10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2011

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

For the transition period from                      to                     

Commission File Number 0-23320

OLYMPIC STEEL, INC.

(Exact name of registrant as specified in its charter)

Ohio	34-1245650
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
5096 Richmond Road, Bedford Heights, Ohio	44146
(Address of principal executive offices)	(Zip Code)

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

Indicate the number of shares of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding as of May 6, 2011
Common stock, without par value	10,900,134

Olympic Steel, Inc.
Index to Form 10-Q

	Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets — March 31, 2011 (unaudited) and December 31, 2010 (audited)		3
Consolidated Statements of Operations — for the three months ended March 31, 2011 and 2010 (unaudited)		4
Consolidated Statements of Cash Flows — for the three months ended March 31, 2011 and 2010 (unaudited)		5
Notes to Consolidated Financial Statements (unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures About Market Risk		23
Item 4. Controls and Procedures		25
Part II. OTHER INFORMATION
Item 5. Other Information		26
Item 6. Exhibits		27
SIGNATURES		28
EXHIBITS		29
EX-10.30
EX-10.31
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Olympic Steel, Inc.

Consolidated Balance Sheets

(in thousands)

	March 31,			December 31,
	2011			2010
	(unaudited)			(audited)
Assets
Cash and cash equivalents	$	2,604		$	1,492
Accounts receivable, net		136,904			82,859
Inventories		198,910			200,606
Income taxes receivable and deferred		3,123			8,200
Prepaid expenses and other		4,970			5,652
Total current assets		346,511			298,809
Property and equipment, at cost		246,925			239,500
Accumulated depreciation		(124,326	)		(121,266	)
Net property and equipment		122,599			118,234
Goodwill		7,083			7,083
Other long-term assets		5,467			5,312
Total assets	$	481,660		$	429,438
Liabilities
Accounts payable	$	98,927		$	81,645
Accrued payroll		6,726			11,214
Other accrued liabilities		10,561			9,766
Total current liabilities		116,214			102,625
Credit facility revolver		80,940			55,235
Other long-term liabilities		6,410			4,807
Deferred income taxes		6,165			5,133
Total liabilities		209,729			167,800
Shareholders’ Equity
Preferred stock		—			—
Common stock		119,164			118,976
Retained earnings		152,767			142,662
Total shareholders’ equity		271,931			261,638
Total liabilities and shareholders’ equity	$	481,660		$	429,438

The accompanying notes are an integral part of these statements.

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Olympic Steel, Inc.

Consolidated Statements of Operations

(in thousands, except per share and tonnage data)

	Three Months Ended
	March 31,
	2011		2010
	(unaudited)
Tons sold
Direct		294,887		201,025
Toll		22,455		20,465
		317,342		221,490
Net sales	$	294,381	$	167,901
Costs and expenses
Cost of materials sold (excludes items shown separately below)		230,962		132,536
Warehouse and processing		15,590		10,572
Administrative and general		13,211		8,885
Distribution		6,208		4,057
Selling		5,804		3,877
Occupancy		1,826		1,399
Depreciation		3,467		3,246
Total costs and expenses		277,068		164,572
Operating income		17,313		3,329
Interest and other expense on debt		805		506
Income before income taxes		16,508		2,823
Income tax provision		6,185		1,112
Net income	$	10,323	$	1,711
Earnings per share:
Net income per share — basic	$	0.94	$	0.16
Weighted average shares outstanding — basic		10,935		10,905
Net income per share — diluted	$	0.94	$	0.16
Weighted average shares outstanding — diluted		10,945		10,918

The accompanying notes are an integral part of these statements.

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Olympic Steel, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended
	March 31,
	2011			2010
	(unaudited)
Cash flows from (used for) operating activities:
Net income	$	10,323		$	1,711
Adjustments to reconcile net income to net cash from operating activities -
Depreciation and amortization		3,544			3,454
Loss on disposition of property and equipment		9			16
Stock-based compensation		177			184
Other long-term assets		(232	)		(1,091	)
Other long-term liabilities		1,603			(5,339	)
Long-term deferred income taxes		1,032			660
		16,456			(405	)
Changes in working capital:
Accounts receivable		(54,045	)		(30,671	)
Inventories		1,696			(17,611	)
Income taxes receivable and deferred		5,077			474
Prepaid expenses and other		682			154
Accounts payable		17,277			19,609
Change in outstanding checks		5			(636	)
Accrued payroll and other accrued liabilities		(3,633	)		3,948
		(32,941	)		(24,733	)
Net cash used for operating activities		(16,485	)		(25,138	)
Cash flows from (used for) investing activities:
Capital expenditures		(7,903	)		(2,262	)
Proceeds from disposition of property and equipment		2			4
Net cash used for investing activities		(7,901	)		(2,258	)
Cash flows from (used for) financing activities:
Credit facility revolver borrowings, net		25,705			23,420
Proceeds from exercise of stock options (including tax benefit) and employee stock purchases		11			12
Dividends paid		(218	)		(218	)
Net cash from financing activities		25,498			23,214
Cash and cash equivalents:
Net change		1,112			(4,182	)
Beginning balance		1,492			5,190
Ending balance	$	2,604		$	1,008

The accompanying notes are an integral part of these statements.

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Olympic Steel, Inc.

Notes to Consolidated Financial Statements
(unaudited)

March 31, 2011

(1) Basis of Presentation:

The accompanying consolidated financial statements have been prepared from the financial records of Olympic Steel, Inc. and its wholly-owned subsidiaries (collectively, Olympic or the Company), without audit and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods covered by this report. Year-to-date results are not necessarily indicative of 2011 annual results and these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. All significant intercompany transactions and balances have been eliminated in consolidation.

Outstanding checks of $13.1 million, $13.1 million and $9.6 million, as of March 31, 2011, December 31, 2010 and March 31, 2010, respectively, represent checks issued that have not yet been presented for payment to the banks and are classified as accounts payable in the Company’s Consolidated Balance Sheet. The Company typically funds these overdrafts through normal collections of funds or transfers from bank balances at other financial institutions.

In June 2010, the Company revised the presentation of changes of outstanding checks from a financing activity to an operating activity in its Consolidated Statement of Cash Flows with a conforming change to the prior period presentation. The effect of this revision had no impact on the net increase (decrease) in cash; however, it changed the cash used in operating activities for the three-month period ended March 31, 2010 from $(24.5) million as previously disclosed in the quarterly report on Form 10-Q for the three month period ended March 31, 2010 to $(25.1) million, with a corresponding change in the cash flows provided by financing activities for the three month period ended March 31, 2010 from $22.6 million to $23.2 million.

(2) Accounts Receivable:

The Company maintained allowances for doubtful accounts and unissued credits of $3.5 million and $2.9 million at March 31, 2011 and December 31, 2010, respectively. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience

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and specific customer collection issues that have been identified. Estimations are based upon a calculated percentage of accounts receivable, which remains fairly level from year to year, and judgments about the probable effects of economic conditions on certain customers, which can fluctuate significantly from year to year. The Company cannot guarantee that the rate of future credit losses will be similar to past experience. The Company considers all available information when assessing the adequacy of its allowance for doubtful accounts each quarter.

(3) Inventories:

Steel inventories consist of the following:

	March 31,		December 31,
(in thousands)	2011		2010
Unprocessed	$	140,253	$	143,410
Processed and finished		58,657		57,196
Totals	$	198,910	$	200,606

(4) Investments in Joint Ventures:

The Company and the United States Steel Corporation each own 50% of Olympic Laser Processing (OLP), a company that produced laser welded sheet steel blanks for the automotive industry. OLP ceased operations during the first quarter of 2006. In December 2006, the Company advanced $3.2 million to OLP to cover a loan guarantee. As of March 31, 2011, the investment in and advance to OLP was valued at $2.5 million on the Company’s Consolidated Balance Sheet. The Company believes the underlying value of OLP’s remaining real estate, upon liquidation, will be sufficient to repay the $2.5 million advance at a later date.

(5) Debt:

On June 30, 2010, the Company entered into a new asset-based revolving credit facility (the ABL revolving credit facility). The ABL revolving credit facility provides for a revolving credit line of $125 million (which may be increased up to $175 million subject to the Company obtaining commitments for such increase). Borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables and inventories, or $125 million in the aggregate. The ABL revolving credit facility matures on June 30, 2015.

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The ABL revolving credit facility requires the Company to comply with various covenants, the most significant of which include: (i) until maturity of the ABL revolving credit facility, if any commitments or obligations are outstanding and the Company’s availability is less than the greater of $20 million or 15% of the aggregate amount of revolver commitments, then the Company must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.10 to 1.00 for the most recent twelve fiscal month period; (ii) limitations on dividend payments; (iii) restrictions on additional indebtedness; and (iv) limitations on investments and joint ventures. The Company has the option to borrow based on the agent’s base rate plus a premium ranging from 1.00% to 1.50% or the London Interbank Offered Rate (LIBOR) plus a premium ranging from 2.50% to 3.00%.

As of March 31, 2011, the Company was in compliance with its covenants and had approximately $42 million of availability under the ABL revolving credit facility.

(6) Shares Outstanding and Earnings Per Share:

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

	For the Three Months
	Ended March 31,
	2011		2010
(in thousands, except per share data)
Weighted average basic shares outstanding		10,935		10,905
Assumed exercise of stock options and issuance of stock awards		10		13
Weighted average diluted shares outstanding		10,945		10,918
Net income	$	10,323	$	1,711
Basic earnings per share	$	0.94	$	0.16
Diluted earnings per share	$	0.94	$	0.16
Anti-dilutive securities outstanding		163		143

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(7) Derivative Instruments:

The fair value of our derivative instruments are set forth below. The fair value is determined based on quoted market prices and reflect the estimated amounts the Company would pay or receive to terminate the nickel swaps.

