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 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 subsidiary guarantors. There are no significant restrictions on our ability to obtain funds from any of the subsidiary guarantors by dividends or loans. The supplemental consolidating financial information has been presented in lieu of separate financial statements of the subsidiary guarantors as such separate financial statements are not considered meaningful.

Condensed Unaudited Consolidating Balance Sheet

As of June 30, 2016

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Assets
Cash and cash equivalents	$	13.4	$	(0.4)	$	103.5	$	—	$	116.5
Accounts receivable, net		78.9		808.9		153.5		(5.3)		1,036.0
Inventories		68.2		1,324.8		230.8		—		1,623.8
Income taxes receivable		46.1		—		—		(29.2)		16.9
Other current assets		34.6		11.9		15.5		(1.4)		60.6
Total current assets		241.2		2,145.2		503.3		(35.9)		2,853.8

Investments in subsidiaries		5,298.0		342.5		—		(5,640.5)		—
Property, plant and equipment, net		115.1		1,352.9		209.2		—		1,677.2
Goodwill		23.8		1,674.0		133.1		—		1,830.9
Intangible assets, net		13.0		1,058.3		134.0		—		1,205.3
Intercompany receivables		765.4		45.9		33.8		(845.1)		—
Other assets		27.1		44.1		6.2		—		77.4
Total assets	$	6,483.6	$	6,662.9	$	1,019.6	$	(6,521.5)	$	7,644.6

Liabilities & Equity
Accounts payable	$	36.6	$	259.4	$	70.1	$	(5.3)	$	360.8
Accrued compensation and retirement costs		19.9		82.7		6.0		—		108.6
Other current liabilities		55.3		42.6		56.6		(30.6)		123.9
Current maturities of long-term debt and short-term borrowings		400.0		—		84.7		—		484.7
Total current liabilities		511.8		384.7		217.4		(35.9)		1,078.0
Long-term debt		1,674.1		5.7		4.9		—		1,684.7
Intercompany borrowings		—		700.1		145.0		(845.1)		—
Other long-term liabilities		196.9		504.5		51.1		—		752.5
Total Reliance stockholders’ equity		4,100.8		5,060.7		579.8		(5,640.5)		4,100.8
Noncontrolling interests		—		7.2		21.4		—		28.6
Total equity		4,100.8		5,067.9		601.2		(5,640.5)		4,129.4
Total liabilities and equity	$	6,483.6	$	6,662.9	$	1,019.6	$	(6,521.5)	$	7,644.6

Condensed Unaudited Consolidating Balance Sheet

As of December 31, 2015

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Assets
Cash and cash equivalents	$	10.7	$	(1.0)	$	94.6	$	—	$	104.3
Accounts receivable, net		66.5		701.8		152.3		(4.0)		916.6
Inventories		56.0		1,145.1		234.9		—		1,436.0
Income taxes receivable		38.2		—		(1.7)		—		36.5
Other current assets		36.4		15.1		12.6		(3.3)		60.8
Total current assets		207.8		1,861.0		492.7		(7.3)		2,554.2

Investments in subsidiaries		5,046.2		328.0		—		(5,374.2)		—
Property, plant and equipment, net		115.5		1,311.3		208.7		—		1,635.5
Goodwill		23.8		1,571.1		129.9		—		1,724.8
Intangible assets, net		14.0		977.5		133.9		—		1,125.4
Intercompany receivables		614.2		45.4		30.5		(690.1)		—
Other assets		24.6		50.9		6.2		—		81.7
Total assets	$	6,046.1	$	6,145.2	$	1,001.9	$	(6,071.6)	$	7,121.6

Liabilities & Equity
Accounts payable	$	25.3	$	160.0	$	65.7	$	(4.0)	$	247.0
Accrued compensation and retirement costs		29.5		79.1		10.1		—		118.7
Other current liabilities		54.0		15.3		57.2		(3.3)		123.2
Current maturities of long-term debt and short-term borrowings		400.0		—		100.8		—		500.8
Total current liabilities		508.8		254.4		233.8		(7.3)		989.7
Long-term debt		1,417.3		5.7		4.9		—		1,427.9
Intercompany borrowings		—		547.6		142.5		(690.1)		—
Other long-term liabilities		205.9		505.0		50.4		—		761.3
Total Reliance stockholders’ equity		3,914.1		4,824.5		549.7		(5,374.2)		3,914.1
Noncontrolling interests		—		8.0		20.6		—		28.6
Total equity		3,914.1		4,832.5		570.3		(5,374.2)		3,942.7
Total liabilities and equity	$	6,046.1	$	6,145.2	$	1,001.9	$	(6,071.6)	$	7,121.6

