RELIANCE STEEL & ALUMINUM CO - Quarter Report: 2013 June (Form 10-Q)
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
OR
o 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: 001-13122
RELIANCE STEEL & ALUMINUM CO.
(Exact name of registrant as specified in its charter)
California (State or other jurisdiction of incorporation or organization) |
|
95-1142616 (I.R.S. Employer Identification No.) |
350 South Grand Avenue, Suite 5100
Los Angeles, California 90071
(213) 687-7700
(Address of principal executive offices and telephone number)
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 þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ 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 the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:
Large accelerated filer þ |
|
Accelerated filer o |
|
Non-accelerated filer o |
|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ
As of July 31, 2013, 76,994,489 shares of the registrants common stock, no par value, were outstanding.
|
RELIANCE STEEL & ALUMINUM CO.
PART I -- FINANCIAL INFORMATION
RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)
ASSETS | ||||||||||
|
|
|
June 30, |
|
|
|
December 31, |
| ||
Current assets: |
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
|
|
$ |
100.8 |
|
|
|
$ |
97.6 |
|
Accounts receivable, less allowance for doubtful accounts of $22.9 at June 30, 2013 and $20.5 at December 31, 2012 |
|
|
1,143.5 |
|
|
|
807.7 |
| ||
Inventories |
|
|
1,587.1 |
|
|
|
1,272.3 |
| ||
Prepaid expenses and other current assets |
|
|
47.7 |
|
|
|
40.9 |
| ||
Income taxes receivable |
|
|
17.6 |
|
|
|
28.4 |
| ||
Deferred income taxes |
|
|
35.8 |
|
|
|
30.5 |
| ||
Total current assets |
|
|
2,932.5 |
|
|
|
2,277.4 |
| ||
Property, plant and equipment: |
|
|
|
|
|
|
|
| ||
Land |
|
|
170.8 |
|
|
|
155.6 |
| ||
Buildings |
|
|
925.5 |
|
|
|
725.1 |
| ||
Machinery and equipment |
|
|
1,305.0 |
|
|
|
1,124.7 |
| ||
Accumulated depreciation |
|
|
(815.0 |
) |
|
|
(764.7 |
) | ||
|
|
|
1,586.3 |
|
|
|
1,240.7 |
| ||
|
|
|
|
|
|
|
|
| ||
Goodwill |
|
|
1,658.8 |
|
|
|
1,314.6 |
| ||
Intangible assets, net |
|
|
1,313.9 |
|
|
|
936.5 |
| ||
Cash surrender value of life insurance policies, net |
|
|
38.6 |
|
|
|
45.2 |
| ||
Investments in unconsolidated entities |
|
|
16.0 |
|
|
|
15.5 |
| ||
Other assets |
|
|
29.5 |
|
|
|
27.8 |
| ||
Total assets |
|
|
$ |
7,575.6 |
|
|
|
$ |
5,857.7 |
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND EQUITY | ||||||||||
|
|
|
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
|
|
| ||
Accounts payable |
|
|
$ |
419.3 |
|
|
|
$ |
255.6 |
|
Accrued expenses |
|
|
97.4 |
|
|
|
87.4 |
| ||
Accrued compensation and retirement costs |
|
|
98.6 |
|
|
|
112.8 |
| ||
Accrued insurance costs |
|
|
46.9 |
|
|
|
38.8 |
| ||
Current maturities of long-term debt and short-term borrowings |
|
|
114.6 |
|
|
|
83.6 |
| ||
Total current liabilities |
|
|
776.8 |
|
|
|
578.2 |
| ||
Long-term debt |
|
|
2,219.9 |
|
|
|
1,123.8 |
| ||
Long-term retirement costs |
|
|
100.9 |
|
|
|
94.9 |
| ||
Other long-term liabilities |
|
|
34.1 |
|
|
|
27.1 |
| ||
Deferred income taxes |
|
|
721.1 |
|
|
|
466.3 |
| ||
Commitments and contingencies |
|
|
|
|
|
|
|
| ||
Equity: |
|
|
|
|
|
|
|
| ||
Preferred stock, no par value: |
|
|
|
|
|
|
|
| ||
Authorized shares 5,000,000 |
|
|
|
|
|
|
|
| ||
None issued or outstanding |
|
|
¾ |
|
|
|
¾ |
| ||
Common stock, no par value: |
|
|
|
|
|
|
|
| ||
Authorized shares 200,000,000 |
|
|
|
|
|
|
|
| ||
Issued and outstanding shares 76,920,713 at June 30, 2013 and 76,042,546 at December 31, 2012, stated capital |
|
|
779.1 |
|
|
|
722.2 |
| ||
Retained earnings |
|
|
2,955.6 |
|
|
|
2,837.7 |
| ||
Accumulated other comprehensive loss |
|
|
(21.2 |
) |
|
|
(1.5 |
) | ||
Total Reliance shareholders equity |
|
|
3,713.5 |
|
|
|
3,558.4 |
| ||
Noncontrolling interests |
|
|
9.3 |
|
|
|
9.0 |
| ||
Total equity |
|
|
3,722.8 |
|
|
|
3,567.4 |
| ||
Total liabilities and equity |
|
|
$ |
7,575.6 |
|
|
|
$ |
5,857.7 |
|
* Amounts were derived from audited financial statements.