	Fair Value of Derivative Instruments
	Not Designated as Hedges
	As of March 31, 2011
	Assets				Liabilities
(in thousands)	Current		Fair value		Current		Fair value
Nickel swaps	$	42	$	42	$	—	$	—
Embedded customer derivatives		—		—		174		174
Total derivative fair value	$	42	$	42	$	174	$	174

The embedded customer derivatives are included in Other accrued liabilities and the nickel swaps are included in Accounts receivable, net on the Consolidated Balance Sheet at March 31, 2011.

As of March 31, 2011, we had received $132 thousand of net derivative gains that we had not yet settled under the embedded customer derivative agreement. Settlement of these liabilities is expected to occur during the second quarter of 2011. There was no net impact of the derivatives to the Company’s Consolidated Statement of Operations for the three months ended March 31, 2011. The table below shows the impact of the derivatives for the three months ended March 31, 2011.

	Net Gain (Loss)
(in thousands)	Recognized
Nickel swaps	$	88
Embedded customer derivatives		(88	)
Total	$	—

The fair value of the Company’s nickel swaps and embedded customer derivatives is determined by using Level 2 inputs. The inputs used include the price of nickel indexed to the London Metal Exchange (LME). The following table presents information about the Company’s asset

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and liabilities that were measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company.

	Fair Value Measurements
	at March 31, 2011
(in thousands)	Level 1		Level 2			Level 3		Total
Nickel swaps	$	—	$	42		$	—	$	42
Embedded customer derivatives		—		(174	)		—		(174	)
	$	—	$	(132	)	$	—	$	(132	)

(8) Stock Options:

In January 1994, the Olympic Steel, Inc. Stock Option Plan (Option Plan) was adopted by the Board of Directors and approved by the shareholders of the Company. The Option Plan terminated on January 5, 2009. Termination of the Option Plan did not affect outstanding options.

A total of 1,300,000 shares of common stock were originally reserved for issuance under the Option Plan. To the extent possible, shares of treasury stock were used to satisfy shares resulting from the exercise of stock options. Options vested over periods ranging from six months to five years and all expire 10 years after the grant date.

The following table summarizes the effect of the impact of stock options on the results of operations:

	For the Three Months
	Ended March 31,
	2011		2010
(in thousands, except per share data)
Stock option expense before taxes	$	—	$	43
Stock option expense after taxes	$	—	$	26
Impact per basic share	$	—	$	—
Impact per diluted share	$	—	$	—

All pre-tax charges related to stock options were included in the caption “Administrative and general” on the accompanying Consolidated Statement of Operations.

The following table summarizes stock option award activity during the three months ended March 31, 2011:

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					Weighted	Aggregate
	Number of		Weighted Average		Average Remaining	Intrinsic Value
	Options		Exercise Price		Contractual Term	(in thousands)
Outstanding at December 31, 2010		46,007	$	20.90
Granted		—		—
Exercised		—		—
Canceled		—		—
Outstanding at March 31, 2011		46,007	$	20.90	4.4 years	$	548
Exercisable at March 31, 2011		46,007	$	20.90	4.4 years	$	548

There were no stock options exercised during the three months ended March 31, 2011 and 2010. All options were vested by June 30, 2010. The fair value of options vested during the three months ended March 31, 2010 totaled $43 thousand.

By December 31, 2010, all expense with respect to stock option awards had been recognized and amortized into expense.

(9) Restricted Stock Units and Performance Share Units:

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

On each of January 2, 2008, January 2, 2009, January 4, 2010 and March 1, 2011, the Compensation Committee of the Company’s Board of Directors approved the grant of 1,800 restricted stock units (RSUs) to each non-employee Director. Subject to the terms of the Plan and the RSU agreement, the RSUs vest after one year of service (from the date of grant). The RSUs are not converted into shares of common stock until the director either resigns or is terminated from the Board of Directors.

On January 4, 2010, the Compensation Committee of the Company’s Board of Directors approved the grant of 23,202 RSUs in the aggregate to the members of senior management of the Company. Subject to the terms of the Plan and the RSU agreement, the RSUs vest at the end of three years from the date of grant.

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The Compensation Committee of the Company’s Board of Directors also granted 34,379 and 54,024 performance-earned restricted stock units (PERSUs) in the aggregate to the members of senior management of the Company on January 2, 2008 and January 2, 2009, respectively. The PERSUs may be earned based on the Company’s performance for a period of 36 months from the date of grant, and would be converted to shares of common stock based on the achievement of two separate financial measures: (1) the Company’s EBITDA (50% weighted) and (2) return on invested capital (50% weighted). No shares will be earned unless the threshold amounts for the performance measures are met. Up to 150% of the targeted amount of PERSUs may be earned.

The fair value of each RSU and PERSU was estimated to be the closing price of the Company’s common stock on the date of the grant, which was $26.91, $33.85, $21.68 and $32.20 for the grants on March 1, 2011, January 4, 2010, January 2, 2009 and January 2, 2008, respectively.

Stock-based compensation expense recognized on RSUs and PERSUs for the three months ended March 31, 2011 and 2010, respectively, is summarized in the following table:

	For the Three Months
	Ended March 31,
(in thousands, except per share data)	2011		2010
Stock award expense before taxes	$	87	$	142
Stock award expense after taxes	$	55	$	86
Impact per basic share	$	0.01	$	0.01
Impact per diluted share	$	—	$	0.01

All pre-tax charges related to RSUs and PERSUs were included in the caption “Administrative and general” on the accompanying Consolidated Statement of Operations.

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The following table summarizes the activity related to RSUs for the three months ended March 31, 2011:

				Weighted Average		Aggregate Intrinsic
	Number of Shares			Exercise Price		Value
Outstanding at December 31, 2010		46,602		$	33.41
Granted		18,825		$	26.91
Converted into shares		—		$	—
Forfeited		(438	)	$	33.85
Outstanding at March 31, 2011		64,989		$	31.76	$	175
Vested at March 31, 2011		31,959		$	31.08	$	122

No RSUs were converted into shares during the three months ended March 31, 2011 or 2010.

The following table summarizes the activity related to PERSUs for the three months ended March 31, 2011:

				Weighted Average		Aggregate Intrinsic
	Number of Shares			Exercise Price		Value
Outstanding at December 31, 2010		52,987		$	21.68
Granted		—		$	—
Converted into shares		—		$	—
Lapsed based on performance criteria		—		$	—
Forfeited		(1,141	)	$	21.68
Outstanding at March 31, 2011		51,846		$	21.68	$	598
Vested at March 31, 2011		—		$	—	$	—

Since inception of the PERSU program, no PERSUs have been converted into shares. There was no expense included on the accompanying Consolidated Statement of Operations for the three months ended March 31, 2011 or 2010 related to the PERSUs as the minimum performance requirements for the PERSUs are not expected to be met.

(10) Income Taxes:

For the first three months of 2011, the Company recorded an income tax provision of $6.2 million, or 37.5%, compared to $1.1 million, or 39.4%, for the first three months of 2010.

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(11) Supplemental Cash Flow Information:

Interest paid during the first three months of 2011 totaled $889 thousand, compared to $169 thousand in the first three months of 2010. Income taxes paid during the first three months of 2011 totaled $22 thousand compared to income taxes refunded of $7 thousand for the first three months of 2010.

(12) Impact of Recently Issued Accounting Pronouncements:

There were no accounting pronouncements issued or effective in the first quarter of 2011 expected to have a future material impact on Olympic’s financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and accompanying notes contained herein and our consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2010. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2010. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appear elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are a leading U.S. metals service center with over 57 years of experience. Our primary focus is on the direct sale and distribution of large volumes of processed carbon, coated, aluminum and stainless flat-rolled sheet, coil and plate products. We act as an intermediary between metal producers and manufacturers that require processed metal for their operations. We serve customers in most carbon steel consuming industries, including manufacturers and fabricators of transportation and material handling equipment, construction and farm machinery, storage tanks, environmental and energy generation equipment, automobiles, food service and electrical equipment, military vehicles and equipment, as well as general and plate fabricators and metals service centers. We distribute our products primarily through a direct sales force.

During the first quarter of 2011 we operated as a single business segment with 16 strategically-located processing and distribution facilities in Connecticut, Georgia, Illinois, Iowa, Kentucky, Michigan, Minnesota, North Carolina, Ohio, Pennsylvania and Washington. This geographic footprint allows us to focus on regional customers and larger national and multi-national accounts, primarily located throughout the midwestern, eastern and southern United States. During April 2011, we purchased a building on United States Steel Corporation’s, or U.S. Steel’s Gary Works facility in Gary, Indiana for $4.3 million, where we plan to locate our new temper

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mill and cut-to-length line. In addition, we have entered into lease agreements to lease additional warehouse facilities in Quincy, Washington and Kansas City, Missouri in order to expand our geographic footprint to the west. The second quarter of 2011 will also include our first international expansion as we leased a warehouse facility in Monterrey, Mexico for plate distribution to our customers in that area. The addition of these new locations brings our total number of locations to 21.

