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10-Q 1 d699767d10q.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2014

¨	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 333-189642

RYERSON INC.

(Exact name of registrant as specified in its charter)

DELAWARE

36-3425828

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

227 W. Monroe, 27^th Floor

Chicago, Illinois 60606

(Address of principal executive offices)

(312) 292-5000

(Registrant’s telephone number, including area code)

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 ¨ No ¨

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of May 5, 2014 there were 100 shares of Common Stock, par value $0.01 per share, outstanding.

RYERSON INC. AND SUBSIDIARY COMPANIES

INDEX


		PAGE NO.

Part I. Financial Information:

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)—Three Months Ended March 31, 2014 and 2013		3

	Condensed Consolidated Statements of Cash Flows (Unaudited)—Three Months Ended March 31, 2014 and 2013		4

	Condensed Consolidated Balance Sheets—March 31, 2014 (Unaudited) and December 31, 2013		5

	Notes to Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28

Item 4.	Controls and Procedures		28

Part II. Other Information:

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors		29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 3.	Defaults Upon Senior Securities		32

Item 4.	Mine Safety Disclosures		32

Item 5.	Other Information		32

Item 6.	Exhibits		30

Signature			31

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

RYERSON INC. AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)


	Three Months Ended March 31,
	2014			2013
Net sales	$	874.4		$	891.1
Cost of materials sold		726.7			735.3

Gross profit		147.7			155.8
Warehousing, delivery, selling, general and administrative		117.8			121.7
Impairment charge on fixed assets		—			0.9

Operating profit		29.9			33.2
Other income and (expense), net		2.0			1.2
Interest and other expense on debt		(27.4	)		(28.4	)

Income before income taxes		4.5			6.0
Provision for income taxes		3.5			1.1

Net income		1.0			4.9
Less: Net loss attributable to noncontrolling interest		(0.9	)		(2.2	)

Net income attributable to Ryerson Inc.	$	1.9		$	7.1

Comprehensive income (loss)	$	(6.2	)	$	6.1
Less: Comprehensive loss attributable to noncontrolling interest		(1.1	)		(2.1	)

Comprehensive income (loss) attributable to Ryerson Inc.	$	(5.1	)	$	8.2

See Notes to Condensed Consolidated Financial Statements

RYERSON INC. AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)


	Three Months Ended March 31,
	2014			2013
Operating activities:
Net income	$	1.0		$	4.9

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10.9			11.3
Deferred income taxes		5.4			0.8
Provision for allowances, claims and doubtful accounts		0.9			0.9
Impairment charge on fixed assets		—			0.9
Other items		(0.1	)		—
Change in operating assets and liabilities, net of the effects of acquisitions:
Receivables		(53.9	)		(41.5	)
Inventories		25.1			(6.0	)
Other assets		0.2			(0.1	)
Accounts payable		30.0			54.5
Accrued liabilities		21.9			17.3
Accrued taxes payable/receivable		(3.1	)		(0.9	)
Deferred employee benefit costs		(13.3	)		(12.4	)

Net adjustments		24.0			24.8

Net cash provided by operating activities		25.0			29.7

Investing activities:
Increase in restricted cash		—			(0.1	)
Capital expenditures		(3.4	)		(4.0	)
Proceeds from sales of property, plant and equipment		0.1			0.2

Net cash used in investing activities		(3.3	)		(3.9	)

Financing activities:
Net repayments of short-term borrowings		(19.8	)		(41.1	)
Long-term debt issuance costs		—			(0.2	)
Net increase in book overdrafts		25.0			19.9
Principal payments on capital lease obligation		(0.2	)		—

Net cash provided by (used in) financing activities		5.0			(21.4	)

Net increase in cash and cash equivalents		26.7			4.4
Effect of exchange rate changes on cash and cash equivalents		(3.7	)		(1.2	)

Net change in cash and cash equivalents		23.0			3.2
Cash and cash equivalents—beginning of period		74.0			70.8

Cash and cash equivalents—end of period	$	97.0		$	74.0

Supplemental disclosures:
Cash paid during the period for:
Interest paid to third parties	$	3.5		$	4.6
Income taxes, net		0.4			0.9
Noncash investing activities:
Asset additions under capital leases	$	2.7		$	—

See Notes to Condensed Consolidated Financial Statements.

RYERSON INC. AND SUBSIDIARY COMPANIES

Condensed Consolidated Balance Sheets

(In millions, except shares)


	March 31, 2014			December 31, 2013
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	97.0		$	74.0
Restricted cash		1.8			1.8
Receivables less provision for allowances, claims and doubtful accounts of $6.3 in 2014 and $5.4 in 2013		437.1			385.4
Inventories		706.2			733.0
Prepaid expenses and other current assets		49.2			47.7

Total current assets		1,291.3			1,241.9
Property, plant, and equipment, at cost		652.9			650.5
Less: Accumulated depreciation		205.2			197.8

Property, plant and equipment, net		447.7			452.7
Deferred income taxes		47.4			49.7
Other intangible assets		49.7			51.2
Goodwill		92.0			92.0
Deferred charges and other assets		28.3			30.5

Total assets	$	1,956.4		$	1,918.0

Liabilities
Current liabilities:
Accounts payable	$	261.6		$	207.2
Salaries, wages and commissions		32.0			33.0
Deferred income taxes		121.1			121.0
Other accrued liabilities		73.9			54.0
Short-term debt		32.5			32.3
Current portion of deferred employee benefits		13.5			13.6

Total current liabilities		534.6			461.1
Long-term debt		1,242.5			1,262.5
Deferred employee benefits		306.3			320.8
Taxes and other credits		22.4			16.8

Total liabilities		2,105.8			2,061.2
Commitments and contingencies
Redeemable noncontrolling interest		1.2			1.3
Equity
Ryerson Inc. stockholders’ equity (deficit):
Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issued at 2014 and 2013		—			—
Capital in excess of par value		64.7			64.7
Accumulated deficit		(14.9	)		(16.8	)
Accumulated other comprehensive loss		(196.9	)		(189.9	)

Total Ryerson Inc. stockholders’ equity (deficit)		(147.1	)		(142.0	)
Noncontrolling interest		(3.5	)		(2.5	)

Total equity (deficit)		(150.6	)		(144.5	)

Total liabilities and equity	$	1,956.4		$	1,918.0

See Notes to Condensed Consolidated Financial Statements.

RYERSON INC. AND SUBSIDIARY COMPANIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1: FINANCIAL STATEMENTS

Ryerson Inc. (“Ryerson”), a Delaware corporation, is a wholly-owned subsidiary of Ryerson Holding Corporation (“Ryerson Holding”). Ryerson Holding is 100% owned by affiliates of Platinum Equity, LLC (“Platinum”).

Ryerson conducts materials distribution operations in the United States through its wholly-owned direct subsidiary Joseph T. Ryerson & Son, Inc. (“JT Ryerson”), a Delaware corporation, in Canada through its indirect wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”) and in Mexico through its indirect wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to our North American operations, we conduct materials distribution operations in China through Ryerson China Limited (“Ryerson China”), a company in which we have a 50% direct ownership percentage and an additional 50% interest through affiliates of Ryerson Holding, and in Brazil through Açofran Aços e Metais Ltda (“Açofran”), a company in which we have a 50% direct ownership percentage since February 17, 2012. Unless the context indicates otherwise, Ryerson, JT Ryerson, Ryerson Canada, Ryerson China, Ryerson Mexico and Açofran, together with their subsidiaries, are collectively referred to herein as “we,” “us,” “our,” or the “Company.”

The following table shows our percentage of sales by major product lines for the three months ended March 31, 2014 and 2013, respectively:


	Three Months Ended March 31,
Product Line	2014			2013
Carbon Steel Flat		26	%		25	%
Carbon Steel Plate		11			12
Carbon Steel Long		17			15
Stainless Steel Flat		15			16
Stainless Steel Plate		4			4
Stainless Steel Long		3			4
Aluminum Flat		14			14
Aluminum Plate		3			3
Aluminum Long		4			4
Other		3			3

Total		100	%		100	%

Results of operations for any interim period are not necessarily indicative of results of any other periods or for the year. The financial statements as of March 31, 2014 and for the three-month periods ended March 31, 2014 and 2013 are unaudited, but in the opinion of management include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The year-end condensed consolidated balance sheet data contained in this report was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013 -11 was issued to promote consistency among financial statement issuers and amends Accounting Standards Codification (“ASC”) 740, “Income Taxes,” to provide clarification of the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. According to ASU 2013-11, an unrecognized tax benefit or a portion of an unrecognized tax benefit should be presented in the financial statements as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. The revised guidance is effective for interim and annual periods beginning after December 15, 2013 with early adoption permitted. We adopted this guidance for our fiscal year beginning January 1, 2014. The adoption did not have a material impact on our financial statements.

