8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
January 3, 2007

RELIANCE STEEL & ALUMINUM CO.

(Exact name of registrant as specified in its charter)

California
(State or other jurisdiction of
incorporation) 001-13122
(Commission File Number) 95-1142616
(I.R.S. Employer
Identification Number)

350 S. Grand Ave., Suite 5100
Los Angeles, CA 90071
(Address of principal executive offices)

(213) 687-7700
(Registrant’s telephone number, including area code)

Not applicable.
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EXHIBIT 23.1

EXHIBIT 23.2

EXHIBIT 99.1

EXHIBIT 99.2

Item 8.01. Other Events.

Reliance Steel & Aluminum Co. (the “Company”) is filing this Current Report on Form 8-K for the purpose of, among other things, incorporating the contents of this report in the Registration Statement on Form S-4 (the “Registration Statement”) that the Company will file on the date hereof.

This report contains an additional footnote to the Company’s audited financial statements for the fiscal year ended December 31, 2005 and unaudited financial statements for the fiscal quarter ended September 30 2006. The additional footnote provides condensed consolidating financial information in accordance with Rule 3-10(f) of Regulation S-X promulgated by the Securities and Exchange Commission in order for the subsidiary guarantors that will be additional registrants on the Registration Statement to continue to be exempt from Securities Exchange Act of 1934 (the “Exchange Act”) reporting requirements pursuant to Rule 12h-5 under the Exchange Act.

This report also contains Yarde Metals, Inc.’s (“Yarde”) audited financial statements for the fiscal year ended June 30, 2006. Yarde is a subsidiary guarantor that will be an additional registrant on the Registration Statement. These financial statements are provided in accordance with Rule 3-10(g) of Regulation S-X in order that Yarde will also continue to be exempt from Exchange Act reporting requirements pursuant to Rule 12h-5 under the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

N/A.

(b)	Pro Forma Financial Information. N/A.
(c)	Exhibits.

Exhibit No.	Description
23.1	Consent of Del Conte, Hyde, Annello & Schuch, P.C.
23.2	Consent of Ernst & Young LLP
99.1	Updated historical financial information of Reliance Steel & Aluminum Co. as required by Rule 3-10 of Regulation S-X.
99.2	Yarde Metals, Inc. and Affiliate’s audited combined balance sheet at June 30, 2006 and audited combined statements of income and retained earnings, and cash flows for the year then ended and notes thereto and Report of Independent Auditors.

2

SIGNATURES

     Pursuant to the requirements 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.

	RELIANCE STEEL & ALUMINUM CO.
Dated: January 3, 2007	By	/s/ David H. Hannah
		David H. Hannah
		Chief Executive Officer

3

RELIANCE STEEL & ALUMINUM CO.

FORM 8-K

INDEX TO EXHIBITS

Exhibit No.	Description
23.1	Consent of Del Conte, Hyde, Annello & Schuch, P.C.
23.2	Consent of Ernst & Young LLP
99.1	Updated historical financial information of Reliance Steel & Aluminum Co. as required by Rule 3-10 of Regulation S-X.
99.2	Yarde Metals, Inc. and Affiliate’s audited combined balance sheet at June 30, 2006 and audited combined statements of income and retained earnings, and cash flows for the year then ended and notes thereto and Report of Independent Auditors.

EX-23.1

Exhibit 23.1

[Letterhead of Del Conte, Hyde, Anello & Schuch, P.C.]

Reliance Steel & Aluminum Co.
Los Angeles, CA

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We consent to the use in this Current Report of Reliance Steel & Aluminum Co. on Form 8-K of our report dated November 3, 2006 on the combined balance sheet of Yarde Metals, Inc. and Affiliates as of June 30, 2006 and the related combined statements of income, comprehensive income, changes in retained earnings and members’/partners’ equity, cash flows, the combined schedules of cost of revenue and selling, general and administrative expenses, and the combining balance sheet, combining statements of income, comprehensive income, changes in retained earnings and members’/partners equity and cash flows, and combining schedules of cost of revenue and selling, general and administrative expenses for the year then ended (which includes an explanatory paragraph relating to the adoption of Interpretation No. 46R, Consolidation of Variable Interest Entities, issued by the Financial Accounting Standards Board ).

/s/ Del Conte, Hyde, Anello & Schuch, P.C.

Farmington, Connecticut
January 3, 2007

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-4) and related Prospectus of Reliance Steel & Aluminum Co., for the registration of $350,000,000 of 6.200% Senior Notes due 2016 and $250,000,000 of 6.850% Senior Notes due 2036, of our report dated March 10, 2006 (except for Note 14, as to which the date is December 29, 2006) with respect to the consolidated financial statements and schedule of Reliance Steel & Aluminum Co. included in this Current Report (Form 8-K) which updates Item 8 of Reliance Steel & Aluminum Co.’s Annual Report (Form 10-K) for the year ended December 31, 2005 and of our report dated March 10, 2006 with respect to Reliance Steel & Aluminum Co.’s management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Reliance Steel & Aluminum Co., included in its Annual Report (Form 10-K) for the year ended December 31, 2005, filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP

Los Angeles, California
January 3, 2007

EX-99.1

EXHIBIT 99.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors
Reliance Steel & Aluminum Co.

     We have audited the accompanying consolidated balance sheets of Reliance Steel & Aluminum Co. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reliance Steel & Aluminum Co. and subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Reliance Steel & Aluminum Co.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2006 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Los Angeles, California
March 10, 2006, except for Note 14, as to which
the date is December 29, 2006

Note 14. Condensed Consolidating Financial Statements

     In November 2006, the Company issued senior unsecured notes for an aggregate principal amount of $600 million at fixed interest rates that are guaranteed by certain of its wholly owned domestic subsidiaries. The accompanying combined and consolidating financial information has been prepared and presented pursuant to Rule 3-10 of SEC Regulation S-X “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or being Registered.” The guarantees are full and unconditional and joint and several obligations of each of the guarantor subsidiaries. There are no significant restrictions on the ability of the Company to obtain funds from any of the guarantor subsidiaries by dividends or loan. The supplemental consolidating financial information has been presented in lieu of separate financial statements of the guarantors as such separate financial statements are not considered meaningful.

     Consolidating financial information related to the Company, its guarantor subsidiaries and non-guarantor subsidiaries as of December 31, 2005, and 2004 and for each of the three years in the period ended December 31, 2005 is shown below:

Condensed Consolidating Balance Sheet
As of December 31, 2005
(amounts in thousands)

						Non-
				Guarantor		Guarantor
	Parent			Subsidiaries		Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	(7,912	)	$	35,717	$	7,217	$	—		$	35,022
Accounts receivable, less allowance for doubtful accounts		70,533			288,372		12,640		(1,614	)		369,931
Inventories		58,659			304,318		24,408		—			387,385
Prepaid expenses and other current assets		110			15,659		3,240		—			19,009
Deferred income taxes		—			35,868		133		—			36,001
Total current assets		121,390			679,934		47,638		(1,614	)		847,348
Investments in subsidiaries		571,358			989,050		—		(1,560,408	)		—
Property, plant and equipment, net		66,692			403,405		9,622		—			479,719
Goodwill		12,437			372,293		—		—			384,730
Intangible assets, net		906			43,442		36		—			44,384
Intercompany receivables		212,919			—		—		(212,919	)		—
Other assets		552			12,653		148		(464	)		12,889
Total assets	$	986,254		$	2,500,777	$	57,444	$	(1,775,405	)	$	1,769,070
Liabilities & Shareholders’ Equity
Accounts payable	$	35,241		$	146,322	$	4,494	$	(1,614	)	$	184,443
Accrued compensation and retirement costs		8,418			42,023		1,913		—			52,354
Other current liabilities		6,310			38,657		1,994		—			46,961
Current maturities of long-term debt		49,200			325		—		—			49,525
Current maturities of capital lease obligations		—			536		—		—			536
Total current liabilities		99,169			227,863		8,401		(1,614	)		333,819
Long-term debt		300,050			1,225		—		—			301,275
Intercompany borrowings		—			190,264		22,655		(212,919	)		—
Deferred taxes and other long-term liabilities		—			104,125		604		(618	)		104,111
Total shareholders’ equity		587,035			1,977,300		25,784		(1,560,254	)		1,029,865
Total liabilities and shareholders’ equity	$	986,254		$	2,500,777	$	57,444	$	(1,775,405	)	$	1,769,070

1

Condensed Consolidating Balance Sheet
As of December 31, 2004
(amounts in thousands)

						Non-
				Guarantor		Guarantor
	Parent			Subsidiaries		Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	(10,638	)	$	21,084	$	1,213	$	—		$	11,659
Accounts receivable, less allowance for doubtful accounts		73,114			247,953		10,463		(1,539	)		329,991
Inventories		73,988			256,922		18,869		—			349,779
Prepaid expenses and other current assets		171			11,749		5,296		—			17,216
Deferred income taxes		—			24,584		—		—			24,584
Total current assets		136,635			562,292		35,841		(1,539	)		733,229
Investments in subsidiaries		570,159			877,388		—		(1,447,547	)		—
Property, plant and equipment, net		67,181			382,792		8,840		—			458,813
Goodwill		12,436			329,344		—		—			341,780
Intangible assets, net		1,245			15,368		60		—			16,673
Intercompany receivables		196,027			—		—		(196,027	)		—
Other assets		45			12,721		70		—			12,836
Total assets	$	983,728		$	2,179,905	$	44,811	$	(1,645,113	)	$	1,563,331
Liabilities & Shareholders’ Equity
Accounts payable	$	28,301		$	110,700	$	4,840	$	(1,539	)	$	142,302
Accrued compensation and retirement costs		7,628			40,702		1,629		—			49,959
Other current liabilities		8,238			26,716		1,063		—			36,017
Current maturities of long-term debt		46,150			250		—		—			46,400
Total current liabilities		90,317			178,368		7,532		(1,539	)		274,678
Long-term debt		349,300			31,550		—		—			380,850
Intercompany borrowings		—			175,118		20,909		(196,027	)		—
Deferred taxes and other long-term liabilities		—			85,274		518		(541	)		85,251
Total shareholders’ equity		544,111			1,709,595		15,852		(1,447,006	)		822,552
Total liabilities and shareholders’ equity	$	983,728		$	2,179,905	$	44,811	$	(1,645,113	)	$	1,563,331