See accompanying notes to unaudited consolidated financial statements.
RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
|
|
|
Three Months |
|
|
|
Six Months |
| ||||||||||||
|
|
|
Ended June 30, |
|
|
|
Ended June 30, |
| ||||||||||||
|
|
|
2013 |
|
|
|
2012 |
|
|
|
2013 |
|
|
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
|
$ |
2,448.3 |
|
|
|
$ |
2,209.7 |
|
|
|
$ |
4,473.6 |
|
|
|
$ |
4,498.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales (exclusive of depreciation and amortization shown below) |
|
|
1,826.7 |
|
|
|
1,640.3 |
|
|
|
3,323.2 |
|
|
|
3,350.8 |
| ||||
Warehouse, delivery, selling, general and administrative |
|
|
426.0 |
|
|
|
346.7 |
|
|
|
783.7 |
|
|
|
704.4 |
| ||||
Depreciation and amortization |
|
|
50.1 |
|
|
|
36.5 |
|
|
|
91.2 |
|
|
|
72.0 |
| ||||
|
|
|
2,302.8 |
|
|
|
2,023.5 |
|
|
|
4,198.1 |
|
|
|
4,127.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
|
145.5 |
|
|
|
186.2 |
|
|
|
275.5 |
|
|
|
370.8 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest |
|
|
(22.1 |
) |
|
|
(15.0 |
) |
|
|
(35.2 |
) |
|
|
(29.5 |
) | ||||
Other (expense) income, net |
|
|
(0.6 |
) |
|
|
(3.5 |
) |
|
|
2.3 |
|
|
|
3.0 |
| ||||
Income before income taxes |
|
|
122.8 |
|
|
|
167.7 |
|
|
|
242.6 |
|
|
|
344.3 |
| ||||
Income tax provision |
|
|
40.9 |
|
|
|
57.5 |
|
|
|
76.2 |
|
|
|
116.2 |
| ||||
Net income |
|
|
81.9 |
|
|
|
110.2 |
|
|
|
166.4 |
|
|
|
228.1 |
| ||||
Less: Net income attributable to noncontrolling interests |
|
|
0.9 |
|
|
|
1.4 |
|
|
|
1.7 |
|
|
|
3.1 |
| ||||
Net income attributable to Reliance |
|
|
$ |
81.0 |
|
|
|
$ |
108.8 |
|
|
|
$ |
164.7 |
|
|
|
$ |
225.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted earnings per common share attributable to Reliance shareholders |
|
|
$ |
1.05 |
|
|
|
$ |
1.44 |
|
|
|
$ |
2.13 |
|
|
|
$ |
2.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per common share attributable to Reliance shareholders |
|
|
$ |
1.06 |
|
|
|
$ |
1.45 |
|
|
|
$ |
2.15 |
|
|
|
$ |
3.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash dividends per share |
|
|
$ |
0.30 |
|
|
|
$ |
0.15 |
|
|
|
$ |
0.60 |
|
|
|
$ |
0.30 |
|
See accompanying notes to unaudited consolidated financial statements.
RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
| ||||||||||||
|
|
|
2013 |
|
|
|
2012 |
|
|
|
2013 |
|
|
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
|
$ |
81.9 |
|
|
|
$ |
110.2 |
|
|
|
$ |
166.4 |
|
|
|
$ |
228.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency translation loss |
|
|
(9.8 |
) |
|
|
(9.2 |
) |
|
|
(19.9 |
) |
|
|
(1.6 |
) | ||||
Unrealized (loss) gain on investments, net of tax |
|
|
|
|
|
|
(0.2 |
) |
|
|
0.2 |
|
|
|
|
| ||||
Total other comprehensive loss |
|
|
(9.8 |
) |
|
|
(9.4 |
) |
|
|
(19.7 |
) |
|
|
(1.6 |
) | ||||
Comprehensive income |
|
|
72.1 |
|
|
|
100.8 |
|
|
|
146.7 |
|
|
|
226.5 |
| ||||
Less: Comprehensive income attributable to noncontrolling interests |
|
|
0.9 |
|
|
|
1.4 |
|
|
|
1.7 |
|
|
|
3.1 |
| ||||
Comprehensive income attributable to Reliance |
|
|
$ |
71.2 |
|
|
|
$ |
99.4 |
|
|
|
$ |
145.0 |
|
|
|
$ |
223.4 |
|
See accompanying notes to unaudited consolidated financial statements.
RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|
|
Six Months Ended |
| ||||||
|
|
|
2013 |
|
|
|
2012 |
| ||
Operating activities: |
|
|
|
|
|
|
|
| ||
Net income |
|
|
$ |
166.4 |
|
|
|
$ |
228.1 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||
Depreciation and amortization expense |
|
|
91.2 |
|
|
|
72.0 |
| ||
Deferred income tax provision (benefit) |
|
|
0.6 |
|
|
|
(2.5 |
) | ||
Loss (gain) on sales of property, plant and equipment |
|
|
1.0 |
|
|
|
(0.2 |
) | ||
Equity in earnings of unconsolidated entities |
|
|
(0.9 |
) |
|
|
(1.1 |
) | ||
Dividends received from unconsolidated entities |
|
|
0.4 |
|
|
|
0.6 |
| ||
Share-based compensation expense |
|
|
14.5 |
|
|
|
11.5 |
| ||
Other |
|
|
(0.5 |
) |
|
|
0.8 |
| ||
Changes in operating assets and liabilities (excluding effect of businesses acquired): |
|
|
|
|
|
|
|
| ||
Accounts receivable |
|
|
(133.2 |
) |
|
|
(98.6 |
) | ||
Inventories |
|
|
62.8 |
|
|
|
(183.4 |
) | ||
Prepaid expenses and other assets |
|
|
11.3 |
|
|
|
8.8 |
| ||
Accounts payable and other liabilities |
|
|
70.3 |
|
|
|
(14.8 |
) | ||
Net cash provided by operating activities |
|
|
283.9 |
|
|
|
21.2 |
| ||
|
|
|
|
|
|
|
|
| ||
Investing activities: |
|
|
|
|
|
|
|
| ||
Purchases of property, plant and equipment |
|
|
(74.3 |
) |
|
|
(86.8 |
) | ||
Acquisitions, net of cash acquired |
|
|
(794.7 |
) |
|
|
(82.3 |
) | ||
Proceeds from sales of property, plant and equipment |
|
|
0.8 |
|
|
|
2.8 |
| ||
Net proceeds from redemptions of life insurance policies |
|
|
6.9 |
|
|
|
0.7 |
| ||
Other |
|
|
0.8 |
|
|
|
(1.7 |
) | ||
Net cash used in investing activities |
|
|
(860.5 |
) |
|
|
(167.3 |
) | ||
|
|
|
|
|
|
|
|
| ||
Financing activities: |
|
|
|
|
|
|
|
| ||
Net short-term debt repayments |
|
|
(469.3 |
) |
|
|
(29.4 |
) | ||
Proceeds from long-term debt borrowings |
|
|
2,257.9 |
|
|
|
458.0 |
| ||
Principal payments on long-term debt |
|
|
(1,191.6 |
) |
|
|
(259.5 |
) | ||
Debt issuance costs |
|
|
(10.3 |
) |
|
|
¾ |
| ||
Payments to noncontrolling interest holders |
|
|
(1.4 |
) |
|
|
(1.4 |
) | ||
Dividends paid |
|
|
(46.0 |
) |
|
|
(22.5 |
) | ||
Tax (deficit) benefit from share-based compensation |
|
|
(0.3 |
) |
|
|
0.2 |
| ||
Exercise of stock options |
|
|
42.4 |
|
|
|
9.7 |
| ||
Net cash provided by financing activities |
|
|
581.4 |
|
|
|
155.1 |
| ||
Effect of exchange rate changes on cash |
|
|
(1.6 |
) |
|
|
¾ |
| ||
Increase in cash and cash equivalents |
|
|
3.2 |
|
|
|
9.0 |
| ||
Cash and cash equivalents at beginning of year |
|
|
97.6 |
|
|
|
84.6 |
| ||
Cash and cash equivalents at end of period |
|
|
$ |
100.8 |
|
|
|
$ |
93.6 |
|
|
|
|
|
|
|
|
|
| ||
Supplemental cash flow information: |
|
|
|
|
|
|
|
| ||
Interest paid during the period |
|
|
$ |
29.9 |
|
|
|
$ |
29.0 |
|
Income taxes paid during the period |
|
|
$ |
65.7 |
|
|
|
$ |
142.4 |
|
|
|
|
|
|
|
|
|
| ||
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
| ||
Debt assumed in connection with acquisitions |
|
|
$ |
529.9 |
|
|
|
$ |
29.5 |
|
See accompanying notes to unaudited consolidated financial statements.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
1. Basis of Presentation
Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements, have been included. The results of operations for the six months ended June 30, 2013 are not necessarily indicative of the results for the full year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2012, included in Reliance Steel & Aluminum Co.s (Reliance, the Company, we, our or us) Annual Report on Form 10-K.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.
