury, or canceled and retired as our Board
may determine from time to time. Any repurchases of common stock are subject to the covenants contained in the ABL
Credit Facility. Our ABL Credit Facility restricts the aggregate amount of dividends and common stock repurchases that we
can pay to $2.5 million annually. Purchases in excess of $2.5 million require us to (i) maintain availability in excess of 25%
of the aggregate revolver commitments or (ii) to maintain availability equal to or greater than 15% of the aggregate revolver
commitments and we must maintain a pro-forma ratio of EBITDA minus certain capital expenditures and cash taxes paid to
fixed charges of at least 1.00 to 1.00. The timing and amount of any repurchases under the stock repurchase program will
depend upon several factors, including market and business conditions, and limitations under the ABL Credit Facility, and
repurchases may be discontinued at any time.

Recent Sales of Unregistered Securities

We did not have any unregistered sales of equity securities during the quarter ended December 31, 2015.

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, 2015. 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.

For the Years Ended December 31,

2015

2014
2012
2013
(in thousands, except per share data)

2011

Income Statement Data:
Net sales
Cost of materials sold
Gross profit (a)
Operating expenses (b)
Intangible asset 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 (d)
Dividends declared

Shares Outstanding:
Weighted average shares - basic
Weighted average shares - diluted

$ 1,175,543 $ 1,436,270 $ 1,263,331 $ 1,383,701 $ 1,261,872
999,207 1,113,852 1,008,462
253,410
264,124
208,942
244,469
-
-
44,468
19,655
5,953
6,703
37,485
12,924
24,970
7,647 $

942,214 1,160,310
275,960
233,329
261,332
236,157
23,836
24,951
(9,208)
(27,779)
6,780
5,690
(16,114)
(33,594)
(19,064) $
(26,777) $

269,849
244,817
6,583
18,449
8,357
10,139
2,277 $

(2.39) $
(2.39)
0.08 $

(1.71) $
(1.71)
0.08 $

0.69 $
0.69
0.08 $

0.21 $
0.21
0.08 $

2.28
2.28
0.08

11,192
11,192

11,120
11,120

11,065
11,074

10,989
10,995

10,937
10,951

Balance Sheet Data (as of December 31):
Current assets
Current liabilities
Working capital (e)
Total assets
Total debt
Shareholders' equity

308,946 $ 458,709 $
131,977
77,060
326,732
231,886
700,748
513,470
148,490
247,620
254,695 $ 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

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 income of $3,347 in 2015, 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

intangible asset impairment shown separately below.

(c) Calculated by dividing net income (loss) by weighted average basic shares outstanding.
(d) Calculated by dividing net income (loss) by weighted average diluted shares outstanding.
(e) Calculated is calculated as current assets less current liabilities.

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 three reportable segments; carbon flat products, specialty metals flat
products, and tubular and pipe products. We provide metals processing and distribution services for a wide range of
customers. Our carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed
carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. Our specialty metals flat products segment’s
focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar
products and fabricated parts. In addition, 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. 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.

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; fluctuations in the value of the U.S. dollar to foreign currencies,
competition; metals pricing, demand and availability; energy prices; pricing and availability of raw materials used in the
production of metals; global supply, the level of metals imported into the United States, 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 metals 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. 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, and we have
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. 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. 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.

Reportable Segments

The Company now operates in three reportable segments; carbon flat products, specialty metals flat products and tubular and
pipe products. Commencing with the first quarter of 2015, the flat products segment has been separated into two reportable
segments; carbon flat products and specialty metals flat products. The flat products segments’ assets and resources are shared
by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and processed on
the shared equipment. As such, total assets and capital expenditures are reported in the aggregate for the flat products
segments. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the
carbon flat products segment and the specialty metals flat products segment based upon an established allocation
methodology. The financial information for 2014 has been recast to reflect the new segment reporting structure. The financial
information for 2013 has not been recast due to system limitations and the carbon and specialty metals flat products segment
financial information is reported consolidated.

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 the chief
operating decision maker, or CODM, to assess performance and make operating and resource allocation decisions. Our
CODM evaluates performance and allocates resources based primarily on operating income. Our operating segments are
based primarily on internal management reporting.

Carbon flat products

The primary focus of our carbon flat products segment is on the direct sale and distribution of large volumes of processed
carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. 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, 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.

Specialty metals flat products

The primary focus of our specialty metals flat products segment is on the direct sale and distribution of processed stainless
and aluminum flat-rolled sheet and coil products, flat bar products and fabricated parts. We act as an intermediary between
metals producers and manufacturers that require processed metals for their operations. We serve customers in various
industries, including manufacturers of food service and commercial appliances, agriculture equipment, transportation and
automotive equipment. We distribute these products primarily through a direct sales force.

Combined, the carbon and specialty metals flat products segments have 23 strategically-located processing and distribution
facilities in the United States and one in Monterrey, Mexico. Many of our facilities service both the carbon and the specialty
metals flat products segments, and certain assets and resources are shared by the segments. Our 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.

Tubular and pipe products

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

Corporate expenses

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the
unallocated expenses related to managing the entire Company (i.e., all three 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.

Due to the nature of the products sold in each segment, there are significant differences in the segments’ average selling price
and the cost of materials sold. The tubular and pipe products segment generally has the highest average selling price among
the three segments followed by the specialty metals flat products and carbon flat products segments. Due to the nature of the
tubular and pipe products, we do not report tons sold or per ton information. Gross profit per ton is generally higher in the
specialty metals flat products segment than the carbon flat products segment. Gross profit as a percentage of net sales is
generally highest in the tubular and pipe products segment, followed by the carbon and specialty metals flat products
segments.

Due to the differences in average selling prices, gross profit and gross profit percentage among the segments, a change in the
mix of sales impacts total net sales, gross profit, and gross profit percentage. In addition, certain inventory in the tubular and
pipe products segment is valued under the last-in, first-out, or LIFO, method. Adjustments to the LIFO inventory value are
recorded to cost of materials sold and may impact the gross margin and gross margin percentage at the consolidated Company
and tubular and pipe products segment levels.

Results of Operations

2015 Compared to 2014

The metals industry experienced a significant decline in the price of metals during 2015 as a result of the strengthened U.S.
dollar, a historically high level of imported materials arriving in the United States, low raw material costs to produce metals
and a global oversupply of metals. The price of hot-rolled carbon flat steel decreased approximately 41% during 2015.
Similarly, the price of stainless steel and aluminum decreased during 2015. The declines in metals shipments and pricing
have negatively impacted our 2015 sales and earnings. Industry demand has also softened in 2015 compared to 2014 as
evidenced by lower year over year shipments by metals service centers in the United States. During the second quarter of
2015, we recorded an impairment charge in our tubular and pipe products segment as a result of the continued decline in
metals pricing and its impact on the tubular and pipe products segment results. The impairment charge consisted of a $16.5
million goodwill impairment, which eliminated the remaining goodwill in the tubular and pipe products segment, and a partial
impairment of $8.0 million related to the segment’s tradename. The tradename is an indefinitely lived intangible asset with
a remaining value of $15.4 million. In the fourth quarter of 2015, we recorded a $500 thousand impairment charge, which
fully eliminated the goodwill in our specialty metals flat products segment.

The following table sets forth certain consolidated income statement data for the years ended December 31, 2015 and 2014
(dollars shown in thousands):

2015

% of net
sales

2014

% of net
sales

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

$ 1,175,543
942,214
233,329
236,157
24,951
(27,779)
(125)
5,690
(33,594)
(6,817)
(26,777)

100.0 $ 1,436,270
80.2 1,160,310
275,960
19.8
261,332
20.1
23,836
2.1
(9,208)
(2.4)
(126)
(0.0)
6,780
0.5
(16,114)
(2.9)
2,950
(0.6)
(19,064)
(2.3) $

100.0
80.8
19.2
18.1
1.7
(0.6)
(0.0)
0.5
(1.1)
0.2
(1.3)

(a) Includes $3,347 of LIFO income for 2015 and $365 of LIFO expense for 2014.
(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. Excludes goodwill and

intangible asset impairment shown seperately below for comparability purposes.

(d) The non-cash goodwill and intangible asset impairment charge is seperately displayed for operating expense
comparability purposes. $24,451 in 2015 and $23,836 in 2014 of the impairment charge is related to the tubular and
pipe products segment and $500 in 2015 is related to the specialty metals flat products segment.