2

Condensed Consolidating Statement of Income
For the year ended December 31, 2005
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	736,804	$	2,571,386		$	77,385		$	(18,524	)	$	3,367,051
Other income, net		435		12,625			(18	)		(9,371	)		3,671
		737,239		2,584,011			77,367			(27,895	)		3,370,722
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		538,970		1,874,035			54,601			(18,606	)		2,449,000
Warehouse, delivery, selling, general and administrative		112,820		384,945			13,862			(3,722	)		507,905
Depreciation and amortization		6,924		39,157			550			—			46,631
Interest		26,513		3,924			352			(5,567	)		25,222
		685,227		2,302,061			69,365			(27,895	)		3,028,758
Income before minority interest and income taxes		52,012		281,950			8,002			—			341,964
Minority interest		—		(8,666	)		(86	)		—			(8,752	)
Equity in earnings of subsidiaries		171,196		2,128			—			(173,324	)		—
Income from continuing operations before income taxes		223,208		275,412			7,916			(173,324	)		333,212
Provision for income taxes		19,900		105,650			2,225			—			127,775
Net income	$	203,308	$	169,762		$	5,691		$	(173,324	)	$	205,437

Condensed Consolidating Statement of Income
For the year ended December 31, 2004
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	711,020	$	2,190,330		$	57,305		$	(15,621	)	$	2,943,034
Other income, net		1,141		13,795			741			(11,509	)		4,168
		712,161		2,204,125			58,046			(27,130	)		2,947,202
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		514,534		1,572,436			39,581			(15,703	)		2,110,848
Warehouse, delivery, selling, general and administrative		115,039		362,699			11,697			(5,548	)		483,887
Depreciation and amortization		7,280		36,731			616			—			44,627
Interest		26,869		7,318			382			(5,879	)		28,690
		663,722		1,979,184			52,276			(27,130	)		2,668,052
Income before minority interest and income taxes		48,439		224,941			5,770			—			279,150
Minority interest		—		(8,193	)		(989	)		—			(9,182	)
Equity in earnings of subsidiaries		139,988		(728	)		—			(139,260	)		—
Income from continuing operations before income taxes		188,427		216,020			4,781			(139,260	)		269,968
Provision for income taxes		17,971		80,032			2,237			—			100,240
Net income	$	170,456	$	135,988		$	2,544		$	(139,260	)	$	169,728

3

Condensed Consolidating Statement of Income
For the year ended December 31, 2003
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	488,411	$	1,378,929		$	26,896		$	(11,303	)	$	1,882,933
Other income, net		1,044		9,952			160			(8,319	)		2,837
		489,455		1,388,881			27,056			(19,622	)		1,885,770
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		357,680		1,005,136			20,977			(11,483	)		1,372,310
Warehouse, delivery, selling, general and administrative		98,175		293,579			7,930			(3,757	)		395,927
Depreciation and amortization		7,849		27,493			1,528			—			36,870
Interest		24,520		6,118			489			(4,382	)		26,745
		488,224		1,332,326			30,924			(19,622	)		1,831,852
Income before minority interest and income taxes		1,231		56,555			(3,868	)		—			53,918
Minority interest		—		1,394			(456	)		—			938
Equity in earnings of subsidiaries		33,715		(466	)		—			(33,249	)		—
Income from continuing operations before income taxes		34,946		57,483			(4,324	)		(33,249	)		54,856
Provision for income taxes		467		22,113			(1,734	)		—			20,846
Net income	$	34,479	$	35,370		$	(2,590	)	$	(33,249	)	$	34,010

4

Condensed Consolidating Cash Flow Statement
For the year ended December 31, 2005
(amounts in thousands)

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from operating activities:
Net income (loss)	$	203,308		$	169,763		$	5,690		$	(173,324	)	$	205,437
Equity in earnings of subsidiaries		(171,196	)		(2,128	)		—			173,324			—
Adjustments to reconcile net income to cash provided by (used in) operating activities		141,458			(75,778	)		1,102			—			66,782
Cash provided by (used in) operating activities		173,570			91,857			6,792			—			272,219
Cash Flows from investing activities:
Purchases of property, plant and equipment, net		(6,229	)		(45,058	)		(2,453	)		—			(53,740	)
Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired		(94,377	)		—			—			—			(94,377	)
Intercompany loan repayments (advances), net		(16,892	)		—			—			16,892			—
Other investing activities, net		1,485			—			—			—			1,485
Cash provided by (used in) investing activities		(116,013	)		(45,058	)		(2,453	)		16,892			(146,632	)
Cash Flows from financing activities:
Net borrowings (repayments) of long-term debt		(46,200	)		(47,311	)		—			—			(93,511	)
Dividends paid		(12,530	)		—			—			—			(12,530	)
Intercompany borrowings (repayments)		—			15,145			1,747			(16,892	)		—
Other financing activities		3,898			—			—			—			3,898
Cash provided by (used in) financing activities		(54,832	)		(32,166	)		1,747			(16,892	)		(102,143	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(81	)		—			(81	)
Increase (decrease) in cash and cash equivalents		2,725			14,633			6,005			—			23,363
Cash and cash equivalents at beginning of period		(10,637	)		21,083			1,213			—			11,659
Cash and cash equivalents at end of period	$	(7,912	)	$	35,716		$	7,218		$	—		$	35,022

5

Condensed Consolidating Cash Flow Statement
For the year ended December 31, 2004
(amounts in thousands)

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from operating activities:
Net income (loss)	$	170,457		$	135,987		$	2,544		$	(139,260	)	$	169,728
Equity in earnings of subsidiaries		(139,988	)		728			—			139,260			—
Adjustments to reconcile net income to cash provided by (used in) operating activities		(4,130	)		(39,547	)		(4,283	)		—			(47,960	)
Cash provided by (used in) operating activities		26,339			97,168			(1,739	)		—			121,768
Cash Flows from investing activities:
Purchases of property, plant and equipment, net		(4,496	)		(30,040	)		(1,446	)		—			(35,982	)
Tax reimbursements made related to prior acquisition		(16,475	)		—			—			—			(16,475	)
Intercompany loan repayments (advances), net		5,441			—			—			(5,441	)		—
Other investing activities, net		2,808			—			—			—			2,808
Cash provided by (used in) investing activities		(12,722	)		(30,040	)		(1,446	)		(5,441	)		(49,649	)
Cash Flows from financing activities:
Net borrowings (repayments) of long-term debt		(22,150	)		(42,250	)		—			—			(64,400	)
Dividends paid		(8,448	)		—			—			—			(8,448	)
Intercompany borrowings (repayments)		—			(6,717	)		1,276			5,441			—
Other financing activities		8,657			—			—			—			8,657
Cash provided by (used in) financing activities		(21,941	)		(48,967	)		1,276			5,441			(64,191	)
Effect of exchange rate changes on cash and cash equivalents		—			—			1,565			—			1,565
Increase (decrease) in cash and cash equivalents		(8,324	)		18,161			(344	)		—			9,493
Cash and cash equivalents at beginning of period		(2,313	)		2,922			1,557			—			2,166
Cash and cash equivalents at end of period	$	(10,637	)	$	21,083		$	1,213		$	—		$	11,659

6

Condensed Consolidating Cash Flow Statement
For the year ended December 31, 2003
(amounts in thousands)

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from operating activities:
Net income (loss)	$	34,477		$	35,372		$	(2,590	)	$	(33,249	)	$	34,010
Equity in earnings of subsidiaries		(33,715	)		466			—			33,249			—
Adjustments to reconcile net income to cash provided by (used in) operating activities		255,931			(184,428	)		2,307			—			73,810
Cash provided by (used in) operating activities		256,693			(148,590	)		(283	)		—			107,820
Cash Flows from investing activities:
Purchases of property, plant and equipment, net		(2,290	)		(17,292	)		(1,327	)		—			(20,909	)
Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired		(245,850	)		—			—			—			(245,850	)
Intercompany loan repayments (advances), net		(147,238	)		—			—			147,238			—
Other investing activities, net		3,020			—			—			—			3,020
Cash provided by (used in) investing activities		(392,358	)		(17,292	)		(1,327	)		147,238			(263,739	)
Cash Flows from financing activities:
Net borrowings (repayments) of long-term debt		134,850			12,395			—			—			147,245
Dividends paid		(7,643	)		—			—			—			(7,643	)
Intercompany borrowings (repayments)		—			145,651			1,587			(147,238	)		—
Other financing activities		8,706			—			—			—			8,706
Cash provided by (used in) financing activities		135,913			158,046			1,587			(147,238	)		148,308
Effect of exchange rate changes on cash and cash equivalents		—			—			472			—			472
Increase (decrease) in cash and cash equivalents		248			(7,836	)		449			—			(7,139	)
Cash and cash equivalents at beginning of period		(2,561	)		10,759			1,107			—			9,305
Cash and cash equivalents at end of period	$	(2,313	)	$	2,923		$	1,556		$	—		$	2,166

7

     Unaudited consolidating financial information related to the Company, its guarantor subsidiaries and non-guarantor subsidiaries as of September 30, 2006 and for the three and nine-month periods ended September 30, 2006 and 2005, respectively, is reflected below.

Unaudited Condensed Consolidating Balance Sheet
As of September 30, 2006
(amounts in thousands)

						Non-
				Guarantor		Guarantor
	Parent			Subsidiaries		Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	(17,448	)	$	27,695	$	11,794	$	—		$	22,041
Accounts receivable, less allowance for doubtful accounts		96,243			616,694		36,954		(3,941	)		745,950
Inventories		116,178			829,670		41,657		—			987,505
Prepaid expenses and other current assets		—			18,885		726		—			19,611
Deferred income taxes		—			35,482		142		—			35,624
Total current assets		194,973			1,528,426		91,273		(3,941	)		1,810,731
Investments in subsidiaries		590,191			1,986,657		—		(2,576,848	)		—
Property, plant and equipment, net		88,065			632,954		15,161		—			736,180
Goodwill		15,328			741,633		2,704		—			759,665
Intangible assets, net		1,120			350,513		26		—			351,659
Intercompany receivables		504,925			—		—		(504,925	)		—
Other assets		526			72,777		1,611		(464	)		74,450
Total assets	$	1,395,128		$	5,312,960	$	110,775	$	(3,086,178	)	$	3,732,685
Liabilities & Shareholders’ Equity
Accounts payable	$	47,792		$	302,446	$	31,439	$	(3,941	)	$	377,736
Accrued compensation and retirement costs		4,958			74,150		3,301		—			82,409
Other current liabilities		15,110			89,745		3,275		—			108,130
Current maturities of long-term debt		44,200			51,040		1,118		—			96,358
Current maturities of capital lease obligations		—			553		—		—			553
Total current liabilities		112,060			517,934		39,133		(3,941	)		665,186
Long-term debt		279,850			873,151		—		—			1,153,001
Intercompany borrowings		—			493,400		11,525		(504,925	)		—
Deferred taxes and other long-term liabilities		—			239,864		1,443		—			241,307
Total shareholders’ equity		1,003,218			3,188,611		58,674		(2,577,312	)		1,673,191
Total liabilities and shareholders’ equity	$	1,395,128		$	5,312,960	$	110,775	$	(3,086,178	)	$	3,732,685

