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 certain of our 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 June 30, 2014

(in millions)

						Non-
			Guarantor			Guarantor		Consolidating
	Parent		Subsidiaries			Subsidiaries		Adjustments			Consolidated

Assets
Cash and cash equivalents	$	49.4	$	(11.0	)	$	75.1	$	—		$	113.5
Accounts receivable, less allowance for doubtful accounts	79.7		992.9			96.6		—			1,169.2
Inventories	64.9		1,549.5			155.5		—			1,769.9
Income taxes receivable	52.2		—			—		(52.2		)	—
Intercompany receivables	0.6		17.7			1.4		(19.7		)	—
Other current assets	115.0		50.1			14.6		(76.9		)	102.8
Total current assets	361.8		2,599.2			343.2		(148.8		)	3,155.4

Investments in subsidiaries	4,645.3		219.2			—		(4,864.5		)	—
Property, plant and equipment, net	103.9		1,306.5			197.4		—			1,607.8
Goodwill	23.8		1,549.8			102.7		—			1,676.3
Intangible assets, net	33.0		1,037.0			116.2		—			1,186.2
Intercompany receivables	1,365.0		84.5			10.2		(1,459.7		)	—
Other assets	22.6		61.1			5.3		—			89.0
Total assets	$	6,555.4	$	6,857.3		$	775.0	$	(6,473.0	)	$	7,714.7

Liabilities & Equity
Accounts payable	$	40.4	$	414.6		$	22.5	$	(19.7	)	$	457.8
Accrued compensation and retirement costs	13.3		81.9			9.8		—			105.0
Other current liabilities	63.7		82.6			68.1		(53.9		)	160.5
Deferred income taxes	—		75.2			—		(75.2		)	—
Current maturities of long-term debt and short-term borrowings	31.5		—			7.7		—			39.2
Total current liabilities	148.9		654.3			108.1		(148.8		)	762.5
Long-term debt	2,040.6		5.7			46.9		—			2,093.2
Intercompany borrowings	—		1,312.2			147.5		(1,459.7		)	—
Other long-term liabilities	321.6		445.3			37.9		—			804.8
Total Reliance shareholders’ equity	4,044.3		4,433.3			431.2		(4,864.5		)	4,044.3
Noncontrolling interests	—		6.5			3.4		—			9.9
Total equity	4,044.3		4,439.8			434.6		(4,864.5		)	4,054.2
Total liabilities and equity	$	6,555.4	$	6,857.3		$	775.0	$	(6,473.0	)	$	7,714.7

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 June 30, 2014
(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	191.8		$	2,311.4		$	173.6		$	(60.0	)	$	2,616.8

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	136.0			1,738.6			128.9			(60.0		)	1,943.5
Warehouse, delivery, selling, general and administrative	42.6			387.6			31.1			(16.4		)	444.9
Depreciation and amortization	5.0			42.9			4.8			—			52.7
	183.6			2,169.1			164.8			(76.4		)	2,441.1

Operating income	8.2			142.3			8.8			16.4			175.7

Other income (expense):
Interest	(19.3		)	(7.6		)	(1.3		)	8.0			(20.2		)
Other income (expense), net	23.1			0.4			(0.4		)	(24.4		)	(1.3		)
Income before equity in earnings of subsidiaries and income taxes	12.0			135.1			7.1			—			154.2
Equity in earnings of subsidiaries	76.5			3.8			—			(80.3		)	—
Income before income taxes	88.5			138.9			7.1			(80.3		)	154.2
Income tax (benefit) provision	(8.0		)	61.4			3.0			—			56.4
Net income	96.5			77.5			4.1			(80.3		)	97.8
Less: Net income attributable to noncontrolling interests	—			1.2			0.1			—			1.3
Net income attributable to Reliance	$	96.5		$	76.3		$	4.0		$	(80.3	)	$	96.5
Comprehensive income attributable to Reliance	$	97.2		$	76.3		$	17.5		$	(80.3	)	$	110.7