Net sales decreased $261 million, or 18.2%, to $1.18 billion in 2015 from $1.44 billion in 2014. Carbon flat products net
sales decreased $220 million, or 22.3%, and were 65.1% of total net sales in 2015 compared to 68.6% in 2014. Specialty
metals flat products net sales decreased $14.2 million, or 6.9%, and were 16.4% of total net sales in 2015 compared to 14.4%
in 2014. Tubular and pipe products net sales decreased $26.9 million, or 11.0%, and were 18.5% of total net sales in 2015
compared to 17.0% of total net sales in 2014. The decrease in sales for the year ended December 31, 2015 was due to a 10.2%
decrease in sales volume and an 8.9% decrease in average selling prices in 2015 compared to 2014. The decrease in tons sold
was due to decreased customer demand, specifically in the heavy equipment, agriculture, mining and energy sectors, and
lower industry-wide shipments in 2015 compared to 2014.

Cost of materials sold decreased $218 million, or 18.8%, to $942 million in 2015 from $1.16 billion in 2014. During 2015,
we recorded LIFO income of $3.3 million compared to LIFO expense of $365 thousand recorded in 2014. The decrease in
cost of materials sold in 2015 is primarily due to the decreased sales volume of 10.2%, decreased metals costs of 9.6% during
2015 and the impact of LIFO income during 2015 compared to LIFO expense in 2014.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 19.8% in 2015 from
19.2% in 2014. Gross profit as a percentage of net sales increased in the carbon flat products segment to 19.2% from 18.2%
in 2014 and in the tubular and pipe products segment to 32.5% from 28.9% in 2014. Gross profit as a percentage of net sales
decreased in the specialty metals flat products segment to 8.2% in 2015 from 12.5% in 2014. LIFO increased gross profit by
0.3% of net sales in 2015 and had no consolidated gross profit impact in 2014. The increase in gross profit as a percentage
of net sales during 2015 was primarily due to the cost of materials sold decreasing more than selling prices in the carbon flat
rolled and tubular and pipe products segments, as well as the impact of LIFO income in 2015 compared to LIFO expense in
2014.

Operating expenses (as defined in footnote (c) in the table above) decreased $25.2 million, or 9.6%, to $236.2 million in 2015
from $261.3 million in 2014. As a percentage of net sales, operating expenses increased to 20.1% in 2015 from 18.1% in
2014. Operating expenses decreased in all categories as reported on the Company’s Consolidated Statements of
Comprehensive Income. During 2015, we executed on our profit improvement plan, which contributed to the cost reductions.
Distribution expense decreased by $5.2 million, or 12.7%, due to the decreased sales volume. Warehouse and processing
costs decreased $6.8 million, or 7.3%, primarily due to reductions in labor and personnel expenses and reduced warehouse
consumables expenses related to the 10.2% 2015 volume decrease. Administrative costs decreased by $7.2 million, or 10.0%,
primarily related to reductions in labor and personnel expenses, centralization of certain administrative functions, lower
variable based incentive compensation and decreases in travel and entertainment expenses. Selling expenses decreased $3.6
million, or 14.7%, as a result of decreased variable compensation associated with fewer sales employees and decreased
discretionary spending. Occupancy expenses decreased $560 thousand as a result of decreased heating and snow removal
expenses. Depreciation expense decreased $1.7 million, or 8.8%, as a result of certain assets being fully depreciated in 2014.
Operating expenses in the carbon flat products segment decreased $19.0 million, operating expenses in the specialty metals
products segment decreased $2.4 million, operating expenses in the tubular and pipe products segment decreased $1.8 million,
and Corporate expenses decreased $0.9 million.

The goodwill and intangible asset impairment charge in 2015 includes a $16.5 million non-cash goodwill impairment and a
$8.0 million intangible asset impairment for the tubular and pipe products segment as well as a $500 thousand goodwill
impairment for the specialty metals flat products segment. The 2015 goodwill impairment charges fully impaired the goodwill
for both the tubular and pipe products segment and the specialty metals flat products segment. The goodwill and intangible
asset impairment charge in 2014 included a $23.8 million goodwill impairment for the tubular and pipe products segment.

Interest and other expense on debt totaled $5.7 million in 2015 compared to $6.8 million in 2014. Our effective borrowing
rate, exclusive of deferred financing fees and commitment fees, was 2.1% in 2015 compared to 2.4% in 2014. The decrease
in interest and other expense on debt in 2015 was primarily attributable to lower average borrowings and lower average
borrowing rates during 2015 compared to 2014.

For 2015, loss before income taxes totaled $33.6 million compared to loss before income taxes of $16.1 million in 2014.
2015 includes goodwill impairment charges of $17.0 million and a $8.0 million intangible asset impairment charge and LIFO
income of $3.3 million. 2014 included a goodwill impairment charge of $23.8 million related to the tube and pipe segment
and LIFO expense of $365 thousand.

An income tax benefit of 20.3% was recorded for 2015, compared to an income tax provision of (18.3%) in 2013. The 2015
and 2014 effective income tax rates were impacted by the non-deductibility of the goodwill impairment charges. The income
tax benefit for 2015 prior to the goodwill impairment charge was 39.8%. The income tax provision for 2014 prior to the
goodwill impairment charge was 38.2%. We expect our 2016 income tax rate to approximate 38% to 40%.

Net loss for 2015 totaled $26.8 million, or $2.39 per basic and diluted share, compared to net loss of $19.1 million, or $1.71
per basic and diluted share, for 2014. The goodwill and intangible asset impairments in 2015 impacted earnings per share by
$1.93 per basic and diluted shares. The goodwill impairment in 2014 impacted earnings per basic and diluted shares by $2.14.

Segment Results of Operations

Carbon flat products

The following table sets forth certain income statement data for the carbon flat products segment for the years ended
December 31, 2015 and 2014 (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 (loss)

2015

2014

% of net
sales

935,165
102,360
1,037,525

765,400
738
618,674
146,726
153,943
(7,217)

1,059,409
106,725
1,166,134

100.0 $

80.8
19.2
20.1
(0.9) $

985,039
845
805,747
179,292
172,986
6,306

100.0

81.8
18.2
17.6
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.

Tons sold decreased 11.0% to 1.04 million tons in 2015 from 1.17 million tons in 2014. Toll tons sold decreased 4.1% to 102
thousand tons in 2015 from 107 thousand tons in 2014. The decrease in tons sold was due to decreased customer demand,
specifically in the heavy equipment, agriculture, mining and energy sectors, and lower industry-wide shipments of carbon
flat products in 2015 compared to 2014.

Net sales decreased $220 million, or 22.3%, to $765.4 million in 2015 from $985.0 million in 2014. Average selling prices
in 2015 decreased 12.7% to $738 per ton, compared to $845 per ton in 2013. The decrease in sales was due to an 11.0%
decrease in sales volume and a 12.7% decrease in average selling prices during 2015. The decrease in the average selling
price is a result of declining prices in the metals industry during 2015 discussed in the overview of Results of Operations
above. We expect market carbon flat metals prices in the first quarter of 2016 to increase slightly over the prices in the fourth
quarter of 2015.

Cost of materials sold decreased $187.1 million, or 23.2%, to $618.7 million in 2015 from $805.7 million in 2014. The
decrease in cost of materials sold was due to the volume decrease of 11.0% as well as a 13.7% decrease in the average cost
of materials sold per ton during 2015 compared to 2014.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) increased to 19.2% in 2015 from
18.2% in 2014. The increase in gross profit percentage in 2015 was primarily due to the cost of materials sold decreasing
more than selling prices. The average gross profit per ton sold declined to $141 in 2015 from $154 in 2014 due to the
significant decline in market prices for metals in 2015.

Operating expenses in 2015 decreased $19.0 million, or 11.0%, to $153.9 million from $173.0 million in 2014 mirroring the
sales volume decrease of 11.0%. As a percentage of net sales, operating expenses increased to 20.1% for 2015 from 17.6%
in 2014. Operating expenses decreased through reductions in labor and personnel expenses, lower variable based incentive
compensation, decreases in travel and entertainment expenses, and lower distribution expense as a result of lower sales
volumes.

Operating loss for 2015 totaled $7.2 million compared to operating income of $6.3 million in 2014.

Specialty metals flat products

The following table sets forth certain income statement data for the specialty metals flat products segment for the years ended
December 31, 2015 and 2014 (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)
Goodwill impairment charge (c)
Operating income (loss)

2015

2014

% of net
sales

72,041
36
72,077

192,516
2,671
176,686
15,830
16,904
500
(1,574)

72,917
45
72,962

206,692
2,833
180,812
25,880
19,771
-
6,109

100.0 $

91.8
8.2
8.8
0.2
(0.8) $

100.0

87.5
12.5
9.5
-
3.0

(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. Excludes goodwill

impairment charge shown separately below for comparability purposes.

Tons sold decreased 1.2% to 72 thousand tons in 2015 from 73 thousand tons in 2014. The decrease in tons sold was due to
decreased customer demand and lower industry wide shipments of stainless and aluminum flat products.