We sell a broad range of products, many of which have different gross profits and margins. Products that have more value-added processing generally have a greater gross profit and higher margins. Accordingly, our overall gross profit is affected by, among other things, product mix, the amount of processing performed, the demand for and availability of metal, volatility in selling prices and material purchase costs. We also perform toll processing of customer-owned metal. We sell certain products internationally, primarily in Puerto Rico and Mexico. All international sales and payments are made in U.S. dollars. Recent international sales have been immaterial to our consolidated financial results.

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

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

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our competitors’ responses to those demands could result in lower sale prices and, consequently, lower margins as we use existing metal inventory.

At March 31, 2011, we employed approximately 1,174 people. Approximately 207 of the hourly plant personnel at our Detroit and Minneapolis facilities are represented by three separate collective bargaining units. A collective bargaining agreement covering our Detroit workers expires August 31, 2012. Collective bargaining agreements covering our Minneapolis plate and coil facility workers expire March 31, 2012 and September 30, 2015, respectively. We have never experienced a work stoppage and we believe that our relationship with employees is good. However, any prolonged work stoppages by our personnel represented by collective bargaining units could have a material adverse impact on our business, financial condition, results of operations and cash flows.

Critical Accounting Policies

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

For further information regarding the accounting policies that we believe to be critical accounting policies and that affect our more significant judgments and estimates used in preparing our consolidated financial statements, see Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2010.

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Results of Operations

The following table sets forth certain income statement data for the three months ended March 31, 2011 and 2010 (dollars are shown in thousands):

	For the Three Months Ended March 31,
	2011					2010
			% of net					% of net
	$		sales			$		sales
Net sales	$	294,381		100.0	%	$	167,901		100.0	%
Gross profit (1)		63,419		21.5	%		35,365		21.1	%
Operating expenses (2)		46,106		15.7	%		32,036		19.1	%
Operating income	$	17,313		5.9	%	$	3,329		2.0	%

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

Tons sold increased 43.3% to 317 thousand in the first quarter of 2011 from 221 thousand in the first quarter of 2010. Tons sold in the first quarter of 2011 included 295 thousand from direct sales and 22 thousand from toll processing, compared with 201 thousand direct tons and 20 thousand toll tons in the comparable period of last year. Tons sold in the first quarter of 2011 were higher in substantially all markets in which we sell, compared to the first quarter of 2010.

Net sales increased 75.3% to $294.4 million in the first quarter of 2011 from $167.9 million in the first quarter of 2010. Average selling prices in the first quarter of 2011 were $928 per ton, compared with $758 per ton in the first quarter of 2010, and $846 per ton in the fourth quarter of 2010. The increase in sales was due to both higher levels of tons sold and increased average sell prices. We expect our second quarter sales and gross margins to remain strong and soften towards the end of the second quarter as we believe market prices peaked in April 2011. We anticipate shipments to begin to slow during the later part of the second quarter of 2011 and the beginning of third quarter due to normal seasonal patterns.

As a percentage of net sales, gross profit totaled 21.5% in the first quarter of 2011 compared to 21.1% in the first quarter of 2010.

Operating expenses in the first quarter of 2011 increased $14.1 million from the first quarter of 2010. Higher operating expenses in the first quarter of 2011 were primarily attributable to increased variable expenses, such as distribution, due to increased shipment levels; warehouse

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and processing expense resulting from more hours worked due to the increased volume; and selling costs, including higher sales incentives, resulting from increased tons sold and sales. In addition, performance based incentives increased as well during the first quarter of 2011. As a percentage of net sales, operating expenses decreased to 15.7% for the first quarter of 2011 from 19.1% in the comparable 2010 period.

Interest and other expense on debt totaled $805 thousand for the first quarter of 2011 compared to $506 thousand for the first quarter of 2010. Our effective borrowing rate, exclusive of deferred financing fees and commitment fees, was 3.8% for the first three months of 2011 compared to 5.6% for the first three months of 2010. The increase in interest and other expense on debt in the first quarter of 2011 was primarily attributable to higher levels of borrowings offset by the lower borrowing rate under our new ABL revolving credit facility.

For the first quarter of 2011, income before income taxes totaled $16.5 million compared to a $2.8 million in the first quarter of 2010. An income tax provision of 37.5% was recorded for the first three months of 2011, compared to an income tax provision of 39.4% for the first three months of 2010. Income taxes paid during the first three months of 2011 totaled $22 thousand compared to income taxes refunded of $7 thousand for the first three months of 2010.

Net income for the first quarter of 2011 totaled $10.3 million or $0.94 per basic and diluted share, compared to $1.7 million or $0.16 per basic and diluted share for the first quarter of 2010.

Liquidity and Capital Resources

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

Working capital at March 31, 2011 totaled $230.3 million, a $34.1 million increase from December 31, 2010. The increase was attributable to the rising price and volume environment, which increased our working capital requirements. The increase was primarily attributable to a $54.0 million increase in accounts receivable (resulting from higher sales volumes and sales prices) and a $3.7 million decrease in accrued expenses, partially offset by a $17.3 million increase in accounts payable (associated with higher steel prices and increased steel purchases) and a $5.1 million decrease in income taxes receivable and deferred. Inventory decreased by $1.7 million as we continue to improve our inventory turns.

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For the three months ended March 31, 2011, we used $16.5 million of net cash for operations, of which $16.5 million was generated from working capital.

During the first three months of 2011, we spent $7.9 million on capital expenditures. The expenditures were primarily attributable to progress payments on the new temper mill, which will be located in Gary, Indiana, additional processing equipment at our existing facilities and continued investments in our new business systems. During the remainder of 2011, we expect to spend approximately $30 million to $40 million for capital expenditures primarily related to the investment in our new business system implementations, value-added equipment and maintenance-type capital expenditures.

We continue to successfully implement our new business systems. During the first three months of 2011, we expensed $197 thousand and capitalized $357 thousand associated with the implementation of the systems. Since the project began in 2006, we have expensed $10.1 million and capitalized $15.9 million associated with the project.

During the first three months of 2011, $25.5 million of cash was provided from financing activities, which primarily consisted of borrowings under our ABL revolving credit facility.

In February 2011, our Board of Directors approved a regular quarterly dividend of $0.02 per share, which was paid on March 15, 2011 to shareholders of record as of March 1, 2011. Regular dividend distributions in the future are subject to the availability of cash, the $2.5 million annual limitation on cash dividends under our ABL revolving credit facility and continuing determination by our Board of Directors that the payment of dividends remains in the best interest of our shareholders.

Our ABL revolving credit facility provides for a revolving credit line of $125 million (which may be increased up to $175 million subject to the Company obtaining commitments for such increase). Borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables and inventories, or $125 million in the aggregate. The ABL revolving credit facility matures on June 30, 2015.

The ABL revolving credit facility requires us to comply with various covenants, the most significant of which include: (i) until maturity of the ABL revolving credit facility, if any commitments or obligations are outstanding and our availability is less than the greater of $20 million or 15% of the aggregate amount of revolver commitments, then we must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least

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1.10 to 1.00 for the most recent twelve fiscal month period; (ii) limitations on dividend payments; (iii) restrictions on additional indebtedness; and (iv) limitations on investments and joint ventures. We have the option to borrow based on the agent’s base rate plus a premium ranging from 1.00% to 1.50% or the London Interbank Offered Rate (LIBOR) plus a premium ranging from 2.50% to 3.00%.

As of March 31, 2011, we were in compliance with the covenants under the ABL revolving credit facility and had approximately $42 million of availability.

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

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Forward-Looking Information

This Quarterly Report on Form 10-Q and other documents we file with the SEC contain various forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, business, our beliefs and management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, conferences, webcasts, phone calls and conference calls. Words such as “may,” “will,” “anticipate,” “should,” “intend,” “expect,” “believe,” “estimate,” “project,” “plan,” “potential,” and “continue,” as well as the negative of these terms or similar expressions, are intended to identify forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those implied by such statements including, but not limited to, those set forth in Item 1A (Risk Factors), as found in our Annual Report on Form 10-K for the year ended December 31, 2010, and the following:

• the ability to successfully place the new Gary, Indiana facility in operation during the expected timeframe and achieve expected results;

• the success of our new startups in Gary, Indiana; Mount Sterling, Kentucky; Monterrey, Mexico; and Kansas City, Missouri;

• the ability to successfully integrate the newly leased locations or newly acquired businesses into our operations and achieve expected results;

• general and global business, economic, financial and political conditions, including the ongoing effects of the global economic recovery;

• access to capital and global credit markets;

• competitive factors such as the availability and pricing of metal, industry shipping and inventory levels and rapid fluctuations in customer demand and metal pricing;

• the cyclicality and volatility within the metal industry;

• the ability of our customers (especially those that may be highly leveraged, and those with inadequate liquidity) to maintain their credit availability;

• the ability of our customers to honor their agreements related to derivative instruments;

• customer, supplier and competitor consolidation, bankruptcy or insolvency;

• reduced production schedules, layoffs or work stoppages by our own or our suppliers’ or customers’ personnel;

• the availability and costs of transportation and logistical services;

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• equipment installation delays or malfunctions, including the new Gary, Indiana temper mill and cut-to-length line;

• the amounts, successes and our ability to continue our capital investments and strategic growth initiatives and our business information system implementations;

• the successes of our strategic efforts and initiatives to increase sales volumes, maintain or improve working capital turnover and free cash flows, reduce costs and improve inventory turnover and improve our customer service;

• the timing and outcome of inventory lower of cost or market adjustments;

• the adequacy of our existing information technology and business system software;

• the successful implementation of our new information systems;

• the timing and outcome of our joint venture’s efforts and ability to liquidate its remaining real estate;

• our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;

• our ability to generate free cash flow through operations, reduce inventory and to repay debt within anticipated time frames; and

• the recently enacted federal healthcare legislation’s impact on the healthcare benefits required to be provided by us and the impact of such legislation on our compensation and administrative costs.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our principal raw material is flat-rolled carbon, coated and stainless steel, and aluminum that we typically purchase from multiple primary metal producers. The metal industry as a whole is cyclical and, at times, pricing and availability of metal can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition, levels of inventory held by other metals service centers, consolidation of metal producers, higher raw material costs for the producers of metal, import

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duties and tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials for us.