Condensed Unaudited Consolidating Statement of Income
For the three months ended June 30, 2013

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	183.6		$	2,139.2		$	177.5		$	(52.0	)	$	2,448.3

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	129.3			1,617.6			131.8			(52.0		)	1,826.7
Warehouse, delivery, selling, general and administrative	58.6			349.8			31.4			(13.8		)	426.0
Depreciation and amortization	5.1			40.9			4.1			—			50.1
	193.0			2,008.3			167.3			(65.8		)	2,302.8

Operating (loss) income	(9.4		)	130.9			10.2			13.8			145.5

Other income (expense):
Interest	(21.2		)	(4.9		)	(0.8		)	4.8			(22.1		)
Other income (expense), net	18.5			(0.2		)	(0.3		)	(18.6		)	(0.6		)
(Loss) income before equity in earnings of subsidiaries and income taxes	(12.1		)	125.8			9.1			—			122.8
Equity in earnings of subsidiaries	82.1			3.2			—			(85.3		)	—
Income before income taxes	70.0			129.0			9.1			(85.3		)	122.8
Income tax (benefit) provision	(11.0		)	49.5			2.4			—			40.9
Net income	81.0			79.5			6.7			(85.3		)	81.9
Less: Net income attributable to noncontrolling interests	—			0.8			0.1			—			0.9
Net income attributable to Reliance	$	81.0		$	78.7		$	6.6		$	(85.3	)	$	81.0
Comprehensive income (loss) attributable to Reliance	$	81.0		$	78.7		$	(3.2	)	$	(85.3	)	$	71.2

Condensed Unaudited Consolidating Statement of Income
For the six months ended June 30, 2014

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	374.2		$	4,556.3		$	361.2		$	(121.9	)	$	5,169.8

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	282.1			3,417.2			271.9			(121.9		)	3,849.3
Warehouse, delivery, selling, general and administrative	87.7			768.7			62.3			(32.8		)	885.9
Depreciation and amortization	9.5			85.8			9.3			—			104.6
	379.3			4,271.7			343.5			(154.7		)	4,839.8

Operating (loss) income	(5.1		)	284.6			17.7			32.8			330.0

Other income (expense):
Interest	(38.5		)	(13.8		)	(2.5		)	14.4			(40.4		)
Other income, net	43.6			0.2			2.1			(47.2		)	(1.3		)
Income before equity in earnings of subsidiaries and income taxes	—			271.0			17.3			—			288.3
Equity in earnings of subsidiaries	161.2			6.6			—			(167.8		)	—
Income before income taxes	161.2			277.6			17.3			(167.8		)	288.3
Income tax (benefit) provision	(22.5		)	118.2			6.9			—			102.6
Net income	183.7			159.4			10.4			(167.8		)	185.7
Less: Net income attributable to noncontrolling interests	—			1.9			0.1			—			2.0
Net income attributable to Reliance	$	183.7		$	157.5		$	10.3		$	(167.8	)	$	183.7
Comprehensive income attributable to Reliance	$	184.6		$	157.6		$	14.7		$	(167.8	)	$	189.1

Condensed Unaudited Consolidating Statement of Income
For the six months ended June 30, 2013

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	363.0		$	3,877.9		$	341.2		$	(108.5	)	$	4,473.6

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	267.4			2,909.0			255.3			(108.5		)	3,323.2
Warehouse, delivery, selling, general and administrative	109.5			649.4			54.7			(29.9		)	783.7
Depreciation and amortization	9.1			74.5			7.6			—			91.2
	386.0			3,632.9			317.6			(138.4		)	4,198.1