Net sales decreased $14.2 million, or 6.9%, to $192.5 million in 2015 from $206.7 million in 2014. Average selling prices in
2015 decreased to $2,671 per ton, compared to $2,833 per ton in 2014. The decrease in sales was due to a 1.2% decrease in
sales volume and a 5.7% decrease in the average selling price during 2015. The decrease in the year over year average selling
price per ton is a result of declining market price of nickel and aluminum, which continue to pressure stainless and aluminum
pricing. We expect market stainless and aluminum prices in the first quarter of 2016 to continue to be pressured.

Cost of materials sold decreased $4.1 million, or 2.3%, to $176.7 million in 2015 from $180.8 million in 2014. The decrease
in cost of materials sold was due to the volume decrease of 1.2% and a 1.1% decrease in the average cost of materials sold
per ton during 2015 compared to 2014.

As a percentage of net sales, gross profit (as defined in footnote (a) in the table above) decreased to 8.2% in 2015 from 12.5%
in 2014. The average gross profit per ton sold totaled $220 in 2015 compared to $355 per ton in 2015. The decrease in the
gross profit percentage is a result of the declining price of nickel, which is a large component of stainless steel and aluminum
pricing, and the cost of our material not declining as fast as the average sell price due to slower inventory turns in 2015.

Operating expenses (as defined in footnote (b) in the table above) decreased $2.9 million, or 14.5%, to $16.9 million in 2015
from $19.8 million in 2014. The decrease in operating expenses exceeded the decrease in sales volume of 1.2%. As a
percentage of net sales, operating expenses decreased to 8.8% of net sales in 2015 from 9.5% in 2014. Variable operating
expenses, such as distribution and wages decreased as a result of lower sales volumes. Expenses also decreased as a result of
the profit improvement plan initiated in 2015 and the decrease in variable performance-based incentive compensation in 2015
compared to 2014. In 2015 we recorded a $500 thousand non-cash goodwill impairment charge as a result of the continued
market pressures which fully eliminated the goodwill for the specialty metals flat products segment.

Operating loss for 2015 totaled $1.6 million compared to operating income of $6.1 million in 2015.

Tubular and pipe products

The following table sets forth certain income statement data for the tubular and pipe products segment for 2015 and 2014
(dollars shown in thousands).

2015

% of net
sales

2014

% of net
sales

Net sales
Cost of materials sold (a)
Gross profit (b)
Operating expenses (c)
Goodwill and intangible asset impairment (d)
$
Operating loss

217,627
146,854
70,773
58,190
24,451
(11,868)

100.0 $
67.5
32.5
26.8
11.2
(5.5) $

244,539
173,751
70,788
60,603
23,836
(13,651)

100.0
71.1
28.9
24.8
9.7
(5.6 )

(a) Includes $3,347 of LIFO income in 2015 and $365 of LIFO expense in 2014.
(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.
(d) The non-cash goodwill and intangible asset impairment charges are separately displayed for operating expense

comparability purposes.

Net sales decreased $26.9 million, or 11.0%, to $217.6 million in 2015 from $244.5 million in 2014. The decrease in net
sales was due to a 5.7% decrease in the sales volume and a 5.6% decrease in the average selling price during 2015. The
decrease in volume was due to decreased customer demand and lower industry-wide shipments of pipe and tube products.

Cost of materials sold decreased $26.9 million, or 15.5%, to $146.9 million in 2015 from $173.8 million in 2014. The decrease
in cost of materials sold was due to a 5.7% decrease in sales volume and a 10.4% decrease in the average cost of materials
sold which was impacted by the LIFO income of $3.3 million in 2015 compared to LIFO expense of $365 thousand in 2014.

As a percentage of net sales, gross profit (as defined in footnote (b) in the table above) increased to 32.5% in 2015 from
28.9%, in 2014. The LIFO income recorded in 2015 increased gross profit by 1.5% of net sales and the LIFO expense recorded
in 2014, decreased gross profit by 0.2% of net sales. Gross profit as a percentage of net sales increased as a result of increased
value added processing sales and an increase in the product mix to higher margin sales.

Operating expenses (as defined in footnote (c) in the table above) decreased $2.4 million, or 4.0%, to $58.2 million from
$60.6 million in 2014. As a percentage of net sales, operating expenses increased to 26.8% for 2015 compared to 24.8% for
2014. Variable operating expenses, such as distribution and certain selling expenses, decreased as a result of lower sales
volume and net sales. Depreciation expense increased as a result of recent investments in processing equipment.

In 2015 we recorded a $16.5 million non-cash goodwill impairment charge and an $8.0 million non-cash intangible asset
impairment charge. In 2014 we recorded a $23.8 million non-cash goodwill impairment charge.

Operating loss for 2015 totaled $11.9 million, compared to an operating loss of $13.7 million in 2014. The operating loss for
2015 was the result of the goodwill impairment of $16.5 million and the asset impairment charge of $8.0 million. The 2014
operating loss was a result of the $23.8 million goodwill impairment as well as LIFO expense of $365 thousand.

Corporate expenses

Corporate expenses decreased $0.9 million, or 10.7%, to $7.1 million in 2015 compared to $8.0 million in 2014. The decrease
in corporate expenses is primarily attributable to decreases in travel and entertainment expenses and lower variable
performance-based compensation in 2015 compared to 2014. Corporate expenses include the unallocated expenses related to
managing the entire Company (i.e. all three 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.

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)
Goodwill impairment charge (d)
Operating income (loss)
Other income (loss), net
Interest and other expense on debt
Income (loss) before income taxes
Income taxes
Net income (loss)

2014

% of net
sales

2013

% of net
sales

$ 1,436,270
1,160,310
275,960
261,332
23,836
(9,208)
(126)
6,780
(16,114)
2,950
(19,064)

100.0 $ 1,263,331
999,207
80.8
264,124
19.2
244,469
18.2
-
1.6
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.
(d) The non-cash goodwill impairment charge for the tubular and pipe prodcuts segment is seperately displayed for

operating expense comparability purposes.

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 was 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.

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%.

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

Commencing with the first quarter of 2015, the flat products segment has been separated into two reportable segments; carbon
flat products and specialty metals flat products. The flat products segments’ assets and resources are shared by the carbon
and specialty metals segments and both segments’ products are stored in the shared facilities and processed on the shared
equipment. Separate carbon flat products and specialty metals flat products segment data is not available for 2013 due to
system limitations. As a result, the carbon flat products and specialty metals flat products segments’ 2014 results have been
consolidated into the flat products segment in the discussion below. 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):

2014

2013

% 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

1,132,325
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

100.0 $ 1,026,769
943
834,994
191,775
179,669
12,106

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.

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.

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).

2014

% of net
sales

2013

% of net
sales

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

244,539
173,751
70,788
60,603
23,836
(13,651)

100.0 $
71.1
28.9
24.8
9.7
(5.6) $

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

100.0
69.4
30.6
24.3
-
6.3

(a) Includes $365 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 cossts and expenses less the cost of materials sold.
(d) The non-cash goodwill impairment charge is seperately displayed for operating expense comparability purposes.

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.

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.

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 share repurchases 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.

2015 Compared to 2014

Operating Activities

During 2015, we generated $107.5 million of cash from operations, of which $12.4 million was generated from operating
activities and $95.1 million was generated from working capital. During 2014, we used $39.6 million of cash for operations,
of which $25.4 million was generated from operating activities and $65.0 million was used for working capital.

Net cash from operations totaled $12.4 million during 2015 and was primarily comprised of depreciation and amortization
of $19.9 million and the non-cash goodwill and intangible asset impairment of $25.0 million, offset by the net loss of $26.8
million. Net cash from operations totaled $25.4 million during 2014 and was primarily comprised of 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.

Working capital at December 31, 2015 totaled $231.9 million, a $94.8 million decrease from December 31, 2014. The
decrease was primarily attributable to a $104.5 million decrease in inventory (resulting from decreased inventory purchases
and lower metals cost in 2015 compared to 2014) and a $30.9 million decrease in accounts receivable (resulting from lower
sales volume and selling prices), offset by a $35.6 million decrease in accounts payable and outstanding checks and a $18.5
million decrease in accrued payroll and other accrued liabilities. The decrease in prepaid expenses and other and accrued
payroll and other accrued liabilities is mainly related to the decrease in metals derivatives.

Investing Activities

Net cash used for investing activities was $7.3 million during 2015, compared to $7.8 million during 2014. In 2015, capital
expenditures were primarily attributable to additional processing equipment at our flat products (carbon and specialty metals)
and tube and pipe products existing facilities. During 2016, we expect to limit our capital spending to less than our annual
depreciation expense (approximately $18 million in 2016).

