12. 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 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 September 30, 2015

(in millions)

						Non-
			Guarantor			Guarantor		Consolidating
	Parent		Subsidiaries			Subsidiaries		Adjustments			Consolidated

Assets
Cash and cash equivalents	$	13.6	$	(7.1	)	$	87.6	$	—		$	94.1
Accounts receivable, net	78.4		850.2			164.9		(19.2		)	1,074.3
Inventories	46.3		1,293.2			247.8		—			1,587.3
Income taxes receivable	82.2		—			—		(43.6		)	38.6
Other current assets	121.9		37.3			15.2		(78.7		)	95.7

Total current assets	342.4		2,173.6			515.5		(141.5		)	2,890.0

Investments in subsidiaries	5,011.9		286.0			—		(5,297.9		)	—
Property, plant and equipment, net	107.9		1,309.2			208.9		—			1,626.0
Goodwill	23.8		1,571.1			132.1		—			1,727.0
Intangible assets, net	14.6		987.9			138.2		—			1,140.7
Intercompany receivables	820.9		41.1			26.3		(888.3		)	—
Other assets	24.3		41.9			5.7		—			71.9

Total assets	$	6,345.8	$	6,410.8		$	1,026.7	$	(6,327.7	)	$	7,455.6


Liabilities & Equity
Accounts payable	$	32.4	$	234.4		$	78.9	$	(19.2	)	$	326.5
Accrued compensation and retirement costs	22.2		86.3			10.7		—			119.2
Other current liabilities	71.2		60.4			57.9		(46.5		)	143.0
Deferred income taxes	—		75.2			0.6		(75.8		)	—
Current maturities of long-term debt and short-term borrowings	50.0		—			59.4		—			109.4

Total current liabilities	175.8		456.3			207.5		(141.5		)	698.1
Long-term debt	1,935.9		5.7			44.5		—			1,986.1
Intercompany borrowings	—		733.2			155.1		(888.3		)	—
Other long-term liabilities	314.3		455.5			51.1		—			820.9
Total Reliance stockholders’ equity	3,919.8		4,753.6			544.3		(5,297.9		)	3,919.8
Noncontrolling interests	—		6.5			24.2		—			30.7

Total equity	3,919.8		4,760.1			568.5		(5,297.9		)	3,950.5

Total liabilities and equity	$	6,345.8	$	6,410.8		$	1,026.7	$	(6,327.7	)	$	7,455.6

Condensed Unaudited Consolidating Balance Sheet

As of December 31, 2014

(in millions)

						Non-
			Guarantor			Guarantor		Consolidating
	Parent		Subsidiaries			Subsidiaries		Adjustments			Consolidated

Assets
Cash and cash equivalents	$	41.9	$	(8.3	)	$	72.6	$	—		$	106.2
Accounts receivable, net	72.7		923.1			164.8		(16.0		)	1,144.6
Inventories	57.6		1,454.2			240.3		—			1,752.1
Other current assets	139.3		38.5			16.1		(75.7		)	118.2

Total current assets	311.5		2,407.5			493.8		(91.7		)	3,121.1

Investments in subsidiaries	4,891.8		299.9			—		(5,191.7		)	—
Property, plant and equipment, net	103.8		1,333.7			218.9		—			1,656.4
Goodwill	23.8		1,571.0			141.6		—			1,736.4
Intangible assets, net	16.1		1,056.7			154.6		—			1,227.4
Intercompany receivables	1,361.7		26.1			18.2		(1,406.0		)	—
Other assets	22.7		52.5			5.9		—			81.1

Total assets	$	6,731.4	$	6,747.4		$	1,033.0	$	(6,689.4	)	$	7,822.4


Liabilities & Equity
Accounts payable	$	29.2	$	212.3		$	60.6	$	(15.6	)	$	286.5
Accrued compensation and retirement costs	23.9		89.9			14.6		—			128.4
Other current liabilities	65.2		26.1			62.6		0.1			154.0
Deferred income taxes	—		75.1			0.6		(75.7		)	—
Current maturities of long-term debt and short-term borrowings	43.8		—			50.1		—			93.9

Total current liabilities	162.1		403.4			188.5		(91.2		)	662.8
Long-term debt	2,156.6		5.7			45.8		—			2,208.1
Intercompany borrowings	—		1,242.5			163.5		(1,406.0		)	—
Other long-term liabilities	313.7		456.2			54.1		(0.4		)	823.6
Total Reliance stockholders’ equity	4,099.0		4,633.4			558.4		(5,191.8		)	4,099.0
Noncontrolling interests	—		6.2			22.7		—			28.9

Total equity	4,099.0		4,639.6			581.1		(5,191.8		)	4,127.9

Total liabilities and equity	$	6,731.4	$	6,747.4		$	1,033.0	$	(6,689.4	)	$	7,822.4