In April 2014, the FASB issued ASU 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This update amends the criteria for reporting discontinued operations to, among other things, raise the threshold for disposals to qualify as discontinued operations. Under the revised standard, a discontinued operation must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results. The revised standard will also allow an entity to have certain continuing cash flows or involvement with the component after the disposal. This update is effective for interim and annual reporting periods, beginning after December 15, 2014, with early adoption permitted. We will adopt this guidance for our fiscal year beginning January 1, 2015. We do not expect the adoption to have a material impact on our financial statements.

NOTE 3: INVENTORIES

The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. Interim LIFO calculations are based on actual inventory levels.

Inventories, at stated LIFO value, were classified at March 31, 2014 and December 31, 2013 as follows:


	March 31, 2014		December 31, 2013
	(In millions)
In process and finished products	$	706.2	$	733.0

If current cost had been used to value inventories, such inventories would have been $58 million and $67 million lower than reported at March 31, 2014 and December 31, 2013, respectively. Approximately 89% and 91% of inventories are accounted for under the LIFO method at March 31, 2014 and December 31, 2013, respectively. Non-LIFO inventories consist primarily of inventory at our foreign facilities using the weighted-average cost and the specific cost methods. Substantially all of our inventories consist of finished products.

The Company has consignment inventory at certain customer locations, which totaled $11.1 million and $11.7 million at March 31, 2014 and December 31, 2013, respectively.

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $92.0 million at March 31, 2014. Pursuant to ASC 350, “Intangibles – Goodwill and Other,” we review the recoverability of goodwill annually as of October 1 or whenever significant events or changes occur which might impair the recovery of recorded amounts. The most recently completed impairment test of goodwill was performed as of October 1, 2013 and it was determined that no impairment existed. Other intangible assets with finite useful lives continue to be amortized over their useful lives. We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

NOTE 5: LONG-TERM DEBT

Long-term debt consisted of the following at March 31, 2014 and December 31, 2013:


	March 31, 2014		December 31, 2013
	(In millions)
Ryerson Secured Credit Facility	$	342.5	$	369.1
9% Senior Secured Notes due 2017		600.0		600.0
11¹/₄% Senior Notes due 2018		300.0		300.0
Foreign debt		32.5		25.7

Total debt		1,275.0		1,294.8
Less:
Short-term credit facility borrowings		—		6.6
Short-term foreign debt		32.5		25.7

Total long-term debt	$	1,242.5	$	1,262.5

Ryerson Credit Facility

On April 3, 2013, Ryerson amended and restated its $1.35 billion revolving credit facility agreement (as amended and restated, the “Ryerson Credit Facility”), to, among other things, extend the maturity date to the earlier of (a) April 3, 2018 or (b) August 16, 2017 (60 days prior to the scheduled maturity date of the 9% Senior Secured Notes due October 15, 2017 (“2017 Notes”)), if the 2017 Notes are then outstanding. At March 31, 2014, Ryerson had $342.5 million of outstanding borrowings, $27 million of letters of credit issued and $292 million available under the $1.35 billion Ryerson Credit Facility compared to $369.1 million of outstanding borrowings, $27 million of letters of credit issued and $234 million available at December 31, 2013. Total credit availability is limited by the amount of eligible accounts receivable and inventory pledged as collateral under the agreement insofar as Ryerson is subject to a borrowing base comprised of the aggregate of these two amounts, less applicable reserves. Eligible accounts receivable, at any date of determination, are comprised of the aggregate value of all accounts directly created by a borrower in the ordinary course of business

arising out of the sale of goods or the rendition of services, each of which has been invoiced, with such receivables adjusted to exclude various ineligible accounts, including, among other things, those to which a borrower does not have sole and absolute title and accounts arising out of a sale to an employee, officer, director, or affiliate of a borrower. Eligible inventory, at any date of determination, is comprised of the aggregate value of all inventory owned by a borrower, with such inventory adjusted to exclude various ineligible inventory, including, among other things, any inventory that is classified as “supplies” or is unsaleable in the ordinary course of business and 50% of the value of any inventory that (i) has not been sold or processed within a 180 day period and (ii) which is calculated to have more than 365 days of supply based upon the immediately preceding 6 months consumption. The weighted average interest rate on the borrowings under the Ryerson Credit Facility was 2.2 percent and 2.1 percent at March 31, 2014 and December 31, 2013, respectively.

The total $1.35 billion revolving credit facility has an allocation of $1.215 billion to Ryerson’s subsidiaries in the United States and an allocation of $135 million to Ryerson Canada. Amounts outstanding under the U.S. facility bear interest at a rate determined by reference to the base rate (Bank of America’s prime rate) or a LIBOR rate or, for the Canadian facility a rate determined by reference to the Canadian base rate (Bank of America-Canada Branch’s “Base Rate” for loans in U.S. Dollars in Canada) or the BA rate (average annual rate applicable to Canadian Dollar bankers’ acceptances) or a LIBOR rate and the Canadian prime rate (Bank of America-Canada Branch’s “Prime Rate.”). The spread over the base rate and Canadian prime rate is between 0.50% and 1.00% and the spread over the LIBOR and for the bankers’ acceptances is between 1.50% and 2.00%, depending on the amount available to be borrowed. Overdue amounts and all amounts owed during the existence of a default bear interest at 2% above the rate otherwise applicable thereto. The Company also pays commitment fees on amounts not borrowed at a rate between 0.25% and 0.375% depending on the average borrowings as a percentage of the total $1.35 billion agreement during a rolling three month period.

Borrowings under the Ryerson Credit Facility are secured by (i) in the case of the U.S. facility, first-priority liens on all of the inventory, accounts receivable, lockbox accounts (excluding any proceeds therein of collateral securing the 2017 Notes on a first priority lien basis) and related U.S. assets of Ryerson, the U.S. subsidiary borrowers and certain other U.S. subsidiaries of Ryerson that act as guarantors, and (ii) in the case of the Canadian facility, the assets securing the U.S. Facility and also first priority liens on all of the inventory, accounts receivable, lockbox accounts and related assets of Ryerson’s Canadian subsidiary borrower and its Canadian subsidiaries that act as guarantors thereof.

The Ryerson Credit Facility contains covenants that, among other things, restrict Ryerson and its subsidiaries with respect to the incurrence of debt, the creation of liens, transactions with affiliates, mergers and consolidations, sales of assets and acquisitions. The Ryerson Credit Facility also requires that, if availability under such facility falls below a certain level, the Company maintain a minimum fixed charge coverage ratio as of the end of each calendar month.

The Ryerson Credit Facility contains events of default with respect to, among other things, default in the payment of principal when due or the payment of interest, fees and other amounts due thereunder after a specified grace period, material misrepresentations, failure to perform certain specified covenants, certain bankruptcy events, the invalidity of certain security agreements or guarantees, material judgments and the occurrence of a change of control of Ryerson. If such an event of default occurs, the lenders under the Ryerson Credit Facility will be entitled to various remedies, including acceleration of amounts outstanding under the Ryerson Credit Facility and all other actions permitted to be taken by secured creditors.

The lenders under the Ryerson Credit Facility have the ability to reject a borrowing request if any event, circumstance or development has occurred that has had or could reasonably be expected to have a material adverse effect on Ryerson. If Ryerson or any significant subsidiaries of the other borrowers becomes insolvent or commences bankruptcy proceedings, all amounts borrowed under the Ryerson Credit Facility will become immediately due and payable.

Proceeds from borrowings under the Ryerson Credit Facility and repayments of borrowings thereunder that are reflected in the Consolidated Statements of Cash Flows represent borrowings under the Company’s revolving credit agreement with original maturities greater than three months. Net proceeds (repayments) under the Ryerson Credit Facility represent borrowings under the Ryerson Credit Facility with original maturities less than three months.