Financing Activities

In 2015, $100.8 million of cash was used for financing activities which primarily consisted of $98.3 million of net repayments
under our ABL Credit Facility. 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 2016, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which is payable on
March 15, 2016 to shareholders of record as of March 1, 2016. Our Board previously approved 2015 regular quarterly
dividends of $0.02 per share, which were paid on each of March 16, 2015, June 15, 2015, September 15, 2015 and December
15, 2015. 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.

Stock Repurchase Program

On October 2, 2015, we announced that our Board of Directors authorized a stock repurchase program of up to 550,000
shares of the Company’s issued and outstanding common stock, which could include open market repurchases, negotiated
block transactions, accelerated stock repurchases or open market solicitations for shares, all or some of which may be effected
through Rule 10b5-1 plans. Any of the repurchased shares will be held in our treasury, or canceled and retired as our Board
may determine from time to time. Any repurchases of common stock are subject to the covenants contained in the ABL
Credit Facility. Under the ABL Credit Facility, we may repurchase common stock and pay dividends up to $2.5 million in
the aggregate during any trailing twelve months without restrictions. Purchases in excess of $2.5 million require us to (i)
maintain availability in excess of 25% of the aggregate revolver commitments ($91.3 million at December 31, 2015) or (ii)
to maintain availability equal to or greater than 15% of the aggregate revolver commitments ($54.8 million at December 31,
2015) and we must maintain a pro-forma ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed
charges of at least 1.00 to 1.00. The timing and amount of any repurchases under the stock repurchase program will depend
upon several factors, including market and business conditions, and limitations under the ABL Credit Facility, and
repurchases may be discontinued at any time. During 2016, we expect to be limited to the $2.5 million available without
restrictions to repurchase common stock and pay dividends.

During the fourth quarter of 2015, we repurchased 65,283 shares for a total cost of $699 thousand.

Debt Arrangements

Our ABL Credit Facility is collateralized by our accounts receivable and inventory. The ABL Credit Facility consists of a
revolving credit line of $365 million. 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, 2015) 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 stock repurchases; 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, 2015, the Company was in compliance with its covenants and had approximately $87.7 million of
availability under the ABL Credit Facility.

As of December 31, 2015, $2.8 million of bank financing fees 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.

We 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 remaining
hedged balance as of December 31, 2015 was $31.4 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 in July 2011, 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, 2015, we paid
an optional principal payment of $840 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, we 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, 2015
was 0.11% for the IRB debt.

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.

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.

Our Board of Directors approved 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.

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2015:

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

Total

Less than
1 year

1-3 years 3-5 years

More than
5 years

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

$ 148,490 $
11,138
40
11,142
28,735

865 $
3,336
14
-
6,636

1,825 $ 145,800 $
1,550
6,252
26
-
511
-
6,703
10,625

-
-
-
10,631
4,771

Total contractual obligations

$ 199,545 $

10,851 $

18,728 $ 154,564 $

15,402

(a) See Note 6 to the Consolidated Financial Statements.
(b) Future interest obligations are calculated using the debt balances and interest rates in effect on December 31, 2015.
(c) See Note 12 to the Consolidated Financial Statements. Classification is based on expected settlement dates and the

expiration of certain statutes of limitations.

(d) Primarily consists of retirement liabilities and deferred compensation payable in future years.
(e) See Note 11 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 7 to the Consolidated
Financial Statements, as of December 31, 2015, 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, 2015, approximately
$42.7 million, or 20.7% 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. The Company
performs an annual impairment test of goodwill for the specialty metals flat products and tubular and pipe products segments
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
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.

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. As described below, at
December 31, 2015 all of the Company’s goodwill has been impaired; accordingly, future goodwill impairment testing will
no longer be required unless we make acquisitions in the future.

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 2015, the metals industry experienced a significant decline in the price of metals as a result of the strengthened U.S.
dollar, a historically high level of imported materials arriving in the United States, low raw material costs to produce metals,
and an oversupply of metals. The price of hot-rolled carbon steel decreased approximately 22%, or $130 per ton, during the
first six months of 2015. As a result, the Company determined that a triggering event occurred in the Company’s tubular and
pipe products segment during the second quarter of 2015. The challenging market conditions negatively impacted the
segment’s financial performance and the decrease of the Company’s market capitalization led the Company to perform the
two-step quantitative impairment test by comparing the fair value of the tubular and pipe products segment with its carrying
value. The Company engaged an independent third-party valuation expert to assist with the completion of the goodwill and
indefinitely lived intangible asset impairment testing.

The asset impairment testing determined that the carrying value of the operations was in excess of the fair value and
indefinitely lived intangible asset and goodwill impairments were identified. The Company concluded that the indefinitely
lived intangible asset, Trade name, was partially impaired and the impairment in the amount of $8.0 million was recorded in
the second quarter of 2015. 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 full goodwill impairment
of $16.5 million was recorded at June 30, 2015.

The metals industry continued to experience declining metals prices in the second half of 2015 as well as declining nickel
prices. As a result, the Company concluded during its annual goodwill impairment analysis during the fourth quarter of 2015
that the $500 thousand of goodwill related to the specialty metals flat products segment was fully impaired as the implied
fair value of goodwill for specialty metals flat products segment was less than its carrying value.

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 and specialty metals segments’ goodwill, a triggering event occurred
for the long-lived assets of the Company. We performed an undiscounted cash flow analysis that demonstrated there were no
indicators of impairment of the long-lived assets of the Company. Additionally, the indefinite lived intangible asset was
tested for impairment due to the triggering event. This test identified an impairment to the Company’s intangible assets of
$8.0 million, which was recorded in the second quarter of 2015. Based on the Company’s analysis in the fourth quarter of
2015, there were no further impairments of the Company’s long-lived assets in 2015.

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.

Certain engineered products produced by CTI can 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 1.8%, 1.7% and 1.9% of our net sales during
2015, 2014 and 2013, respectively.

Impact of Recently Issued Accounting Pronouncements

In November, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2015-17, “Balance Sheet Classification of Deferred Taxes.” This ASU is part of the FASB’s Simplification Initiative and has
been issued to reduce complexity in the presentation of deferred taxes. This new guidance eliminates the requirement for
entities that present a classified statement of financial position to classify deferred tax assets and liabilities as current and
noncurrent, and instead require that they classify all deferred tax assets and liabilities as noncurrent. As a result, each
jurisdiction will now only have one net noncurrent deferred tax asset or liability. However, the guidance does not change the
existing requirement that only permits offsetting within a jurisdiction. Companies are still prohibited from offsetting deferred
tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. This ASU is effective for financial
statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early
adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated
financial statements. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or
retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include
a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include
quantitative information about the effects of the change on prior periods. The adoption of this ASU is not expected to
materially impact the Company’s consolidated financial statements.

In April 2015, FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU is part of
the FASB’s Simplification Initiative and has been issued to reduce the complexity in the presentation of debt issuance costs.
This new guidance requires companies to present debt issuance costs the same way they currently present debt discounts, as
a direct deduction from the carrying value of that debt liability. The guidance is limited to simplifying the presentation of
debt issuance costs and does not impact the recognition and measurement guidance for debt issuance costs. This ASU is
effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those
fiscal years, with early adoption permitted. The amendments of ASU No. 2015-03 must be applied retrospectively, where the
balance sheet of each presented individual period is adjusted to indicate the period-specific impact of using the new guidance.
The FASB considered that because both debt issuance costs and debt discounts are amortized using the effective interest
method, there would be no effect on the income statement upon adoption of the amendments. The adoption of this guidance
on January 1, 2016 did not have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance on disclosure of uncertainties about an entity’s
ability to continue as a going concern. This guidance requires management to assess the Company’s ability to continue as a
going concern and to provide disclosures under certain circumstances. This guidance is effective for annual reporting periods
ending after December 15, 2016 and interim reporting periods thereafter. Early adoption is permitted. The Company does
not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is a joint project
initiated by the FASB 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. As originally proposed, 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, and interim periods
within those fiscal years, with early adoption permitted. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from
contracts with customers.” This ASU deferred the effective date of ASU No. 2014-09 by one year.

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 7 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 9.6% of our consolidated net sales in 2015 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 2015, 2014 and 2013, 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 were
accounted for as cash flow hedges and all of them settled in 2015. We had no outstanding metals cash flow hedges at
December 31, 2015.

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, 2015 rates and, assuming no change in total debt from December 31, 2015 levels, the
additional annual interest expense to us would be approximately $1.1 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, 2015 was $31.4 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
42

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

Page

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, 2015, 2014 and 2013 .............

Consolidated Balance Sheets as of December 31, 2015 and 2014 ...................................................................................

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013 ................................

Supplemental Disclosures of Cash Flow Information for the Years Ended December 31, 2015, 2014 and 2013 ...........

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2015, 2014 and 2013 .................