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2015
(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	175.1		$	1,936.9		$	222.2		$	(48.0	)	$	2,286.2

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	122.5			1,398.1			175.3			(48.0		)	1,647.9
Warehouse, delivery, selling, general and administrative	38.2			329.5			37.1			24.1			428.9
Depreciation and amortization	3.9			44.8			5.7			—			54.4
Impairment of long-lived assets	—			53.3			—			—			53.3

	164.6			1,825.7			218.1			(23.9		)	2,184.5

Operating income	10.5			111.2			4.1			(24.1		)	101.7

Other income (expense):
Interest	(20.2		)	(4.8		)	(1.9		)	5.7			(21.2		)
Other (expense) income , net	(25.8		)	(0.2		)	4.8			18.4			(2.8		)

(Loss) income before equity in earnings of subsidiaries and income taxes	(35.5		)	106.2			7.0			—			77.7
Equity in earnings of subsidiaries	79.5			2.3			—			(81.8		)	—

Income before income taxes	44.0			108.5			7.0			(81.8		)	77.7
Income tax (benefit) provision	(7.4		)	30.8			1.5			—			24.9

Net income	51.4			77.7			5.5			(81.8		)	52.8
Less: Net income attributable to noncontrolling interests	—			1.3			0.1			—			1.4

Net income attributable to Reliance	$	51.4		$	76.4		$	5.4		$	(81.8	)	$	51.4

Comprehensive income (loss) attributable to Reliance	$	25.6		$	59.8		$	(16.7	)	$	(43.1	)	$	25.6

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2014

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	195.5		$	2,338.6		$	231.3		$	(60.3	)	$	2,705.1

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	149.2			1,762.0			176.1			(60.4		)	2,026.9
Warehouse, delivery, selling, general and administrative	59.6			386.5			38.2			(11.4		)	472.9
Depreciation and amortization	5.1			43.6			5.3			—			54.0
Impairment of long-lived assets	—			—			—			—			—
	213.9			2,192.1			219.6			(71.8		)	2,553.8

Operating (loss) income	(18.4		)	146.5			11.7			11.5			151.3

Other income (expense):
Interest	(19.7		)	(7.5		)	(1.7		)	8.1			(20.8		)
Other income (expense), net	16.9			(1.1		)	3.7			(19.6		)	(0.1		)
(Loss) income before equity in earnings of subsidiaries and income taxes	(21.2		)	137.9			13.7			—			130.4
Equity in earnings of subsidiaries	102.4			4.4			—			(106.8		)	—
Income before income taxes	81.2			142.3			13.7			(106.8		)	130.4
Income tax (benefit) provision	(14.3		)	45.1			2.7			—			33.5
Net income	95.5			97.2			11.0			(106.8		)	96.9
Less: Net income attributable to noncontrolling interests	—			1.4			—			—			1.4
Net income attributable to Reliance	$	95.5		$	95.8		$	11.0		$	(106.8	)	$	95.5
Comprehensive income (loss) attributable to Reliance	$	78.5		$	85.3		$	(1.4	)	$	(83.9	)	$	78.5

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2015

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	552.8		$	6,243.2		$	679.5		$	(151.2	)	$	7,324.3

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	406.0			4,580.4			524.3			(151.3		)	5,359.4
Warehouse, delivery, selling, general and administrative	119.6			1,094.8			111.7			(10.3		)	1,315.8
Depreciation and amortization	12.9			134.6			17.1			—			164.6
Impairment of long-lived assets	—			53.3			—			—			53.3

	538.5			5,863.1			653.1			(161.6		)	6,893.1

Operating income	14.3			380.1			26.4			10.4			431.2

Other income (expense):
Interest	(60.4		)	(15.8		)	(5.2		)	18.1			(63.3		)
Other income (expense), net	11.6			(0.6		)	13.8			(28.5		)	(3.7		)

(Loss) income before equity in earnings of subsidiaries and income taxes	(34.5		)	363.7			35.0			—			364.2
Equity in earnings of subsidiaries	252.3			8.4			—			(260.7		)	—

Income before income taxes	217.8			372.1			35.0			(260.7		)	364.2
Income tax (benefit) provision	(25.1		)	131.5			10.5			—			116.9

Net income	242.9			240.6			24.5			(260.7		)	247.3
Less: Net income attributable to noncontrolling interests	—			4.0			0.4			—			4.4

Net income attributable to Reliance	$	242.9		$	236.6		$	24.1		$	(260.7	)	$	242.9

Comprehensive income (loss) attributable to Reliance	$	199.7		$	206.7		$	(16.2	)	$	(190.5	)	$	199.7

Condensed Unaudited Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2014

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net sales	$	569.7		$	6,894.9		$	592.5		$	(182.2	)	$	7,874.9