2017 and 2018 Notes

On October 10, 2012, Ryerson and its wholly owned subsidiary, Joseph T. Ryerson & Son, Inc., issued $600 million in aggregate principal amount of the 2017 Notes and $300 million in aggregate principal amount of the 11¹/₄% Senior Notes due 2018 (the “2018 Notes” and, together with the 2017 Notes, the “2017 and 2018 Notes”). The 2017 Notes bear interest at a rate of 9% per annum. The 2018 Notes bear interest at a rate of 11.25% per annum. 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.

The 2017 Notes and related guarantees are secured by a first-priority lien on substantially all of our and our guarantors’ present and future assets located in the United States (other than receivables, inventory, related general intangibles, certain other assets and proceeds thereof), subject to certain exceptions and customary permitted liens. The 2017 Notes and related guarantees are secured on a second-priority basis by a lien on the assets that secure our obligations under the Ryerson Credit Facility. The 2018 Notes are not secured. The 2017 and 2018 Notes contain customary covenants that, among other things, limit, subject to certain exceptions, our ability, and the ability of our restricted subsidiaries, to incur additional indebtedness, pay dividends on our capital stock or repurchase our capital stock, make investments, sell assets, engage in acquisitions, mergers or consolidations or create liens or use assets as security in other transactions. Subject to certain exceptions, Ryerson may only pay dividends to Ryerson Holding to the extent of 50% of future net income, once prior losses are offset.

The 2017 Notes will become redeemable by the Company, in whole or in part, at any time on or after April 15, 2015 (the “2017 Redemption Date”) and the 2018 Notes will become redeemable, in whole or in part, at any time on or after October 15, 2015 (the “2018 Redemption Date”), in each case at specified redemption prices. The 2017 and 2018 Notes are redeemable prior to such dates, as applicable, at a redemption price equal to 100% of the principal amount, together with accrued and unpaid interest, if any, to the redemption date, plus a make-whole premium. Additionally, we may redeem up to 35% of each of the 2017 and 2018 Notes prior to the 2017 Redemption Date or 2018 Redemption Date, as applicable, with net cash proceeds from certain equity offerings at a price equal to (a) 109.000%, with respect to the 2017 Notes and (b) 111.250%, with respect to the 2018 Notes, of the principal amount thereof, plus any accrued and unpaid interest. If a change of control occurs, Ryerson must offer to purchase the 2017 and 2018 Notes at 101% of their principal amount, plus accrued and unpaid interest.

Pursuant to registration rights agreements relating to the 2017 and 2018 Notes, we agreed to file with the SEC by July 7, 2013, registration statements with respect to offers to exchange each of the 2017 and 2018 Notes for new issues of our debt securities registered under the Securities Act, with terms substantially identical to those of the 2017 and 2018 Notes and to consummate such exchange offers no later than October 5, 2013. Ryerson completed the exchange offer on September 10, 2013. As a result of completing the exchange offer, Ryerson satisfied its obligation under the registration rights agreements covering each of the 2017 and 2018 Notes.

Foreign Debt

At March 31, 2014, Ryerson China’s total foreign borrowings were $32.5 million, which were owed to banks in Asia at a weighted average interest rate of 4.6% and secured by inventory and property, plant and equipment. At December 31, 2013, Ryerson China’s total foreign borrowings were $25.7 million, which were owed to banks in Asia at a weighted average interest rate of 4.3% and secured by inventory and property, plant and equipment.

Availability under the foreign credit lines was $16 million and $22 million at March 31, 2014 and December 31, 2013, respectively. Letters of credit issued by our foreign subsidiaries totaled $3 million and $4 million at March 31, 2014 and December 31, 2013, respectively.

NOTE 6: EMPLOYEE BENEFITS

The following table summarizes the components of net periodic benefit cost for the three month periods ended March 31, 2014 and 2013 for the Ryerson pension plans and postretirement benefits other than pension:


	Three Months Ended March 31,
	Pension Benefits						Other Benefits
	2014			2013			2014			2013
	(In millions)
Components of net periodic benefit cost
Service cost	$	—		$	1		$	—		$	—
Interest cost		10			9			1			1
Expected return on assets		(12	)		(11	)		—			—
Recognized actuarial net (gain) loss		3			3			(2	)		(2	)

Net periodic benefit cost (credit)	$	1		$	2		$	(1	)	$	(1	)

Contributions

The Company has contributed $10.6 million to the pension plan fund through the three months ended March 31, 2014 and anticipates that it will have a minimum required pension contribution funding of approximately $57 million for the remaining nine months of 2014.

NOTE 7: COMMITMENTS AND CONTINGENCIES

From time to time, we are named as a defendant in legal actions incidental to our ordinary course of business. We do not believe that the resolution of these claims will have a material adverse effect on our financial position, results of operations or cash flows. We maintain liability insurance coverage to assist in protecting our assets from losses arising from or related to activities associated with business operations.

On December 27, 2011, Nancy Hoffman, Mark Hoffman, and Karen Hoffman (collectively, the “plaintiffs”) filed a sixth amended complaint in the Circuit Court of Cook County, Illinois naming JT Ryerson and three other entities as defendants (collectively, the “defendants”) in a lawsuit (Nancy Hoffman, et.al. v. Dorlan Crane, et.al.). That complaint asserted negligence and loss of consortium counts against the defendants for personal injuries allegedly suffered by plaintiffs resulting from a motor vehicle accident. On February 10, 2012, a jury returned a verdict against the defendants and awarded damages totaling $27.7 million for which the defendants are purportedly jointly and severally liable. On August 28, 2012, our post-trial motion was denied. On September 24, 2012, we filed our Notice of Appeal to the Appellate Court of Illinois, First Judicial District. That appeal is now fully briefed and we are awaiting either oral argument (which has been requested) or a decision. Any potential loss ranges from zero to $27.7 million plus interest. We believe that any loss will be covered by insurance. At this time, the Company cannot predict the likely outcome of this matter.

In October 2011, the United States Environmental Protection Agency named us as one of more than 100 businesses that may be a potentially responsible party for the Portland Harbor Superfund Site (“Portland Harbor”). We do not currently have sufficient information available to us to determine the total cost of any required investigation or remediation of the Portland Harbor site and therefore, management cannot predict the ultimate outcome of this matter or estimate a range of potential loss at this time.

There are other various claims and pending actions against the Company. The amount of liability, if any, for those claims and actions at March 31, 2014 is not determinable but, in the opinion of management, such liability, if any, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 8: DERIVATIVES AND FAIR VALUE MEASUREMENTS

Derivatives

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk, foreign currency risk, and commodity price risk. Interest rate swaps are entered into to manage interest rate risk associated with the Company’s floating-rate borrowings. We use foreign currency exchange contracts to hedge our Canadian subsidiaries’ variability in cash flows from the forecasted payment of currencies other than the functional currency. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory components. We may enter into metal commodity futures and options contracts periodically to reduce volatility in the price of metals. We may also enter into natural gas price swaps to manage the price risk of forecasted purchases of natural gas. The Company currently does not account for its derivative contracts as hedges but rather marks them to market with a corresponding offset to current earnings. The Company regularly reviews the creditworthiness of its derivative counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements.

The following table summarizes the location and fair value amount of our derivative instruments reported in our Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013:

Asset Derivatives

Liability Derivatives

March 31, 2014

December 31, 2013

March 31, 2014

December 31, 2013

Balance
Sheet
Location

Fair Value

Balance
Sheet
Location

Fair Value

Balance
Sheet
Location

Fair Value

Balance
Sheet
Location

Fair Value

(In millions)

Derivatives not designated as hedging instruments under ASC 815

Commodity contracts

Prepaid
expenses
and other
current
assets

—

Prepaid
expenses
and other
current
assets

—

Other
accrued
liabilities

—

Other
accrued
liabilities

0.2

As of March 31, 2014 and December 31, 2013, the Company’s foreign currency exchange contracts had a U.S. dollar notional amount of $3.6 million and $2.2 million, respectively. As of March 31, 2014 and December 31, 2013, the Company had 97 tons and 131 tons, respectively, of nickel futures or option contracts related to forecasted purchases. As of March 31, 2014 and December 31, 2013, the Company had 3,180 tons and 4,600 tons, respectively, of hot roll steel coil option contracts related to forecasted purchases. The Company has aluminum price swaps related to forecasted purchases, which had a notional amount of 50 tons and 195 tons as of March 31, 2014 and December 31, 2013, respectively.