Our consolidated financial statements include the assets, liabilities and operating results of majority-owned subsidiaries. The ownership of the other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Our investments in unconsolidated subsidiaries are recorded under the equity method of accounting. All significant intercompany accounts and transactions have been eliminated.
2. Impact of Recently Issued Accounting Guidance
Accounting Guidance Recently Adopted
On January 1, 2013, we adopted changes issued by the Financial Accounting Standards Board (FASB), which require additional disclosures for the reclassification of significant amounts from accumulated comprehensive income to net income. This guidance requires that the effect of certain significant amounts be presented either on the face of the consolidated statements of income or in a single note. For other amounts, we are required to cross-reference disclosures that provide additional detail about those amounts. The adoption of these changes did not have a material impact on our consolidated financial statements.
3. Acquisitions
2013 Acquisitions
On April 30, 2013, we acquired Travel Main Holdings, LLC (Travel Main), a real estate holding company with a portfolio of 18 real estate properties, all of which are leased by certain of our subsidiaries. The transaction value of $75.6 million included the assumption of $43.8 million of net indebtedness. The cash portion of the purchase price was funded with borrowings on our revolving credit facility.
On April 12, 2013, we acquired all the outstanding shares of Metals USA Holdings Corp. (Metals USA) for $20.65 per share in cash, pursuant to which Metals USA has become a wholly owned subsidiary. Metals USA is one of the largest metal service center businesses in the United States and a leading provider of value-added processed aluminum, brass, copper, carbon steel, stainless steel, manufactured metal components and inventory management services. Metals USA sells its products and services to a diverse customer base and broad range of end markets, including the aerospace, auto, defense, heavy equipment, marine transportation, commercial construction, office furniture manufacturing, energy and oilfield service industries, among several others. This acquisition adds a total of 48 service centers strategically located throughout the United States to our existing operations and complements our existing customer base, product mix and geographic footprint. Net sales of Metals USA during the period from April 13, 2013 through June 30, 2013 were $396.5 million.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
The purchase price for Metals USA of $766.8 million along with assumed debt of $486.1 million represents a total transaction value of approximately $1.25 billion. We funded the transaction and refinanced all but $12.3 million of Metals USAs debt with proceeds from our new $500.0 million term loan and our $500.0 million senior notes offering, with the balance drawn on our existing $1.5 billion credit facility (see Note 7). In the six-month period ended June 30, 2013, we incurred approximately $11.4 million in transaction related costs, which are included in warehouse, delivery, selling, general and administrative expenses.
The preliminary allocation of the total purchase price of Metals USA to the fair values of assets acquired and liabilities assumed is as follows:
|
|
(in millions) |
|
| |
Cash |
|
$ |
3.2 |
| |
Accounts receivable |
|
205.9 |
| ||
Inventories |
|
382.6 |
| ||
Property, plant and equipment |
|
248.7 |
| ||
Goodwill |
|
349.1 |
| ||
Intangible assets subject to amortization |
|
182.0 |
| ||
Intangible assets not subject to amortization |
|
220.0 |
| ||
Other current and long-term assets |
|
9.0 |
| ||
Total assets acquired |
|
1,600.5 |
| ||
Current and long-term debt |
|
486.1 |
| ||
Deferred taxes |
|
235.9 |
| ||
Other current and long-term liabilities |
|
111.7 |
| ||
Total liabilities assumed |
|
833.7 |
| ||
Net assets acquired |
|
$ |
766.8 |
| |
2012 Acquisitions
Effective October 1, 2012, through our wholly owned subsidiary Feralloy Corporation (Feralloy), we acquired all the outstanding capital stock of GH Metal Solutions, Inc. (formerly known as The Gas House, Inc.) (GH), a value added processor and fabricator of carbon steel products located in Fort Payne, Alabama that will allow Feralloy to better serve the increasing demands of its diverse customer base. GH operates as a wholly owned subsidiary of Feralloy and had net sales of $30.6 million for the six months ended June 30, 2013.
Effective October 1, 2012, we acquired all the outstanding limited liability company interests of Sunbelt Steel Texas, LLC (Sunbelt), a value added distributor of special alloy steel bar and heavy-wall tubing products to the oil and gas industry headquartered in Houston, Texas with an additional location in Lafayette, Louisiana. Sunbelt had net sales of $22.3 million for the six months ended June 30, 2013.
On July 6, 2012, we acquired substantially all of the assets of Airport Metals (Australia) Pty Ltd., a subsidiary of Samuel Son & Co., Limited, through our newly-formed subsidiary Bralco Metals (Australia) Pty Ltd. (Airport Metals). Airport Metals, based in Melbourne, operates as a stocking distributor of aircraft materials and supplies. Airport Metals had net sales of $1.6 million for the six months ended June 30, 2013.
