11. Condensed Consolidating Financial Statements

In November 2006 and April 2013, we issued senior unsecured notes in the aggregate principal amount of $1.1 billion, at fixed interest rates that are guaranteed by our named 100%-owned domestic subsidiaries that also guarantee borrowings under the Credit Agreement. The accompanying consolidating financial information has been prepared and presented pursuant to Rule 3-10 of SEC Regulation S-X “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” The guarantees are full and unconditional and joint and several obligations of each of the guarantor subsidiaries. There are no significant restrictions on our ability to obtain funds from any of the guarantor subsidiaries by dividends or loans. The supplemental consolidating financial information has been presented in lieu of separate financial statements of the guarantors as such separate financial statements are not considered meaningful.

Condensed Unaudited Consolidating Balance Sheet
As of March 31, 2014

(in millions)

						Non-
			Guarantor			Guarantor		Consolidating
	Parent		Subsidiaries			Subsidiaries		Adjustments			Consolidated

Assets
Cash and cash equivalents	$	46.8	$	(9.5	)	$	76.3	$	—		$	113.6
Accounts receivable, less allowance for doubtful accounts	79.0		976.0			105.1		—			1,160.1
Inventories	60.5		1,449.8			145.9		—			1,656.2
Income taxes receivable	49.9		—			—		(49.9		)	—
Intercompany receivables	0.4		20.7			1.5		(22.6		)	—
Other current assets	109.2		51.9			10.6		(76.5		)	95.2
Total current assets	345.8		2,488.9			339.4		(149.0		)	3,025.1

Investments in subsidiaries	4,555.0		211.5			—		(4,766.5		)	—
Property, plant and equipment, net	100.6		1,291.1			202.3		—			1,594.0
Goodwill	23.8		1,556.8			109.7		—			1,690.3
Intangible assets, net	34.4		1,048.2			114.1		—			1,196.7
Intercompany receivables	1,376.6		112.4			10.1		(1,499.1		)	—
Other assets	20.9		64.4			5.3		—			90.6
Total assets	$	6,457.1	$	6,773.3		$	780.9	$	(6,414.6	)	$	7,596.7

Liabilities & Equity
Accounts payable	$	43.3	$	403.1		$	33.5	$	(22.6	)	$	457.3
Accrued compensation and retirement costs	9.5		69.5			8.9		—			87.9
Other current liabilities	79.5		91.5			44.4		(51.2		)	164.2
Deferred income taxes	—		75.2			—		(75.2		)	—
Current maturities of long-term debt and short-term borrowings	25.3		—			11.5		—			36.8
Total current liabilities	157.6		639.3			98.3		(149.0		)	746.2
Long-term debt	2,038.1		5.7			47.2		—			2,091.0
Intercompany borrowings	—		1,321.7			177.4		(1,499.1		)	—
Other long-term liabilities	321.9		446.6			41.0		—			809.5
Total Reliance shareholders’ equity	3,939.5		4,352.9			413.6		(4,766.5		)	3,939.5
Noncontrolling interests	—		7.1			3.4		—			10.5
Total equity	3,939.5		4,360.0			417.0		(4,766.5		)	3,950.0
Total liabilities and equity	$	6,457.1	$	6,773.3		$	780.9	$	(6,414.6	)	$	7,596.7

Condensed Unaudited Consolidating Balance Sheet
As of December 31, 2013

(in millions)

						Non-
			Guarantor			Guarantor		Consolidating
	Parent		Subsidiaries			Subsidiaries		Adjustments			Consolidated

Assets
Cash and cash equivalents	$	19.7	$	(0.8	)	$	64.7	$	—		$	83.6
Accounts receivable, less allowance for doubtful accounts	64.1		820.3			99.1		—			983.5
Inventories	52.6		1,344.8			142.6		—			1,540.0
Income taxes receivable	34.4		—			—		(0.5		)	33.9
Intercompany receivables	0.3		350.6			2.2		(353.1		)	—
Other current assets	124.8		40.8			8.9		(76.6		)	97.9
Total current assets	295.9		2,555.7			317.5		(430.2		)	2,738.9