8

Unaudited Condensed Consolidating Statement of Income
For the nine months ended September 30, 2006
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	650,784	$	3,405,578		$	145,017		$	(27,963	)	$	4,173,416
Other income, net		833		12,616			1,266			(11,074	)		3,641
		651,617		3,418,194			146,283			(39,037	)		4,177,057
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		462,988		2,505,950			110,376			(28,025	)		3,051,289
Warehouse, delivery, selling, general and administrative		90,514		475,642			23,979			(3,117	)		587,018
Depreciation and amortization		5,475		39,000			657			—			45,132
Interest		18,309		31,123			459			(7,895	)		41,996
		577,286		3,051,715			135,471			(39,037	)		3,725,435
Income before minority interest and income taxes		74,331		366,479			10,812			—			451,622
Minority interest		—		(104	)		(123	)		—			(227	)
Equity in earnings of subsidiaries		221,358		3,820			—			(225,178	)		—
Income from continuing operations before income taxes		295,689		370,195			10,689			(225,178	)		451,395
Provision for income taxes		19,645		148,099			3,786			—			171,530
Net income	$	276,044	$	222,096		$	6,903		$	(225,178	)	$	279,865

Unaudited Condensed Consolidating Statement of Income
For the nine months ended September 30, 2005
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	560,049	$	1,893,463		$	57,857		$	(12,996	)	$	2,498,373
Other income, net		359		10,291			(36	)		(7,905	)		2,709
		560,408		1,903,754			57,821			(20,901	)		2,501,082
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		408,317		1,395,440			40,774			(13,057	)		1,831,474
Warehouse, delivery, selling, general and administrative		83,240		285,254			10,297			(3,178	)		375,613
Depreciation and amortization		5,200		29,208			398			—			34,806
Interest		20,197		3,504			255			(4,666	)		19,290
		516,954		1,713,406			51,724			(20,901	)		2,261,183
Income before minority interest and income taxes		43,454		190,348			6,097			—			239,899
Minority interest		—		(6,271	)		—			—			(6,271	)
Equity in earnings of subsidiaries		109,821		933			—			(110,754	)		—
Income from continuing operations before income taxes		153,275		185,010			6,097			(110,754	)		233,628
Provision for income taxes		9,359		76,750			2,670			—			88,779
Net income	$	143,916	$	108,260		$	3,427		$	(110,754	)	$	144,849

9

Unaudited Condensed Consolidating Statement of Income
For the three months ended September 30, 2006
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	225,595	$	1,352,067		$	58,177		$	(9,631	)	$	1,626,208
Other income, net		91		5,768			836			(4,708	)		1,987
		225,686		1,357,835			59,013			(14,339	)		1,628,195
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		160,017		998,890			44,884			(9,652	)		1,194,139
Warehouse, delivery, selling, general and administrative		31,572		183,652			10,568			(1,089	)		224,703
Depreciation and amortization		1,893		14,336			282			—			16,511
Interest		6,221		16,580			151			(3,598	)		19,354
		199,703		1,213,458			55,885			(14,339	)		1,454,707
Income before minority interest and income taxes		25,983		144,377			3,128			—			173,488
Minority interest		—		(33	)		(62	)		—			(95	)
Equity in earnings of subsidiaries		87,161		1,145			—			(88,306	)		—
Income from continuing operations before income taxes		113,144		145,489			3,066			(88,306	)		173,393
Provision for income taxes		6,786		58,251			851			—			65,888
Net income	$	106,358	$	87,238		$	2,215		$	(88,306	)	$	107,505

Unaudited Condensed Consolidating Statement of Income
For the three months ended September 30, 2005
(amounts in thousands)

			Guarantor			Non-Guarantor
	Parent		Subsidiaries			Subsidiaries		Eliminations			Consolidated
Net sales	$	186,295	$	668,524		$	19,927	$	(4,622	)	$	870,124
Other income, net		86		3,554			121		(2,416	)		1,345
		186,381		672,078			20,048		(7,038	)		871,469
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		136,968		494,197			14,873		(4,642	)		641,396
Warehouse, delivery, selling, general and administrative		28,031		99,003			4,187		(961	)		130,260
Depreciation and amortization		1,716		9,713			108		—			11,537
Interest		6,771		1,352			95		(1,435	)		6,783
		173,486		604,265			19,263		(7,038	)		789,976
Income before minority interest and income taxes		12,895		67,813			785		—			81,493
Minority interest		—		(1,755	)		—		—			(1,755	)
Equity in earnings of subsidiaries		38,976		96			—		(39,072	)		—
Income from continuing operations before income taxes		51,871		66,154			785		(39,072	)		79,738
Provision for income taxes		2,529		27,344			428		—			30,301
Net income	$	49,342	$	38,810		$	357	$	(39,072	)	$	49,437

10

Unaudited Condensed Consolidating Cash Flow Statement
For the nine months ended September 30, 2006
(amounts in thousands)

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from operating activities:
Net income (loss)	$	276,044		$	222,097		$	6,902		$	(225,178	)	$	279,865
Equity in earnings of subsidiaries		(221,358	)		(3,820	)		—			225,178			—
Adjustments to reconcile net income to cash provided by (used in) operating activities		815,448			(1,093,787	)		10,003			—			(268,336	)
Cash provided by (used in) operating activities		870,134			(875,510	)		16,905			—			11,529
Cash Flows from investing activities:
Purchases of property, plant and equipment, net		(17,966	)		(64,245	)		(2,509	)		—			(84,720	)
Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired		(538,714	)		(20,679	)		—			—			(559,393	)
Intercompany loan repayments (advances), net		(292,005	)		—			—			292,005			—
Other investing activities, net		2,272			—			—			—			2,272
Cash provided by (used in) investing activities		(846,413	)		(84,924	)		(2,509	)		292,005			(641,841	)
Cash Flows from financing activities:
Net borrowings (repayments) of long-term debt		(25,200	)		649,275			1,118			—			625,193
Dividends paid		(11,608	)		—			—			—			(11,608	)
Intercompany borrowings (repayments)		—			303,136			(11,131	)		(292,005	)		—
Other financing activities		3,552			—			—			—			3,552
Cash provided by (used in) financing activities		(33,256	)		952,411			(10,013	)		(292,005	)		617,137
Effect of exchange rate changes on cash and cash equivalents		—			—			194			—			194
Increase (decrease) in cash and cash equivalents		(9,535	)		(8,023	)		4,577			—			(12,981	)
Cash and cash equivalents at beginning of period		(7,912	)		35,717			7,217			—			35,022
Cash and cash equivalents at end of period	$	(17,447	)	$	27,694		$	11,794		$	—		$	22,041

11

Unaudited Condensed Consolidating Cash Flow Statement
For the nine months ended September 30, 2005
(amounts in thousands)

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from operating activities:
Net income (loss)	$	143,916		$	108,260		$	3,427		$	(110,754	)	$	144,849
Equity in earnings of subsidiaries		(109,821	)		(933	)		—			110,754			—
Adjustments to reconcile net income to cash provided by (used in) operating activities		119,430			(96,251	)		(2,860	)		—			20,319
Cash provided by (used in) operating activities		153,525			11,076			567			—			165,168
Cash Flows from investing activities:
Purchases of property, plant and equipment, net		(4,567	)		(28,548	)		(1,199	)		—			(34,314	)
Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired		(94,383	)		—			—			—			(94,383	)
Intercompany loan repayments (advances), net		(24,177	)		—			—			24,177			—
Other investing activities, net		1,191			—			—			—			1,191
Cash provided by (used in) investing activities		(121,936	)		(28,548	)		(1,199	)		24,177			(127,506	)
Cash Flows from financing activities:
Net borrowings (repayments) of long-term debt		(23,200	)		(7,181	)		—			—			(30,381	)
Dividends paid		(9,220	)		—			—			—			(9,220	)
Intercompany borrowings (repayments)		—			21,599			2,578			(24,177	)		—
Other financing activities		835			—			—			—			835
Cash provided by (used in) financing activities		(31,585	)		14,418			2,578			(24,177	)		(38,766	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(136	)		—			(136	)
Increase (decrease) in cash and cash equivalents		4			(3,054	)		1,810			—			(1,240	)
Cash and cash equivalents at beginning of period		(10,637	)		21,083			1,213			—			11,659
Cash and cash equivalents at end of period	$	(10,633	)	$	18,029		$	3,023		$	—		$	10,419

12

EX-99.2

EXHIBIT 99.2

Combined Financial Statements

Yarde Metals, Inc. and
Affiliates

June 30, 2006

YARDE METALS, INC. AND AFFILIATES
CONTENTS
JUNE 30, 2006

Independent Auditors’ Report	1
Financial Statements:
Combined Balance Sheet	3
Combined Statement of Income	5
Combined Statement of Comprehensive Income	6
Combined Statement of Changes in Retained Earnings and Members’/Partners’ Equity	7
Combined Statement of Cash Flows	8
Notes to Combined Financial Statements	9
Supplementary Financial Information:
Combined Schedule of Cost of Revenue	24
Combined Schedule of Selling, General and Administrative Expenses	25
Combining Balance Sheet	26
Combining Statement of Income	28
Combining Statement of Comprehensive Income	29
Combining Statement of Changes in Retained Earnings and Members’/Partners’ Equity	30
Statement of Changes in Retained Earnings – Yarde Metals, Inc.	31
Statement of Changes in Members’ Equity – 10160 Phillipp Parkway, LLC	32
Combining Statement of Cash Flows	33
Combining Schedule of Cost of Revenue	34
Combining Schedule of Selling, General and Administrative Expenses	35

[Letterhead of Del Conte, Hyde, Anello & Schuch, P.C.]

To the Board of Directors and Members
Yarde Metals, Inc. and Affiliates
Southington, Connecticut

We have audited the accompanying combined balance sheet of Yarde Metals, Inc. and Affiliates as of June 30, 2006 and the related combined statements of income, comprehensive income, changes in retained earnings and members’/partners’ equity, and cash flows for the year then ended. These combined financial statements are the responsibility of Yarde Metals, Inc. and Affiliates’ management. Our responsibility is to express an opinion on these combined financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Yarde Metals, Inc. and Affiliates as of June 30, 2006, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As described in Note 2 to the combined financial statements, Yarde Metals, Inc. leases its corporate offices and certain warehousing and office facilities from entities that are subject to the provisions of Interpretation No. 46R (FIN 46R), Consolidation of Variable Interest Entities, issued by the Financial Accounting Standards Board. Yarde Metals, Inc. adopted the provisions of FIN 46R for these variable interest entities on July 1, 2005, the effect of which is shown as a cumulative effect of a change in accounting principle in the accompanying combined financial statements.