The following table summarizes the location and amount of gains and losses reported in our Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013:

Derivatives not designated as

hedging instruments under

ASC 815

Location of Gain/(Loss)
Recognized in Income on
Derivatives

Amount of Gain/(Loss) Recognized in

Income on Derivatives

Three Months Ended March 31,

2014

2013

(In millions)

Metal commodity contracts

Cost of materials sold

0.2

(0.3

)

Fair Value Measurements

To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.

Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 – unobservable inputs, such as internally-developed pricing models for the asset or liability due to little or no market activity for the asset or liability.

The following table presents assets and liabilities measured and recorded at fair value on our Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy as of March 31, 2014:


	At March 31, 2014
	Level 1		Level 2		Level 3
	(In millions)
Assets
Cash equivalents:
Commercial paper	$	35.9	$	—	$	—

Prepaid and other current assets:
Common stock—available-for-sale investment	$	20.6	$	—	$	—


	At December 31, 2013
	Level 1		Level 2		Level 3
	(In millions)
Assets
Cash equivalents:
Commercial paper	$	39.9	$	—	$	—

Prepaid and other current assets:
Common stock – available-for-sale investment	$	20.7	$	—	$	—

Liabilities
Mark-to-market derivatives:
Commodity contracts	$	—	$	0.2	$	—

The fair value of each derivative contract is determined using Level 2 inputs and the market approach valuation technique, as described in ASC 820. The Company has various commodity derivatives to lock in nickel prices for varying time periods. The fair value of derivatives is determined by comparing the spot price of each individual contract to the forward market price for a similar contract as published by the London Metal Exchange as of the valuation date. The Company also has commodity derivatives to lock in hot roll coil and aluminum prices for varying time periods. The fair value of derivatives is determined by comparing the spot price of each individual contract to the forward market price of a similar contract for the commodity as published by the Chicago Mercantile Exchange as of the valuation date. In addition, the Company has numerous foreign exchange contracts to hedge our Canadian subsidiaries’ variability in cash flows from the forecasted payment of currencies other than the functional currency, the Canadian dollar. The Company defines the fair value of foreign exchange contracts as the amount of the difference between the contracted and forward market value at the end of the period. The Company estimates the current market value of foreign exchange contracts by obtaining month-end market quotes of foreign exchange rates and forward rates for contracts with similar terms. The Company uses the exchange rates provided by Reuters. Each contract term varies in the number of months, but on average is between 3 to 12 months in length.

The carrying and estimated fair values of the Company’s financial instruments at March 31, 2014 and December 31, 2013 were as follows:


	At March 31, 2014				At December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Cash and cash equivalents	$	97.0	$	97.0	$	74.0	$	74.0
Restricted cash		1.8		1.8		1.8		1.8
Receivables less provision for allowances, claims and doubtful accounts		437.1		437.1		385.4		385.4
Accounts payable		261.6		261.6		207.2		207.2
Long-term debt, including current portion		1,275.0		1,356.7		1,294.8		1,348.8

The estimated fair value of the Company’s cash and cash equivalents, receivables less provision for allowances, claims and doubtful accounts and accounts payable approximate their carrying amounts due to the short-term nature of these financial instruments. The estimated fair value of the Company’s long-term debt and the current portions thereof is determined by using quoted market prices of Company debt securities (Level 2 inputs).

Assets Held for Sale

The Company had $4.6 million and $4.7 million of assets held for sale, classified within “prepaid expenses and other current assets,” as of March 31, 2014 and December 31, 2013, respectively. The Company recorded zero and $0.9 million of impairment charges in the three months ended March 31, 2014 and 2013, respectively, related to certain assets held for sale in order to recognize the assets at their fair value less cost to sell in accordance with ASC 360-10-35-43, “Property, Plant and Equipment – Other Presentation Matters.” The fair values less costs to sell of long-lived assets held for sale are assessed each reporting period that they remain classified as held for sale. Any increase or decrease in the held for sale long-lived asset’s fair value less cost to sell is reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset at the time it was initially classified as held for sale. The fair values of each property were determined based on appraisals obtained from a third-party, pending sales contracts, or recent listing agreements with third-party brokerage firms.

The following table presents those assets that were measured and recorded at fair value on our Consolidated Balance Sheets on a non-recurring basis and their level within the fair value hierarchy at March 31, 2014:


	March 31, 2014
	Level 1		Level 2		Level 3
	(In millions)
Assets
Prepaid expenses and other current assets – assets held for sale	$	—	$	4.6	$	—


	At December 31, 2013
	Level 1		Level 2		Level 3
	(In millions)
Assets
Prepaid expenses and other current assets – assets held for sale	$	—	$	4.7	$	—

Available-For-Sale Investments

The Company has classified investments made during 2010 and 2012 as available-for-sale at the time of their purchase. Investments classified as available-for-sale are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income. Management evaluates investments in an unrealized loss position on whether an other-than-temporary impairment has occurred on a periodic basis. Factors considered by management in assessing whether an other-than-temporary impairment has occurred include: the nature of the investment; whether the decline in fair value is attributable to specific adverse conditions affecting the investment; the financial condition of the investee; the severity and the duration of the impairment; and whether we intend to sell the investment or will be required to sell the investment before recovery of its amortized cost basis. When it is determined that an other-than-temporary impairment has occurred, the investment is written down to its fair value at the end of the period in which it is determined that an other-than-temporary decline has occurred. As of March 31, 2014, the investment was in a gross unrealized gain position. Realized gains and losses are recorded within the statement of operations upon sale of the security and are based on specific identification.

The Company’s available-for-sale securities as of March 31, 2014 can be summarized as follows:


	At March 31, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In millions)
Common stock	$	17.4	$	3.2	$	—	$	20.6

The Company’s available-for-sale securities as of December 31, 2013 can be summarized as follows:


	At December 31, 2013
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In millions)
Common stock	$	17.4	$	3.3	$	—	$	20.7

There is no maturity date for these investments and there have been no sales during the three months ended March 31, 2014.

NOTE 9: STOCKHOLDERS’ EQUITY (DEFICIT), ACCUMULATED OTHER COMPREHENSIVE INCOME AND REDEEMABLE NONCONTROLLING INTEREST

The following table details changes in these accounts:


	Ryerson Inc. Stockholders
										Accumulated Other Comprehensive Income (Loss)
	Common Stock				Capital in Excess of Par Value		Accumulated Deficit			Foreign Currency Translation			Benefit Plan Liabilities			Unrealized Gain on Available- For-Sale Investments			Noncontrolling Interest			Total Equity			Redeemable Noncontrolling Interest
	Shares		Dollars		Dollars		Dollars			Dollars			Dollars			Dollars			Dollars			Dollars			Dollars
	(In millions, except share data)
Balance at January 1, 2014		100	$	—	$	64.7	$	(16.8	)	$	(18.3	)	$	(174.9	)	$	3.3		$	(2.5	)	$	(144.5	)	$	1.3
Net income (loss)		—		—		—		1.9			—			—			—			(0.8	)		1.1			(0.1	)
Foreign currency translation		—		—		—		—			(7.1	)		—			—			(0.2	)		(7.3	)		—
Changes in defined benefit pension and other post-retirement benefit plans		—		—		—		—			—			0.2			—			—			0.2			—
Unrealized loss on available-for-sale investment		—		—		—		—			—			—			(0.1	)		—			(0.1	)		—

Balance at March 31, 2014		100	$	—	$	64.7	$	(14.9	)	$	(25.4	)	$	(174.7	)	$	3.2		$	(3.5	)	$	(150.6	)	$	1.2

The following table details the changes in accumulated other comprehensive income (loss) for the three month period ended March 31, 2014:


	Changes in Accumulated Other Comprehensive Income (Loss) by Component
	Foreign Currency Translation			Benefit Plan Liabilities			Unrealized Gain on Available- For-Sale Investments
	(In millions)
Balance at January 1, 2014	$	(18.3	)	$	(174.9	)	$	3.3
Other comprehensive income (loss) before reclassifications		(7.1	)		—			(0.1	)
Amounts reclassified from accumulated other comprehensive income		—			0.2			—

Net current-period other comprehensive income (loss)		(7.1	)		0.2			(0.1	)

Balance at March 31, 2014	$	(25.4	)	$	(174.7	)	$	3.2

The following table details the reclassifications out of accumulated other comprehensive income (loss) for the three month periods ended March 31, 2014 and 2013:


	Reclassifications Out of Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount reclassified from Accumulated Other Comprehensive Income (Loss)						Affected line item in the Condensed Consolidated Statements of Comprehensive Income
	For the Three Months Ended
	March 31, 2014			March 31, 2013
	(In millions)
Amortization of defined benefit pension and other post-retirement benefit plan items
Actuarial loss	$	0.6		$	1.6		Warehousing, delivery, selling, general and administrative
Prior service credit		(0.4	)		(0.4	)	Warehousing, delivery, selling, general and administrative

Total before tax		0.2			1.2
Tax provision		—			0.1

Net of tax	$	0.2		$	1.1

NOTE 10: RELATED PARTIES

JT Ryerson pays an affiliate of Platinum an annual monitoring fee of up to $5.0 million pursuant to a corporate advisory services agreement. The monitoring fee recorded in the first three months of 2014 and 2013 was $1.3 million.