Notes to Consolidated Financial Statements for the Years Ended December 31, 2015, 2014 and 2013 ..........................

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 (“the Company”) at December 31, 2015 and 2014, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 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, 2015,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). 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 25, 2016

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, 2015. In
making this assessment, our management used the criteria established in Internal Control - Integrated Framework (2013),
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we
concluded that, as of December 31, 2015, 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, 2015 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 and intangible asset impairment

Total costs and expenses

Operating income (loss)

Other loss, net

Income (loss) before interest and income taxes

Interest and other expense on debt

Income (loss) before income taxes

Income tax provision (benefit)

Net income (loss)

Gain (loss) on cash flow hedges
Tax effect of hedges
Reclassification of loss included in net income, net of tax of $804

for 2015
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

2015

2014

2013

1,175,543 $

1,436,270 $

1,263,331

942,214
85,411
64,987
36,073
21,158
9,492
18,147
889
24,951
1,203,322
(27,779)
(125)
(27,904)
5,690
(33,594)
(6,817)
(26,777) $

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 ) $

(1,816)
699

12
(125 )

1,596
(26,298) $

-
(19,177 ) $

(2.39) $
11,192

(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

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 $6,555 and $3,207 as of December 31, 2015

Assets

and 2014, 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
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,10,938 and 10,989 shares

issued and outstanding

Treasury stock, at cost, 65 and 0 shares held
Accumulated other comprehensive loss
Retained earnings

Total shareholders' equity
Total liabilities and shareholders' equity

2015

2014

1,604 $
92,877

2,238
123,804

206,645
7,820
-
308,946
372,129
(205,591 )
166,538
-
24,757
13,229
513,470 $

2,690 $
55,685
6,884
11,801
77,060
145,800
11,419
24,496
258,775

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

128,129
(699 )
(70 )
127,335
254,695
513,470 $

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

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 and intangible asset impairment
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

Repurchase of common stock
Dividends paid

Net cash from (used for) financing activities

2015

2014

2013

(26,777) $

(19,064 ) $

7,647

19,873
24,951
15
1,759
48
(7,504)
12,365

30,927
104,463
13,808
(21,923)
(13,644)
(18,511)
95,120
107,485

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

(7,317)
3
(7,314)

(7,834 )
68
(7,766 )

(16,098 )
20
(16,078 )

311,372
(409,662)
-
-
(840)
(127)

30
(699)
(879)
(100,805)

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 )

Cash and cash equivalents:

Net change
Beginning balance
Ending balance

(634)
2,238
1,604 $

(948 )
3,186
2,238 $

(4,596 )
7,782
3,186

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

2015

2014

2013

$
$

5,083 $
565 $

5,793 $
4,658 $

5,537
7,556

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)

Common
Stock
$ 122,272 $

Treasury
Stock

Balance at December 31, 2012

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

- $
-

122
1,724
-

Balance at December 31, 2013

$ 124,118 $

Net loss
Payment of dividends
Exercise of stock options and employee stock

purchases (7 shares)
Stock-based compensation
Changes in fair value of hedges
Other

- $
-

147
2,074
-
-

Balance at December 31, 2014

$ 126,339 $

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Total
Equity

- $

- $
-

-
-
-

- $

- $
-

-
-
-
-

- $

(579) $ 168,164 $

289,857

- $
-

7,647 $
(876)

-
-
142

-
-
-

7,647
(876)

122
1,724
142

(437) $ 174,935 $

298,616

- $
-

(19,064) $
(878)

(19,064)
(878)

-
-
(113)
1

-
-
-
(2)

147
2,074
(113)
(1)

(549) $ 154,991 $

280,781

Net loss
Repurchase of common stock
Payment of dividends
Exercise of stock options and employee

stock purchases (2 shares)

Stock-based compensation
Changes in fair value of hedges
Other

- $
-
-

- $
(699)
-

- $
-
-

(26,777) $
-
(879)

(26,777)
(699)
(879)

30
1,759
-
1

-
-
-
-

-
-
479
-

-
-
-
-

30
1,759
479
1

Balance at December 31, 2015

$ 128,129 $

(699) $

(70) $ 127,335 $

254,695

The accompanying notes are an integral part of these statements.

Olympic Steel, Inc.
Notes to Consolidated Financial Statements
For The Years Ended December 31, 2015, 2014 and 2013

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 now operates in three reportable segments; carbon flat products, specialty metals
flat products, and tubular and pipe products. The carbon flat products segment and the specialty metals flat products segments
are at times consolidated and referred to as the flat products segments. The flat products segments’ assets and resources are
shared by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and processed
on the shared equipment. Due to the shared assets and resources, certain of the flat products segment expenses are allocated
between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation
methodology. 2014 financial information has been recast to reflect the new segment reporting structure. Due to system
limitations, 2013 financial information is presented for the consolidated flat products segments. Through its carbon flat products
segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate
products, and fabricated parts. Through its specialty metals flat products segment, the Company sells and distributes processed
aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. 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.

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 51%, 43% and 42% of its total steel requirements
from its three largest suppliers in 2015, 2014 and 2013, 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 31%, 29% and 30% of consolidated net sales in
2015, 2014 and 2013, respectively. In addition, the Company’s largest customer accounted for approximately 6%, 6% and 5%
of consolidated net sales in 2015, 2014 and 2013, respectively. Sales to industrial machinery and equipment manufacturers and
their fabricators accounted for 49%, 51% and 50% of consolidated net sales in 2015, 2014 and 2013, 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 carbon and specialty metals flat products segments’ 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, 2015 and December 31, 2014, approximately $42.7 million, or 20.7% of consolidated inventory, and $46.6 million, or 15.0%
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 the specialty metals flat products and tubular and pipe products segments 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 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.

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.

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 2015, the metals industry experienced a significant decline in the price of metals as a result of the strengthened U.S.
dollar, a historically high level of imported materials arriving in the United States, low raw material costs to produce metals, and
an oversupply of metals. As a result, the Company determined that a triggering event occurred in the Company’s tubular and
pipe products segment during the second quarter of 2015. The challenging market conditions negatively impacted the segment’s
financial performance and the decrease of the Company’s market capitalization led the Company to perform the two-step
quantitative impairment test by comparing the fair value of the tubular and pipe products segment with its carrying value. The
Company engaged an independent third-party valuation expert to assist with the completion of the goodwill and indefinitely
lived intangible asset impairment testing.

The asset impairment testing determined that the carrying value of the operations was in excess of the fair value and indefinitely
lived intangible asset and goodwill impairments were identified. The Company concluded that the indefinitely lived intangible
asset, Trade name, was partially impaired and the impairment in the amount of $8.0 million was recorded in the second quarter
of 2015. 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 full goodwill impairment of $16.5 million was recorded
at June 30, 2015.

The metals industry continued to experience declining metals prices in the second half of 2015 as well as declining nickel prices.
As a result, the Company concluded during its annual goodwill impairment analysis during the fourth quarter of 2015 that the
$500 thousand of goodwill related to the specialty metals flat products segment was impaired as the implied fair value of goodwill
for specialty metals flat products segment was less than its carrying value. At December 31, 2015, all of the Company’s goodwill
had been fully impaired.

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 1.8%, 1.7% and 1.9% of our net
sales during 2015, 2014 and 2013, 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 and specialty metals segments’ goodwill, a triggering event occurred for
the long-lived assets of the Company. We performed an undiscounted cash flow analysis that demonstrated there were no
indicators of impairment of the long-lived assets of the Company. Additionally, the indefinite lived intangible asset was tested
for impairment due to the triggering event. This test identified an impairment to the Company’s intangible assets of $8.0 million,
which was recorded in the second quarter of 2015. Based on the Company’s analysis in the fourth quarter of 2015, there were no
further impairments of the Company’s long-lived assets in 2015.

Stock-Based Compensation

The Company records compensation expense for stock options issued to employees and directors. For additional information,
see Note 10, Equity Plans.

Impact of Recently Issued Accounting Pronouncements

In November, 2015, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17,
“Balance Sheet Classification of Deferred Taxes.” This ASU is part of the FASB’s Simplification Initiative and has been issued
to reduce complexity in the presentation of deferred taxes. This new guidance eliminates the requirement for entities that present
a classified statement of financial position to classify deferred tax assets and liabilities as current and noncurrent, and instead
require that they classify all deferred tax assets and liabilities as noncurrent. As a result, each jurisdiction will now only have one
net noncurrent deferred tax asset or liability. However, the guidance does not change the existing requirement that only permits
offsetting within a jurisdiction. Companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against
deferred tax assets of another jurisdiction. This ASU is effective for financial statements issued for fiscal years beginning after
December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect
the adoption of this guidance to have a material impact on its consolidated financial statements. The guidance may be applied
either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance
sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted.
If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior
periods. The adoption of this ASU is not expected to materially impact the Company’s consolidated financial statements.