Investments in subsidiaries	4,647.7		312.4			—		(4,960.1		)	—
Property, plant and equipment, net	100.8		1,298.7			204.4		—			1,603.9
Goodwill	23.8		1,555.7			112.1		—			1,691.6
Intangible assets, net	17.4		1,077.8			118.6		—			1,213.8
Intercompany receivables	1,219.4		22.4			394.3		(1,636.1		)	—
Other assets	20.8		66.6			5.4		—			92.8
Total assets	$	6,325.8	$	6,889.3		$	1,152.3	$	(7,026.4	)	$	7,341.0

Liabilities & Equity
Accounts payable	$	29.1	$	185.8		$	418.5	$	(353.1	)	$	280.3
Accrued compensation and retirement costs	21.1		85.9			12.5		—			119.5
Other current liabilities	53.5		63.1			22.4		(1.9		)	137.1
Deferred income taxes	—		75.2			—		(75.2		)	—
Current maturities of long-term debt and short-term borrowings	25.3		—			11.2		—			36.5
Total current liabilities	129.0		410.0			464.6		(430.2		)	573.4
Long-term debt	2,019.2		5.7			47.6		—			2,072.5
Intercompany borrowings	—		1,550.6			85.5		(1,636.1		)	—
Other long-term liabilities	303.0		466.5			41.2		—			810.7
Total Reliance shareholders’ equity	3,874.6		4,450.1			510.0		(4,960.1		)	3,874.6
Noncontrolling interests	—		6.4			3.4		—			9.8
Total equity	3,874.6		4,456.5			513.4		(4,960.1		)	3,884.4
Total liabilities and equity	$	6,325.8	$	6,889.3		$	1,152.3	$	(7,026.4	)	$	7,341.0

Condensed Unaudited Consolidating Statement of Income
For the three months ended March 31, 2014
(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	182.4		$	2,244.9		$	187.6		$	(61.9	)	$	2,553.0

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	146.1			1,678.6			143.0			(61.9		)	1,905.8
Warehouse, delivery, selling, general and administrative	45.1			381.1			31.2			(16.4		)	441.0
Depreciation and amortization	4.5			42.9			4.5			—			51.9
	195.7			2,102.6			178.7			(78.3		)	2,398.7

Operating (loss) income	(13.3		)	142.3			8.9			16.4			154.3

Other income (expense):
Interest	(19.2		)	(6.2		)	(1.2		)	6.4			(20.2		)
Other income (expense), net	20.5			(0.2		)	2.5			(22.8		)	—
(Loss) income before equity in earnings of subsidiaries and income taxes	(12.0		)	135.9			10.2			—			134.1
Equity in earnings of subsidiaries	84.7			2.8			—			(87.5		)	—
Income before income taxes	72.7			138.7			10.2			(87.5		)	134.1
Income tax (benefit) provision	(14.5		)	56.8			3.9			—			46.2
Net income	87.2			81.9			6.3			(87.5		)	87.9
Less: Net income attributable to noncontrolling interests	—			0.7			—			—			0.7
Net income attributable to Reliance	$	87.2		$	81.2		$	6.3		$	(87.5	)	$	87.2
Comprehensive income (loss) attributable to Reliance	$	87.4		$	81.3		$	(2.8	)	$	(87.5	)	$	78.4

Condensed Unaudited Consolidating Statement of Income
For the three months ended March 31, 2013

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
Net sales	$	179.4		$	1,738.7		$	163.7		$	(56.5	)	$	2,025.3

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	138.1			1,291.4			123.5			(56.5		)	1,496.5
Warehouse, delivery, selling, general and administrative	50.9			299.6			23.3			(16.1		)	357.7
Depreciation and amortization	4.0			33.6			3.5			—			41.1
	193.0			1,624.6			150.3			(72.6		)	1,895.3