Operating (loss) income	(23.0		)	245.0			23.6			29.9			275.5

Other income (expense):
Interest	(34.3		)	(7.4		)	(1.3		)	7.8			(35.2		)
Other income (expense), net	36.8			3.7			(0.5		)	(37.7		)	2.3
(Loss) income before equity in earnings of subsidiaries and income taxes	(20.5		)	241.3			21.8			—			242.6
Equity in earnings of subsidiaries	164.7			8.0			—			(172.7		)	—
Income before income taxes	144.2			249.3			21.8			(172.7		)	242.6
Income tax (benefit) provision	(20.5		)	91.7			5.0			—			76.2
Net income	164.7			157.6			16.8			(172.7		)	166.4
Less: Net income attributable to noncontrolling interests	—			1.6			0.1			—			1.7
Net income attributable to Reliance	$	164.7		$	156.0		$	16.7		$	(172.7	)	$	164.7
Comprehensive income (loss) attributable to Reliance	$	163.2		$	156.2		$	(1.7	)	$	(172.7	)	$	145.0

Condensed Unaudited Consolidating Cash Flow Statement
For the six months ended June 30, 2014

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Cash provided by (used in) operating activities	$	167.8		$	(63.2	)	$	4.9		$	—		$	109.5

Investing activities:
Purchases of property, plant and equipment	(10.4		)	(72.7		)	(3.8		)	—			(86.9		)
Net advances to subsidiaries	(123.0		)	—			—			123.0			—
Other investing activities, net	0.1			(9.1		)	26.2			—			17.2
Cash (used in) provided by investing activities	(133.3		)	(81.8		)	22.4			123.0			(69.7		)

Financing activities:
Net short-term debt repayments	—			—			(3.6		)	—			(3.6		)
Proceeds from long-term debt borrowings	297.0			—			—			—			297.0
Principal payments on long-term debt	(269.5		)	(0.8		)	—			—			(270.3		)
Dividends paid	(54.4		)	—			—			—			(54.4		)
Net intercompany borrowings (repayments)	—			137.5			(14.5		)	(123.0		)	—
Other financing activities, net	22.1			(1.9		)	—			—			20.2
Cash (used in) provided by financing activities	(4.8		)	134.8			(18.1		)	(123.0		)	(11.1		)
Effect of exchange rate changes on cash and cash equivalents	—			—			1.2			—			1.2
Increase (decrease) in cash and cash equivalents	29.7			(10.2		)	10.4			—			29.9
Cash and cash equivalents at beginning of year	19.7			(0.8		)	64.7			—			83.6
Cash and cash equivalents at end of period	$	49.4		$	(11.0	)	$	75.1		$	—		$	113.5

Condensed Unaudited Consolidating Cash Flow Statement
For the six months ended June 30, 2013

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Cash provided by operating activities	$	94.8		$	186.4		$	2.7		$	—		$	283.9

Investing activities:
Purchases of property, plant and equipment	(6.2		)	(62.6		)	(5.5		)	—			(74.3		)
Acquisitions, net of cash acquired	(794.7		)	—			—			—			(794.7		)
Net advances to subsidiaries	(326.9		)	—			—			326.9			—
Other investing activities, net	0.1			8.3			0.1			—			8.5
Cash used in investing activities	(1,127.7		)	(54.3		)	(5.4		)	326.9			(860.5		)

Financing activities:
Net short-term debt (repayments) borrowings	—			(473.8		)	4.5			—			(469.3		)
Proceeds from long-term debt borrowings	2,257.9			—			—			—			2,257.9
Principal (payments) borrowings on long-term debt	(1,191.2		)	(0.5		)	0.1			—			(1,191.6		)
Dividends paid	(46.0		)	—			—			—			(46.0		)
Net intercompany borrowings	—			322.7			4.2			(326.9		)	—
Other financing activities, net	31.8			(1.4		)	—			—			30.4
Cash provided by (used in) financing activities	1,052.5			(153.0		)	8.8			(326.9		)	581.4
Effect of exchange rate changes on cash and cash equivalents	—			—			(1.6		)	—			(1.6		)
Increase (decrease) in cash and cash equivalents	19.6			(20.9		)	4.5			—			3.2
Cash and cash equivalents at beginning of year	28.1			13.1			56.4			—			97.6
Cash and cash equivalents at end of period	$	47.7		$	(7.8	)	$	60.9		$	—		$	100.8