Our audit was conducted for the purpose of forming an opinion on the basic combined financial statements taken as a whole. The combined schedules of cost of revenue and selling, general and administrative expenses, and the combining balance sheet, combining statements of income, comprehensive income, changes in retained earnings and members’/partners’ equity and cash flows, and combining schedules of cost of revenue and selling, general and administrative expenses, on pages 24 through 35, are presented only for purposes of additional analysis and are not a required part of the basic combined financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic combined financial statements taken as a whole.

/s/ Del Conte, Hyde, Anello & Schuch, P.C.

Farmington, Connecticut
November 3, 2006

YARDE METALS, INC. AND AFFILIATES
COMBINED BALANCE SHEET
JUNE 30, 2006

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	8,847,642
Trade receivables		56,602,791
Employee loans receivable		23,572
Inventory		81,782,552
Prepaid expenses		1,465,464
Total Current Assets			$	148,722,021
PROPERTY AND EQUIPMENT
Land		2,905,251
Buildings		22,775,390
Machinery and equipment		23,488,523
Office furnishings and equipment		5,693,517
Motor vehicles		2,329,145
Leasehold improvements		1,052,295
		58,244,121
Less accumulated depreciation		19,619,358
Total Property and Equipment				38,624,763
OTHER ASSETS
Employee loans receivable, net of current portion		132,267
Federal tax deposit to retain fiscal year		2,184,517
Derivative swap obligation		1,143,955
Deposits		388,448
Loan closing costs, net of amortization		129,470
Total Other Assets				3,978,657
Total Assets			$	191,325,441

The accompanying notes are an integral
part of these financial statements.

- 3 -

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Notes payable — Short-term	$	75,347,402
Current maturities of long-term debt		9,451,453
Notes payable — Related parties		14,774,809
Accounts payable		23,349,161
Accrued compensation		8,789,568
Accrued taxes and expenses		9,101,232
Total Current Liabilities			$	140,813,625
LONG-TERM DEBT, NET OF CURRENT PORTION				12,744,150
Total Liabilities				153,557,775
EQUITY
Common stock		1,500
Additional paid-in capital		10,028,500
Retained earnings		17,925,477
Members’/Partners’ equity		8,668,234
Accumulated other comprehensive income		1,143,955
Total Equity				37,767,666
Total Liabilities and Equity			$	191,325,441

- 4 -

YARDE METALS, INC. AND AFFILIATES
COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2006

REVENUE
Net sales	$	386,104,556
Rental income		30,000
Total Revenue				$	386,134,556
COST OF REVENUE					317,678,299
Gross Profit					68,456,257
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES					33,992,726
Income from Operations					34,463,531
OTHER INCOME (EXPENSE)
Interest and dividend income		5,679
Gain on sale of assets		15,164
Other income		45,753
Shareholder compensation		(17,221,000	)
Compensation related to the sale		(9,137,005	)
Interest expense		(5,472,160	)		(31,763,569	)
Income before Provision for Income and Other Taxes					2,699,962
PROVISION FOR INCOME AND OTHER TAXES					90,357
Net Income				$	2,609,605

The accompanying notes are an integral
part of these financial statements.

- 5 -

YARDE METALS, INC. AND AFFILIATES
COMBINED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2006

NET INCOME	$	2,609,605
OTHER COMPREHENSIVE INCOME
Interest rate swap adjustment		837,174
Total Comprehensive Income	$	3,446,779

The accompanying notes are an integral
part of these financial statements.

- 6 -

YARDE METALS, INC. AND AFFILIATES
COMBINED STATEMENT OF CHANGES IN RETAINED EARNINGS AND MEMBERS’/PARTNERS’ EQUITY
FOR THE YEAR ENDED JUNE 30, 2006

											Accumulated
			Additional								Other
	Common		Paid-in		Retained			Members’/			Comprehensive
	Stock		Capital		Earnings			Partners’ Equity			Income		Total
Balance, June 30, 2005, as previously reported	$	1,500	$	10,028,500	$	16,861,753		$	8,175,233		$	306,781	$	35,373,767
Adjustment for understatement of accrued compensation		—		—		(684,198	)		—			—		(684,198	)
Balance, June 30, 2005		1,500		10,028,500		16,177,555			8,175,233			306,781		34,689,569
Cumulative effect of change in accounting principle due to adoption of FIN 46R on July 1, 2005		—		—		512,580			—			—		512,580
Net income		—		—		1,242,452			1,367,153			—		2,609,605
Dividends paid		—		—		(7,110	)		—			—		(7,110	)
Members’/Partners’ draw		—		—		—			(874,152	)		—		(874,152	)
Other comprehensive income		—		—		—			—			837,174		837,174
Balance, June 30, 2006	$	1,500	$	10,028,500	$	17,925,477		$	8,668,234		$	1,143,955	$	37,767,666

The accompanying notes are an integral part of these financial statements.

- 7 -

YARDE METALS, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2006

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,609,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,409,182
Gain on sale of assets		(15,164	)
Increase in allowance for doubtful accounts		91,594
(Increase) decrease in operating assets:
Trade receivables		(10,621,002	)
Inventory		(91,553	)
Prepaid expenses		(797,054	)
Federal tax deposit		(151,188	)
Deposits		(137,904	)
Loan closing costs, net of amortization		(41,867	)
Increase (decrease) in operating liabilities:
Accounts payable		1,074,913
Accrued compensation		2,023,545
Accrued taxes and expenses		7,525,615
Net Cash Provided by Operating Activities				$	4,878,722
CASH FLOWS FROM INVESTING ACTIVITIES
Repayments from employees, net		15,841
Proceeds from sale of assets		227,191
Purchases of property and equipment		(4,474,901	)
Net Cash Used in Investing Activities					(4,231,869	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from notes payable — Short-term		17,267,000
Proceeds from long-term borrowing		3,182,173
Repayment of long-term debt		(4,549,198	)
Repayment of related party notes		(9,092,037	)
Dividends paid		(7,110	)
Members’/Partners’ draw		(874,102	)
Net Cash Provided by Financing Activities					5,926,726
Net increase in cash and cash equivalents					6,573,579
Cash and cash equivalents at beginning of year					2,274,063
Cash and Cash Equivalents at End of Year				$	8,847,642

The accompanying notes are an integral part of these financial statements.

- 8 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 1 — NATURE OF BUSINESS AND PRINCIPLES OF COMBINATION

The accompanying combined financial statements include the operations of Yarde Metals, Inc., 10160 Phillipp Parkway, LLC, Route 38 Associates, LLC, 45 Newell Street, LLC, Yarde Realty Company and Yarde Lot, LLC, collectively referred to as the “Company”. All inter-company accounts, transactions, and profits are eliminated in the combination.

Yarde Metals, Inc. (“Yarde Metals”) is a Connecticut corporation which commenced operations in 1977. Yarde Metals is primarily engaged in the wholesale distribution of metal alloys to a broad range of customers operating in various industries throughout the world. The majority of Yarde Metals’ customers are concentrated in the New England, Mid-Atlantic and Ohio Regions.

10160 Phillipp Parkway, LLC (“10160 Phillipp”) is an Ohio limited liability company whose members are also some of the shareholders/officers of Yarde Metals. This entity was formed in December 2003 to acquire and hold warehousing facilities for Yarde Metals in Ohio. 10160 Phillipp leases the office and warehouse facilities in Streetsboro, Ohio to Yarde Metals. The financial success of 10160 Phillipp is dependent upon the financial success of Yarde Metals.

Route 38 Associates, LLC (“Route 38”) is a New Hampshire limited liability company whose members are also some of the shareholders/officers of Yarde Metals. This entity was formed to construct warehousing facilities for Yarde Metals in New Hampshire. Route 38 leases the office and warehouse facilities in Pelham, New Hampshire to Yarde Metals. The financial success of Route 38 is dependent upon the financial success of Yarde Metals.

45 Newell Street Associates, LLC (“45 Newell”) is a Connecticut limited liability company whose members are also some of the shareholders/officers of Yarde Metals. 45 Newell leases the office and warehouse facilities, acquired in March 2001, in Southington, Connecticut to Yarde Metals. The financial success of 45 Newell is dependent upon the financial success of Yarde Metals.

Yarde Realty Company (“Yarde Realty”) is a Connecticut partnership whose partners are also some of the shareholders/officers of Yarde Metals. This entity was formed in 1980 to acquire and hold warehousing facilities for Yarde Metals in Bristol, Connecticut. Yarde Realty leases the warehouse facilities in Bristol, Connecticut to Yarde Metals. The financial success of Yarde Realty is dependent upon the financial success of Yarde Metals.

Yarde Lot, LLC (“Yarde Lot”) is a Connecticut limited liability company whose members are also some of the shareholders/officers of Yarde Metals. Yarde Lot leases the parking lot across from the office and warehouse facilities in Southington, Connecticut to Yarde Metals. The financial success of Yarde Lot is dependent upon the financial success of Yarde Metals.

- 9 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of combined financial statements in conformity with accounting principles generally accepted in the United States of America 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 combined financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, requires a full set of general purpose financial statements to be expanded to include the reporting of “comprehensive income”. Comprehensive income is comprised of two components, net income and other comprehensive income. For the year ended June 30, 2006, the only items qualifying as other comprehensive income were the interest rate swap agreement adjustments.

For purposes of the financial statements, the Company considers all highly liquid investments with original maturities of three months or less as the equivalent of cash. There were no cash equivalents at June 30, 2006.

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based upon an estimate of collectibility of the accounts receivable, prior bad debt history and current credit conditions. Generally, the Company does not charge or accrue interest/finance charges on past due trade receivables unless the account is turned over for collections. A receivable is considered past due based upon management’s knowledge of the customer, past experience and current conditions. Management periodically reviews its receivable balances and determines which customers are to be turned over for collections. Accounts are written off as uncollectible when collection procedures are unsuccessful.

Inventory, which consists primarily of metal alloys purchased for resale, is valued at the lower of cost or market, which is determined on the specific identification method.

Property and equipment are stated at cost. Major renewals and betterments are capitalized, while maintenance and repairs that do not improve or extend the lives of the respective assets are charged against income. Depreciation and amortization are recorded using straight-line methods over the estimated useful lives of the related assets. The estimated useful lives of assets are as follows:

Buildings	15-40 years
Machinery and equipment	7-10 years
Office furnishings and equipment	5-10 years
Motor vehicles	3-10 years
Leasehold improvements	5-40 years

- 10 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Depreciation expense for the year ended June 30, 2006 was $3,380,283.

Rentals pertaining to noncapitalized lease agreements, which merely convey the right to use property, are expensed as incurred.