Operating (loss) income	(13.6		)	114.1			13.4			16.1			130.0

Other income (expense):
Interest	(13.1		)	(2.5		)	(0.5		)	3.0			(13.1		)
Other income (expense), net	18.3			3.9			(0.2		)	(19.1		)	2.9
(Loss) income before equity in earnings of subsidiaries and income taxes	(8.4		)	115.5			12.7			—			119.8
Equity in earnings of subsidiaries	82.6			4.8			—			(87.4		)	—
Income before income taxes	74.2			120.3			12.7			(87.4		)	119.8
Income tax (benefit) provision	(9.5		)	42.2			2.6			—			35.3
Net income	83.7			78.1			10.1			(87.4		)	84.5
Less: Net income attributable to noncontrolling interests	—			0.8			—			—			0.8
Net income attributable to Reliance	$	83.7		$	77.3		$	10.1		$	(87.4	)	$	83.7
Comprehensive income attributable to Reliance	$	82.2		$	77.5		$	1.5		$	(87.4	)	$	73.8

Condensed Unaudited Consolidating Cash Flow Statement
For the three months ended March 31, 2014

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Cash provided by (used in) operating activities	$	164.6		$	(94.5	)	$	(1.3	)	$	—		$	68.8

Investing activities:
Purchases of property, plant and equipment	(3.3		)	(23.7		)	(1.9		)	—			(28.9		)
Net advances to subsidiaries	(134.6		)	—			—			134.6			—
Other investing activities, net	0.1			(9.2		)	—			—			(9.1		)
Cash used in investing activities	(137.8		)	(32.9		)	(1.9		)	134.6			(38.0		)

Financing activities:
Net short-term debt borrowings	—			—			0.3			—			0.3
Proceed from long-term debt borrowings	160.0			—			—			—			160.0
Principal payments on long-term debt	(141.3		)	(0.4		)	—			—			(141.7		)
Dividends paid	(27.1		)	—			—			—			(27.1		)
Intercompany borrowings	—			119.1			15.5			(134.6		)	—
Other financing activities, net	8.7			—			—			—			8.7
Cash provided by financing activities	0.3			118.7			15.8			(134.6		)	0.2
Effect of exchange rate changes on cash and cash equivalents	—			—			(1.0		)	—			(1.0		)
Increase (decrease) in cash and cash equivalents	27.1			(8.7		)	11.6			—			30.0
Cash and cash equivalents at beginning of year	19.7			(0.8		)	64.7			—			83.6
Cash and cash equivalents at end of period	$	46.8		$	(9.5	)	$	76.3		$	—		$	113.6

Condensed Unaudited Consolidating Cash Flow Statement
For the three months ended March 31, 2013

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Cash provided by (used in) operating activities	$	112.9		$	(66.5	)	$	25.8		$	—		$	72.2

Investing activities:
Purchases of property, plant and equipment	(3.0		)	(21.6		)	(2.2		)	—			(26.8		)
Net advances to subsidiaries	(52.2		)	—			—			52.2			—
Other investing activities, net	—			7.3			—			—			7.3
Cash used in investing activities	(55.2		)	(14.3		)	(2.2		)	52.2			(19.5		)

Financing activities:
Net short-term debt borrowings	—			—			3.1			—			3.1
Proceed from long-term debt borrowings	50.0			—			—			—			50.0
Principal payments on long-term debt	(110.0		)	—			—			—			(110.0		)
Dividends paid	(22.9		)	—			—			—			(22.9		)
Net intercompany borrowings (repayments)	—			81.6			(29.4		)	(52.2		)	—
Other financing activities, net	30.8			(0.7		)	—			—			30.1
Cash (used in) provided by financing activities	(52.1		)	80.9			(26.3		)	(52.2		)	(49.7		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(0.5		)	—			(0.5		)
Increase (decrease) in cash and cash equivalents	5.6			0.1			(3.2		)	—			2.5
Cash and cash equivalents at beginning of year	28.1			13.1			56.4			—			97.6
Cash and cash equivalents at end of period	$	33.7		$	13.2		$	53.2		$	—		$	100.1