In April 2015, FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU is part of the
FASB’s Simplification Initiative and has been issued to reduce the complexity in the presentation of debt issuance costs. This
new guidance requires companies to present debt issuance costs the same way they currently present debt discounts, as a direct
deduction from the carrying value of that debt liability. The guidance is limited to simplifying the presentation of debt issuance
costs and does not impact the recognition and measurement guidance for debt issuance costs. This ASU is effective for financial
statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early
adoption permitted. The amendments of ASU No. 2015-03 must be applied retrospectively, where the balance sheet of each
presented individual period is adjusted to indicate the period-specific impact of using the new guidance. The FASB considered
that because both debt issuance costs and debt discounts are amortized using the effective interest method, there would be no
effect on the income statement upon adoption of the amendments. The adoption of this guidance on January 1, 2016 did not have
a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance on disclosure of uncertainties about an entity’s
ability to continue as a going concern. This guidance requires management to assess the Company’s ability to continue as a going
concern and to provide disclosures under certain circumstances. This guidance is effective for annual reporting periods ending
after December 15, 2016 and interim reporting periods thereafter. Early adoption is permitted. The Company does not expect the
adoption of this guidance to have a material impact on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is a joint project
initiated by the FASB 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. As
originally proposed, 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, and interim periods within those fiscal years, with early adoption
permitted. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from contracts with customers.” This ASU deferred
the effective date of ASU No. 2014-09 by one year.

2. Accounts Receivable:

Accounts receivable are presented net of allowances for doubtful accounts and unissued credits of $3.1 million and $2.9 million
as of December 31, 2015 and 2014, respectively. Bad debt expense totaled $506 thousand in 2015, $467 thousand in 2014 and
$83 thousand in 2013.

3. Inventories:

Inventories consisted of the following:

(in thousands)
Unprocessed
Processed and finished

Totals

As of December 31,
2015

2014

163,942 $
42,703
206,645 $

238,226
72,882
311,108

During 2015, the Company recorded $3.3 million of LIFO income as a result of decreased metals pricing during 2015. The LIFO
income increased the Company’s inventory balance and decreased its cost of materials sold.

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.

If the FIFO method had been in use, inventories would have been $6.6 million and $3.2 million lower than reported at December
31, 2015 and 2014, 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
-
5 - 10
7 - 30
2 - 15
3 - 7
2 - 5
2 - 5

December 31,
2015

December 31,
2014

16,001 $
2,799
131,294
185,555
6,582
27,350
1,274
1,274
372,129
(205,591)
166,538 $

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

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, 2015, primarily consisted of payments for additional processing equipment at our
existing facilities that was not yet placed into service.

5. Goodwill and Intangible Assets:

In accordance with the Accounting Standards Codification (ASC), an impairment test of goodwill and indefinitely lived
intangible assets is performed at least annually 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 2015, the metals industry experienced a significant decline in the price of metals as a result of the strengthened U.S.
dollar, a historically high level of imported materials arriving in the United States, low raw material costs to produce metals, and
an oversupply of metals. The price of hot-rolled carbon steel decreased approximately 22%, or $130 per ton, during the first six
months of 2015. As a result, the Company determined that a triggering event occurred in the Company’s tubular and pipe products
segment during the second quarter of 2015. The challenging market conditions negatively impacted the segment’s financial
performance and the decrease of the Company’s market capitalization led the Company to perform the two-step quantitative
impairment test by comparing the fair value of the tubular and pipe products segment with its carrying value. The Company
engaged an independent third-party valuation expert to assist with the completion of the goodwill and indefinitely lived intangible
asset impairment testing.

The asset impairment testing determined that the carrying value of the operations was in excess of the fair value and indefinitely
lived intangible asset and goodwill impairments were identified. The Company concluded that the indefinitely lived intangible
asset, Trade name, was partially impaired and the impairment in the amount of $8 million was recorded in the second quarter of
2015. 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.

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 full goodwill impairment of $16.5 million was recorded at June
30, 2015.

The metals industry continued to experience declining metals prices in the second half of 2015 as well as declining nickel prices.
As a result, the Company concluded during its annual goodwill impairment analysis during the fourth quarter of 2015 that the
$500 thousand of goodwill related to the specialty metals flat products segment was fully impaired as the implied fair value of
goodwill for specialty metals flat products segment was less than its carrying value.

Goodwill, by reportable segment, was as follows as of December 31, 2015 and 2014:

(in thousands)
Balance as of December 31, 2013

Acquisitions
Impairments

Balance as of December 31, 2014

Acquisitions
Impairments

Balance as of December 31, 2015

Specialty
Metals
Flat Products

Tubular and
Pipe
Products

500 $
-
-
500 $
-
(500)
- $

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

Total

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

All of the Company’s intangible assets were recorded in connection with its July 1, 2011 acquisition of CTI. The intangible assets
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 in the second quarter of 2015, a triggering event occurred for
the intangible assets subject to amortization and an impairment test was completed. The test revealed no impairment to the
Company’s intangible assets subject to amortization.

Intangible assets, net, consisted of the following as of December 31, 2015 and 2014:

(in thousands)

As of December 31, 2015

Gross Carrying
Amount

Accumulated
Amortization

Impairments

Intangible
Assets,
Net

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

13,332 $
23,425
36,757 $

(4,000) $
-
(4,000) $

- $
(8,000 )
(8,000 ) $

9,332
15,425
24,757

(in thousands)

As of December 31, 2014

Gross Carrying
Amount

Accumulated
Amortization

Impairments

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

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. Debt:

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

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

Less current amount

Total long-term debt

As of

December 31,
2015

December 31,
2014

145,800 $
2,690
148,490
(2,690)
145,800 $

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

The Company’s existing asset-based credit facility (the ABL Credit Facility) is collateralized by the Company’s accounts
receivable and inventory. The ABL Credit Facility consists of a revolving credit line of $365 million. 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, 2015)
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 common stock
repurchases; 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, 2015, the Company was in compliance with its covenants and had approximately $87.7 million of availability
under the ABL Credit Facility.

As of December 31, 2015, $2.8 million of bank financing fees 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 the 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, 2015 was $31.4 million. 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 Industrial Revenue Bond (IRB) indebtedness was 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, 2015, the Company paid an optional principal payment of $840 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, 2015 was 0.11% 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, 2015, 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)
ABL Credit Facility
Industrial revenue bond
Total principal payments

2016

2017

2018

2019

Total

- $
865
865 $

- $
895
895 $

- $
930
930 $

145,800 $
-
145,800 $

145,800
2,690
148,490

The overall effective interest rate for all debt, exclusive of deferred financing fees and deferred commitment fees, amounted to
2.1%, 2.4% and 2.3% in 2015, 2014 and 2013, respectively. Interest paid totaled $5.1 million, $5.8 million and $5.5 million for
the years ended December 31, 2015, 2014 and 2013, respectively. Average total debt outstanding was $211.2 million, $234.7
million and $219.2 million in 2015, 2014 and 2013, respectively.

7. Derivative Instruments:

Metals swaps

During 2015, 2014 and 2013, 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 and are included in “Other accrued liabilities” and “Prepaid expenses and other”
on the Consolidated Balance Sheet at December 31, 2015. 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 five months remaining and the there are no
outstanding carbon swaps as of December 31, 2015. 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, 2015 and 2014.

In 2014, the Company entered into cash flow metals hedges to mitigate its risk of volatility in the price of metals. The cash flow
metals hedges are indexed to the NYMEX price of U.S. Midwest Domestic Hot-Rolled Coil Steel with third-party brokers. There
were no cash flow metals hedges outstanding as of December 31, 2015. The metals hedges were accounted for as cash flow
hedges. The impact of the mark-to-market adjustment on settled hedges is recorded in “Cost of materials sold” in the

accompanying Consolidated Statements of Comprehensive Income. The impact for the twelve months ended December 31, 2015
was $2.4 million of expense.

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, 2015 was $31.4 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.

There was no net impact from the nickel swaps or embedded customer derivative agreements to the Company’s Consolidated
Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013. The table below shows the total
impact to the Company’s Consolidated Statements of Comprehensive Income through “Net income (loss)” of the derivatives for
the years ended December 31, 2015, 2014 and 2013.