NOTE 11: INCOME TAXES

For the three months ended March 31, 2014, the Company recorded income tax expense from operations of $3.5 million compared to $1.1 million in the prior year. The $3.5 million tax expense in the first quarter of 2014 primarily represents taxes at local statutory rates where the Company operates, but generally excludes any tax benefit for losses in jurisdictions with historical losses.

In accordance with FASB ASC 740, “Income Taxes,” the Company assesses the realizability of its deferred tax assets. The Company records a valuation allowance when, based upon the evaluation of all available evidence, it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. In making this determination, we analyze, among other things, our recent history of earnings, the nature and timing of reversing book-tax temporary differences, tax planning strategies and future income. After considering both the positive and negative evidence available, in the second quarter of 2009, the Company determined that it was more-likely-than-not that it would not realize a portion of its U.S. deferred tax assets. As a result, the Company established a valuation allowance against a portion of its U.S. deferred tax assets. In 2013, the Company recognized a total net tax benefit of $76.8 million due to the release of a portion of the valuation allowance as the Company determined it is more likely than not that certain deferred tax assets will be realized.

The Company will continue to maintain a valuation allowance on certain foreign and U.S. federal and state deferred tax assets until such time as in management’s judgment, considering all available positive and negative evidence, the Company determines that these deferred tax assets are more likely than not realizable. The valuation allowance is reviewed quarterly and will be maintained until sufficient positive evidence exists to support the reversal of some or all of the valuation allowance. The valuation allowance was $18.4 million at March 31, 2014 and December 31, 2013.

NOTE 12: 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 March 31, 2014 and December 31, 2013 and for the three-month periods ended March 31, 2014 and 2013:

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2014

(In millions)


	Parent			Joseph T. Ryerson			Guarantor		Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	742.8		$	568.6	$	111.9		$	(548.9	)	$	874.4
Cost of materials sold		—			624.8			556.7		94.1			(548.9	)		726.7

Gross profit		—			118.0			11.9		17.8			—			147.7
Warehousing, delivery, selling, general and administrative		1.3			92.6			6.1		17.8			—			117.8

Operating profit (loss)		(1.3	)		25.4			5.8		—			—			29.9
Other income and (expense), net		—			—			—		2.0			—			2.0
Interest and other expense on debt		(3.8	)		(23.0	)		—		(0.6	)		—			(27.4	)
Intercompany transactions:
Interest expense on intercompany loans		(7.5	)		—			—		—			7.5			—
Interest income on intercompany loans		—			5.5			2.0		—			(7.5	)		—

Income (loss) before income taxes		(12.6	)		7.9			7.8		1.4			—			4.5
Provision (benefit) for income taxes		(10.0	)		6.2			5.7		1.6			—			3.5
Equity in (earnings) loss of subsidiaries		(4.5	)		(9.7	)		1.2		—			13.0			—

Net income (loss)		1.9			11.4			0.9		(0.2	)		(13.0	)		1.0
Less: Net loss attributable to noncontrolling interest		—			—			—		(0.9	)		—			(0.9	)

Net income attributable to Ryerson Inc.	$	1.9		$	11.4		$	0.9	$	0.7		$	(13.0	)	$	1.9

Comprehensive income (loss)	$	(5.1	)	$	11.4		$	0.8	$	(7.3	)	$	(6.0	)	$	(6.2	)
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—		(1.1	)		—			(1.1	)

Comprehensive income (loss) attributable to Ryerson Inc.	$	(5.1	)	$	11.4		$	0.8	$	(6.2	)	$	(6.0	)	$	(5.1	)

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2013

(In millions)


	Parent			Joseph T. Ryerson			Guarantor		Non-guarantor			Eliminations			Consolidated
Net sales	$	—		$	749.7		$	604.8	$	122.7		$	(586.1	)	$	891.1
Cost of materials sold		—			621.9			593.4		106.1			(586.1	)		735.3

Gross profit		—			127.8			11.4		16.6			—			155.8
Warehousing, delivery, selling, general and administrative		1.3			94.3			5.5		20.6			—			121.7
Impairment charge on fixed assets		—			0.9			—		—			—			0.9

Operating profit (loss)		(1.3	)		32.6			5.9		(4.0	)		—			33.2
Other income and (expense), net		—			0.1			—		1.1			—			1.2
Interest and other expense on debt		(4.6	)		(23.1	)		—		(0.7	)		—			(28.4	)
Intercompany transactions:
Interest expense on intercompany loans		(5.4	)		—			—		—			5.4			—
Interest income on intercompany loans		—			3.4			2.0		—			(5.4	)		—

Income (loss) before income taxes		(11.3	)		13.0			7.9		(3.6	)		—			6.0
Provision (benefit) for income taxes		(1.7	)		2.1			1.2		(0.5	)		—			1.1
Equity in (earnings) loss of subsidiaries		(16.7	)		(8.0	)		0.9		—			23.8			—

Net income (loss)		7.1			18.9			5.8		(3.1	)		(23.8	)		4.9
Less: Net loss attributable to noncontrolling interest		—			—			—		(2.2	)		—			(2.2	)

Net income attributable to Ryerson Inc.	$	7.1		$	18.9		$	5.8	$	(0.9	)	$	(23.8	)	$	7.1

Comprehensive income (loss)	$	8.2		$	19.8		$	9.5	$	(6.6	)	$	(24.8	)	$	6.1
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—		(2.1	)		—			(2.1	)

Comprehensive income (loss) attributable to Ryerson Inc.	$	8.2		$	19.8		$	9.5	$	(4.5	)	$	(24.8	)	$	8.2

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2014

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	1.9		$	11.4		$	0.9		$	(0.2	)	$	(13.0	)	$	1.0

Non-cash expenses		(8.5	)		15.5			6.9			1.7			1.5			17.1
Equity in (earnings) loss of subsidiaries		(4.5	)		(9.7	)		1.2			—			13.0			—
Changes in working capital		0.4			(67.1	)		85.0			(9.9	)		(1.5	)		6.9

Net adjustments		(12.6	)		(61.3	)		93.1			(8.2	)		13.0			24.0

Net cash provided by (used in) operating activities		(10.7	)		(49.9	)		94.0			(8.4	)		—			25.0

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		—			41.7			(103.0	)		(0.2	)		58.2			(3.3	)

FINANCING ACTIVITIES:
Net cash provided by financing activities		31.6			12.0			12.8			6.8			(58.2	)		5.0

Net increase (decrease) in cash and cash equivalents		20.9			3.8			3.8			(1.8	)		—			26.7
Effect of exchange rates		—			—			—			(3.7	)		—			(3.7	)

Net change in cash and cash equivalents		20.9			3.8			3.8			(5.5	)		—			23.0
Beginning cash and cash equivalents		—			7.8			2.4			63.8			—			74.0

Ending cash and cash equivalents	$	20.9		$	11.6		$	6.2		$	58.3		$	—		$	97.0

RYERSON INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2013

(In millions)


	Parent			Joseph T. Ryerson			Guarantor			Non-guarantor			Eliminations			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	7.1		$	18.9		$	5.8		$	(3.1	)	$	(23.8	)	$	4.9

Non-cash expenses		0.1			11.4			0.9			1.5			—			13.9
Equity in (earnings) loss of subsidiaries		(16.7	)		(8.0	)		0.9			—			23.8			—
Changes in working capital		625.2			1,044.6			(1,662.4	)		3.5			—			10.9