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)	431.3			5,179.2			448.0			(182.3		)	5,876.2
Warehouse, delivery, selling, general and administrative	147.3			1,155.2			100.5			(44.2		)	1,358.8
Depreciation and amortization	14.6			129.4			14.6			—			158.6
Impairment of long-lived assets	—			—			—			—			—

	593.2			6,463.8			563.1			(226.5		)	7,393.6

Operating (loss) income	(23.5		)	431.1			29.4			44.3			481.3

Other income (expense):
Interest	(58.2		)	(21.3		)	(4.2		)	22.5			(61.2		)
Other income (expense), net	60.5			(0.9		)	5.8			(66.8		)	(1.4		)

(Loss) income before equity in earnings of subsidiaries and income taxes	(21.2		)	408.9			31.0			—			418.7
Equity in earnings of subsidiaries	263.6			11.0			—			(274.6		)	—

Income before income taxes	242.4			419.9			31.0			(274.6		)	418.7
Income tax (benefit) provision	(36.8		)	163.3			9.6			—			136.1

Net income	279.2			256.6			21.4			(274.6		)	282.6
Less: Net income attributable to noncontrolling interests	—			3.3			0.1			—			3.4

Net income attributable to Reliance	$	279.2		$	253.3		$	21.3		$	(274.6	)	$	279.2

Comprehensive income attributable to Reliance	$	267.6		$	243.8		$	13.3		$	(257.1	)	$	267.6

Condensed Unaudited Consolidating Cash Flow Statement

For the Nine Months Ended September 30, 2015

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net cash provided by operating activities	$	114.4		$	562.6		$	39.3		$	—		$	716.3

Investing activities:
Purchases of property, plant and equipment	(14.2		)	(97.1		)	(8.1		)	—			(119.4		)
Net repayments from subsidiaries	490.5			—			—			(490.5		)	—
Other investing activities, net	(5.9		)	11.4			0.1			—			5.6

Net cash provided by (used in) investing activities	470.4			(85.7		)	(8.0		)	(490.5		)	(113.8		)

Financing activities:
Net short-term debt borrowings	—			—			9.9			—			9.9
Proceeds from long-term debt borrowings	510.0			—			—			—			510.0
Principal payments on long-term debt	(727.3		)	(1.7		)	—			—			(729.0		)
Dividends and dividend equivalents paid	(90.7		)	—			—			—			(90.7		)
Share repurchases	(313.9		)	—			—			—			(313.9		)
Net intercompany repayments	—			(474.0		)	(16.5		)	490.5			—
Other financing activities, net	8.8			—			(3.3		)	—			5.5

Net cash used in financing activities	(613.1		)	(475.7		)	(9.9		)	490.5			(608.2		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(6.4		)	—			(6.4		)

(Decrease) increase in cash and cash equivalents	(28.3		)	1.2			15.0			—			(12.1		)
Cash and cash equivalents at beginning of year	41.9			(8.3		)	72.6			—			106.2

Cash and cash equivalents at end of period	$	13.6		$	(7.1	)	$	87.6		$	—		$	94.1

Condensed Unaudited Consolidating Cash Flow Statement

For the Nine Months Ended September 30, 2014

(in millions)

							Non-
				Guarantor			Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated

Net cash provided by (used in) operating activities	$	139.2		$	(0.3	)	$	23.9		$	—		$	162.8

Investing activities:
Purchases of property, plant and equipment	(13.5		)	(113.1		)	(7.8		)	—			(134.4		)
Acquisitions, net of cash acquired	—			(32.3		)	(112.7		)				(145.0		)
Net advances to subsidiaries	(229.2		)	—			—			229.2			—
Other investing activities, net	(0.7		)	(14.2		)	33.1			—			18.2

Net cash used in investing activities	(243.4		)	(159.6		)	(87.4		)	229.2			(261.2		)

Financing activities:
Net short-term debt borrowings	—			—			4.3			—			4.3
Proceeds from long-term debt borrowings	535.0			—			0.7			—			535.7
Principal payments on long-term debt	(367.1		)	(1.5		)	—			—			(368.6		)
Dividends and dividend equivalents paid	(81.7		)	—			—			—			(81.7		)
Net intercompany borrowings	—			163.2			66.0			(229.2		)	—
Other financing activities, net	28.7			(2.9		)	—			—			25.8

Net cash provided by financing activities	114.9			158.8			71.0			(229.2		)	115.5
Effect of exchange rate changes on cash and cash equivalents	—			—			—			—			—

Increase (decrease) in cash and cash equivalents	10.7			(1.1		)	7.5			—			17.1
Cash and cash equivalents at beginning of year	19.7			(0.8		)	64.7			—			83.6

Cash and cash equivalents at end of period	$	30.4		$	(1.9	)	$	72.2		$	—		$	100.7