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

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

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

Approximately 11.1% of our net sales in the first three months of 2011 were directly to automotive manufacturers or manufacturers of automotive components and parts. Historically, due to the concentration of customers in the automotive industry, our gross margins on these sales have generally been less than our margins on sales to customers in other industries.

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

We are exposed to the impact of fluctuating steel prices and interest rate changes. During the first three months of 2011 we entered into nickel swaps at the request of our customers. While these derivatives are intended to be effective in helping us manage risk, they have not been designated as hedging instruments. For certain customers, we enter into contractual relationships that entitle us to pass-through the economic effect of trading positions that we take with other third parties on our customers’ behalf.

Our primary interest rate risk exposure results from variable rate debt. We have not entered into any interest rate hedge transactions for speculative purposes or otherwise. However, we do have the option to enter into 30- to 180-day fixed base rate Euro loans under the ABL revolving credit facility.

Item 4. Controls and Procedures

The evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report has been carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. These disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports that are filed with or submitted to the SEC is: (i) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (ii) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2011, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the first quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Items 1, 1A, 2, 3 and 4 of this Part II are either inapplicable or are answered in the negative and are omitted pursuant to the instructions to Part II.

Item 5. Other Information

     Effective May 5, 2011, the Company and Mr. David A. Wolfort entered into a new employment agreement that superseded and replaced the original employment agreement between the Company and Mr. Wolfort, entered into as of January 1, 2006. Under the new employment agreement, Mr. Wolfort will continue to serve as President and Chief Operating Officer of the Company for a term ending January 1, 2016. The term will be automatically renewed on January 1, 2016 for an additional three years unless either the Company or Mr. Wolfort provides six months advance notice of a desire to not renew the term. Under the agreement, Mr. Wolfort receives a base salary of $700,000 per year, subject to possible increases as determined by the Board. During the period of employment, Mr. Wolfort will be eligible for a performance bonus under the Company’s Senior Management Compensation Program Plan in place as of 2011, as amended, or such other bonus plan that may replace the plan, and Mr. Wolfort will be eligible to participate in any long-term incentive plan, which may be created or amended by the Board from time to time. If the Company terminates Mr. Wolfort’s employment “without cause” during the term of the agreement and the termination does not otherwise entitle Mr. Wolfort to payments under his Management Retention Agreement with the Company, Mr. Wolfort will continue to receive his compensation and continued benefits under the agreement during the period ending on the earlier of (i) January 1, 2016 (or January 1, 2019 if the employment agreement is renewed) or (ii) the second anniversary of the termination of his employment. If Mr. Wolfort’s employment terminates during the term of the agreement due to death or disability, and he or his beneficiaries are not entitled to any payments under his Management Retention Agreement with the Company, Mr. Wolfort or his beneficiaries will continue to receive his base salary for twelve months and his spouse and minor children will be entitled to twelve months of continued health insurance. The new employment agreement includes non-competition and non-solicitation covenants that will be in effect while Mr. Wolfort is employed by the Company and for the two-year period following the termination of his employment.

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Item 6. Exhibits

Exhibit	Description of Document	Reference
10.30 *	Olympic Steel, Inc. Senior Manager Compensation Plan	Filed herewith
10.31 *	David A. Wolfort Employment Agreement effective as of January 1, 2011	Filed herewith
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith
32.2	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith

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

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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.

	OLYMPIC STEEL, INC. (Registrant)
Date: May 6, 2011	By:	/s/ Michael D. Siegal
		Michael D. Siegal
		Chairman of the Board and Chief Executive Officer
	By:	/s/ Richard T. Marabito
		Richard T. Marabito
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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EX-10.30

Exhibit 10.30

OLYMPIC STEEL, INC.
SENIOR MANAGER COMPENSATION PLAN

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Effective: January 1, 2011
TABLE OF CONTENTS

ARTICLE 1 — Overview	31
ARTICLE 2 — Annual Cash Incentive	33
ARTICLE 3 — Stock Ownership Requirements and Long-Term Incentive	36

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ARTICLE 1 — Overview

Adoption of Plan; Relation to Omnibus Plan; Administration

Olympic Steel, Inc. has adopted the Olympic Steel, Inc. Senior Manager Compensation Plan (the “Plan”) on the terms set forth herein. The Plan operates under and is subject to the Olympic Steel, Inc. 2007 Omnibus Incentive Plan (the “Omnibus Plan”). Words and phrases used herein with capital letters that are defined in the Omnibus Plan are used herein as so defined.

The cash incentives payable under Article 2 of the Plan constitute Cash-Based Awards under Article 10 of the Omnibus Plan, the Company share match under Article 3 of the Plan constitutes Other Stock Based Awards under Article 10 of the Omnibus Plan and the Restricted Stock Units under Article 3 of the Plan constitute Restricted Share unit Awards under Article 8 of the Omnibus Plan.

The Plan shall be administered pursuant to Article 2 of the Omnibus Plan.

Eligibility

The Plan is available to Executives, Commercial Vice Presidents, General Managers, certain Corporate Vice President and Directors and other employees (as determined by the Committee or its delegee) of Olympic Steel, Inc. (the “Company”). Eligible participants must sign the Company’s Non-Solicitation requirement in order to participate in the Plan.

The Plan year is the Company’s fiscal year. Participation in the Plan may be offered to an employee at any time. If an employee becomes eligible to participate in the Plan (through promotion or new-hire) for at least three months during the Plan year, then he or she will be eligible for a pro-rata cash incentive award based on the number of whole and partial months of the employee’s employment during the Plan year.

If the participant is not employed at the end of the Plan year or is demoted to an ineligible position during the Plan year, he or she will forfeit awards under the Plan. For example, a participant who leaves the Company on October 31, 2011 is not entitled to any cash incentive for 2011. If termination prior to the end of the Plan year was the result of death, Disability or retirement at or after age 55, the participant will be eligible for a pro-rata cash incentive award based on actual performance against the targets set forth herein and on the number of whole and partial months of employment during the year, unless the Committee (or its delegee) determines that a lesser amount shall be paid. Termination of employment shall refer to events which constitute a “separation of service” as defined in Treasury Regulation §1.409A-1(h) and means the participant’s separation from service with the Company and all members of the controlled group (within the meaning of Treasury Regulation §1.409A-1(g)), for any reason, including without limitation, quit, discharge, or retirement, or a leave of absence (including military leave, sick leave, or other bona fide leave of absence such as temporary employment by the government if the period of such leave exceeds the greater of six months or the period for which the Employee’s right to reemployment is provided either by statute or by contract). “Separation from service” also means the permanent decrease in the participant’s service for the Company and all controlled group members to a level that is no more than 20% of its prior level. For this purpose, whether a “separation of service” has occurred is determined based on whether it is reasonably anticipated that no further services will be performed by the participant after a certain date or that the level of bona fide services the participant will perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20%

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of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services if the participant has been providing services less than 36 months).

Effective Date

The Plan is effective January 1, 2011 and runs annually from January 1 to December 31 of each year. This version of the Plan supersedes any previous cash incentive programs. The Plan may be changed, amended, suspended or terminated by the Board of Directors.

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ARTICLE 2 — Annual Cash Incentive

Base Incentive

The base cash incentive under the Plan is calculated as a percentage of pre-tax income.

The base cash incentive for Executives, Commercial Vice Presidents, Corporate Vice Presidents and Corporate Directors shall typically be determined as a percentage of consolidated pre-tax income.

The base cash incentive for General Managers shall typically be determined as a percentage of regional pre-tax income.

Kickers

The base cash incentive shall be increased or decreased based upon performance in certain areas. An example of such “kickers” can be found in Appendix A.

Incentive Statement

Each participant will receive a periodic statement calculating his or her incentive. An example of the statement can be found in Appendix B.

Overall Limitations

The annual cash incentive is subject to overall divisional, regional and total company limitations. The annual calculated cash incentive to a General Manager cannot exceed 15% of the divisional pre-tax income (after taking into consideration all expenses, including the amount of the annual cash incentive for the General Manager and any allocation of any annual cash incentive for the Regional Commercial Vice President or any other applicable plan participant).

The annual calculated cash incentive to all participants within a region cannot exceed 15% of the regional pre-tax income (after taking into consideration all annual cash incentives paid under this Plan which are properly chargeable to the region).

The annual calculated cash incentive to all participants within this Plan cannot exceed 15% of the consolidated pre-tax income (after taking into consideration all annual cash incentives paid under this Plan).

To the extent that the calculated cash incentive exceeds the applicable 15% threshold, incentives will be reduced pro-rata at the divisional, regional or consolidated level, as applicable, until such incentives no longer exceed the 15% threshold.