Net adjustments		608.6			1,048.0			(1,660.6	)		5.0			23.8			24.8

Net cash provided by (used in) operating activities		615.7			1,066.9			(1,654.8	)		1.9			—			29.7

INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities		(0.1	)		(577.8	)		1,464.3			(0.9	)		(889.4	)		(3.9	)

FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities		(615.2	)		(492.9	)		191.2			6.1			889.4			(21.4	)

Net increase (decrease) in cash and cash equivalents		0.4			(3.8	)		0.7			7.1			—			4.4
Effect of exchange rates		—			0.2			(0.1	)		(1.3	)		—			(1.2	)

Net change in cash and cash equivalents		0.4			(3.6	)		0.6			5.8			—			3.2
Beginning cash and cash equivalents		0.2			15.3			1.9			53.4			—			70.8

Ending cash and cash equivalents	$	0.6		$	11.7		$	2.5		$	59.2		$	—		$	74.0

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

MARCH 31, 2014

(In millions)


	Parent			Joseph T. Ryerson		Guarantor		Non-guarantor			Eliminations			Consolidated
ASSETS
Current assets	$	24.5		$	1,256.3	$	61.0	$	245.5		$	(296.0	)	$	1,291.3
Property, plant and equipment net of accumulated depreciation		—			386.6		3.2		57.9			—			447.7
Other noncurrent assets		1,118.3			827.2		422.6		5.0			(2,155.7	)		217.4

Total Assets	$	1,142.8		$	2,470.1	$	486.8	$	308.4		$	(2,451.7	)	$	1,956.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	252.7		$	274.2	$	177.2	$	124.8		$	(294.3	)	$	534.6
Noncurrent liabilities		1,037.2			1,192.1		11.3		26.4			(695.8	)		1,571.2
Redeemable noncontrolling interest		—			—		—		1.2			—			1.2
Ryerson Inc. stockholders’ equity		(147.1	)		1,003.8		298.3		159.5			(1,461.6	)		(147.1	)
Noncontrolling interest		—			—		—		(3.5	)		—			(3.5	)

Total Liabilities and Equity	$	1,142.8		$	2,470.1	$	486.8	$	308.4		$	(2,451.7	)	$	1,956.4

RYERSON INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2013

(In millions)


	Parent			Joseph T. Ryerson		Guarantor		Non-guarantor			Eliminations			Consolidated
ASSETS
Current assets	$	3.5		$	1,173.7	$	113.0	$	235.4		$	(283.7	)	$	1,241.9
Property, plant and equipment net of accumulated depreciation		—			387.8		3.1		61.8			—			452.7
Other noncurrent assets		1,113.0			870.6		321.8		5.8			(2,087.8	)		223.4

Total Assets	$	1,116.5		$	2,432.1	$	437.9	$	303.0		$	(2,371.5	)	$	1,918.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	259.3		$	239.7	$	135.0	$	110.8		$	(283.7	)	$	461.1
Noncurrent liabilities		999.2			1,200.0		5.3		27.7			(632.1	)		1,600.1
Redeemable noncontrolling interest		—			—		—		1.3			—			1.3
Ryerson Inc. stockholders’ equity		(142.0	)		992.4		297.6		165.7			(1,455.7	)		(142.0	)
Noncontrolling interest		—			—		—		(2.5	)		—			(2.5	)

Total Liabilities and Equity	$	1,116.5		$	2,432.1	$	437.9	$	303.0		$	(2,371.5	)	$	1,918.0

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed on March 13, 2014 and the caption “Industry and Operating Trends” included herein “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report. Moreover, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.

The following discussion should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and related Notes thereto in Item 1, “FINANCIAL STATEMENTS” in this Quarterly Report on Form 10-Q and the Company’s Consolidated Financial Statements and related Notes thereto for the year ended December 31, 2013 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed on March 13, 2014.

Industry and Operating Trends

We purchase large quantities of metal products from primary producers and sell these materials in smaller quantities to a wide variety of metals-consuming industries. More than one-half of the metals products sold are processed by us by burning, sawing, slitting, blanking, cutting to length or other techniques. We sell our products and services to many industries, including industrial equipment manufacturing, industrial fabrication, electrical machinery production, transportation equipment manufacturing, heavy equipment manufacturing and oil and gas. Revenue is recognized upon delivery of product to customers. The timing of shipment is substantially the same as the timing of delivery to customers given the proximity of our distribution sites to our customers.

Sales, cost of materials sold, gross profit and operating expense control are the principal factors that impact our profitability:

Net sales. Our sales volume and pricing is driven by market demand, which is largely determined by overall industrial production and conditions in specific industries in which our customers operate. Sales prices are also primarily driven by market factors such as overall demand and availability of product. Our net sales include revenue from product sales, net of returns, allowances, customer discounts and incentives.

Cost of materials sold. Cost of materials sold includes metal purchase and in-bound freight costs, third-party processing costs and direct and indirect internal processing costs. The cost of materials sold fluctuates with our sales volume and our ability to purchase metals at competitive prices. Increases in sales volume generally enable us both to improve purchasing leverage with suppliers, as we buy larger quantities of metals inventories, and to reduce operating expenses per ton sold.

Gross profit. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring metals at competitive prices, our ability to manage the impact of changing prices and efficiently managing our internal and external processing costs.

Operating expenses. Optimizing business processes and asset utilization to lower fixed expenses such as employee, facility and truck fleet costs which cannot be rapidly reduced in times of declining volume, and maintaining a low fixed cost structure in times of increasing sales volume, have a significant impact on our profitability. Operating expenses include costs related to warehousing and distributing our products as well as selling, general and administrative expenses.

The metals service center industry is generally considered cyclical with periods of strong demand and higher prices followed by periods of weaker demand and lower prices due to the cyclical nature of the industries in which the largest consumers of metals operate. However, domestic metals prices are volatile and remain difficult to predict due to their commodity nature and the extent which prices are affected by interest rates, foreign exchange rates, energy prices, international supply/demand imbalances, surcharges and other factors.

Results of Operations—Comparison of First Quarter 2014 to First Quarter 2013


	Three months ended March 31, 2014			% of Net Sales			Three months ended March 31, 2013			% of Net Sales
	($ in millions)
Net sales	$	874.4			100.0	%	$	891.1			100.0	%
Cost of materials sold		726.7			83.1			735.3			82.5

Gross profit		147.7			16.9			155.8			17.5
Warehousing, delivery, selling, general and administrative expenses		117.8			13.5			121.7			13.7
Impairment charges on fixed assets		—			—			0.9			0.1

Operating profit		29.9			3.4			33.2			3.7
Other expenses		(25.4	)		(2.9	)		(27.2	)		(3.0	)

Income before income taxes		4.5			0.5			6.0			0.7
Provision for income taxes		3.5			0.4			1.1			0.1

Net income		1.0			0.1			4.9			0.6
Less: Net loss attributable to noncontrolling interest		(0.9	)		(0.1	)		(2.2	)		(0.2	)

Net income attributable to Ryerson Inc.	$	1.9			0.2	%	$	7.1			0.8	%

The following table shows the Company’s percentage of sales revenue by major product lines for the first quarter of 2014 and 2013:


	Three Months Ended March 31,
Product Line	2014			2013
Carbon Steel Flat		26	%		25	%
Carbon Steel Plate		11			12
Carbon Steel Long		17			15
Stainless Steel Flat		15			16
Stainless Steel Plate		4			4
Stainless Steel Long		3			4
Aluminum Flat		14			14
Aluminum Plate		3			3
Aluminum Long		4			4
Other		3			3

Total		100	%		100	%

Net sales. Revenue for the first quarter of 2014 decreased 1.9% from the same period a year ago to $874.4 million. Average selling price decreased 1.1% against the price levels in the first quarter of 2013 with the largest decreases in our stainless steel flat and aluminum plate product lines, partially offset by increases in carbon flat and carbon plate product lines. Tons sold in the first quarter of 2014 decreased 0.8% compared to the year-ago quarter with the largest decreases in shipments of aluminum long and stainless steel long products, partially offset by increases in shipments of aluminum plate and aluminum flat products.