(in thousands)
Interest rate swap (CTI)
Fixed interest rate swap (ABL)
Cash flow metals hedges
Metals swaps
Embedded customer derivatives
Total loss

Net Gain (Loss) Recognized
2014

2013

2015

(77) $
(365)
(2,400)
(2,304)
2,304
(2,842) $

(100) $
(472)
(312)
934
(934)
(884) $

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

8. 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 2015 and 2014, 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, 2015 and December 31, 2014. Following is a description of the
valuation methodologies used for assets and liabilities measured at fair value as of December 31, 2015 and December 31, 2014:

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, 2015

Level 1 Level 2 Level 3

Total

$
$

- $
- $

- $
-
-
- $

384 $
384 $

384 $
102
114
600 $

- $
- $

- $
-
-
- $

384
384

384
102
114
600

Value of Items Not Recorded at Fair Value
As of December 31, 2015

Level 1 Level 2 Level 3 Total

2,690 $
-
2,690 $

- $
145,800
145,800 $

2,690
- $
-
145,800
- $ 148,490

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
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.

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 $2.7 million and $3.5 million at December 31, 2015 and 2014, respectively.

The fair value of the ABL Credit Facility is determined using Level 2 inputs. The carrying value of the ABL Credit Facility was
$145.8 million and $244.1 million at December 31, 2015 and 2014, respectively. 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.

The table below shows assets measured at fair value on a nonrecurring basis. The fair value of goodwill and the trade name are
determined using Level 3 inputs. Refer to note 5 for additional discussion.

Assets Measured at Fair Value on a Nonrecurring Basis

(in thousands)

12/31/15

Level 1

Level 2

Level 3

Goodwill (tubular and pipe products segment)
Goodwill (specialty metals flat products

segment)

Trade name (tubular and pipe products segment)
$
Total

- $

-
15,425
15,425 $

- $

-
-
- $

- $

-
-
- $

Total
Gain/(Loss)

- $

(16,451)

-
15,425
15,425 $

(500)
(8,000)
(24,951)

9. 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, 2015 was $31.4 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. There were no carbon swaps outstanding as of December 31, 2015. 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 at December 31, 2014.

10. Equity Plans:

Stock Options

In January 1994, the Stock Option Plan (Option Plan) was adopted by the Board of Directors and approved by the shareholders
of the Company. The Option Plan terminated on January 5, 2009. Termination of the Option Plan did not affect outstanding
options. A total of 1,300,000 shares of common stock were originally reserved for issuance under the Option Plan. To the extent
possible, shares of treasury stock were used to satisfy shares resulting from the exercise of stock options. Options vested over
periods ranging from six months to five years and all expire 10 years after the grant date.

The following table summarizes stock-based award activity during the year ended December 31, 2015:

Outstanding at December 31, 2014
Granted
Exercised
Canceled
Outstanding at December 31, 2015
Exercisable at December 31, 2015

Number of
Options

Weighted
Average
Exercise Price
32.63
-
-
32.63
32.63
32.63

20,170 $
-
-
(1,000)
19,170 $
19,170 $

Weighted
Average
Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic
Value
(in thousands)

1.3 $
1.3 $

-
-

There were no stock options exercised during 2015. There were 7,000 and 11,667 stock options exercised during 2014 and 2013,
respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2014 and 2013 was $103
thousand and $218 thousand, respectively. Net cash proceeds from the exercise of stock options, exclusive of income tax benefits,
were $86 thousand for both years ended December 31, 2014 and 2013. Income tax benefits of $40 thousand and $83 thousand
were realized from stock option exercises during the years ended December 31, 2014 and 2013, 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, 2015, March 1, 2014 and January 2, 2013, the Compensation Committee of the Company’s Board of Directors
approved the grant of 4,639, 2,544 and 1,800 restricted stock units (RSUs), respectively, to each non-employee Director. 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
were $15.09, $27.51 and $23.41 for the grants on March 1, 2015, March 1, 2014 and January 2, 2013, 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 2015, 2014 and 2013, the Company matched 9,000, 9,875 and 8,500
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.

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

(in thousands)
RSU expense before taxes
RSU expense after taxes

$
$

For the years ended December 31,
2014

2015

2013

1,047 $
631 $

1,252 $
774 $

936
554

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, 2015:

Outstanding at December 31, 2014
Granted
Converted into shares
Forfeited
Outstanding at December 31, 2015
Vested at December 31, 2015

Number of
Shares

Weighted Average
Estimated Fair
Value

238,023 $
69,771
(19,900)
-
287,894 $
271,599 $

25.11
14.54
25.34
-
22.39
22.33

Of the RSUs granted in 2015, 2014 and 2013, 47,639, 21,506 and 28,341, respectively, were used to fund supplemental executive
retirement plan contributions. There was no intrinsic value for the RSUs that were converted into shares in 2015 and 2014. There
were no RSUs converted into shares during 2013.

11. 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 2024. In some cases, the leases include options to extend. Rent and lease
expense was $8.7 million, $8.2 million and $7.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The future annual minimum lease payments as of December 31, 2015 are as follows:

(in thousands)
Lease payments

2016

2017

2018

2019

2020

Thereafter Total

6,636 $

5,783 $

4,842 $

3,697 $

3,006 $

4,771 $ 28,735

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, 2015, approximately 305 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 31, 2017
August 31, 2017
December 21, 2017
May 25, 2018
August 12, 2018
March 4, 2020
May 31, 2020
September 30, 2020
January 29, 2021

12. 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

2015

As of December 31,
2014

2013

(149) $
(752)
(901)
(5,916)
(6,817) $

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

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

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

2015

2014

2,986 $
2,926
500
7,311
143
13,866
(1,030 )
12,836

(6,018 )
(20,601 )
(11,329 )
(1 )
(37,949 )
(25,113 ) $

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)

The deferred tax liability decreased by $105 thousand related to the interest rate swap and by $3.1 million related to the partial
impairment of the indefinite lived intangible asset, Tradename. Refer to footnote 5, Goodwill and Intangible Assets, for a detailed
analysis of the partial impairment.

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

(in thousands)
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

2015

2014

2013

58 $
(20)
13
(13)
38 $

75 $
(17 )
13
(13 )
58 $

112
(37)
23
(23)
75

It is expected that the amount of unrecognized tax benefits will not materially change in the next twelve months. The tax years
2012 through 2014 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, 2015 and
December 31, 2014, the Company had approximately $2 thousand and $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
Change in unrecognized tax benefits
All other, net
Effective income tax rate

2015

2014

2013

35.0%
1.4%
(17.1%)
0.1%
0.9%
20.3%

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

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

Income taxes paid in 2015, 2014 and 2013 totaled $0.5 million, $4.7 million and $7.6 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.

13. 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,
2014

2013

2015

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

awards

Weighted average diluted shares outstanding

11,192

11,120

11,065

-
11,192

-
11,120

9
11,074

Net income (loss)

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

$
$

(26,777) $

(19,064) $

7,647

(2.39) $
(2.39) $

(1.71) $
(1.71) $

0.69
0.69

201

Anti-dilutive securities outstanding

125

118

14. Stock Repurchase Program:

On October 2, 2015, the Company announced that its Board of Directors authorized a stock repurchase program of up to 550,000
shares of the Company’s issued and outstanding common stock, which could include open market repurchases, negotiated block
transactions, accelerated stock repurchases or open market solicitations for shares, all or some of which may be effected through
Rule 10b5-1 plans. Any of the repurchased shares are held in the Company’s treasury, or canceled and retired as the Board may
determine from time to time. Any repurchases of common stock are subject to the covenants contained in the ABL Credit Facility.
Under the ABL Credit Facility, the Company may repurchase common stock and pay dividends up to $2.5 million in the
aggregate during any trailing twelve months without restrictions. Purchases of common stock or dividend payments in excess of
$2.5 million in the aggregate require the Company to (i) maintain availability in excess of 25% of the aggregate revolver
commitments ($91.3 million at December 31, 2015) or (ii) to maintain availability equal to or greater than 15% of the aggregate
revolver commitments ($54.8 million at December 31, 2015) and the Company must maintain a pro-forma ratio of EBITDA
minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.00 to 1.00.

During the fourth quarter of 2015, the Company repurchased 65,283 shares of outstanding common stock at an average cost of
$10.71 per share.

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 chief operating decision maker (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 2015, the flat products segment has been separated into two reportable segments; carbon
flat products and specialty metals flat products. The flat products segments’ assets and resources are shared by the carbon and
specialty metals segments and both segments’ products are stored in the shared facilities and processed on the shared equipment.
As such, total assets and capital expenditures are reported in the aggregate for the flat products segments. Due to the shared assets
and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the
specialty metals flat products segment based upon an established allocation methodology. 2014 financial information has been
recast to reflect the new segment reporting structure. Due to system limitations, 2013 financial information is presented for the
consolidated flat products segments.

The Company now operates in three reportable segments; carbon flat products, specialty metals flat products, and tubular and
pipe products. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon
and coated flat-rolled sheet, coil and plate products and fabricated parts. Through its specialty metals flat products segment, the
Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and
fabricated parts. 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.

