Note 19: Condensed Consolidating Financial Statements

On October 19, 2007, Ryerson issued the Ryerson Notes. The Ryerson Notes are fully and unconditionally guaranteed on a senior secured basis by each of Ryerson's existing and future domestic subsidiaries that are co-borrowers or guarantee our obligations under the Ryerson Credit Facility. Each guarantor of the Ryerson Notes is 100% owned by Ryerson and the guarantees are joint and several. Ryerson Inc. may only pay dividends to Ryerson Holding to the extent of 50% of future net income, once prior losses are offset. Presented below is the condensed consolidating financial information of Ryerson and its subsidiaries as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009.

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2011

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	4,093.0		$	645.0		$	(8.2	)	$	4,729.8
Cost of materials sold		—			3,522.8			556.4			(8.2	)		4,071.0

Gross profit		—			570.2			88.6			—			658.8
Warehousing, delivery, selling, general and administrative expenses		5.2			448.2			86.4			—			539.8
Restructuring and other charges		—			10.0			1.1			—			11.1
Impairment charges on fixed assets and goodwill		—			7.8			1.5			—			9.3

Operating profit (loss)		(5.2	)		104.2			(0.4	)		—			98.6
Other income and (expense), net		(0.2	)		6.0			(1.2	)		—			4.6
Interest and other expense on debt		(76.6	)		(0.1	)		(3.4	)		—			(80.1	)
Intercompany transactions:
Interest expense on intercompany loans		(42.0	)		—			—			42.0			—
Interest income on intercompany loans		—			42.0			—			(42.0	)		—

Income (loss) before income taxes		(124.0	)		152.1			(5.0	)		—			23.1
Provision (benefit) for income taxes		(51.9	)		34.3			6.1			—			(11.5	)
Equity in (earnings) loss of subsidiaries		(115.0	)		2.8			—			112.2			—

Net income (loss)		42.9			115.0			(11.1	)		(112.2	)		34.6
Less: Net loss attributable to noncontrolling interest		—			—			(8.3	)		—			(8.3	)

Net income (loss) attributable to Ryerson Inc.	$	42.9		$	115.0		$	(2.8	)	$	(112.2	)	$	42.9

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2010

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	3,351.3		$	550.5		$	(6.3	)	$	3,895.5
Cost of materials sold		—			2,886.7			475.3			(6.3	)		3,355.7

Gross profit		—			464.6			75.2			—			539.8
Warehousing, delivery, selling, general and administrative expenses		4.9			426.2			74.6			—			505.7
Restructuring and other charges		—			12.0			—			—			12.0
Gain on insurance settlement		(2.6	)		—			—			—			(2.6	)
Impairment charge on fixed assets		—			1.4			—			—			1.4
Pension and other postretirement benefits curtailment loss		—			2.0			—			—			2.0

Operating profit (loss)		(2.3	)		23.0			0.6			—			21.3
Other income and (expense), net		—			—			(3.2	)		—			(3.2	)
Interest and other expense on debt		(70.3	)		(1.3	)		(3.6	)		—			(75.2	)
Intercompany transactions:
Interest expense on intercompany loans		(55.9	)		—			(0.4	)		56.3			—
Interest income on intercompany loans		—			56.3			—			(56.3	)		—

Income (loss) before income taxes		(128.5	)		78.0			(6.6	)		—			(57.1	)
Provision (benefit) for income taxes		(15.4	)		25.3			3.0			—			12.9
Equity in (earnings) loss of subsidiaries		(47.7	)		4.6			—			43.1			—

Net income (loss)		(65.4	)		48.1			(9.6	)		(43.1	)		(70.0	)
Less: Net loss attributable to noncontrolling interest		—			—			(4.6	)		—			(4.6	)

Net income (loss) attributable to Ryerson Inc.	$	(65.4	)	$	48.1		$	(5.0	)	$	(43.1	)	$	(65.4	)

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2009

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	2,647.2		$	423.4		$	(4.5	)	$	3,066.1
Cost of materials sold		—			2,247.6			367.5			(4.5	)		2,610.6

Gross profit		—			399.6			55.9			—			455.5
Warehousing, delivery, selling, general and administrative expenses		3.4			417.3			63.2			—			483.9
Gain on sale of assets		—			(3.3	)		—			—			(3.3	)
Impairment charge on fixed assets		—			19.3			—			—			19.3
Pension and other postretirement benefits curtailment gain		—			—			(2.0	)		—			(2.0	)

Operating loss		(3.4	)		(33.7	)		(5.3	)		—			(42.4	)
Other income and (expense), net		2.7			—			(12.9	)		—			(10.2	)
Interest and other expense on debt		(69.1	)		(1.7	)		(2.1	)		—			(72.9	)
Intercompany transactions:
Interest expense on intercompany loans		(56.5	)		(2.1	)		(0.3	)		58.9			—
Interest income on intercompany loans		—			56.9			2.0			(58.9	)		—

Income (loss) before income taxes		(126.3	)		19.4			(18.6	)		—			(125.5	)
Provision for income taxes		42.7			16.7			7.5			—			66.9
Equity in loss of subsidiaries		20.3			15.4			—			(35.7	)		—

Net loss		(189.3	)		(12.7	)		(26.1	)		35.7			(192.4	)
Less: Net loss attributable to noncontrolling interest		—			—			(3.1	)		—			(3.1	)

Net loss attributable to Ryerson Inc.	$	(189.3	)	$	(12.7	)	$	(23.0	)	$	35.7		$	(189.3	)