Intangible assets for the Company consist of loan acquisition costs that are being amortized on the straight-line basis over 5-20 years. Amortization expense for the year ended June 30, 2006 was $28,899.

Yarde Metals has elected, by consent of its stockholders, to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under these provisions, Yarde Metals does not pay Federal corporate income taxes on its taxable income. Instead, the stockholders are liable for individual Federal income taxes on their respective shares of Yarde Metals’ taxable income. Accordingly, the financial statements reflect no provision or liability for Federal income taxes. Yarde Metals is liable for state income taxes only in certain states that do not follow the federal pass-thru treatment.

Income tax expense includes state taxes currently payable and deferred. When material, Yarde Metals provides for deferred taxes on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. These differences relate primarily to inventory costs capitalized for income tax purposes, but expensed for financial reporting purposes, bad debt expense reported in different periods for financial reporting and income tax purposes, and different depreciation methods and lives used for financial reporting and income tax purposes.

In addition, because Yarde Metals reports on a fiscal year basis, it must represent to the Internal Revenue Service that either the fiscal year is its natural year or it must pay a deposit. The deposit is calculated as the product of the highest individual tax rate plus 1%, the percentage of the deferral period to a total year, and the entity’s taxable income for the prior year.

10160 Phillipp, Route 38, 45 Newell, Yarde Realty and Yarde Lot are not taxpaying entities for income tax purposes, and thus, no Federal income tax expense has been recorded in the statements. Income from the limited liability companies and the partnership are taxed to the members/partners on their individual returns.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables, trade sales and trade purchases. The Company has limited concentration of credit risk regarding trade receivables and trade sales due to the large number of customers comprising the Company’s base and their dispersion across different industries. As of June 30, 2006, the Company had no significant concentration of credit risk regarding trade receivables and trade sales. The Company has significant concentration of

-11-

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

credit risk regarding trade purchases. Purchases from one vendor accounted for 18% of total purchases in the year ended June 30, 2006.

Interest rate swap contracts designated and qualifying as cash flow hedges are reported at fair value. The gain or loss on the effective portion of the hedge initially is included as a component of other comprehensive income and subsequently reclassified into earnings when interest on the related debt is paid.

Advertising costs are charged to operations when incurred. For the year ended June 30, 2006, advertising expense was $331,474.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) with the objective of improving financial reporting by companies involved with variable interest entities. FIN 46 clarifies the application of Accounting Research Bulletin No. 51 to certain entities, defined as variable interest entities, in which equity investors do not have characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated support from other parties. In December 2003, the FASB issued a revision to FIN 46 (FIN 46R) to clarify some of the provisions of FIN 46.

On July 1, 2005, Yarde Metals, Inc. adopted FIN 46R related to 10160 Phillipp Parkway, LLC, Route 38 Associates, LLC, 45 Newell Street Associates, LLC, Yarde Realty Company and Yarde Lot, LLC, which resulted in the combining of these entities with Yarde Metals, Inc. for financial reporting purposes. The effect of Yarde Metals, Inc. adopting FIN 46R related to 10160 Phillipp Parkway, LLC, Route 38 Associates, LLC, 45 Newell Street Associates, LLC, Yarde Realty Company and Yarde Lot, LLC as of July 1, 2005, is recorded as a cumulative effect of a change in accounting principle of $512,580 in the accompanying combined statement of changes in retained earnings and members’ equity as of June 30, 2006.

NOTE 3 — TRADE RECEIVABLES

     Trade receivables at June 30, 2006 consist of the following:

Open accounts receivable	$	58,306,347
Less: Allowance for doubtful accounts		1,703,556
Total Trade Receivables	$	56,602,791

- 12 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 4 — NOTES PAYABLE — SHORT-TERM

On August 16, 2005, Yarde Metals refinanced its revolving line of credit, which was to expire on December 31, 2007. Yarde Metals may borrow up to the sum of 85% of eligible trade receivables and 65% of eligible inventory, to a maximum of $100,000,000. Interest for the year ended June 30, 2006 was payable at the current LIBOR Market Index rate or the bank’s one-month, three-month or six-month LIBOR plus 1% (the LIBOR rate plus the applicable margin at June 30, 2006 was 6.33%). The line of credit also has an optional hedge that allows Yarde Metals to enter into an interest rate swap agreement (see Note 6). This interest rate swap agreement was subsequently terminated on July 19, 2006. The lines are secured by substantially all assets of Yarde Metals and are personally guaranteed by the majority stockholders. The balance due on the line of credit at June 30, 2006 was $75,347,402. As disclosed in Note 16, Yarde Metals was acquired by Reliance Steel & Aluminum Co. on August 1, 2006. As a result of this transaction, the revolving line of credit became due and payable on August 1, 2006.

NOTE 5 — LONG-TERM DEBT

Long-term debt at June 30, 2006 is summarized below:
Mortgage loan payable to Connecticut Development Authority in monthly installments of $28,121 including interest at 5.00% through March 2020, secured by property and all improvements, a first priority lien and security interest in all of the personal property and fixtures, an assignment of leases and rentals with respect to the premises, and assignment of all contracts, permits, approvals and UCC filings of the property in Southington, CT held by 45 Newell Street Associates, LLC. The note contains personal guarantees by the members and a corporate officer and a corporate guarantee by Yarde Metals, Inc.	$	3,516,013
Second mortgage loan payable to Banknorth, N.A. in monthly installments of $43,229 including interest until the maturity date of April 1, 2016, the interest rate was fixed at 6.00% through April 2004, at which time the interest rate was adjusted to the Three Year Federal Home Loan Bank of Boston Classic Advance Rate plus the applicable margin. As of June 30, 2006, the interest rate was 4.90% and is scheduled for adjustment on April 1, 2007, and every three years thereafter until maturity. The mortgage is secured by property and all improvements, a first priority lien and security interest in all of the personal property and

- 13 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 5 — LONG-TERM DEBT (Continued)

fixtures, an assignment of leases and rentals with respect to the premises, and assignment of all contracts, permits, approvals and UCC filings of property in Southington, CT held by 45 Newell Street Associates, LLC. The note contains personal guarantees by the members and a corporate officer.	4,021,636
First mortgage loan payable to Banknorth, N.A. in monthly installments of $17,034 including interest until the maturity date of April 1, 2016, the interest rate was fixed at 6.00% through April 2004, at which time the interest rate was adjusted to the Three Year Federal Home Loan Bank of Boston Classic Advance Rate plus the applicable margin. As of June 30, 2006 the interest was 4.90% and is scheduled for adjustment on April 1, 2007, and every three years thereafter until maturity. The mortgage is secured by property and all improvements, a first priority lien and security interest in all of the personal property and fixtures, an assignment of leases and rentals with respect to the premises, and assignment of all contracts, permits, approvals and UCC filings of property in Southington, CT held by 45 Newell Street, LLC. The note contains personal guarantees by the members and a corporate officer.	1,575,153
First mortgage loan payable to Wachovia in monthly installments, through April 2016, of $12,685 plus interest at a rate of the bank’s one-month LIBOR plus 1.16% (6.33% at June 30, 2006), secured by property and all improvements, a first priority lien and security interest in all of the personal property and fixtures, an assignment of leases and rentals with respect to the premises, and assignment of all contracts, permits, approvals and UCC filings of property in Streetsboro, OH held by 10160 Phillipp Parkway, LLC. The note contains personal guarantees by the members and a corporate officer and a corporate guarantee by Yarde Metals, Inc.	1,416,765

- 14 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 5 — LONG-TERM DEBT (Continued)

Note payable to GE Capital Public Finance in monthly installments of $26,687 including interest at 5.83% through December 2014, secured by property and all improvements, a first priority lien and security interest in all of the personal property and fixtures, an assignment of leases and rentals with respect to the premises, and assignment of all contracts, permits, approvals and UCC filings of property in Pelham, NH held by Route 38 Associates, LLC. The note contains personal guarantees by the members and a corporate officer and a corporate guarantee by Yarde Metals, Inc.	2,142,445
$2,500,000 equipment line of credit payable to Wachovia with advances made at 80% of the invoice cost of the equipment purchased over a draw period ending December 31, 2006. At that point this converts to a five-year term loan. Interest only is paid during the draw period. Once converted, 1/60th of the principal balance plus interest at a rate of the bank’s one-month, three-month or six-month LIBOR plus 1.00% or the current LIBOR Market Index Rate plus 1.00% (6.33% at June 30, 2006) will be payable monthly. The note is secured by substantially all the assets of Yarde Metals, Inc. and is personally guaranteed by the majority stockholders.	1,213,420
Note payable to GE Capital Public Finance at 5.83% with monthly payments of interest only until June 2001, and monthly payments of $9,890, including principal and interest from June 2001 to June 2011. The note is secured by equipment of Yarde Metals, Inc.	366,860
Term loan for $8,500,000 payable to Wachovia used to refinance certain existing term debt with forty-eight equal monthly principal payments, through August 2009, of $177,083 plus interest at a rate of the bank’s one-month, three-month or six-month LIBOR plus 1.00% or at Yarde Metals’ discretion the current LIBOR Market Index Rate plus 1.00% (6.33% at June 30, 2006). The note is secured by substantially all the assets of Yarde Metals, Inc. and is personally guaranteed by the majority stockholders.	6,729,167

- 15 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 5 — LONG-TERM DEBT (Continued)

Mortgage loan payable to Banknorth, N.A. in monthly installments of $12,961 including interest at 5.32% through February 2009, secured by a second mortgage on real property, a collateral assignment of leases and rentals with respect to the premises in Southington, CT held by 45 Newell Street Associates, LLC. The note contains personal guarantees by the members and a corporate officer.	965,921
Mortgage loan payable to Connecticut Development Authority in monthly installments of $11,609 including interest at 7.40% through September 2008, secured by a second mortgage on real property, a collateral assignment of leases and rentals with respect to the premises in Bristol, CT held by Yarde Realty Company. The note contains personal guarantees by the members and a corporate officer and a corporate guarantee by Yarde Metals, Inc.	248,222
	22,195,602
Less: Current maturities	9,451,452
Total Long-Term Debt	$ 12,744,150

     The expected maturities of long-term debt are as follows:

YEAR ENDING
JUNE 30,
2007	$	9,448,408
2008		1,190,932
2009		2,909,809
2010		962,922
2011		1,031,002
Thereafter		6,652,529
Total Long-Term Debt		$ 22,195,602

Yarde Metals also has two Capex Notes with Wachovia that would allow Yarde Metals to borrow $2,500,000 for each of the next two years starting January 2006. Interest only will be paid during the draw period and principal of 1/60^th of the converted amount plus interest will be paid thereafter. Yarde Metals may choose to pay interest at a rate of the bank’s
one-month, three-month or six-month LIBOR plus 1.00% or the current LIBOR Market Index Rate plus 1.00%. Yarde Metals paid off its two Capex Notes in July 2006.