Individual Limitations

The annual cash incentive for non-commercial participants entering the Plan after January 1, 2009 and for certain other future participants, as determined by the Executives, may be limited to a multiple of salary. The following table outlines the limitation:

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Consolidated Pre-Tax Income	Incentive Limit
$0 - $40 million	1.00X Salary
$50 million	1.25X Salary
$60 million	1.50X Salary
$70 million	1.75X Salary
$80 million or above	2.00X Salary

Pre-tax income amounts within categories will be extrapolated. For example, if consolidated pre-tax income is $55 million, the applicable limitation is 1.375X salary.

Payout Provisions

The annual cash incentive shall be paid pursuant to the instructions found in Appendix C. An illustrative example of the payout provisions can be found in Appendix D.

Miscellaneous Provisions

• Extraordinary items will be excluded in assessing the level of performance for purposes of determining the cash incentive award (e.g., large write-down of an asset unrelated to normal operations), unless the Compensation Committee of the Board of Directors determines that an extraordinary item shall not be excluded and the inclusion of the extraordinary item results in a lesser award amount. Notwithstanding the foregoing, no adjustment shall be made under this paragraph with respect to cash incentive awards that constitute performance-based compensation subject to Section 9.4(d) of the Omnibus Plan to the extent that such adjustment would cause the award to fail to meet the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.

• Amounts earned under this plan may be eligible for treatment as deferred compensation. See the Olympic Steel, Inc. Executive Deferred Compensation Plan for more details.

• In the event of a change-in-control in the ownership of Olympic Steel, all incentive program participants shall be entitled to receive a pro-rata share of the annual cash incentive for the portion of the year prior to the change-in-control. Such pro-rata share shall be paid within 30 days following the occurrence of the change-in-control.

• Nothing in this Plan or in any agreement entered into pursuant to this Plan shall confer upon any participant the right to continue in the employment of Olympic Steel or affect any right which Olympic Steel may have to terminate the employment of the participant.

• The Plan may be changed, amended, suspended or terminated at any time by the Board of Directors. However, any changes or amendments shall not have a discretionary impact on the payment of incentives as governed by IRC Sec. 409A. It is intended that this Plan and the payments hereunder either be exempt from, or comply with, IRC Sec. 409A and the final regulations thereunder (“Section 409A”), and this Plan shall be so construed and administered. In the event that the Company reasonably determines that any compensation payable under this Plan may be subject to taxation under Section 409A, the Company shall have the authority to adopt, prospectively or retroactively, such amendments to this Plan or to take any other actions it determines necessary or appropriate to (a) exempt all or any portion of the compensation payable under this Plan from Section 409A or (b) comply with the requirements of Section 409A. In no event, however, shall this provision or any other provisions of this Plan be construed to require the Company to provide any gross-up for the tax consequences of any provisions of, or payments under, this Agreement and the Company

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shall have no responsibility for tax consequences to participant (or his or her beneficiary) resulting from the terms or operation of this Program. For purposes of Section 409A, the payments hereunder are intended to constitute the right to a series of separate payments.

Performance-Based Compensation

The cash incentive payable under the Plan in respect of performance during the 2011 Plan year to the individuals who are listed as the Company’s named executive officers in the Company’s 2011 proxy statement shall constitute “performance-based compensation” that is subject to Section 9.4(d) of the Omnibus Plan.

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ARTICLE 3 — Stock Ownership Requirements and Long-Term Incentive

Stock Ownership Requirements

Executives, Commercial and Corporate Vice Presidents and General Managers must comply with the Company’s stock ownership requirements in order to participate in the Company’s Long-Term Incentive Plan (“LTIP”). Corporate Directors may choose to voluntarily meet the stock ownership requirements in order to participate in the LTIP.

To comply with the Company’s stock ownership requirements, individuals must own 750 shares of Olympic stock for every year in which they participate in the Plan, starting with the later of January 1, 2011 or the participant’s entry into the Plan. Participants who fail to meet the stock ownership requirements will not be eligible for an LTIP grant until their ownership deficiency is rectified. A table outlining the stock ownership requirements can be found in Appendix E.

Company Match

In order to assist participants in meeting their stock ownership requirement, annually, for every 500 shares of Olympic stock the participant purchases, the Company will provide a 250 share match. The matching shares vest immediately. Participants may purchase more than 500 shares annually, but the Company match may not exceed 250 shares of stock per year.

Restricted Stock Units

Participants who comply with the stock ownership requirement are eligible for periodic grants of Restricted Stock Units (“RSUs”). Qualified participants will receive the following RSU grants:

• 5-year anniversary             $25,000 of RSUs

• 10-year anniversary           $50,000 of RSUs

• 15-year anniversary           $75,000 of RSUs

• 20-year anniversary           $100,000 of RSUs

• 25-year anniversary           $100,000 of RSUs

Anniversary dates are measured from the later of January 1, 2011 or the participant’s entry into the Plan.

The number of RSUs granted on the anniversary date is determined by dividing the amount of the RSU grant by the closing price of a share of the Company’s common stock on the date of the anniversary (or, if there is no trading on such date, on the most recent date on which the Company’s common stock is traded). For example, assume a participant enters the Plan on January 1, 2011. Further assume the participant works continuously for the Company and reaches his or her 5-year anniversary in the Plan on January 1, 2016, when the closing price of the stock is $25 per share. The individual will receive 1,000 RSUs on January 1, 2016 ($25,000 / $25).

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Each RSU will vest and convert into the right to receive, subject to the provisions set forth below, one share of Olympic stock (i) upon the participant’s retirement from the Company at or after age 62, (ii) upon the participant’s retirement from the Company at or after age 55 if the participant has completed at least 35 years of service to the Company, or (iii) at age 62 if the participant retires from the Company after age 54 but before age 62 with less than 35 years of service to the Company, provided that the participant does not compete against the Company between the time of the participant’s retirement and the time the participant reaches age 62. Each RSU will also vest and convert into the right to receive, subject to the provisions set forth below, one share of Olympic stock upon the earlier death or Disability of the participant or upon an earlier change-in-control of the Company. Except as otherwise provided herein, participants who leave the Company prior to retirement (whether voluntarily or involuntarily), will forfeit the RSUs.

Shares of Olympic stock will be delivered on the following basis:

• Shares attributable to RSUs that vest by reason of the participant’s death or Disability or the occurrence of a change-in-control shall be delivered to the participant within 30 days after such death, Disability or change-in-control.

• Subject to the final paragraph of this section of the Plan, shares attributable to RSUs that vest by reason of the participant’s attainment of age 62 following the participant’s retirement from the Company after age 54 with less than 35 years of service to the Company but prior to age 62 shall be delivered within 30 days after the participant’s attainment of age 62, provided that such shares shall be forfeited if the participant competes against Olympic Steel between the time of the participant’s retirement and the time the participant reaches age 62.

• Subject to the final paragraph of this section of the Plan, shares attributable to RSUs that vest by reason of the participant’s retirement at or after age 55 with at least 35 years of service or after age 62 shall be delivered within 30 days after the participant’s retirement.

• Notwithstanding the foregoing, if the participant is a “specified employee” for purposes of Section 409A of the Code (as determined pursuant to procedures adopted by the Company for purposes of identifying the Company’ specified employees) at the time of the participant’s retirement, shares deliverable to the participant on account of the participant’s retirement shall be delivered no earlier than the first day of the seventh month following the participant’s retirement (or within 30 days after the participant’s death, if earlier).

Miscellaneous Provisions

• Participants who have purchased Olympic stock prior to the later of January 1, 2011 or their entry into the Plan will receive credit for those shares of stock against their ownership requirements; however, those shares will not be eligible for the Company match.

• Individuals who purchase more than 500 shares in a given year are limited to 250 Company matching shares in that year; however, any shares purchased above the 500 share limit can be applied toward purchases in future years. For example, assume a participant purchases 1,000 shares in Year 1. The participant will receive 250 matching shares in Year 1 against 500 of the purchased shares. The participant can use the remaining 500 shares that were purchased against their ownership requirements and receive an additional 250 matching shares in Year 2.

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• All stock purchased must comply with the Company’s Policy on Transactions in Securities.

• In years in which no cash incentives are paid, the Compensation Committee of the Board of Directors may waive the 500 share stock purchase for the year and extend the stock ownership and anniversary table by one year. Similarly, at the discretion of the Executives, new participants in the plan can be given an additional year to meet their Year 1 ownership requirements.

• Restricted stock units are not eligible to receive dividends. In addition to such adjustments as may be made pursuant to Section 3.4 of the Omnibus Plan, the share ownership requirement, company match and anniversary RSUs will be adjusted for any stock splits or stock dividends.

• Annually, each participant will be responsible for submitting proof of stock purchases and stock ownership to the administrator of this Plan.

• The Company matching shares will be distributed once per quarter on, or around, February 15, May 15, August 15 and November 15 of each year. Matching shares will be distributed only to participants who remain employed on the date of distribution.

• For purposes of the Plan the following terms are defined as follows:

* “Competing against Olympic Steel” is defined as being an employee, an owner, an officer, a consultant or holding any other significant position with any metal service center or metal distributor conducting business within those portions of the United States wherein the Company is conducting business at the relevant time.

* A change-in-control is defined as an event which results in a Change of Control within the meaning of the Omnibus Plan and also results in a change in the ownership or effective control, or in the ownership of a substantial portion of the assets, of the Company, within the meaning of Treasury Regulation §1.409A-3(i)(5)).

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EX-10.31

Exhibit 10.31

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of May 5, 2011 (the “Effective Date”), by and between OLYMPIC STEEL, INC., an Ohio corporation (the “Company”), and DAVID A. WOLFORT (“Executive”).

