NOTE 13: CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

On October 10, 2012, Ryerson and JT Ryerson issued the 2017 and 2018 Notes. The 2017 Notes are fully and unconditionally guaranteed on a senior secured basis and the 2018 Notes are fully and unconditionally guaranteed on a senior unsecured basis by all of our existing and future domestic subsidiaries that are co-borrowers or guarantee obligations under the Ryerson Credit Facility. Each guarantor of the 2017 and 2018 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.

The following are condensed consolidating financial information of Ryerson and its guarantor and non-guarantor subsidiaries and affiliates as of September 30, 2013 and December 31, 2012 and for the three-month and nine-month periods ended September 30, 2013 and 2012:

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2013

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non- guarantor			Eliminations			Consolidated
Net sales	$	—		$	726.2		$	596.5		$	116.3		$	(579.2	)	$	859.8
Cost of materials sold		—			599.2			585.7			99.0			(579.2	)		704.7

Gross profit		—			127.0			10.8			17.3			—			155.1
Warehousing, delivery, selling, general and administrative		1.3			91.3			6.3			20.7			—			119.6
Impairment charge on goodwill		—			1.1			—			—			—			1.1

Operating profit (loss)		(1.3	)		34.6			4.5			(3.4	)		—			34.4
Other income and (expense), net		—			—			—			(1.1	)		—			(1.1	)
Interest and other expense on debt		(3.3	)		(23.1	)		—			(0.7	)		—			(27.1	)
Intercompany transactions:
Interest expense on intercompany loans		(7.4	)		—			—			—			7.4			—
Interest income on intercompany loans		—			5.5			1.9			—			(7.4	)		—

Income (loss) before income taxes		(12.0	)		17.0			6.4			(5.2	)		—			6.2
Provision (benefit) for income taxes		(8.6	)		12.2			5.3			(6.0	)		—			2.9
Equity in earnings of subsidiaries		(7.7	)		(4.7	)		(4.1	)		—			16.5			—

Net income		4.3			9.5			5.2			0.8			(16.5	)		3.3
Less: Net loss attributable to noncontrolling interest		—			—			—			(1.0	)		—			(1.0	)

Net income attributable to Ryerson Inc.	$	4.3		$	9.5		$	5.2		$	1.8		$	(16.5	)	$	4.3

Comprehensive income	$	9.8		$	10.3		$	5.7		$	4.7		$	(21.9	)	$	8.6
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—			(1.2	)		—			(1.2	)

Comprehensive income attributable to Ryerson Inc.	$	9.8		$	10.3		$	5.7		$	5.9		$	(21.9	)	$	9.8

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)


	Parent			Joseph T. Ryerson			Guarantor		Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	811.5		$	639.9	$	131.9		$	(621.1	)	$	962.2
Cost of materials sold		—			661.7			628.0		113.1			(621.1	)		781.7

Gross profit		—			149.8			11.9		18.8			—			180.5
Warehousing, delivery, selling, general and administrative		1.0			98.2			6.6		21.3			—			127.1

Operating profit (loss)		(1.0	)		51.6			5.3		(2.5	)		—			53.4
Other income and (expense), net		—			0.1			—		(1.6	)		—			(1.5	)
Interest and other expense on debt		(19.0	)		(0.1	)		—		(0.7	)		—			(19.8	)
Intercompany transactions:
Interest expense on intercompany loans		(13.9	)		(10.3	)		—		—			24.2			—
Interest income on intercompany loans		—			—			24.2		—			(24.2	)		—

Income (loss) before income taxes		(33.9	)		41.3			29.5		(4.8	)		—			32.1
Provision for income taxes		—			0.4			—		0.1			—			0.5
Equity in (earnings) loss of subsidiaries		(67.4	)		(8.7	)		1.6		—			74.5			—

Net income (loss)		33.5			49.6			27.9		(4.9	)		(74.5	)		31.6
Less: Net loss attributable to noncontrolling interest		—			—			—		(1.9	)		—			(1.9	)

Net income (loss) attributable to Ryerson Inc.	$	33.5		$	49.6		$	27.9	$	(3.0	)	$	(74.5	)	$	33.5

Comprehensive income	$	44.6		$	49.8		$	31.2	$	2.3		$	(85.4	)	$	42.5
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—		(2.1	)		—			(2.1	)

Comprehensive income attributable to Ryerson Inc.	$	44.6		$	49.8		$	31.2	$	4.4		$	(85.4	)	$	44.6