Cost of materials sold. Cost of materials sold decreased 1.2% to $726.7 million in the first quarter of 2014 compared to $735.3 million in the first quarter of 2013. The decrease in cost of materials sold in the first quarter of 2014 compared to the same period a year ago is primarily due to a decrease in the average cost of materials sold per ton in addition to the decrease in tons sold. The average cost of materials sold per ton decreased to $1,436 in the first quarter of 2014 from $1,442 in the first quarter of 2013. The average cost of materials sold for our stainless steel long, stainless steel plate and aluminum plate product lines decreased more than our other products, in line with the change in average selling price per ton of those products, partially offset by increases in the average cost of materials sold for our carbon flat products. During the first quarter of 2014, LIFO expense was $9.2 million compared to LIFO income of $4.4 million in the first quarter of 2013.

Gross profit. Gross profit decreased by $8.1 million to $147.7 million in the first quarter of 2014. Gross profit as a percent of sales in the first quarter of 2014 decreased to 16.9% from 17.5% in the first quarter of 2013. While our cost of materials sold per ton decreased in the first quarter of 2014 as compared to the first quarter of 2013, revenue per ton decreased at a faster pace resulting in lower gross margins.

Operating expenses. Total operating expenses decreased by $4.8 million to $117.8 million in the first quarter of 2014 from $122.6 million in the first quarter of 2013. The decrease was primarily due to lower salaries and wages of $2.8 million resulting from lower employment levels, lower pension expense of $1.1 million, lower legal fees of $1.0 million, lower reorganization expenses of $1.0 million and a $0.9 million impairment charges on fixed assets in the first quarter of 2013, partially offset by higher incentive compensation expense of $1.4 million and higher heating costs of $0.7 million. On a per ton basis, first quarter of 2014 operating expenses decreased to $233 per ton from $240 per ton in the first quarter of 2013.

Operating profit. For the first quarter of 2014, the Company reported an operating profit of $29.9 million, or $59 per ton, compared to $33.2 million, or $65 per ton, in the first quarter of 2013, as a result of the factors discussed above.

Other expenses. Interest and other expense on debt decreased to $27.4 million in the first quarter of 2014 from $28.4 million in the first quarter of 2013, primarily due to lower interest rates on credit facility borrowings. Other income and (expense), net was income of $2.0 million in the first quarter of 2014 as compared to income of $1.2 million in the same period a year ago. The other income in both periods was primarily related to foreign exchange gains related to our foreign operations.

Provision for income taxes. In the first quarter of 2014, the Company recorded income tax expense of $3.5 million compared to $1.1 million in the first quarter of 2013. The $3.5 million income tax expense in the first quarter of 2014 primarily represents taxes at local statutory rates where the Company operates, but generally excludes any tax benefit for losses in jurisdictions with historical losses. During the first quarter of 2013, the $1.1 million of income tax expense primarily represented foreign and U.S. state income tax expense and adjustments related to our tax LIFO inventory method.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are cash and cash equivalents, cash flows from operations and borrowing availability under the $1.35 billion revolving credit facility agreement (as amended and restated, the “Ryerson Credit Facility”) that matures on the earlier of (a) April 3, 2018 or (b) August 16, 2017, 60 days prior to the scheduled maturity date of the $600 million of 9% Senior Secured Notes due 2017 (the “2017 Notes”), if the 2017 Notes are then outstanding. Its principal source of operating cash is from the sale of metals and other materials. Its principal uses of cash are for payments associated with the procurement and processing of metals and other materials inventories, costs incurred for the warehousing and delivery of inventories and the selling and administrative costs of the business, capital expenditures, and for interest payments on debt.

The following table summarizes the Company’s cash flows:


	Three Months Ended March 31,
	2014			2013
	(In millions)
Net cash provided by operating activities	$	25.0		$	29.7
Net cash used in investing activities		(3.3	)		(3.9	)
Net cash provided by (used in) financing activities		5.0			(21.4	)
Effect of exchange rates on cash and cash equivalents		(3.7	)		(1.2	)

Net increase in cash and cash equivalents	$	23.0		$	3.2

The Company had cash and cash equivalents at March 31, 2014 of $97.0 million, compared to $74.0 million at December 31, 2013. The Company had $1,275 million and $1,295 million of total debt outstanding and a debt-to-capitalization ratio of 113% and 112% at March 31, 2014 and December 31, 2013, respectively. The Company had total liquidity (defined as cash and cash equivalents, marketable securities and availability under the Ryerson Credit Facility and foreign debt facilities) of $426 million at March 31, 2014 versus $351 million at December 31, 2013. Total liquidity is not a U.S. generally accepted accounting principles (“GAAP”) financial measure. We believe that total liquidity provides additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with generally accepted accounting principles and total liquidity is not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements.

Below is a reconciliation of cash and cash equivalents to total liquidity:


	March 31, 2014		December 31, 2013
	(In millions)
Cash and cash equivalents	$	97	$	74
Marketable securities		21		21
Availability on Ryerson Credit Facility and foreign debt facilities		308		256

Total liquidity	$	426	$	351

Of the total cash and cash equivalents, as of March 31, 2014, $58.4 million was held in subsidiaries outside the United States which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate funds from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate funds held in foreign jurisdictions, which could result in higher effective tax rates. The Company has not recorded a deferred tax liability for the effect of a possible repatriation of these assets as management intends to permanently reinvest these assets outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.

Net cash provided by operating activities of $25.0 million in the first three months of 2014 was primarily due to an increase in accounts payable of $30.0 million resulting from a higher level of material purchases at the end of the first quarter of 2014 compared to year-end 2013, a decrease in inventory of $25.1 million as the company was able to reduce inventory levels as sales increased in the first quarter of 2014 compared to the fourth quarter of 2013, non-cash depreciation and amortization expense of $10.9 million and an increase in accrued liabilities of $21.9 million, partially offset by an increase in accounts receivable of $53.9 million resulting from higher sales levels in the first three months of 2014 compared to year-end 2013 and pension contributions of $10.6 million. Net cash provided by operating activities of $29.7 million in the first three months of 2013 was primarily due to an increase in accounts payable of $54.5 million resulting from a higher level of material purchases at the end of the first quarter of 2013 compared to year-end 2012, higher accrued liabilities of $17.3 million and non-cash depreciation and amortization expense of $11.3 million, partially offset by an increase in accounts receivable of $41.5 million resulting from higher sales levels in the first quarter of 2013 compared to year-end 2012 and pension contributions of $9.6 million.

Capital expenditures during the first three months of 2014 totaled $3.4 million compared to $4.0 million in the first three months of 2013. The Company sold property, plant and equipment and assets held for sale generating cash proceeds of $0.1 million and $0.2 million during the first three months of 2014 and 2013, respectively.

Net cash provided by financing activities in the first three months of 2014 was $5.0 million compared to $21.4 million used in financing activities in the first three months of 2013. Net cash provided by financing activities in the first three months of 2014 was primarily related to an increase in book overdrafts of $25.0 million partially offset by repayments on credit facility borrowings resulting from the net cash provided by operating activities discussed above. Net cash used by financing activities in the first three months of 2013 was primarily related to repayments on credit facility borrowings as a result of the net cash provided by operating activities discussed above.

We believe that cash flow from operations and proceeds from the Ryerson Credit Facility will provide sufficient funds to meet our contractual obligations and operating requirements in the normal course of business.

Total Debt

As a result of net cash provided by operating activities, total debt in the Condensed Consolidated Balance Sheet decreased to $1,275.0 million at March 31, 2014 from $1,294.8 million at December 31, 2013.

Total debt outstanding as of March 31, 2014 consisted of the following amounts: $342.5 million borrowing under the Ryerson Credit Facility, $600.0 million under the 2017 Notes, $300.0 million of 11¹/₄% Senior Notes due 2018 (the “2018 Notes” and, together with the 2017 Notes, the “2017 and 2018 Notes”), and $32.5 million of foreign debt. Discussion of each of these borrowings follows.