     WHEREAS, the Company desires to continue to employ Executive in the position of President and Chief Operating Officer of the Company, and Executive desires to accept such employment, on the terms and subject to the conditions hereinafter set forth;

     WHEREAS, Executive has valuable knowledge and experience relating to the Company’s businesses and the industries in which it operates, and the parties desire to provide for his services to the Company on the terms set forth herein;

     WHEREAS, the Company and Executive currently are parties to an employment agreement, effective as of January 1, 2006 (the “Prior Agreement”) and the Management Retention Agreement, dated April 26, 2000, and amended as of December 31, 2008 (the “Management Retention Agreement”); and

     WHEREAS, the Company and Executive desire that this Agreement supersede and completely replace the Prior Agreement as of the Effective Date.

     NOW, THEREFORE, in consideration of the respective covenants and agreements of the parties herein contained, the Company and Executive agree as follows:

     1. Term of Employment. The Company hereby agrees to continue to employ Executive, and Executive hereby agrees to continue to serve the Company, on the terms and conditions set forth herein for the period commencing on January 1, 2011 and expiring on January 1, 2016 (the “Employment Period”). The Employment Period shall automatically be renewed on January 1, 2016 for a period of an additional three years from such date unless, not later than July 1, 2015, the Company or Executive has given notice to the other party that it or he, as the case may be, does not wish to have the Employment Period extended. Such extension shall be included in the defined term Employment Period. In any case, the Employment Period may be terminated earlier under the terms and conditions set forth herein.

     2. Position and Duties. Executive is the President and Chief Operating Officer of the Company and reports to the Chief Executive Officer and the Board of Directors for the Company, and is presently a member of the Board of Directors. In this position, Executive has the responsibility for the general management and operation of the Company and the performance of such other executive services and duties as shall be reasonably assigned to and requested of him by, and subject to the direction and supervision of, the Chief Executive Officer and the Board of Directors of the Company. Executive shall serve in any position and office with the Company as the Board of Directors of the Company (the “Board”) may determine from time to time. However, Executive shall always remain as President and at the level of a senior executive officer of the Company. During the Employment Period, Executive shall devote substantially all his working time and efforts to the business and affairs of the Company and serve the Company in its business and perform his duties to the best of his ability.

     3. Compensation.

     (a) Salary. Effective April 1, 2011 and for the remainder of the Employment Period thereafter, Executive shall receive a base salary at the rate of Seven Hundred Thousand Dollars ($700,000) per year (the “Base Salary”). Executive’s salary may be adjusted, although any such adjustment shall be at the sole discretion of the Board of Directors of the Company or any duly authorized Committee thereof, including but not limited to the Compensation Committee. Notwithstanding the foregoing, in no event shall Executive’s salary be adjusted

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below the amount of the Base Salary. Such salary shall be payable in accordance with the normal policies of the Company for payment of its senior executives.

     (b) Benefits Generally. During the Employment Period, Executive shall be eligible to participate in all welfare and benefit plans which are currently maintained or established, or which may be established and maintained in the future, by the Company for its senior executives generally (subject, however, to all of the terms and conditions thereof, including any eligibility requirements therefor), including but not limited to: (i) group life insurance coverage; (ii) hospitalization or disability insurance coverage, (iii) retirement plans, including but not limited to any supplemental executive retirement plan, (iv) long term incentive and equity-based plans; and (v) the reimbursement plan for financial services and tax planning. For purposes of this Agreement, no benefit shall be considered to have accrued as of any date under any welfare or benefit plan referred to in this Section 3(b) if such benefit remains subject to a discretionary determination under the terms of such plan as of such date.

     (c) Expenses. The Company shall reimburse Executive for reasonable direct expenses incurred by him on behalf of the Company in the performance of his duties during the Employment Period. Executive shall furnish the Company with such documentation as is requested by the Company in order for it to comply with the Code and regulations thereunder in connection with the proper deduction of such expenses.

     (d) Bonus Plan. During the Employment Period, Executive shall be eligible for an annual performance bonus (the “Annual Bonus”) under the Senior Management Compensation Program Plan of 2011, as such plan may be amended by the Board from time to time, or such other bonus plan that replaces such plan, in such amount and based on the Company’s performance against specific target levels as is determined by the Board of Directors of the Company or any duly authorized Committee thereof, including but not limited to the Compensation Committee of the Board.

     If the Company is required to restate its annual financial statements for any fiscal year and such restatement would reduce the bonus payment for the period covered by such financial restatement by more than 5%, Executive shall reimburse the Company for the difference between the bonus actually paid and the bonus payable under the restated financial statement. Executive shall make such reimbursement not later than sixty (60) days after the restated financial statements have been made final and disclosed to the public.

     (e) Long Term Incentive Plan. During the Employment Period, Executive shall be eligible to participate in any long term incentive plan, as any such plan may be created or amended by the Board from time to time.

     4. Termination of Employment.

     (a) Events of Termination. The Employment Period shall terminate immediately upon the occurrence of any of the following events:

          (i) the death of Executive;

          (ii) upon receipt by Executive of the Company’s written notice of intent to terminate due to Disability (the “Disability Effective Date”);

          (iii) voluntary termination by Executive of his employment with the Company;

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          (iv) upon receipt by the Executive of the Company’s written notice that specifies the reasons for termination for Good Cause; or

          (v) thirty (30) days after Executive’s receipt of the Company’s written notice terminating Executive at any time other than for Good Cause, Death or Disability, for any reason or no reason.

     For purposes of Section 4, expiration of the Employment Period upon a notice of the Company under Section 1 that it does not wish to extend the Employment Period shall be deemed a termination for Good Cause, pursuant to Section 4(a)(iv) and expiration of the Employment Period upon a notice of Executive under Section 1 that he does not wish to extend the Employment Period shall be deemed a resignation of Executive pursuant to Section 4(a)(iii).

     (b) Notice of Termination. Any termination by the Company for Good Cause (except for the failure by the Company to extend the Employment Period beyond January 1, 2016) shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) specifies the Termination Date (as defined below). The failure or omission by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder.

     (c) Termination Date. “Termination Date” means (i) if Executive’s employment is terminated by the Company for Good Cause, the date of termination of employment that is set forth in the Notice of Termination (which shall not be earlier than the date on which such notice is given), (ii) if Executive’s employment is terminated by the Company other than for Good Cause or Disability, or Executive resigns, the date on which the Company or Executive notifies Executive or the Company, respectively, of such termination, or such later date as may be specified by the terminating party in such notice, and (iii) if Executive’s employment is terminated by reason of death or Disability, the date of death of Executive or the Disability Effective Date, as the case may be.

     5. Obligations of the Company upon Termination.

     (a) Discharge Other than for Good Cause or Disability. Executive shall be entitled to the severance benefits specified in this Section 5(a) if, during the Employment Period, the Company terminates Executive’s employment for any reason other than for Good Cause or Disability, provided that Executive shall only be entitled to the severance benefits specified in Section 5(a)(ii) if upon such a termination Executive is not entitled to any payments or benefits in connection with such termination under the Management Retention Agreement. In any such case:

          (i) Accrued Benefits. Executive shall be entitled to any:

               (A) incremental Base Salary at the rate then in effect otherwise payable through the Termination Date to the extent not previously paid, which shall be paid in a lump sum in cash within thirty (30) calendar days from the Termination Date;

               (B) Annual Bonus which has been earned and accrued but remains unpaid which shall be paid in the same form and at the same time as such Annual

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Bonus, if any, is paid to other senior executive officers as further provided under Section 5(a)(ii)(B);

               (C) benefits provided for in Section 3(b) which have accrued up to and including the Termination Date, subject to the terms and conditions of the welfare and benefit plans referenced in Section 3(b); and

               (D) reimbursement of reasonable expenses incurred up to and including the Termination Date under the terms of Section 3(c).

          (ii) Continuation of Benefits. Provided Executive has executed and delivered to the Company a Release and Waiver of Claims within 60 days after the Termination Date and Executive refrains from revoking, rescinding or otherwise repudiating such Release and Waiver of Claims for all applicable periods during which Executive may revoke it (failure to provide such a release shall result in the forfeiture of all benefits under this subparagraph (ii)), during the period ending on the earlier of (x) the last day of the Employment Period as set forth in Section 1 above (or the last day of the extended Employment Period if this Agreement is renewed for an additional term pursuant to Section 1 above), (y) a breach by Executive of any obligation set forth in Section 6, or (z) twenty-four (24) months following termination of employment by the Company under Section 5(a), Executive shall be entitled to continue to receive:

               (A) an amount equal to Executive’s Base Salary then in effect, which shall be paid in equal monthly or more frequent installments, on the same schedule and in accordance with the Company’s regular payroll policies for senior executives, commencing thirty (30) days after the Termination Date;

               (B) an Annual Bonus, if any, determined as follows:

                    (i) if the other senior executive officers are not entitled to an Annual Bonus payment with respect to the fiscal year of the Company, then Executive shall not be paid an Annual Bonus for such year; or

                    (ii) if the other senior executive officers are entitled to an Annual Bonus payment with respect to the fiscal year of the Company, then, at the discretion of the Compensation Committee, the Executive may be paid a portion of the Annual Bonus that otherwise would have been payable to Executive had he remained employed throughout such year, in the same form and on the same date(s) as payment is made to the other senior executive officers, in an amount prorated by multiplying said amount by a fraction where the numerator equals the number of complete months in such partial year during which Executive was employed and the denominator equals twelve; and

               (C) subject to the terms and conditions of the welfare and benefit plans referenced in Section 3(b), and to the extent permitted by applicable law, any benefits provided for in Section 3(b) under substantially the same terms and conditions, including the cost, if any, to Executive, subject to generally applicable changes to the level, and cost, of coverage that may be made with respect to senior executive officers, provided that such continuation shall not be required hereunder to the extent that Executive is entitled, absent any individual waivers or other arrangements, to receive during such period the same type of coverage from another employer or recipient of Executive’s services.