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, 2015, 2014 and 2013. The Company assesses
the performance of the segments based on operating income.

(in thousands)
Net sales

Carbon flat products
Specialty metals flat products
Consolidated flat products
Tubular and pipe products

Total net sales

Depreciation and amortization
Carbon flat products
Specialty metals flat products
Consolidated flat products
Tubular and pipe products
Corporate

Total depreciation and amortization

Operating income

Carbon flat products
Specialty metals flat products
Consolidated flat products
Tubular and pipe products
Corporate
Goodwill and intangible asset impairment (b)

Total operating income (loss)
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,
2014

2015

2013 (a)

765,400 $
192,516
957,916
217,627
1,175,543 $

985,039
206,692
1,191,731
244,539
1,436,270 $

n/a
n/a
1,026,769
236,562
1,263,331

12,200 $
698
12,898
6,036
102
19,036 $

(7,217) $
(1,074)
(8,291)
12,583
(7,120)
(24,951)
(27,779) $
(125)
(27,904)
5,690
(33,594) $

14,250
805
15,055
5,624
101
20,780 $

6,306
6,109
12,415
10,185
(7,972)
(23,836)
(9,208) $
(126)
(9,334)
6,780
(16,114) $

n/a
n/a
16,883
5,308
50
22,241

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

(a) Segment information for 2013 is not available for carbon flat products and specialty metals flat products due to system limitations.
(b) $24,451 of the goodwill and intangible asset impairment in 2015 related to the tubular and pipe products segment, $500 related to the

specialty metals flat products segment. The goodwill impairment in 2014 related to the tubular and pipe products segment.

(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

2015

2014

2013

4,295 $
3,022
-
7,317 $

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

3,794
11,616
688
16,098

- $
-
- $

500
16,451
16,951

329,885 $
183,129
456
513,470 $

496,253
203,937
558
700,748

There were no material revenue transactions between the carbon flat products, specialty metals flat products and tubular and pipe
products segments for the years ended December 31, 2015, 2014 and 2013.

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 segments’ 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, 2015, 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 green 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, 2020. CTI contributions to the Multiemployer Plan were immaterial for the years ended
December 31, 2015 and 2014.

Retirement plan expense, which includes all Company 401(k), profit-sharing, SERP defined contributions and the Multiemployer
Plan, amounted to $2.0 million, $2.2 million and $2.2 million for the years ended December 31, 2015, 2014 and 2013,
respectively.

The fair values of the Company’s SERP assets as of December 31, 2015 are as follows:

Quoted Prices
in Active
Markets
Level 1

Observable

Unobservable

Inputs
Level 2

Inputs
Level 3

1,590 $
-
-
-
1,590 $

- $
25
213
5,391
5,629 $

-
-
-
-
-

(in thousands)
Equity securities
Money market funds
Fixed income
Mutual funds
Total

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, 2013

Allowance for doubtful accounts
Tax valuation reserve

Year Ended December 31, 2014

Allowance for doubtful accounts
Tax valuation reserve

Year Ended December 31, 2015

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

$
$

1,597 $
1,200 $

83 $
98 $

1,519 $
1,298 $

467 $
83 $

1,348 $
1,381 $

506 $
- $

- $
- $

(161) $
- $

1,519
1,298

(638) $
- $

1,348
1,381

(555) $
(351) $

1,299
1,030

SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except per share data)

2015
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

Market price of common stock: (c)

High
Low

2014
Net sales
Operating income (loss) (b)
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

$
$

2nd

1st
345,865 $ 315,251 $
(24,398)
(25,895)
(22,260) $
(1.99) $
11,201
(1.99) $
11,201

3,345
1,751
1,069 $
0.10 $
11,195
0.10 $
11,195

3rd
276,922 $
453
(1,036)
(598) $
(0.05) $
11,203
(0.05) $
11,203

Year

4th
237,505 $ 1,175,543
(27,779)
(33,594)
(26,777)
(2.39)
11,192
(2.39)
11,192

(7,179)
(8,414)
(4,988) $
(0.45) $
11,174
(0.45) $
11,173

18.57 $
12.86

20.93 $
10.44

17.92 $
6.40

12.60 $
8.98

20.93
6.40

2nd

1st
346,913 $ 386,047 $
7,108
5,325
3,494 $
0.32 $
11,089
0.32 $
11,089

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

3rd
376,617 $
4,117
2,495
1,556 $
0.14 $
11,120
0.14 $
11,120

Year

4th
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: (c)

High
Low

30.95 $
25.84

29.58 $
20.88

25.83 $
20.57

21.39 $
15.75

30.95
15.75

(a) Operating income (loss) includes $3,347 of LIFO income related to the Company's tubular and pipe products segment as
well as a $16,451 goodwill impairment charge and a $8,000 intangible asset impairment charge recorded in the second
quarter related to the Company's tubular and pipe products segment and a $500 goodwill impairment charge recorded in
the fourth quarter related to the specialty metals flat products segment.

(b) Operating income (loss) includes $365 of LIFO expense and a $23,836 goodwill impairment charge related to the

Company's tubular and pipe products segment recorded in the fourth quarter of 2014.

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, 2015 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, 2015 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 2016 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 2016 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 2016 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 2016 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 2016 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, 2015, 2014 and 2013

Consolidated Balance Sheets as of December 31, 2015 and 2014

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013

Supplemental Disclosures of Cash Flow Information for the Years Ended December 31, 2015, 2014 and 2013

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2015, 2014 and 2013

Notes to Consolidated Financial Statements for the Years Ended December 31, 2015, 2014 and 2013

(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.

SIGNATURES

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.

February 25, 2016

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 25, 2016

/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/ Michael G. Rippey*
Michael G. Rippey, 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 25, 2016

OLYMPIC STEEL, INC.
INDEX TO EXHIBITS

Exhibit
2.2

3.1(i)

Description
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.
Amended and Restated Articles of Incorporation

3.1(ii)

Amended and Restated Code of Regulations

4.25

10.1 *

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.
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

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

Reference
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).

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 3.1 to
Company’s Form 10-Q filed with the
Commission on August 6, 2015 (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).
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).

Exhibit
10.20 *

Description
Olympic Steel, Inc. Supplemental Executive Retirement
Plan

10.21 *

Olympic Steel, Inc. 2007 Omnibus Incentive Plan

10.27*

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

10.28*

Form of Performance-Earned Restricted Stock Unit (PERS
Unit) Agreement for Mr. Manson and Ms. Potash.

10.30 *

Olympic Steel, Inc. Senior Manager Compensation Plan

10.31 *

David A. Wolfort Employment Agreement effective as of
January 1, 2016

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

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

10.36 *

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

10.37*

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

Reference
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).
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).
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).
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 8-K filed with the
Commission on December 31, 2015
(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).
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).
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).
Incorporated by reference to Exhibit 10.1 to
Registrant’s Form 10-Q filed with the
Commission on May 1, 2015 (Commission
File No. 0-23320).

Exhibit
21
23

24
31.1

31.2

32.1

32.2

101.INS
101.SCH
101.CAL

101.DEF
101.LAB
101.PRE

Description

Reference

Filed herewith
Filed herewith

Filed herewith

Furnished herewith

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
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase
Document
XBRL Taxonomy Extension Definition
XBRL Taxonomy Extension Label Linkbase Document
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 December 2015

250.00

200.00

150.00

100.00

50.00

0.00

2010

2011

2012

2013

2014

2015

Olympic Steel Inc.

NASDAQ Composite-Total Returns

Peer Group

The peer group consists of Worthington Industries, Ryerson Holding Corporation, Shiloh Industries, Inc.,
A.M. Castle & Co., and Reliance Steel & Aluminum Co.

Directors & Officers

BOARD OF DIRECTORS

Michael D. Siegal, 63
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, Practice Leader Capital Markets, Jones Day

David A. Wolfort, 63
President and Chief Operating Officer,
Olympic Steel

Arthur F. Anton, 58
President and Chief Executive Officer,
Swagelok Company

Ralph M. Della Ratta, 62
Founder and Managing Director,
Western Reserve Partners LLC

Howard L. Goldstein, CPA, 63
Partner,
Appelrouth, Farah & Co. P.A.

The Honorable Dirk A. Kempthorne, 64
President and Chief Executive Officer,
The American Council of Life Insurers

Donald R. McNeeley, 61
President and Chief Operating Officer,
Chicago Tube & Iron, a subsidiary of Olympic Steel

Michael G. Rippey, 58
Senior Advisor,
Nippon Steel USA

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

2016 Annual Meeting
The annual meeting of shareholders will be held:

Friday, April 29, 2016
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, 2015, may do so
by writing to Investor Relations at the Company’s
Corporate Headquarters (address indicated above).

This product
is made from
recycled paper