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2011

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	42.9		$	115.0		$	(11.1	)	$	(112.2	)	$	34.6

Non-cash expenses		(24.1	)		66.2			7.9			—			50.0
Equity in (earnings) loss of subsidiaries		(115.0	)		2.8			—			112.2			—
Changes in working capital		265.5			(292.9	)		(2.6	)		—			(30.0	)

Net adjustments		126.4			(223.9	)		5.3			112.2			20.0

Net cash used in operating activities		169.3			(108.9	)		(5.8	)		—			54.6

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		97.3			188.7			(10.2	)		(390.8	)		(115.0	)

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		(264.1	)		(79.5	)		10.7			390.8			57.9

Net increase (decrease) in cash and cash equivalents		2.5			0.3			(5.3	)		—			(2.5	)
Effect of exchange rates		—			—			1.6			—			1.6

Net change in cash and cash equivalents		2.5			0.3			(3.7	)		—			(0.9	)
Beginning cash and cash equivalents		0.5			15.7			46.0			—			62.2

Ending cash and cash equivalents	$	3.0		$	16.0		$	42.3		$	—		$	61.3

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2010

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(65.4	)	$	48.1		$	(9.6	)	$	(43.1	)	$	(70.0	)

Non-cash expenses		(74.0	)		182.2			6.7			—			114.9
Equity in (earnings) loss of subsidiaries		(47.7	)		4.6			—			43.1			—
Changes in working capital		13.1			(238.8	)		(17.6	)		—			(243.3	)

Net adjustments		(108.6	)		(52.0	)		(10.9	)		43.1			(128.4	)

Net cash used in operating activities		(174.0	)		(3.9	)		(20.5	)		—			(198.4	)

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		61.4			66.5			1.3			(173.6	)		(44.4	)

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		113.1			(51.5	)		(50.7	)		173.6			184.5

Net increase (decrease) in cash and cash equivalents		0.5			11.1			(69.9	)		—			(58.3	)
Effect of exchange rates		—			—			5.6			—			5.6

Net change in cash and cash equivalents		0.5			11.1			(64.3	)		—			(52.7	)
Beginning cash and cash equivalents		—			4.6			110.3			—			114.9

Ending cash and cash equivalents	$	0.5		$	15.7		$	46.0		$	—		$	62.2

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2009

(In millions)


	Parent			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net loss	$	(189.3	)	$	(12.7	)	$	(26.1	)	$	35.7		$	(192.4	)

Non-cash expenses		60.8			50.3			4.0			—			115.1
Equity in loss of subsidiaries		20.3			15.4			—			(35.7	)		—
Changes in working capital		50.5			296.1			15.4			—			362.0

Net adjustments		131.6			361.8			19.4			(35.7	)		477.1

Net cash provided by (used in) operating activities		(57.7	)		349.1			(6.7	)		—			284.7

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		37.1			(332.6	)		34.4			293.2			32.1

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		20.5			(19.5	)		(28.7	)		(293.2	)		(320.9	)

Net decrease in cash and cash equivalents		(0.1	)		(3.0	)		(1.0	)		—			(4.1	)
Effect of exchange rates		—			—			10.1			—			10.1

Net change in cash and cash equivalents		(0.1	)		(3.0	)		9.1			—			6.0
Beginning cash and cash equivalents		0.1			7.6			101.2			—			108.9

Ending cash and cash equivalents	$	—		$	4.6		$	110.3		$	—		$	114.9

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2011

(In millions)


	Parent		Guarantor		Non-guarantor		Eliminations			Consolidated
ASSETS
Current Assets	$	1,399.6	$	1,089.2	$	225.9	$	(1,362.0	)	$	1,352.7
Property, plant and equipment net of accumulated depreciation		—		419.3		71.8		—			491.1
Other noncurrent assets		798.1		1,480.5		15.4		(2,074.6	)		219.4

Total Assets	$	2,197.7	$	2,989.0	$	313.1	$	(3,436.6	)	$	2,063.2

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities	$	44.5	$	1,781.6	$	84.4	$	(1,363.2	)	$	547.3
Noncurrent liabilities		2,129.8		484.4		31.0		(1,160.6	)		1,484.6
Ryerson Inc. stockholders' equity		23.4		723.0		189.8		(912.8	)		23.4
Noncontrolling interest		—		—		7.9		—			7.9

Total Liabilities and Equity	$	2,197.7	$	2,989.0	$	313.1	$	(3,436.6	)	$	2,063.2

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2010

(In millions)


	Parent		Guarantor		Non-guarantor		Eliminations			Consolidated
ASSETS
Current Assets	$	1,668.7	$	1,142.0	$	239.4	$	(1,629.3	)	$	1,420.8
Property, plant and equipment net of accumulated depreciation		—		425.8		64.6		—			490.4
Other noncurrent assets		806.4		1,731.3		13.6		(2,401.2	)		150.1

Total Assets	$	2,475.1	$	3,299.1	$	317.6	$	(4,030.5	)	$	2,061.3

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities	$	19.2	$	2,089.7	$	78.5	$	(1,629.3	)	$	558.1
Noncurrent liabilities		2,393.4		462.1		24.0		(1,453.7	)		1,425.8
Ryerson Inc. stockholders' equity		62.5		747.3		200.2		(947.5	)		62.5
Noncontrolling interest		—		—		14.9		—			14.9

Total Liabilities and Equity	$	2,475.1	$	3,299.1	$	317.6	$	(4,030.5	)	$	2,061.3