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     (b) Death or Disability.

          (i) Accrued Benefits. Executive or his estate or beneficiaries, hereunder, as appropriate, in the event of the death of Executive, shall be entitled to the severance benefits specified in this Section 5(b) if, during the Employment Period, Executive’s employment with the Company terminates as a result of Executive’s death or Disability under Section 4(a)(i) or 4(a)(ii). In either such case, Executive shall be entitled to any (i) incremental Base Salary, (ii) Annual Bonus which has been earned and accrued but remains unpaid which shall be paid in the same form and at the same time as such Annual Bonus, if any, is paid to other senior executive officers, (iii) benefits provided for in Section 3(b) which have accrued up to and including the Termination Date, subject to the terms and conditions of the welfare and benefit plans referenced in Section 3(b), and (iv) reimbursement of reasonable expenses incurred up to and including the Termination Date under the terms of Section 3(c). After the Termination Date, Executive shall no longer be eligible to participate in any of the welfare or benefit plans referenced in Section 3(b), except to the extent and on the terms that participation in any such plan by former employees is expressly provided for by the terms of such plan.

          (ii) Continuation of Benefits. In addition to the Accrued Benefits payable under Section 5(b)(i), but only to the extent that Executive or his estate or beneficiaries are not entitled to twelve (12) months of Base Salary in connection with Executive’s termination of employment as a result of Executive’s death or Disability under the Management Retention Agreement, Executive or his estate or beneficiaries, hereunder, as appropriate, in the event of the death of the Executive, shall be entitled to twelve (12) month’s Base Salary payable in equal monthly or more frequent installments, on the same schedule and in accordance with the Company’s regular payroll policies for senior executives, commencing thirty days (30) after the Termination Date. Further, Executive’s surviving spouse, if any, and minor children shall be eligible to continue to participate in the Company’s health insurance programs, at the expense of the Company for twelve (12) months after the death or Disability of Executive to the extent such continuation is permitted by applicable law. After such one-year period, Executive’s dependents shall be entitled to participate in any insurance program of the Company to the extent required by federal or state law. No provision of this Agreement shall limit any of Executive’s (or his beneficiaries’) rights under any insurance, pension or other benefit programs of the Company for which Executive shall be eligible at the time of such death or disability.

     (c) Discharge for Good Cause or Resignation. If Executive’s employment with the Company is terminated by Executive on a voluntary basis under Section 4(a)(iii) or is terminated by the Company for Good Cause under Section 4(a)(iv), Executive shall be entitled to (i) payment of incremental Base Salary only through the Termination Date and thereafter such salary shall end and cease to be payable, (ii) at the discretion of the Compensation Committee, payment of any Annual Bonus which has been earned and accrued but remains unpaid which shall be paid in the same form and at the same time as such Annual Bonus, if any, is paid to other senior executive officers, but in no event shall any portion of any subsequent Annual Bonus be deemed to have been earned and accrued, (iii) receive any benefits provided for in Section 3(b) which have accrued up to and including the Termination Date, subject to the terms and conditions of the welfare and benefit plans referenced in Section 3(b), and (iv) reimbursement of reasonable expenses incurred up to and including the Termination Date under the terms of Section 3(c). After the Termination Date, Executive shall no longer be eligible to participate in any of the welfare or benefit plans referenced in Section 3(b), except to the extent and on the terms that participation in any such plan by former employees is expressly provided for by the terms of such plan.

     (d) No Further Obligations. Except as expressly set forth in this Section 5, Executive shall not be entitled to any other payments or benefits under this Agreement as a result of the termination of Executive’s employment.

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     6. Restrictive Covenants.

     (a) Non-Competition. While employed by the Company and for a period of twenty-four (24) months after ceasing to be so employed (the “Restricted Period”) for whatever reason, Executive shall not, directly or indirectly, own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, partner, director, consultant or other position, or have any financial interest in with (i) any metal service center or distributor conducting business within those portions of the United States wherein the Company is conducting business on the Termination Date, or (ii) a business engaged in direct competition with any other significant business carried on by the Company on the Termination Date. In no event shall ownership of less than five (5) percent of the equity of a corporation, limited liability company or other business entity, standing alone, constitute a violation hereof.

     (b) Non-Solicitation. During the Restrictive Period, Executive shall not directly, indirectly or through an affiliate: (i) solicit, induce, divert, or take away or attempt to solicit, induce, divert or take away any customer, distributor, or supplier of the Company; (ii) solicit, induce, or hire or attempt to solicit, induce, or hire any employee of the Company or any individual who was an employee of the Company on the Termination Date and who has left the employment of the Company after the Termination Date within one year of the termination of such employee’s employment with the Company, or (iii) in any way directly or indirectly interfere with such relationships.

     (c) Confidentiality.

          (i) Executive shall keep in strict confidence, and shall not, directly or indirectly, at any time while employed by the Company or after ceasing to be so employed, disclose, furnish, publish, disseminate, make available or, except in the course of performing his duties of employment hereunder, use for his benefit or the benefit of others any Confidential Information. Executive specifically acknowledges that all Confidential Information, in whatever media or form maintained, and whether compiled by the Company or Executive, (1) derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, (2) that reasonable efforts have been made by the Company to maintain the secrecy of such information, (3) that such information is the sole property of the Company, and (4) that any disclosure or use of such information by Executive while employed by the Company (except in the course of performing his duties and obligations hereunder for the Company) or after ceasing to be so employed shall constitute a misappropriation of the Company’s trade secrets.

          (ii) Notwithstanding the provisions of Section 6(c)(i), Executive may disclose the Confidential Information to anyone outside of the Company with the Company’s express written consent, or Confidential information that: (i) is at the time of receipt or thereafter becomes publicly known through no wrongful act of Executive; or (ii) is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement.

          (iii) In addition to the above provisions of Section 6(c), all memoranda, notes, lists, records and other documents (and all copies thereof) made or compiled by Executive or made available to Executive concerning the business of the Company will be delivered to the Company at any time on request.

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     7. Amendment to Management Retention Agreement. The parties hereby agree that Section 5(a) of the Management Retention Agreement is hereby amended in its entirety to provide as follows:

“(a) If Employee dies during the Contract Period, the Company shall pay Employee’s designated beneficiary (or, in the event of the decease of or failure to designate a beneficiary, Employee’s personal representative) the base salary, provided for in paragraph 4(a) above for a 12-month period commencing thirty days (30) after the date of death, but without prejudice to any payments otherwise due Employee in respect of his death.”

     8. Binding Agreement; Successors. This Agreement shall inure to the benefit of and be binding upon Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts would still be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s spouse, or if his spouse does not survive him, to Executive’s estate. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, including, without limitation, any person acquiring directly or indirectly all or substantially all of the assets of the Company, whether by merger, consolidation, sale or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement). The Company shall require any such successor to assume and agree to perform this Agreement.

     9. Notice. All notices, requests and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) when hand delivered, (b) one business day after being sent by recognized overnight delivery service, or (c) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid, and in each case addressed as follows (or addressed as otherwise specified by notice under this Section):

(i)	If to the Company, to:
	Olympic Steel, Inc. 5096 Richmond Road Bedford, Ohio 44146 Attention: Chief Executive Officer
	With a copy to: Olympic Steel, Inc. 5096 Richmond Road Bedford, Ohio 44146 Attention: Chairman, Compensation Committee
(ii)	If to Executive, to:
	David A. Wolfort 70 Ridgecreek Trail Moreland Hills, Ohio 44022

     10. Withholding. The Company may withhold from any amounts payable under or in connection with this Agreement all federal, state, local and other taxes as may be required to be withheld by the Company under applicable law or governmental regulation or ruling.

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     11. Amendments; Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, and is signed by Executive and an officer of the Company specifically designated by the Board of the Company or its Compensation Committee to execute such writing. No delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

     12. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to the conflict of law principles of such State.

     13. Equitable Relief. Executive and the Company acknowledge and agree that the covenants contained in Section 6 are of a special nature and that any breach, violation or evasion by Executive of the terms of Section 6 will result in immediate and irreparable injury and harm to the Company, for which there is no adequate remedy at law, and will cause damage to the Company in amounts difficult to ascertain. Accordingly, the Company shall be entitled to the remedy of injunction, as well as to all other legal or equitable remedies to which the Company may be entitled (including, without limitation, the right to seek monetary damages), for any breach, violation or evasion by Executive of the terms of Section 6.

     14. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. In the event that any provision of Section 6 is found by a court of competent jurisdiction to be invalid or unenforceable as against public policy, such court shall exercise its discretion in reforming such provision to the end that Executive shall be subject to such restrictions and obligations as are reasonable under the circumstances and enforceable by the Company.

     15. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

     16. Headings; Definitions. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Certain capitalized terms used in this Agreement are defined on Schedule A attached hereto.