Effective April, 27, 2012, through our wholly owned subsidiary Precision Strip, Inc. (PSI), we acquired the assets of the Worthington Steel Vonore, Tennessee plant, a processing facility owned by Worthington Industries, Inc. The Vonore plant operates as a PSI location which processes and delivers carbon steel, aluminum and stainless steel products on a toll basis, processing the metal for a fee without taking ownership of the metal. The Vonore location had net sales of $1.4 million for the six months ended June 30, 2013.
Effective April 3, 2012, we acquired all the outstanding limited liability company interests of National Specialty Alloys, LLC (NSA), a global specialty alloy processor and distributor of premium stainless steel and nickel alloy bars and shapes, headquartered in Houston, Texas with additional locations in Anaheim, California; Buford, Georgia; Tulsa, Oklahoma and Mexico City, Mexico. NSA had net sales of $41.6 million for the six months ended June 30, 2013.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Effective February 1, 2012, through our wholly owned subsidiary Diamond Manufacturing Company, we acquired McKey Perforating Co., Inc. (McKey), headquartered in New Berlin, Wisconsin and its subsidiary, McKey Perforated Products Co., Inc., located in Manchester, Tennessee. McKey provides a full range of metal perforating and fabrication services to customers located primarily in the U.S. McKey had net sales of $10.0 million for the six months ended June 30, 2013.
The combined transaction value of our 2012 acquisitions was $226.5 million, which included the assumption and/or repayment of $59.4 million of debt. We funded these acquisitions with borrowings on our revolving credit facility.
Purchase price allocation
The acquisitions discussed in this note have been accounted for under the acquisition method of accounting and, accordingly, the respective purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of each acquisition. The accompanying consolidated statements of income include the revenues and expenses of each acquisition since its respective acquisition date. The consolidated balance sheets reflect the allocation of each acquisitions purchase price as of June 30, 2013, as applicable. The purchase price allocations for the 2013 acquisitions are preliminary and are pending the completion of certain purchase price adjustments based on tangible and intangible asset valuations and various pre-acquisition period tax returns.
Pro forma financial information
The following pro forma summary financial results present the consolidated results of operations as if the acquisition of Metals USA had occurred at the beginning of the reporting period being presented, after the effect of certain adjustments, including interest expense on the acquisition debt, non-recurring acquisition related costs, and amortization of certain identifiable intangible assets. The pro forma summary financial results reflect Metals USAs historical method for inventory valuation, which was the first-in, first-out (FIFO) method for the majority of its inventories. Metals USA adopted the last-in, first-out (LIFO) method of inventory valuation upon acquisition.
The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the Metals USA acquisition been made as of January 1, 2013 or 2012, or of any potential results which may occur in the future.
|
|
Three Months Ended |
|
Three Months Ended | ||||||
|
|
(in millions, except |
|
(in millions, except | ||||||
Pro forma: |
|
|
|
|
|
|
|
| ||
Net sales |
|
|
$ |
2,519.2 |
|
|
|
$ |
2,746.8 |
|
Net income attributable to Reliance |
|
|
$ |
84.7 |
|
|
|
$ |
125.2 |
|
Diluted earnings per common share attributable to Reliance shareholders |
|
|
$ |
1.09 |
|
|
|
$ |
1.66 |
|
Basic earnings per common share attributable to Reliance shareholders |
|
|
$ |
1.10 |
|
|
|
$ |
1.67 |
|
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
|
|
Six Months Ended |
|
Six Months Ended | ||||||
|
|
(in millions, except |
|
(in millions, except | ||||||
Pro forma: |
|
|
|
|
|
|
|
| ||
Net sales |
|
|
$ |
5,003.6 |
|
|
|
$ |
5,560.4 |
|
Net income attributable to Reliance |
|
|
$ |
172.2 |
|
|
|
$ |
255.2 |
|
Diluted earnings per common share attributable to Reliance shareholders |
|
|
$ |
2.23 |
|
|
|
$ |
3.38 |
|
Basic earnings per common share attributable to Reliance shareholders |
|
|
$ |
2.25 |
|
|
|
$ |
3.40 |
|
4. Goodwill
The change in the carrying amount of goodwill for the six months ended June 30, 2013 is as follows:
|
|
|
(in millions) |
| |
Balance as of December 31, 2012 |
|
|
$ |
1,314.6 |
|
Acquisition |
|
|
349.1 |
| |
Effect of foreign currency translation |
|
|
(4.9 |
) | |
Balance as of June 30, 2013 |
|
|
$ |
1,658.8 |
|
We had no accumulated impairment losses related to goodwill as of June 30, 2013.