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	2,241.9		$	1,800.0		$	360.7		$	(1,744.8	)	$	2,657.8
Cost of materials sold		—			1,857.4			1,766.2			309.6			(1,744.8	)		2,188.4

Gross profit		—			384.5			33.8			51.1			—			469.4
Warehousing, delivery, selling, general and administrative		3.8			278.9			17.5			62.5			—			362.7
Restructuring and other charges		—			—			—			2.1						2.1
Impairment charges on fixed assets and goodwill		—			2.0			—			6.8			—			8.8

Operating profit (loss)		(3.8	)		103.6			16.3			(20.3	)		—			95.8
Other income and (expense), net		—			0.2			—			1.9			—			2.1
Interest and other expense on debt		(11.9	)		(69.2	)		—			(2.2	)		—			(83.3	)
Intercompany transactions:
Interest expense on intercompany loans		(19.4	)		—			—			—			19.4			—
Interest income on intercompany loans		—			13.6			5.8			—			(19.4	)		—

Income (loss) before income taxes		(35.1	)		48.2			22.1			(20.6	)		—			14.6
Provision (benefit) for income taxes		(13.0	)		18.3			8.3			(7.4	)		—			6.2
Equity in earnings of subsidiaries		(35.4	)		(14.3	)		(0.2	)		—			49.9			—

Net income (loss)		13.3			44.2			14.0			(13.2	)		(49.9	)		8.4
Less: Net loss attributable to noncontrolling interest		—			—			—			(4.9	)		—			(4.9	)

Net income (loss) attributable to Ryerson Inc.	$	13.3		$	44.2		$	14.0		$	(8.3	)	$	(49.9	)	$	13.3

Comprehensive income (loss)	$	11.8		$	46.7		$	15.8		$	(19.1	)	$	(48.3	)	$	6.9
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—			(4.9	)		—			(4.9	)

Comprehensive income (loss) attributable to Ryerson Inc.	$	11.8		$	46.7		$	15.8		$	(14.2	)	$	(48.3	)	$	11.8

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)


	Parent			Joseph T. Ryerson			Guarantor		Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	2,684.6		$	2,249.9	$	420.5		$	(2,180.6	)	$	3,174.4
Cost of materials sold		—			2,235.3			2,206.2		358.2			(2,180.6	)		2,619.1

Gross profit		—			449.3			43.7		62.3			—			555.3
Warehousing, delivery, selling, general and administrative		3.5			305.6			19.3		61.6			—			390.0
Impairment charge on fixed assets		—			0.9			—		—			—			0.9

Operating profit (loss)		(3.5	)		142.8			24.4		0.7			—			164.4
Other income and (expense), net		0.3			0.2			—		(1.5	)		—			(1.0	)
Interest and other expense on debt		(56.4	)		(0.1	)		—		(2.4	)		—			(58.9	)
Intercompany transactions:
Interest expense on intercompany loans		(38.5	)		(30.1	)		—		—			68.6			—
Interest income on intercompany loans		—			—			68.6		—			(68.6	)		—

Income (loss) before income taxes		(98.1	)		112.8			93.0		(3.2	)		—			104.5
Provision for income taxes		—			4.0			2.0		0.4			—			6.4
Equity in (earnings) loss of subsidiaries		(200.4	)		(38.0	)		1.0		—			237.4			—

Net income (loss)		102.3			146.8			90.0		(3.6	)		(237.4	)		98.1
Less: Net loss attributable to noncontrolling interest		—			—			—		(4.2	)		—			(4.2	)

Net income attributable to Ryerson Inc.	$	102.3		$	146.8		$	90.0	$	0.6		$	(237.4	)	$	102.3

Comprehensive income	$	115.2		$	147.5		$	94.6	$	2.9		$	(249.8	)	$	110.4
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—		(4.8	)		—			(4.8	)

Comprehensive income attributable to Ryerson Inc.	$	115.2		$	147.5		$	94.6	$	7.7		$	(249.8	)	$	115.2

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	13.3		$	44.2		$	14.0		$	(13.2	)	$	(49.9	)	$	8.4

Non-cash expenses		(0.1	)		37.8			2.5			13.1			—			53.3
Equity in earnings of subsidiaries		(35.4	)		(14.3	)		(0.2	)		—			49.9			—
Changes in working capital		616.5			1,038.0			(1,640.1	)		11.9			—			26.3

Net adjustments		581.0			1,061.5			(1,637.8	)		25.0			49.9			79.6

Net cash provided by (used in) operating activities		594.3			1,105.7			(1,623.8	)		11.8			—			88.0