     17. No Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, except as provided in Section 8.

     18. Entire Agreement; No Other Arrangements. This Agreement contains the entire agreement between the parties with respect to the employment of Executive and supersedes any and all other agreements, including, without limitation, the Prior Agreement, either oral or in writing, with respect to the employment of Executive, with the exception of the Management Retention Agreement, which shall remain in full force and effect. In the event of any conflict between the Agreement and the Management Retention Agreement, the terms of the Management Retention Agreement shall prevail other than with respect to Section 7 hereof. Executive acknowledges that, in executing this Agreement, he has not relied on any representations not set forth in this Agreement. Executive represents that his employment by the Company will not violate any other agreement by which Executive is bound.

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     19. Separation from Service. All references to “termination of employment” or forms and derivations thereof shall refer to events which constitute a “separation from service” as defined in Treasury Regulation §1.409A-1(h) and means the Executive’s separation from service with the Company and all members of the controlled group, for any reason, including without limitation, quit, discharge, or retirement, or a leave of absence (including military leave, sick leave, or other bona fide leave of absence such as temporary employment by the government if the period of such leave exceeds the greater of six months or the period for which the Executive’s right to reemployment is provided either by statute or by contract). “Separation from service” also means the permanent decrease in the Executive’s service for the Company and all controlled group members to a level that is no more than 20% of its prior level. For this purpose, whether a “separation from service” has occurred is determined based on whether it is reasonably anticipated that no further services will be performed by the Executive after a certain date or that the level of bona fide services the Executive will perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services if the Executive has been providing services less than 36 months).

     20. Six-Month Delay. Notwithstanding anything to the contrary contained in this Agreement, and solely to the extent that any payment or benefit payable pursuant to this Agreement is not exempt from the requirements of Section 409A, if the Executive is a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) on the date of a separation from service, and the Company’s stock is publicly traded on an established securities market or otherwise, any such non-exempt payments under this Agreement which would otherwise have been payable within the first six (6) months shall be paid in the seventh (7th) month following Executive’s Termination Date. Notwithstanding the foregoing, payments delayed pursuant to this paragraph shall commence as soon as practicable following the date of death of the Executive prior to the end of the six (6) month period but in no event later than ninety (90) days following the date of death.

     21. Reimbursement and In-Kind Benefits. Any reimbursement of expenses or any in-kind benefits provided under this Agreement, that are subject to and not exempt from Code Section 409A, shall also be subject to the following additional rules: (i) any reimbursement of eligible expenses or in-kind benefits shall be paid as they are incurred (but, solely to the extent not exempt from Code Section 409A, not prior to the end of the six-month period following his termination of employment); provided that in no event shall any such payment be made later than the end of the calendar year following the calendar year in which such expense was incurred; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

     22. Code Section 409A. It is intended that the payments and benefits provided under this Agreement shall either be exempt from application of, or comply with, the requirements of Code Section 409A and the final regulations thereunder. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent and shall make payments in such time and manner as the Company determines would minimize or reduce the risk of adverse taxation under Code Section 409A. In the event that the Company reasonably determines that any compensation or benefits payable under this Agreement may be subject to taxation under Code Section 409A, the Company, after consultation with the Executive, shall have the authority

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to adopt, prospectively or retroactively, such amendments to this Agreement or to take any other actions it determines necessary or appropriate to (a) exempt the compensation and benefits payable under this Agreement from Code Section 409A or (b) comply with the requirements of Code Section 409A. In no event, however, shall this section or any other provisions of this Agreement be construed to require the Company to provide any gross-up for the tax consequences of any provisions of, or payments under, this Agreement and the Company shall have no responsibility for tax consequences to Executive (or his beneficiary) resulting from the terms or operation of this Agreement. For purposes of Code Section 409A, any payments or benefits under this Agreement are intended to constitute the right to a series of separate payments or benefits.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

OLYMPIC STEEL, INC.
By:	/s/ Michael D. Siegal
	Name:	Michael D. Siegal
	Title:	Chief Executive Officer

/s/ David A. Wolfort 

DAVID A. WOLFORT 

(“Executive”) 

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SCHEDULE A

Certain Definitions

As used in this Agreement, the following capitalized terms shall have the following meanings:

“Affiliate” of a specified entity means an entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the entity specified.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Confidential Information” means confidential business information of the Company and its customers and vendors, without limitation as to when or how Executive may have acquired such information. Such Confidential Information shall include, without limitation, the Company’s sales figures, profit or loss figures or other information related to the Company’s internal financial statements, customers, clients, suppliers, vendors and product information, sources of supply, customer lists or other information, selling and servicing methods and business techniques, product development plans, sales and distribution information, business plans and opportunities, or corporate alliances and other information concerning the Company’s actual or anticipated business or products, or which is received in confidence by or for the Company from any other person.

“Disability” means the inability of Executive for a continuous period of ninety (90) days or for one hundred and eighty (180) days in the aggregate during any twelve (12) month period to perform any material portion of the duties of his position hereunder on an active full-time basis by reason of a disability condition. The Company and Executive acknowledge and agree that the material duties of Executive’s position are unique and critical to the Company and that a disability condition that causes Executive to be unable to perform the essential functions of his position under the circumstances described above will constitute an undue hardship on the Company. Notwithstanding the foregoing, Executive shall not be disabled provided that all of the following conditions have been satisfied:

     (a) after receipt of the Company’s written notice of intent to terminate due to Disability, Executive shall have the right within ten (10) days to dispute the Company’s ability to terminate him under this section;

     (b) within ten (10) days after exercising such right, Executive shall submit to a physical exam by the Chief of Medicine of any major hospital in the metropolitan Cleveland area;

     (c) such physician shall issue his written statement to the effect that in his opinion, based upon his diagnosis, Executive is capable of resuming his employment and devoting his full time and energy in discharging his duties within ten (10) days after the date of such statement; and

     (d) the Executive returns to work on a full-time basis and devotes his energy in discharging his duties.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.

“Good Cause” means a reasonable determination by the Board made in good faith (without the participation of Executive) of the Company, pursuant to the exercise of its business judgment, that anyone of the following events has occurred:

     (a) Executive is found by the Board to have engaged in (1) willful misconduct, (ii) willful or gross neglect, (iii) fraud, (iv) misappropriation, or (v) embezzlement in the performance of his duties hereunder;

     (b) Executive has materially breached the provisions of Section 6 or any other material provision of this Agreement and fails to cure such breach within ten (l0) days following

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written notice from the Company specifying such breach which notice from the Company shall be provided within thirty (30) days after said breach;

     (c) Executive is found by the Board to have failed to provide reasonable cooperation with any federal government or other governmental regulatory investigation, the reasonableness of such cooperation to be determined by reference to statutory and regulatory authorities, Federal Sentencing Guidelines, and relevant case law interpretations;

     (d) Executive signs or certifies statements required to be made pursuant to Sarbanes-Oxley Sections 302 and 906, or other similar rules or regulations then in effect, which turn out to be false or inaccurate in any material respect; provided, however, that the Board has made a reasonable determination in good faith that the Executive knew or should have known that such statements were false or inaccurate in any material respect;

     (e) Executive has been indicted by a state or federal grand jury with respect to a felony, a crime of moral turpitude or any crime involving the Company (other than pursuant to actions taken at the direction or with the approval of the Board) and a special committee of the Board, chaired by an outside director appointed by the Chair of the Audit Committee, considers the matter, makes a recommendation to the Board to terminate Executive’s employment for Good Cause, and the Board concurs in that recommendation; or

     (f) Executive is found by the Board to have engaged in a material violation of the Code of Conduct of the Company as then in effect.

“Release and Waiver of Claims” means a written release and waiver by Executive, to the fullest extent allowable under applicable law and in form reasonably acceptable to the Company, of all claims, demands, suits, actions, causes of action, damages and rights against the Company and its Affiliates whatsoever which he may have had on account of the termination of his employment, including, without limitation, claims of discrimination, including on the basis of sex, race, age, national origin, religion, or handicapped status, and any and all claims, demands and causes of action for severance or other termination pay. Such Release and Waiver of Claims shall not, however, apply to the obligations of the Company arising under this Agreement, any indemnification agreement between Executive and the Company, any retirement plans, any stock option agreements, COBRA Continuation Coverage or rights of indemnification Executive may have under the Company’s Articles of Incorporation or Code of Regulations (or comparable charter document) or by statute.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

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EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Michael D. Siegal, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Olympic Steel, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Michael D. Siegal
	Michael D. Siegal
	Olympic Steel, Inc. Chairman and Chief Executive Officer
	May 6, 2011

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EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Richard T. Marabito, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Olympic Steel, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Richard T. Marabito
	Richard T. Marabito
	Olympic Steel, Inc. Chief Financial Officer and Treasurer
	May 6, 2011

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EX-32.1

Exhibit 32.1

Certification of the Principal Executive Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Michael D. Siegal, the Chairman & Chief Executive Officer of Olympic Steel, Inc. (the “Company”), certify that to the best of my knowledge, based upon a review of this report on Form 10-Q for the period ended March 31, 2011 of the Company (the “Report”):

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, as of the dates and for the periods expressed in this Report.

By:	/s/ Michael D. Siegal
	Michael D. Siegal
	Olympic Steel, Inc. Chairman & Chief Executive Officer  May 6, 2011

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EX-32.2

Exhibit 32.2

Certification of the Principal Financial Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Richard T. Marabito, the Chief Financial Officer and Treasurer of Olympic Steel, Inc. (the “Company”), certify that to the best of my knowledge, based upon a review of this report on Form 10-Q for the period ended March 31, 2011 of the Company (the “Report”):

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in this Report.

By:	/s/ Richard T. Marabito
	Richard T. Marabito
	Olympic Steel, Inc. Chief Financial Officer and Treasurer  May 6, 2011

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