Ryerson Credit Facility

On April 3, 2013, Ryerson amended and restated the Ryerson Credit Facility to, among other things, extend the maturity date to the earlier of (a) April 3, 2018 or (b) August 16, 2017,60 days prior to the scheduled maturity date of the 2017 Notes, if the 2017 Notes are then outstanding. At March 31, 2014, Ryerson had $342.5 million of outstanding borrowings, $27 million of letters of credit issued and $292 million available under the $1.35 billion Ryerson Credit Facility compared to $369.1 million of outstanding borrowings, $27 million of letters of credit issued and $234 million available at December 31, 2013. Total credit availability is limited by the amount of eligible accounts receivable and inventory pledged as collateral under the agreement insofar as Ryerson is subject to a borrowing base comprised of the aggregate of these two amounts, less applicable reserves. Eligible accounts receivable, at any date of determination, are comprised of the aggregate value of all accounts directly created by a borrower in the ordinary course of business arising out of the sale of goods or the rendition of services, each of which has been invoiced, with such receivables adjusted to exclude various ineligible accounts, including, among other things, those to which a borrower does not have sole and absolute title and accounts arising out of a sale to an employee, officer, director, or affiliate of a borrower. Eligible inventory, at any date of determination, is comprised of the aggregate value of all inventory owned by a borrower, with such inventory adjusted to exclude various ineligible inventory, including, among other things, any inventory that is classified as “supplies” or is unsaleable in the ordinary course of business and 50% of the value of any inventory that (i) has not been sold or processed within a 180 day period and (ii) which is calculated to have more than 365 days of supply based upon the immediately preceding 6 months consumption. The weighted average interest rate on the borrowings under the Ryerson Credit Facility was 2.2 percent and 2.1 percent at March 31, 2014 and December 31, 2013, respectively.

2017 and 2018 Notes

On October 10, 2012, Ryerson and its wholly owned subsidiary, Joseph T. Ryerson & Son, Inc., issued $600 million in aggregate principal amount of the 2017 Notes and $300 million in aggregate principal amount of the 2018 Notes. The 2017 Notes bear interest at a rate of 9% per annum. The 2018 Notes bear interest at a rate of 11.25% per annum. 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.

Foreign Debt

Pension Funding

At December 31, 2013, pension liabilities exceeded plan assets by $203 million. The Company anticipates that it will have a minimum required pension contribution of approximately $68 million in 2014 under the Employee Retirement Income Security Act of 1974 (“ERISA”) and Pension Protection Act in the U.S and the Ontario Pension Benefits Act in Canada. Through the three months ended March 31, 2014, the Company has made $11 million in pension contributions, and anticipates an additional $57 million of contributions in the remaining nine months of 2014. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. The Company is unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on the Company’s financial position or cash flows. The Company believes that cash flow from operations and the Ryerson Credit Facility described above will provide sufficient funds to make the minimum required contribution in 2014.

Contractual Obligations

The following table presents contractual obligations at March 31, 2014:


	Payments Due by Period
Contractual Obligations(1)(2)	Total		Less than 1 year		1 – 3 years		4 – 5 years		After 5 years
	(In millions)
2017 Notes	$	600	$	—	$	—	$	600	$	—
2018 Notes		300		—		—		300		—
Ryerson Credit Facility		343		—		—		343		—
Foreign Debt		32		32		—		—		—
Interest on 2017 Notes, 2018 Notes, Foreign Debt and Ryerson Credit Facility (3)		377		95		190		92		—
Purchase Obligations (4)		41		40		1		—		—
Operating Leases		121		25		40		25		31
Pension Withdrawal Liability		1		—		—		—		1
Capital Lease Obligations		4		1		2		1		—

Total	$	1,819	$	193	$	233	$	1,361	$	32

(1)	The contractual obligations disclosed above do not include the Company’s potential future pension funding obligations (see discussion under “Pension Funding” caption).

(2)	Due to uncertainty regarding the completion of tax audits and possible outcomes, we do not know the timing of when our obligations related to unrecognized tax benefits will occur, if at all.

(3)	Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the Ryerson Credit Facility.

(4)	The purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers.

Income Taxes

The Company released most of its remaining valuation allowance related to certain US federal and state deferred tax assets at December 31, 2013. The Company assesses the need for a valuation allowance considering all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The fourth quarter of 2013 was the first quarter in which the Company’s overall U.S. operations had sustained an operating profit in both the preceding cumulative three fiscal year period and in each of its two preceding fiscal years, providing objective evidence of Ryerson’s ability to earn future profits. Combined with Ryerson’s projections of future income providing additional subjective evidence of Ryerson’s ability to earn future profits and management’s judgment, the Company determined that these deferred tax assets were more likely than not realizable and accordingly the valuation allowance was no longer required.

The Company will continue to maintain a valuation allowance on certain foreign and U.S. federal and state deferred tax assets until such time as in management’s judgment, considering all available positive and negative evidence and consistent with its past determinations, the Company determines that these deferred tax assets are more likely than not realizable.

Recent legislative proposals in the U.S. would repeal the use of the last-in-first-out method of accounting (“LIFO method”) for inventory for U.S. tax purposes. If legislation repealing the use of the LIFO method for tax purposes becomes law, we would expect an increase in the cash taxes the Company will need to pay over a 10 year period.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk

We are exposed to market risk related to our fixed-rate and variable-rate long-term debt. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. Changes in interest rates may affect the market value of our fixed-rate debt. The estimated fair value of our long-term debt and the current portions thereof using quoted market prices of Company debt securities recently traded and market-based prices of similar securities for those securities not recently traded was $1,357 million at March 31, 2014 and $1,349 million at December 31, 2013 as compared with the carrying value of $1,275 million and $1,295 million at March 31, 2014 and December 31, 2013, respectively.

A hypothetical 1% increase in interest rates on variable rate debt would have increased interest expense for the first three months of 2014 by approximately $0.9 million.

Foreign exchange rate risk

We are subject to exposure from fluctuations in foreign currencies. We use foreign currency exchange contracts to hedge our Canadian subsidiaries’ variability in cash flows from the forecasted payment of currencies other than the functional currency. The Canadian subsidiaries’ foreign currency contracts were principally used to purchase U.S. dollars. We had foreign currency contracts with a U.S. dollar notional amount of $3.6 million outstanding at March 31, 2014 and a value of zero. We do not currently account for these contracts as hedges but rather mark these contracts to market with a corresponding offset to current earnings. For the three months ended March 31, 2014, the Company recognized a loss less than $0.1 million associated with its foreign currency contracts. A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of March 31, 2014 would not have a material effect to the financial statements.

The currency effects of translating the financial statements of our foreign subsidiaries are included in accumulated other comprehensive loss and will not be recognized in the statement of operations until there is a liquidation or sale of those foreign subsidiaries.

Commodity price risk

Metal prices can fluctuate significantly due to several factors including changes in foreign and domestic production capacity, raw material availability, metals consumption and foreign currency rates. Declining metal prices could reduce our revenues, gross profit and net income. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory components. We may enter into metal commodity futures and options contracts to reduce volatility in the price of these metals.

As of March 31, 2014, we had 97 tons of nickel futures or option contracts, 3,180 tons of hot roll coil swaps and 50 tons of aluminum price swaps outstanding all with values of zero. We do not currently account for these contracts as hedges, but rather mark these contracts to market with a corresponding offset to current earnings. For the three months ended March 31, 2014, the Company recognized a gain of $0.2 million associated with its metal commodity derivatives. A hypothetical strengthening or weakening of 10% in the commodity prices underlying the commodity derivative contracts from the market rate as of March 31, 2014 would not have a material effect to the financial statements.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2014.

Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s controls over financial reporting during the quarter ended March 31, 2014.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

In October 2011, the United States Environmental Protection Agency named us as one of more than 100 businesses that may be a potentially responsible party for the Portland Harbor Superfund Site (“Portland Harbor”). We do not currently have sufficient information available to us to determine the total cost of any required investigation or remediation of the Portland Harbor site. Management cannot predict the ultimate outcome of this matter or estimate a range of potential loss at this time.

Item 1A.

Risk Factors

There have been no material changes relating to this Item from those set forth in Item 1A on the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Items 2, 3, 4, and 5 are not applicable and have been omitted.

Item 6.

Exhibits

The following exhibits are filed herewith:


Exhibit No.		Description

31.1		Certificate of the Principal Executive Officer of the Company, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certificate of the Principal Financial Officer of the Company, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Written Statement of Michael C. Arnold, President and Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Written Statement of Edward J. Lehner, Executive Vice President and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


RYERSON INC.

By:		/s/ EDWARD J. LEHNER
		Edward J. Lehner
		Executive Vice President & Chief Financial Officer
		(duly authorized signatory and principal financial officer of the registrant)

Date: May 7, 2014

Large accelerated filer

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Smaller reporting company