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		493.7			(614.5	)		1,444.2			(2.6	)		(1,333.7	)		(12.9	)

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		(1,080.5	)		(495.9	)		181.0			(0.8	)		1,333.7			(62.5	)

Net increase (decrease) in cash and cash equivalents		7.5			(4.7	)		1.4			8.4			—			12.6
Effect of exchange rates		—			—			(0.1	)		(2.6	)		—			(2.7	)

Net change in cash and cash equivalents		7.5			(4.7	)		1.3			5.8			—			9.9
Beginning cash and cash equivalents		0.2			15.3			1.9			53.4			—			70.8

Ending cash and cash equivalents	$	7.7		$	10.6		$	3.2		$	59.2		$	—		$	80.7

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	102.3		$	146.8		$	90.0		$	(3.6	)	$	(237.4	)	$	98.1

Non-cash expenses		18.3			12.3			2.2			5.5			—			38.3
Equity in (earnings) loss of subsidiaries		(200.4	)		(38.0	)		1.0			—			237.4			—
Changes in working capital		9.8			(83.7	)		20.3			3.3			—			(50.3	)

Net adjustments		(172.3	)		(109.4	)		23.5			8.8			237.4			(12.0	)

Net cash provided by (used in) operating activities		(70.0	)		37.4			113.5			5.2			—			86.1

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		(2.2	)		(26.1	)		(143.1	)		1.9			140.0			(29.5	)

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		69.5			(11.0	)		29.2			(13.2	)		(140.0	)		(65.5	)

Net increase (decrease) in cash and cash equivalents		(2.7	)		0.3			(0.4	)		(6.1	)		—			(8.9	)
Effect of exchange rates		—			(0.2	)		—			1.8			—			1.6

Net change in cash and cash equivalents		(2.7	)		0.1			(0.4	)		(4.3	)		—			(7.3	)
Beginning cash and cash equivalents		3.0			14.5			1.5			42.3			—			61.3

Ending cash and cash equivalents	$	0.3		$	14.6		$	1.1		$	38.0		$	—		$	54.0

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

SEPTEMBER 30, 2013

(In millions)


	Parent			Joseph T. Ryerson		Guarantor		Non-guarantor			Eliminations			Consolidated
ASSETS
Current assets	$	18.4		$	1,159.4	$	121.2	$	236.5		$	(277.8	)	$	1,257.7
Property, plant and equipment net of accumulated depreciation		—			393.8		3.2		64.5			—			461.5
Other noncurrent assets		978.9			934.8		371.8		7.2			(2,079.2	)		213.5

Total Assets	$	997.3		$	2,488.0	$	496.2	$	308.2		$	(2,357.0	)	$	1,932.7

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	245.4		$	290.0	$	160.7	$	98.9		$	(277.9	)	$	517.1
Noncurrent liabilities		1,025.0			1,331.9		0.8		30.5			(699.0	)		1,689.2
Redeemable noncontrolling interest		—			—		—		1.3			—			1.3
Ryerson Inc. stockholders’ equity		(273.1	)		866.1		334.7		179.3			(1,380.1	)		(273.1	)
Noncontrolling interest		—			—		—		(1.8	)		—			(1.8	)

Total Liabilities and Equity	$	997.3		$	2,488.0	$	496.2	$	308.2		$	(2,357.0	)	$	1,932.7

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2012

(In millions)


	Parent			Joseph T. Ryerson		Guarantor		Non-guarantor		Eliminations			Consolidated
ASSETS
Current assets	$	381.7		$	2,215.9	$	63.0	$	214.5	$	(1,620.8	)	$	1,254.3
Property, plant and equipment net of accumulated depreciation		—			410.8		3.1		69.5		—			483.4
Other noncurrent assets		944.2			319.2		1,818.6		14.4		(2,869.9	)		226.5

Total Assets	$	1,325.9		$	2,945.9	$	1,884.7	$	298.4	$	(4,490.7	)	$	1,964.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	16.5		$	254.3	$	1,738.3	$	67.7	$	(1,620.8	)	$	456.0
Noncurrent liabilities		1,594.3			1,872.2		0.8		32.8		(1,711.4	)		1,788.7
Redeemable noncontrolling interest		—			—		—		1.7		—			1.7
Ryerson Inc. stockholders’ equity		(284.9	)		819.4		145.6		193.5		(1,158.5	)		(284.9	)
Noncontrolling interest		—			—		—		2.7		—			2.7

Total Liabilities and Equity	$	1,325.9		$	2,945.9	$	1,884.7	$	298.4	$	(4,490.7	)	$	1,964.2