- 16 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 5 — LONG-TERM DEBT (Continued)

The revolving and equipment lines of credit and the equipment note payable to Wachovia (Yarde Metals’ major lender) contain various restrictive financial covenants with respect to borrowings, working capital, tangible net worth, leverage, and debt service coverage. As of June 30, 2006, Yarde Metals failed one of its required ratios.

As disclosed in Note 16, Yarde Metals was acquired by Reliance Steel & Aluminum Co. As a result of this transaction, all debt with Yarde Metals’ lenders became due and payable on August 1, 2006. In addition, all security interests in Yarde Metals’ assets related to the debt were released and all of its corporate guarantees were terminated. Therefore, all debt of Yarde Metals is classified as a current liability as of June 30, 2006.

NOTE 6 — FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107 “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the following information about the fair value of certain financial instruments for which it is practical to estimate that value. For purposes of the following disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The estimated fair values of the Company’s financial instruments at June 30, 2006 are as follows:

	Carrying			Fair Market
	Value			Value
Assets:
Cash and cash equivalents	$	8,847,642		$	8,847,642
Trade receivables including non-current portion		56,602,791			56,602,791
Employee loans receivable		155,839			120,003
Liabilities:
Notes payable including related party notes		(90,122,211	)		(88,946,880	)
Long-term debt		(22,195,603	)		(20,497,282	)

Fair values were determined as follows:

The carrying amount of cash and cash equivalents approximates fair value due to the short-term maturities of these instruments.

The carrying amount of accounts receivable approximate fair value since the receivables are shown net of an allowance for uncollectible amounts.

- 17 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 6 — FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The fair value of employee loans receivable is based on current rates offered by local lending institutions for notes with similar characteristics. The employee loans receivable bear interest at 2.5% per annum, are secured by real estate, and have terms requiring weekly payments of principal and interest over a period of up to ten years.

Fair values of notes payable approximate their carrying values based on quoted market prices for those or similar instruments.

Fair values of notes payable – related parties are based on current rates offered by local lending institutions for notes with similar characteristics. The notes bear interest at 4% per annum and have terms requiring principal and interest payments due June 30, 2010.

Fair values of long-term debt are based on current rates at which the Company could borrow funds at similar remaining maturities.

Yarde Metals and 10160 Phillipp entered into interest rate swap agreements on November 30, 2004 and December 29, 2003, respectively, to control the impact of changes in interest rates on their floating and fixed rate long-term debt. At June 30, 2006, Yarde Metals had one interest rate swap agreement with a commercial bank having a total notional principal amount of $20,000,000 with an interest rate of 7.03% from November 30, 2004 through May 30, 2005 changing to 3.70% effective May 31, 2005 until the termination date. On July 19, 2006, Yarde Metals terminated the swap agreement, which was to mature on November 30, 2009. At June 30, 2006, 10160 Phillipp had one interest rate swap agreement with a commercial bank having a total notional principal amount of $1,600,000 with an interest rate of 4.96%. The interest rate swap agreement of 10160 Phillipp matures on December 29, 2008. The Company is exposed to credit loss in the event of non-performance by the other party to the interest rate swap agreements. However, the Company does not anticipate non-performance by the counter party. The fair market value of the swap agreements at June 30, 2006 was $1,143,955.

NOTE 7 — LEASES

Yarde Metals leases vehicles, equipment, office, and warehouse space under various agreements expiring on dates through 2017. Various office and warehouse facilities are leased from related entities (as described in Note 1), which have common ownership. In accordance with the provisions of FIN 46R (as described in Note 2) the rent expense incurred with these common ownership, or variable interest entities, is eliminated for combined financial statement purposes.

Rent expense relating to vehicle and equipment leases amounted to approximately $1,378,558 for the year ended June 30, 2006. Rent expense relating to office and warehouse leases amounted to approximately $4,354,148, for the year ended June 30, 2006, of which $2,689,640 was eliminated for combined financial statement purposes as it was paid to the related entities.

- 18 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 7 – LEASES (Continued)

Future minimum payments under operating leases at June 30, 2006 are as follows:

	NON-AFFILIATES
YEAR ENDING	OFFICES AND		VEHICLES AND
JUNE 30,	WAREHOUSING		EQUIPMENT
2007	$	1,930,876	$	1,506,008
2008		1,906,026		1,324,428
2009		1,966,813		1,059,364
2010		782,874		697,865
2011		514,178		386,225
Thereafter		3,166,935		208,835
Total	$	10,267,702	$	5,182,725

NOTE 8 — CONTINGENCIES AND COMMITMENTS

Yarde Metals’ loan and security agreement with its major lender contains financial covenants with respect to borrowings, working capital, tangible net worth, leverage, cash flow and interest coverage. In addition, the agreement restricts fixed asset purchases and does not allow the payment of cash dividends, except as provided for in the agreement. There is no requirement to maintain compensating balances under the agreement; however, Yarde Metals is required to pay a facility fee of 1/4 of 1% per calendar quarter on the excess of the average daily maximum amount of the revolving credit minus the average daily outstanding principal amount of the revolving credit loans during such quarter.

The Company maintains cash in bank accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on such accounts. As of June 30, 2006, the aggregate cash balances at the financial institutions used by the Company exceeded the federally insured limit of $100,000 by $11,679,788.

On June 30, 2006, Yarde Metals had placed deposits totaling $157,546, to be applied to the purchase of various pieces of equipment with an estimated aggregate cost of $1,094,478.

NOTE 9 — RELATED PARTY TRANSACTIONS

Yarde Metals has unsecured notes due to stockholders and their family members with interest computed at 4% for the fiscal year ended June 30, 2006. Certain amounts of these notes are subordinated to the bank debt. These loans were due June 30, 2010; however, as a result of the shareholders’ selling their stock (as disclosed in Note 16), all outstanding debt with Yarde Metals’ stockholders was repaid on August 1, 2006. Interest expense on these loans for the year ended June 30, 2006 was $884,295.

- 19 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 9 — RELATED PARTY TRANSACTIONS (Continued)

Yarde Metals leases various office and warehouse facilities from entities that have common ownership, as discussed in Notes 1 and 7.

NOTE 10 — COMMON STOCK TRANSACTIONS

Yarde Metals is authorized to issue 20,000 shares of $0.10 par value common stock, of which 15,000 shares were issued and outstanding on June 30, 2006.

NOTE 11 — PROFIT SHARING AND EMPLOYEE BENEFITS

Yarde Metals sponsors a 401(k) profit sharing plan covering substantially all full-time employees who are not required to fulfill a service waiting period and may enter the plan quarterly on January 1, April 1, July 1 and October 1 of each year. Eligible employees may contribute between 1% and 50% of their annual compensation. Yarde Metals may make a discretionary qualified matching employer contribution up to 50% of the employees’ contribution up to 10% of their annual compensation. The matching contribution was 50% for the year ended June 30, 2006.

In addition, Yarde Metals maintains a discretionary profit sharing plan for employees who are employed on the first and last day of the plan year and have provided one year or 1,000 hours of service. Contributions to the plan are discretionary and are allocated based on participants’ compensation. Yarde Metals did not make discretionary profit sharing contributions for the year ended June 30, 2006.

Total profit sharing expense (401(k) match) for the year ended June 30, 2006 was $1,175,713.

NOTE 12 — SUPPLEMENTARY CASH FLOW INFORMATION

The Company uses the indirect method when presenting its cash flows from operating activities in the Combined Statement of Cash Flows. Therefore, the Company is required to disclose the following information:

Interest paid	$	5,395,676
Income taxes paid (including prepayments)	$	160,751

The Company is also required to disclose non-cash investing and financing activities not included in the Combined Statement of Cash Flows.

- 20 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 12 — SUPPLEMENTARY CASH FLOW INFORMATION (Continued)

On August 16, 2005, Yarde Metals refinanced its existing equipment loans that resulted in the following non-cash transaction:

Term loan	$	8,500,000
Existing Long-term debt repayment		(8,199,153	)
Cash received	$	300,847

During the year ended June 30, 2006, the Company recorded a prior-period adjustment in the amount of $684,198 relating to an error in accrued compensation, as described in Note 15.

During the year ended June 30, 2006, the Company recorded an adjustment in the amount of $512,580 relating to a cumulative effect of a change in accounting principle, as described in Note 2.

During the year ended June 30, 2006, the Company recorded an unrealized gain of $837,174 relating to the interest rate swap agreements.

NOTE 13 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As disclosed in Note 6, the Company has two interest rate swap contracts which are derivative financial instruments for the purpose of hedging the risk of cash flows caused by movements in the interest rates.

The Company’s purpose in entering into these swap arrangements is to hedge against the risk of interest rate increases on the related variable rate debts. Accordingly, the swap arrangements are classified as cash flow hedging activities and represent derivative financial instruments. These derivative financial instruments are not held for trading purposes. The Company accounts for these derivative financial instruments in accordance with Statement of Financial Accounting Standards No. 133, as amended by SFAS No. 137 and SFAS No. 138. Accordingly, the derivative financial instruments are reflected on the combined balance sheet at their fair values. Since these instruments are classified as hedging activities, changes in the fair values of these instruments are recognized as components of other comprehensive income. The effective portion of the gain or loss on the derivative instruments is reported initially as a component of “Accumulated Other Comprehensive Income” (AOCI) and subsequently recognized in earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness, as well as the ineffective portion of the hedge, are reported in earnings immediately.

Adoption of SFAS No. 133 resulted in the Company recording a derivative instrument asset in the amount of $1,143,955 at June 30, 2006. The Company anticipates volatility in AOCI from its cash flow hedges. The amount of volatility will vary with the level of derivative activities and market conditions during any period.

- 21 -

YARDE METALS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006

NOTE 14 – INCOME TAXES

The Company reports on a fiscal year, and is required to pay a deposit to the Internal Revenue Service as described in Note 2. The amount on deposit was $2,184,517 as of June 30, 2006.

The components of state income tax expense for the period ended June 30, 2006 consist of current taxes payable of $70,989.

NOTE 15 – PRIOR-PERIOD ADJUSTMENTS

An error resulting in an understatement of accrued compensated absences was discovered during the current year. Accordingly, an adjustment of $684,198 was made during the year ended June 30, 2006 to reflect the balance due as of July 1, 2005. A corresponding entry was made to reduce retained earnings. A state income tax effect on the restatement was not made since the state income tax effect was not considered material.

Relating to the effects of FIN 46R, as described in Note 2, the Company recorded an adjustment in the amount of $512,580 relating to a cumulative effect of a change in accounting principle.