5. Intangible Assets, net
The following table summarizes our intangible assets, net:
|
|
|
June 30, 2013 |
|
|
|
December 31, 2012 |
| ||||||||||||
|
|
|
Gross |
|
|
|
Accumulated |
|
|
|
Gross |
|
|
|
Accumulated |
| ||||
|
|
|
(in millions) |
| ||||||||||||||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Covenants not to compete |
|
|
$ |
7.9 |
|
|
|
$ |
(7.1 |
) |
|
|
$ |
8.0 |
|
|
|
$ |
(7.1 |
) |
Loan fees |
|
|
41.4 |
|
|
|
(22.4 |
) |
|
|
31.2 |
|
|
|
(20.2 |
) | ||||
Customer lists/relationships |
|
|
701.6 |
|
|
|
(175.9 |
) |
|
|
524.0 |
|
|
|
(153.3 |
) | ||||
Software internal use |
|
|
8.1 |
|
|
|
(5.9 |
) |
|
|
8.1 |
|
|
|
(5.5 |
) | ||||
Other |
|
|
2.8 |
|
|
|
(1.4 |
) |
|
|
6.4 |
|
|
|
(2.5 |
) | ||||
|
|
|
761.8 |
|
|
|
(212.7 |
) |
|
|
577.7 |
|
|
|
(188.6 |
) | ||||
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Trade names |
|
|
764.8 |
|
|
|
|
|
|
|
547.4 |
|
|
|
|
| ||||
|
|
|
$ |
1,526.6 |
|
|
|
$ |
(212.7 |
) |
|
|
$ |
1,125.1 |
|
|
|
$ |
(188.6 |
) |
Intangible assets recorded in connection with our acquisition of Metals USA were $402.0 million (see Note 3). A total of $220.0 million was allocated to the trade names acquired, none of which is subject to amortization. We also recorded $10.3 million of intangible assets in connection with the amendment of our syndicated credit agreement and the new indenture (see Note 7). We recognized amortization expense for intangible assets of $26.4 million and $20.9 million for the six months ended June 30, 2013 and 2012, respectively.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
The following is a summary of estimated aggregated amortization expense for the remaining six months of 2013 and each of the succeeding five years:
|
|
(in millions) |
| |
2013 |
|
$ |
29.9 |
|
2014 |
|
57.8 |
| |
2015 |
|
56.2 |
| |
2016 |
|
55.4 |
| |
2017 |
|
51.3 |
| |
2018 |
|
45.1 |
| |
6. Income Taxes
Our effective income tax rates for the three-month periods ended June 30, 2013 and 2012 were 33.3% and 34.3%, respectively. Our effective income tax rates for the six-month periods ended June 30, 2013 and 2012 were 31.4% and 33.7%, respectively. Permanent items that lowered our effective income tax rates from the federal statutory rate were not materially different in amounts during these periods and related mainly to company-owned life insurance policies, domestic production activities deductions and foreign income levels that are taxed at lower rates. Our 2013 six-month period effective income tax rate was favorably impacted by the settlement of certain tax matters.
7. Debt
Debt consists of the following:
|
|
June 30, |
|
|
|
December 31, |
| ||
|
|
2013 |
|
|
|
2012 |
| ||
|
|
(in millions) |
| ||||||
|
|
|
|
|
|
|
| ||
Unsecured revolving credit facility due April 4, 2018 |
|
$ |
600.0 |
|
|
|
$ |
525.0 |
|
Senior unsecured term loan due from September 30, 2013 to April 4, 2018 |
|
493.8 |
|
|
|
|
| ||
Senior unsecured notes due July 2, 2013 |
|
75.0 |
|
|
|
75.0 |
| ||
Senior unsecured notes due November 15, 2016 |
|
350.0 |
|
|
|
350.0 |
| ||
Senior unsecured notes due April 15, 2023 |
|
500.0 |
|
|
|
|
| ||
Senior unsecured notes due November 15, 2036 |
|
250.0 |
|
|
|
250.0 |
| ||
Other notes and revolving credit facilities |
|
69.2 |
|
|
|
8.9 |
| ||
Total |
|
2,338.0 |
|
|
|
1,208.9 |
| ||
Less: unamortized discount |
|
(3.5 |
) |
|
|
(1.5 |
) | ||
Less: amounts due within one year and short-term borrowings |
|
(114.6 |
) |
|
|
(83.6 |
) | ||
Total long-term debt |
|
$ |
2,219.9 |
|
|
|
$ |
1,123.8 |
|
Unsecured Revolving Credit Facility
On April 4, 2013, we entered into a syndicated Third Amended and Restated Credit Agreement (Credit Agreement) with 26 banks as lenders. The Credit Agreement amends and restates our existing $1.5 billion unsecured revolving credit facility and provides for a $500.0 million term loan, maturing on April 4, 2018. The term loan will amortize in quarterly installments, resulting in an annual amortization of 5% during the first year, 5% during the second year, 10% during the third year, 10% during the fourth year and 10% during the fifth year with the balance to be paid at maturity. The Credit Agreement includes an option to increase the revolving credit facility for up to an additional $500.0 million at our request, subject to approval of the lenders and certain other conditions. Interest on borrowings from the amended and restated revolving credit facility during the three-month period ending June 30, 2013 are at variable rates based on LIBOR plus 1.50% or the bank prime rate plus 0.50% and includes a commitment fee on the unused portion, at an annual rate of 0.25%. The applicable margin over LIBOR rate and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our leverage ratio, as defined.