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2016

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net sales	$	178.2	$	1,857.6	$	214.2	$	(46.1)	$	2,203.9

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		110.7		1,290.3		163.9		(46.1)		1,518.8
Warehouse, delivery, selling, general and administrative		47.0		374.8		35.7		(1.0)		456.5
Depreciation and amortization		4.4		45.6		5.5		—		55.5
		162.1		1,710.7		205.1		(47.1)		2,030.8

Operating income		16.1		146.9		9.1		1.0		173.1

Other income (expense):
Interest		(20.8)		(5.7)		(1.8)		6.6		(21.7)
Other income (expense), net		3.9		(0.3)		4.2		(7.6)		0.2
(Loss) income before equity in earnings of subsidiaries and income taxes		(0.8)		140.9		11.5		—		151.6
Equity in earnings of subsidiaries		92.4		4.7		—		(97.1)		—
Income before income taxes		91.6		145.6		11.5		(97.1)		151.6
Income tax (benefit) provision		(9.3)		56.4		2.4		—		49.5
Net income		100.9		89.2		9.1		(97.1)		102.1
Less: Net income attributable to noncontrolling interests		—		1.2		—		—		1.2
Net income attributable to Reliance	$	100.9	$	88.0	$	9.1	$	(97.1)	$	100.9
Comprehensive income attributable to Reliance	$	96.1	$	88.0	$	11.0	$	(99.0)	$	96.1

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2015

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net sales	$	185.6	$	2,069.2	$	219.4	$	(50.5)	$	2,423.7

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		128.4		1,521.4		168.6		(50.6)		1,767.8
Warehouse, delivery, selling, general and administrative		41.5		379.9		37.2		(17.8)		440.8
Depreciation and amortization		3.9		45.3		5.7		—		54.9
		173.8		1,946.6		211.5		(68.4)		2,263.5

Operating income		11.8		122.6		7.9		17.9		160.2

Other income (expense):
Interest		(20.6)		(5.1)		(1.8)		6.0		(21.5)
Other income (expense), net		18.5		(0.7)		3.3		(23.9)		(2.8)
Income before equity in earnings		9.7		116.8		9.4		—		135.9
Equity in earnings of subsidiaries		74.0		2.6		—		(76.6)		—
Income before income taxes		83.7		119.4		9.4		(76.6)		135.9
Income tax (benefit) provision		(6.5)		45.7		5.1		—		44.3
Net income		90.2		73.7		4.3		(76.6)		91.6
Less: Net income attributable to noncontrolling interests		—		1.3		0.1		—		1.4
Net income attributable to Reliance	$	90.2	$	72.4	$	4.2	$	(76.6)	$	90.2
Comprehensive income attributable to Reliance	$	97.6	$	76.8	$	6.3	$	(83.1)	$	97.6

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2016

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net sales	$	348.0	$	3,674.1	$	435.0	$	(90.5)	$	4,366.6

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		240.0		2,560.8		334.5		(90.5)		3,044.8
Warehouse, delivery, selling, general and administrative		94.6		748.4		70.4		(6.1)		907.3
Depreciation and amortization		8.5		92.0		11.1		—		111.6
		343.1		3,401.2		416.0		(96.6)		4,063.7

Operating income		4.9		272.9		19.0		6.1		302.9

Other income (expense):
Interest		(41.5)		(8.6)		(3.3)		10.0		(43.4)
Other income, net		7.3		0.9		9.2		(16.1)		1.3
(Loss) income before equity in earnings of subsidiaries and income taxes		(29.3)		265.2		24.9		—		260.8
Equity in earnings of subsidiaries		207.0		8.9		—		(215.9)		—
Income before income taxes		177.7		274.1		24.9		(215.9)		260.8
Income tax (benefit) provision		(15.4)		74.9		5.7		—		65.2
Net income		193.1		199.2		19.2		(215.9)		195.6
Less: Net income attributable to noncontrolling interests		—		2.5		—		—		2.5
Net income attributable to Reliance	$	193.1	$	196.7	$	19.2	$	(215.9)	$	193.1
Comprehensive income attributable to Reliance	$	204.0	$	209.8	$	39.7	$	(249.5)	$	204.0

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2015

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net sales	$	377.7	$	4,306.3	$	457.3	$	(103.2)	$	5,038.1