NOTE 16 – SUBSEQUENT EVENT

On August 1, 2006, the Company’s stockholders sold all of their shares to Reliance Steel & Aluminum Co. As a result of this transaction, Yarde Metals became a subsidiary of Reliance Steel & Aluminum Co. through their wholly-owned subsidiary RSAC Management Corp. As part of the transaction, all outstanding debt with Yarde Metals’ stockholders and their current lenders was repaid. In addition, all security interests in Yarde Metals’ assets related to the debt were released and all of its corporate guarantees were terminated.

- 22 -

SUPPLEMENTARY FINANCIAL INFORMATION

- 23 -

YARDE METALS, INC. AND AFFILIATES
COMBINED SCHEDULE OF COST OF REVENUE
FOR THE YEAR ENDED JUNE 30, 2006

Inventory, beginning of year	$	81,690,999
Purchases		271,088,026
Direct labor		25,698,067
Supplies		4,534,885
Trucking, leasing and expense		3,855,532
Medical insurance and reimbursement plan		2,597,723
Payroll taxes		2,271,813
Depreciation and amortization		2,130,669
Utilities		1,819,167
Rent		1,556,482
Maintenance and repairs		945,036
Profit sharing expense		644,596
Freight-in		239,182
Equipment leasing		210,276
Purchased services		109,517
Blades and sharpening		68,881
		399,460,851
Less: Inventory, end of year		81,782,552
Total Cost of Revenue			$	317,678,299

- 24 -

YARDE METALS, INC. AND AFFILIATES
COMBINED SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED JUNE 30, 2006

Administrative and clerical salaries	$	15,670,563
General insurance		2,403,465
Freight-out		2,248,179
Payroll taxes		1,733,246
Medical insurance and reimbursement plan		1,493,870
Sales commissions		1,450,269
Entertainment and travel		1,346,802
Depreciation and amortization		1,278,513
Automobile leasing and expenses		674,722
Bad debts and collection		615,196
Office supplies and expense		601,924
Telephone		584,937
Repairs and maintenance		575,476
Profit sharing expense		531,117
Banking fees		482,997
Property taxes		385,120
Professional services		378,542
Advertising		331,474
Employee relations		246,303
Postage		171,341
Computer supplies		169,725
Dues and subscriptions		137,197
Miscellaneous and other expense		123,974
Employee training		120,695
Rent		108,026
Utilities		67,917
Donations		61,136
Total Selling, General and Administrative Expenses			$	33,992,726

- 25 -

YARDE METALS, INC. AND AFFILIATES
COMBINING BALANCE SHEET
JUNE 30, 2006

ASSETS

	YARDE		10160 PHILLIPP		ROUTE 38		45 NEWELL STREET		YARDE REALTY				ELIMINATING
	METALS, INC.		PARKWAY, LLC		ASSOCIATES, LLC		ASSOCIATES, LLC		COMPANY		YARDE LOT, LLC		ENTRIES		COMBINED
CURRENT ASSETS
Cash and cash equivalents	$	8,612,910	$	17,293	$	36,031	$	135,942	$	18,506	$	26,960	$	—	$	8,847,642
Trade receivables		56,602,791		—		—		—		—		—		—		56,602,791
Employee loans receivable		23,572		—		—		—		—		—		—		23,572
Inventory		81,782,552		—		—		—		—		—		—		81,782,552
Prepaid expenses		1,465,464		—		—		—		—		—		—		1,465,464
Total Current Assets		148,487,289		17,293		36,031		135,942		18,506		26,960		—		148,722,021
PROPERTY AND EQUIPMENT
Land		—		344,675		507,443		1,625,932		241,656		185,545		—		2,905,251
Buildings		—		1,534,689		4,380,075		13,560,003		3,300,623		—		—		22,775,390
Machinery and equipment		23,488,523		—		—		—		—		—		—		23,488,523
Office furnishings and equipment		5,693,517		—		—		—		—		—		—		5,693,517
Motor vehicles		2,329,145		—		—		—		—		—		—		2,329,145
Leasehold improvements		1,052,295		—		—		—		—		—		—		1,052,295
		32,563,480		1,879,364		4,887,518		15,185,935		3,542,279		185,545		—		58,244,121
Less accumulated depreciation		16,192,535		95,918		538,384		1,451,158		1,341,363		—		—		19,619,358
Total Property and Equipment		16,370,945		1,783,446		4,349,134		13,734,777		2,200,916		185,545		—		38,624,763
OTHER ASSETS
Employee loans receivable, net of current portion		132,267		—		—		—		—		—		—		132,267
Federal tax deposit to retain fiscal year		2,184,517		—		—		—		—		—		—		2,184,517
Derivative swap obligation		1,091,169		52,786		—		—		—		—		—		1,143,955
Deposits		388,075		326		—		—		—		47		—		388,448
Loan closing costs, net of amortization		61,503		—		36,458		31,509		—		—		—		129,470
Total Other Assets		3,857,531		53,112		36,458		31,509		—		47		—		3,978,657
Total Assets	$	168,715,765	$	1,853,851	$	4,421,623	$	13,902,228	$	2,219,422	$	212,552	$	—	$	191,325,441

-26-

LIABILITIES AND EQUITY

	YARDE		10160 PHILLIPP		ROUTE 38		45 NEWELL STREET		YARDE REALTY				ELIMINATING
	METALS, INC.		PARKWAY, LLC		ASSOCIATES, LLC		ASSOCIATES, LLC		COMPANY		YARDE LOT, LLC		ENTRIES		COMBINED
CURRENT LIABILITIES
Notes payable — Short-term	$	75,347,402	$	—	$	—	$	—	$	—	$	—	$	—	$	75,347,402
Current maturities of long-term debt		8,309,447		82,854		200,642		733,384		125,126		—		—		9,451,453
Notes payable — Related parties		14,774,809		—		—		—		—		—		—		14,774,809
Accounts payable		23,349,161		—		—		—		—		—		—		23,349,161
Accrued compensation		8,789,568		—		—		—		—		—		—		8,789,568
Accrued taxes and expenses		9,098,732		—		—		2,500		—		—		—		9,101,232
Total Current Liabilities		139,669,119		82,854		200,642		735,884		125,126		—		—		140,813,625
LONG-TERM DEBT, NET OF CURRENT PORTION		—		1,333,911		1,941,803		9,345,340		123,096		—		—		12,744,150
Total Liabilities		139,669,119		1,416,765		2,142,445		10,081,224		248,222		—		—		153,557,775
EQUITY
Common stock		1,500		—		—		—		—		—		—		1,500
Additional paid-in capital		10,028,500		—		—		—		—		—		—		10,028,500
Retained earnings		17,925,477		—		—		—		—		—		—		17,925,477
Members’/Partners’ equity		—		384,300		2,279,178		3,821,004		1,971,200		212,552				8,668,234
Accumulated other comprehensive income		1,091,169		52,786		—		—		—		—		—		1,143,955
Total Equity		29,046,646		437,086		2,279,178		3,821,004		1,971,200		212,552		—		37,767,666
Total Liabilities and Equity	$	168,715,765	$	1,853,851	$	4,421,623	$	13,902,228	$	2,219,422	$	212,552	$	—	$	191,325,441

-27-

YARDE METALS, INC. AND AFFILIATES
COMBINING STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE			10160 PHILLIPP			ROUTE 38			45 NEWELL STREET			YARDE REALTY					ELIMINATING
	METALS, INC.			PARKWAY, LLC			ASSOCIATES, LLC			ASSOCIATES, LLC			COMPANY			YARDE LOT, LLC		ENTRIES			COMBINED
REVENUE
Net sales	$	386,104,556		$	—		$	—		$	—		$	—		$	—	$	—		$	386,104,556
Rental income		—			229,760			365,413			1,859,027			241,440			24,000		(2,689,640	)		30,000
Total Revenue		386,104,556			229,760			365,413			1,859,027			241,440			24,000		(2,689,640	)		386,134,556
COST OF REVENUE		320,056,179			—			—			—			—			—		(2,377,880	)		317,678,299
Gross Profit		66,048,377			229,760			365,413			1,859,027			241,440			24,000		(311,760	)		68,456,257
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		33,693,609			39,277			114,512			371,123			85,470			495		(311,760	)		33,992,726
Income from Operations		32,354,768			190,483			250,901			1,487,904			155,970			23,505		—			34,463,531
OTHER INCOME (EXPENSE)
Interest and dividend income		5,679			—			—			—			—			—		—			5,679
Gain on sale of assets		15,164			—			—			—			—			—		—			15,164
Other income		45,753			—			—			—			—			—		—			45,753
Shareholder compensation		(17,221,000	)		—			—			—			—			—		—			(17,221,000	)
Compensation related to the sale		(9,137,005	)		—			—			—			—			—		—			(9,137,005	)
Interest expense		(4,731,050	)		(73,427	)		(119,607	)		(524,996	)		(23,080	)		—		—			(5,472,160	)
		(31,022,459	)		(73,427	)		(119,607	)		(524,996	)		(23,080	)		—		—			(31,763,569	)
Income before Provision for Income and Other Taxes		1,332,309			117,056			131,294			962,908			132,890			23,505		—			2,699,962
PROVISION FOR INCOME AND OTHER TAXES		89,857			—			—			250			—			250		—			90,357
Net Income	$	1,242,452		$	117,056		$	131,294		$	962,658		$	132,890		$	23,255	$	—		$	2,609,605

-28-

YARDE METALS, INC. AND AFFILIATES
COMBINING STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE		10160 PHILLIPP		ROUTE 38		45 NEWELL STREET		YARDE REALTY				ELIMINATING
	METALS, INC.		PARKWAY, LLC		ASSOCIATES, LLC		ASSOCIATES, LLC		COMPANY		YARDE LOT, LLC		ENTRIES		COMBINED
NET INCOME	$	1,242,452	$	117,056	$	131,294	$	962,658	$	132,890	$	23,255	$	—	$	2,609,605
OTHER COMPREHENSIVE INCOME
Interest rate swap adjustment		784,388		52,786		—		—		—		—		—		837,174
Total Comprehensive Income	$	2,026,840	$	169,842	$	131,294	$	962,658	$	132,890	$	23,255	$	—	$	3,446,779