Weighted average rates on borrowings outstanding on the revolving credit facility were 1.69% and 1.46% as of June 30, 2013 and December 31, 2012, respectively. As of June 30, 2013, we had $57.0 million of letters of credit outstanding under the revolving credit facility with availability to issue an additional $193.0 million of letters of credit.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Senior Unsecured Notes Private Placements
We had $75.0 million of outstanding senior unsecured notes at a fixed rate of 5.35% issued in private placements of debt as of June 30, 2013. On July 2, 2013, the outstanding notes matured and we paid off the notes with borrowings under our credit facility.
Senior Unsecured Notes Publicly Traded
On November 20, 2006 we entered into an indenture (the 2006 Indenture), for the issuance of $600 million of unsecured debt securities. The total debt issued was comprised of two tranches, (a) $350 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.20% per annum, maturing on November 15, 2016 and (b) $250 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.85% per annum, maturing on November 15, 2036.
On April 12, 2013, we entered into an indenture (the 2013 Indenture and, together with the 2006 Indenture, the Indentures), for the issuance of $500.0 million aggregate principal amount of senior unsecured notes at the rate of 4.50% per annum, maturing on April 15, 2023. The net proceeds from the issuance were used to partially fund the acquisition of Metals USA.
Under the Indentures, the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. The notes are guaranteed by our named 100%-owned domestic subsidiaries that guarantee our revolving credit facility. The senior unsecured notes include provisions that require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest in the event of a change in control and a downgrade of our credit rating.
Other Notes and Revolving Credit Facilities
Various other separate revolving credit facilities with a combined credit limit of approximately $20.3 million are in place for operations in Asia and Europe with combined outstanding balances of $12.7 million and $8.3 million as of June 30, 2013 and December 31, 2012, respectively.
Pursuant to our acquisition of Metals USA, we assumed industrial revenue bonds with combined outstanding balances of $12.3 million as of June 30, 2013 that have maturities through 2027. Additionally, we assumed mortgage obligations pursuant to our acquisition of Travel Main which have outstanding balances of $43.6 million as of June 30, 2013. The mortgages, which are secured by the underlying properties, have a fixed interest rate of 6.4% and scheduled amortization payments with a lump sum payment of $39.2 million due October 2016.
Covenants
The Credit Agreement and the note purchase agreements related to our privately placed senior secured notes collectively require us to maintain a minimum net worth and interest coverage ratio and a maximum leverage ratio and include a change of control provision, among other things.
Additionally, our named 100%-owned domestic subsidiaries, which constitute the substantial majority of our subsidiaries, guarantee the borrowings under the revolving credit facility, the Indentures and the private placement notes. The subsidiary guarantors, together with Reliance, are required collectively to account for at least 80% of our consolidated EBITDA and 80% of consolidated tangible assets.
We were in compliance with all debt covenants as of June 30, 2013.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
8. Equity
Common Stock
During the six months ended June 30, 2013, we issued 878,167 shares of common stock in connection with the exercise of employee stock options for total proceeds of approximately $42.4 million.
Dividends
On July 23, 2013, our Board of Directors declared the 2013 third quarter cash dividend of $0.33 per share, an increase of 10% compared to the 2013 second quarter cash dividend. The dividend is payable on September 13, 2013 to shareholders of record as of August 16, 2013.
During the six-months ended June 30, 2013 we declared and paid quarterly dividends of $0.30 per share, or $46.0 million in total, compared to quarterly dividend of $0.15 per share, or $22.5 million in total, in the same period in 2012.
Share-Based Compensation
On May 15, 2013, pursuant to the May 2011 Directors Equity Plan, which has been approved by the shareholders, 12,418 shares of restricted stock were automatically granted to the non-employee members of the Board of Directors. The awards include dividend rights and vest immediately upon grant. The recipients are restricted from trading the restricted stock for one year from date of grant. The fair value of the restricted stock granted was $67.63 per share, the closing price of our common stock on the grant date.
On February 26, 2013, we granted 324,780 restricted stock units (RSUs) to key employees pursuant to the Amended and Restated Stock Option and Restricted Stock Plan. Each RSU consists of the right to receive one share of our common stock and dividend equivalent rights, subject to forfeiture, equal to the accrued cash or stock dividends where the record date for such dividends is after the grant date but before the shares vest. Each 2013 RSU granted has a service condition and cliff vests at December 31, 2015, if the recipient is an employee on that date. In addition to the service criteria, 134,725 of the RSUs granted in 2013 also have performance goals and vest only upon the satisfaction of the service and performance criteria. The fair value of the 2013 RSUs granted was $65.73 per share, the closing price of our common stock on the grant date.