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		283.5		3,182.3		349.0		(103.3)		3,711.5
Warehouse, delivery, selling, general and administrative		81.4		765.3		74.6		(34.4)		886.9
Depreciation and amortization		9.0		89.8		11.4		—		110.2
		373.9		4,037.4		435.0		(137.7)		4,708.6

Operating income		3.8		268.9		22.3		34.5		329.5

Other income (expense):
Interest		(40.2)		(11.0)		(3.3)		12.4		(42.1)
Other income (expense), net		37.4		(0.4)		9.0		(46.9)		(0.9)
Income before equity in earnings		1.0		257.5		28.0		—		286.5
Equity in earnings of subsidiaries		172.8		6.1		—		(178.9)		—
Income before income taxes		173.8		263.6		28.0		(178.9)		286.5
Income tax (benefit) provision		(17.7)		100.7		9.0		—		92.0
Net income		191.5		162.9		19.0		(178.9)		194.5
Less: Net income attributable to noncontrolling interests		—		2.7		0.3		—		3.0
Net income attributable to Reliance	$	191.5	$	160.2	$	18.7	$	(178.9)	$	191.5
Comprehensive income attributable to Reliance	$	174.1	$	146.9	$	0.5	$	(147.4)	$	174.1

Condensed Unaudited Consolidating Cash Flow Statement

For the Six Months Ended June 30, 2016

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net cash (used in) provided by operating activities	$	(34.9)	$	203.9	$	36.2	$	—	$	205.2

Investing activities:
Purchases of property, plant and equipment		(7.2)		(56.7)		(7.8)		—		(71.7)
Acquisitions, net of cash acquired		(322.6)		0.2		—		—		(322.4)
Net repayments from subsidiaries		147.0		—		—		(147.0)		—
Other investing activities, net		(5.5)		4.1		0.1		—		(1.3)
Net cash used in investing activities		(188.3)		(52.4)		(7.7)		(147.0)		(395.4)

Financing activities:
Net short-term debt repayments		—		—		(13.5)		—		(13.5)
Proceeds from long-term debt borrowings		613.0		—		—		—		613.0
Principal payments on long-term debt		(358.1)		(6.9)		(0.1)		—		(365.1)
Dividends and dividend equivalents paid		(58.0)		—		—		—		(58.0)
Net intercompany (repayments) borrowings		—		(144.0)		(3.0)		147.0		—
Other financing activities, net		29.0		—		(2.5)		—		26.5
Net cash provided by (used in) financing activities		225.9		(150.9)		(19.1)		147.0		202.9
Effect of exchange rate changes on cash and cash equivalents		—		—		(0.5)		—		(0.5)
Increase in cash and cash equivalents		2.7		0.6		8.9		—		12.2
Cash and cash equivalents at beginning of year		10.7		(1.0)		94.6		—		104.3
Cash and cash equivalents at end of period	$	13.4	$	(0.4)	$	103.5	$	—	$	116.5

Condensed Unaudited Consolidating Cash Flow Statement

For the Six Months Ended June 30, 2015

(in millions)


					Non-
			Guarantor		Guarantor		Consolidating
	Parent		Subsidiaries		Subsidiaries		Adjustments		Consolidated

Net cash provided by operating activities	$	130.1	$	304.2	$	29.6	$	—	$	463.9

Investing activities:
Purchases of property, plant and equipment		(7.4)		(65.0)		(4.7)		—		(77.1)
Net repayments from subsidiaries		241.5		—		—		(241.5)		—
Other investing activities, net		—		(1.5)		—		—		(1.5)
Net cash provided by (used) in investing activities		234.1		(66.5)		(4.7)		(241.5)		(78.6)

Financing activities:
Net short-term debt borrowings		—		—		6.8		—		6.8
Proceeds from long-term debt borrowings		412.0		—		—		—		412.0
Principal payments on long-term debt		(520.8)		(1.0)		—		—		(521.8)
Dividends and dividend equivalents paid		(61.4)		—		—		—		(61.4)
Share repurchases		(200.0)		—		—		—		(200.0)
Net intercompany repayments		—		(226.7)		(14.8)		241.5		—
Other financing activities, net		8.2		—		(1.9)		—		6.3
Net cash used in financing activities		(362.0)		(227.7)		(9.9)		241.5		(358.1)
Effect of exchange rate changes on cash and cash equivalents		—		—		(1.5)		—		(1.5)
Increase in cash and cash equivalents		2.2		10.0		13.5		—		25.7
Cash and cash equivalents at beginning of year		41.9		(8.3)		72.6		—		106.2
Cash and cash equivalents at end of period	$	44.1	$	1.7	$	86.1	$	—	$	131.9