-29-

YARDE METALS, INC. AND AFFILITATES
COMBINING STATEMENT OF CHANGES IN RETAINED EARNINGS AND MEMBERS’/PARTNERS’ EQUITY
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE			10160 PHILLIPP			ROUTE 38			45 NEWELL STREET			YARDE REALTY					ELIMINATING
	METALS, INC.			PARKWAY, LLC			ASSOCIATES, LLC			ASSOCIATES, LLC			COMPANY			YARDE LOT, LLC		ENTRIES		COMBINED
Balances, June 30, 2005, as previously reported	$	16,861,753		$	399,686		$	2,197,884		$	3,458,346		$	1,930,020		$	189,297	$	—	$	25,036,986
Adjustment for understatement of accrued compensation		(684,198	)		—			—			—			—			—		—		(684,198	)
Balances, June 30, 2005		16,177,555			399,686			2,197,884			3,458,346			1,930,020			189,297		—		24,352,788
Cumulative effect of change in accounting principle due to adoption of FIN 46R on July 1, 2005		512,580			—			—			—			—			—		—		512,580
Net income		1,242,452			117,056			131,294			962,658			132,890			23,255		—		2,609,605
Dividends paid		(7,110	)		—			—			—			—			—		—		(7,110	)
Members’/Partners’ draw		—			(132,442	)		(50,000	)		(600,000	)		(91,710	)		—		—		(874,152	)
Balances, June 30, 2006	$	17,925,477		$	384,300		$	2,279,178		$	3,821,004		$	1,971,200		$	212,552	$	—	$	26,593,711

-30-

YARDE METALS, INC.
STATEMENT OF CHANGES IN RETAINED EARNINGS
FOR THE YEAR ENDED JUNE 30, 2006

								Accumulated
			Additional					Other
	Common		Paid-in		Retained			Comprehensive
	Stock		Capital		Earnings			Income		Total
Balances, June 30, 2005, as previously reported	$	1,500	$	10,028,500	$	16,861,753		$	306,781	$	27,198,534
Adjustment for understatement of accrued compensation		—		—		(684,198	)		—		(684,198	)
Balances, June 30, 2005		1,500		10,028,500		16,177,555			306,781		26,514,336
Cumulative effect of change in accounting principle due to adoption of FIN 46R on July 1, 2005		—		—		512,580			—		512,580
Net income		—		—		1,242,452			—		1,242,452
Dividends paid		—		—		(7,110	)		—		(7,110	)
Other comprehensive income		—		—		—			784,388		784,388
Balances, June 30, 2006	$	1,500	$	10,028,500	$	17,925,477		$	1,091,169	$	29,046,646

-31-

10160 PHILLIPP PARKWAY, LLC
STATEMENT OF CHANGES IN MEMBERS’ EQUITY
FOR THE YEAR ENDED JUNE 30, 2006

				Accumulated
				Other
	Members’			Comprehensive
	Equity			Income		Total
Balances, June 30, 2005	$	399,686		$	—	$	399,686
Net income		117,056			—		117,056
Members’ draw		(132,442	)		—		(132,442	)
Other comprehensive income		—			52,786		52,786
Balances, June 30, 2006	$	384,300		$	52,786	$	437,086

-32-

YARDE METALS, INC. AND AFFILIATES
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE			10160 PHILLIPP			ROUTE 38			45 NEWELL STREET			YARDE REALTY					ELIMINATING
	METALS, INC.			PARKWAY, LLC			ASSOCIATES, LLC			ASSOCIATES, LLC			COMPANY			YARDE LOT, LLC		ENTRIES		COMBINED
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,242,452		$	117,056		$	131,294		$	962,658		$	132,890		$	23,255	$	—	$	2,609,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,809,136			38,512			113,791			366,908			80,755			80		—		3,409,182
Gain on sale of assets		(15,164	)		—			—			—			—			—		—		(15,164	)
Increase in allowance for doubtful accounts		91,594			—			—			—			—			—		—		91,594
(Increase) decrease in operating assets:
Trade receivables		(10,621,002	)		—			—			—			—			—		—		(10,621,002	)
Inventory		(91,553	)		—			—			—			—			—		—		(91,553	)
Prepaid expenses		(797,054	)		—			—			—			—			—		—		(797,054	)
Federal tax deposit		(151,188	)		—			—			—			—			—		—		(151,188	)
Deposits		(137,904	)		—			—			—			—			—		—		(137,904	)
Loan closing costs, net of amortization		(41,867	)		—			—			—			—			—		—		(41,867	)
Increase (decrease) in operating liabilities:
Accounts payable		1,074,913			—			—			—			—			—		—		1,074,913
Accrued compensation		2,023,545			—			—			—			—			—		—		2,023,545
Accrued taxes and expenses		7,525,615			—			—			—			—			—		—		7,525,615
Net Cash Provided by Operating Activities		2,911,523			155,568			245,085			1,329,566			213,645			23,335		—		4,878,722
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment from employees, net		15,841			—			—			—			—			—		—		15,841
Proceeds from sale of assets		227,191			—			—			—			—			—		—		227,191
Purchases of property and equipment		(4,406,723	)		—			—			—			(68,178	)		—		—		(4,474,901	)
Net Cash Used in Investing Activities		(4,163,691	)		—			—			—			(68,178	)		—		—		(4,231,869	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from notes payable — Short-term		17,267,000			—			—			—			—			—		—		17,267,000
Proceeds from long-term borrowing		3,182,173			—			—			—			—			—		—		3,182,173
Repayment of long-term debt		(3,489,090	)		(78,796	)		(173,947	)		(691,139	)		(116,226	)		—		—		(4,549,198	)
Repayment of related party notes		(9,092,037	)		—			—			—			—			—		—		(9,092,037	)
Dividends paid		(7,110	)		—			—			—			—			—		—		(7,110	)
Members’/Partners’ draw		—			(132,442	)		(50,000	)		(600,000	)		(91,660	)		—		—		(874,102	)
Net Cash Provided by (Used in) Financing Activities		7,860,936			(211,238	)		(223,947	)		(1,291,139	)		(207,886	)		—		—		5,926,726
Net increase (decrease) in cash and cash equivalents		6,608,768			(55,670	)		21,138			38,427			(62,419	)		23,335		—		6,573,579
Cash and cash equivalents at beginning of year		2,004,142			72,963			14,893			97,515			80,925			3,625		—		2,274,063
Cash and Cash Equivalents at End of Year	$	8,612,910		$	17,293		$	36,031		$	135,942		$	18,506		$	26,960	$	—	$	8,847,642

- 33 -

YARDE METALS, INC. AND AFFILIATES
COMBINING SCHEDULE OF COST OF REVENUE
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE		10160 PHILLIPP		ROUTE 38		45 NEWELL STREET		YARDE REALTY				ELIMINATING
	METALS, INC.		PARKWAY, LLC		ASSOCIATES, LLC		ASSOCIATES, LLC		COMPANY		YARDE LOT, LLC		ENTRIES			COMBINED
Inventory, beginning of year	$	81,690,999	$	—	$	—	$	—	$	—	$	—	$	—		$	81,690,999
Purchases		271,088,026		—		—		—		—		—		—			271,088,026
Direct labor		25,698,067		—		—		—		—		—		—			25,698,067
Supplies		4,534,885		—		—		—		—		—		—			4,534,885
Trucking, leasing and expense		3,855,532		—		—		—		—		—		—			3,855,532
Medical insurance and reimbursement plan		2,597,723		—		—		—		—		—		—			2,597,723
Payroll taxes		2,271,813		—		—		—		—		—		—			2,271,813
Depreciation and amortization		2,130,669		—		—		—		—		—		—			2,130,669
Utilities		1,819,167		—		—		—		—		—		—			1,819,167
Rent		3,934,362		—		—		—		—		—		(2,377,880	)		1,556,482
Maintenance and repairs		945,036		—		—		—		—		—		—			945,036
Profit sharing expense		644,596		—		—		—		—		—		—			644,596
Freight-in		239,182		—		—		—		—		—		—			239,182
Equipment leasing		210,276		—		—		—		—		—		—			210,276
Purchased services		109,517		—		—		—		—		—		—			109,517
Blades and sharpening		68,881		—		—		—		—		—		—			68,881
		401,838,731		—		—		—		—		—		(2,377,880	)		399,460,851
Less: Inventory, end of year		81,782,552		—		—		—		—		—		—			81,782,552
Total Cost of Revenue	$	320,056,179	$	—	$	—	$	—	$	—	$	—	$	(2,377,880	)	$	317,678,299

- 34 -

YARDE METALS, INC. AND AFFILIATES
COMBINING SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED JUNE 30, 2006

	YARDE		10160 PHILLIPP		ROUTE 38		45 NEWELL STREET		YARDE REALTY				ELIMINATING
	METALS, INC.		PARKWAY, LLC		ASSOCIATES, LLC		ASSOCIATES, LLC		COMPANY		YARDE LOT, LLC		ENTRIES			COMBINED
Administrative and clerical salaries	$	15,670,563	$	—	$	—	$	—	$	—	$	—	$	—		$	15,670,563
General insurance		2,403,465		—		—		—		—		—		—			2,403,465
Freight-out		2,248,179		—		—		—		—		—		—			2,248,179
Payroll taxes		1,733,246		—		—		—		—		—		—			1,733,246
Medical insurance and reimbursement plan		1,493,870		—		—		—		—		—		—			1,493,870
Sales commissions		1,450,269		—		—		—		—		—		—			1,450,269
Entertainment and travel		1,346,802		—		—		—		—		—		—			1,346,802
Depreciation and amortization		678,467		38,512		113,791		366,908		80,755		80		—			1,278,513
Automobile leasing and expenses		674,722		—		—		—		—		—		—			674,722
Bad debts and collection		615,196		—		—		—		—		—		—			615,196
Office supplies and expense		601,695		75		100		—		44		10		—			601,924
Telephone		584,937		—		—		—		—		—		—			584,937
Repairs and maintenance		572,851		—		—		2,625		—		—		—			575,476
Profit sharing expense		531,117		—		—		—		—		—		—			531,117
Banking fees		482,997		—		—		—		—		—		—			482,997
Property taxes		381,329		—		—		—		3,791		—		—			385,120
Professional services		374,356		690		621		1,590		880		405		—			378,542
Advertising		331,474		—		—		—		—		—		—			331,474
Employee relations		246,303		—		—		—		—		—		—			246,303
Postage		171,341		—		—		—		—		—		—			171,341
Computer supplies		169,725		—		—		—		—		—		—			169,725
Dues and subscriptions		137,197		—		—		—		—		—		—			137,197
Miscellaneous and other expense		123,974		—		—		—		—		—		—			123,974
Employee training		120,695		—		—		—		—		—		—			120,695
Rent		419,786		—		—		—		—		—		(311,760	)		108,026
Utilities		67,917		—		—		—		—		—		—			67,917
Donations		61,136		—		—		—		—		—		—			61,136
Total Selling, General and Administrative Expenses	$	33,693,609	$	39,277	$	114,512	$	371,123	$	85,470	$	495	$	(311,760	)	$	33,992,726

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