Share Repurchase Program
As of June 30, 2013, 7,883,033 shares of common stock remain authorized for repurchase under our stock repurchase program. No shares were repurchased in 2013 or 2012. Repurchased shares are redeemed and treated as authorized but unissued shares.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss included the following:
|
|
Foreign Currency |
|
Unrealized Loss |
|
Minimum Pension |
|
Accumulated | ||||||||||||
|
|
|
(in millions) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance as of December 31, 2012 |
|
|
$ |
21.0 |
|
|
|
$ |
(0.2 |
) |
|
|
$ |
(22.3 |
) |
|
|
$ |
(1.5 |
) |
Current-period change |
|
|
(19.9 |
) |
|
|
0.2 |
|
|
|
|
|
|
|
(19.7 |
) | ||||
Balance as of June 30, 2013 |
|
|
$ |
1.1 |
|
|
|
$ |
|
|
|
|
$ |
(22.3 |
) |
|
|
$ |
(21.2 |
) |
Foreign currency translation adjustments are not generally adjusted for income taxes as they relate to indefinite investments in foreign subsidiaries. Unrealized loss on investments and minimum pension liability are net of taxes of $0.1 million and $13.4 million, respectively, as of June 30, 2013 and December 31, 2012.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
9. Commitments and Contingencies
We are currently involved with certain environmental remediation projects related to activities at former manufacturing operations of our wholly owned subsidiary Earle M. Jorgensen Company (EMJ) that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ had insurance policies in place at the time they owned the manufacturing operations that are expected to cover the majority of the related costs. We do not expect that these obligations will have a material adverse impact on our financial position, results of operations or cash flows.
10. Earnings Per Share
Basic earnings per share exclude any dilutive effects of options, restricted shares, RSUs, warrants and convertible securities. Diluted earnings per share are calculated including the dilutive effects of options, restricted shares, RSUs, warrants and convertible securities, if any.
The following table sets forth the computation of basic and diluted earnings per share:
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||
|
|
2013 |
|
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
(in millions, except share and per share amounts) |
| |||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
| ||||
Net income attributable to Reliance |
|
$ |
81.0 |
|
|
$ |
108.8 |
|
$ |
164.7 |
|
$ |
225.0 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
| ||||
Denominator for basic earnings per share: |
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares |
|
76,695,598 |
|
|
75,087,057 |
|
76,497,454 |
|
75,004,840 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
| ||||
Stock options and restricted shares |
|
773,519 |
|
|
424,192 |
|
778,557 |
|
464,129 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator for diluted earnings per share: |
|
|
|
|
|
|
|
|
|
| ||||
Adjusted weighted average shares and assumed conversions |
|
77,469,117 |
|
|
75,511,249 |
|
77,276,011 |
|
75,468,969 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share attributable to Reliance shareholders diluted |
|
$ |
1.05 |
|
|
$ |
1.44 |
|
$ |
2.13 |
|
$ |
2.98 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share attributable to Reliance shareholders basic |
|
$ |
1.06 |
|
|
$ |
1.45 |
|
$ |
2.15 |
|
$ |
3.00 |
|
The computations of earnings per share for the three months ended June 30, 2013 and 2012 do not include 144,143 and 2,462,550 shares reserved for issuance upon exercise of outstanding stock options or vesting of restricted shares, respectively, because their inclusion would have been anti-dilutive.
The computations of earnings per share for the six months ended June 30, 2013 and 2012 do not include 313,912 and 2,468,973 shares reserved for issuance upon exercise of outstanding stock options or vesting of restricted shares, respectively, because their inclusion would have been anti-dilutive.
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
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 our credit facility. 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, 2013
(in millions)
|
|
Parent |
|
|
Guarantor |
|
Non- |
|
Consolidating |
|
Consolidated | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
|
$ |
47.7 |
|
|
|
$ |
(7.8 |
) |
|
|
$ |
60.9 |
|
|
|
$ |
|
|
|
|
$ |
100.8 |
|
Accounts receivable, less allowance for doubtful accounts |
|
76.6 |
|
|
|
967.0 |
|
|
|
99.9 |
|
|
|
|
|
|
|
1,143.5 |
| |||||
Inventories |
|
58.3 |
|
|
|
1,369.5 |
|
|
|
159.3 |
|
|
|
|
|
|
|
1,587.1 |
| |||||
Intercompany receivables |
|
0.6 |
|
|
|
18.2 |
|
|
|
2.8 |
|
|
|
(21.6 |
) |
|
|
|
| |||||
Income taxes receivable |
|
57.2 |
|
|
|
|
|
|
|
|
|
|
|
(39.6 |
) |
|
|
17.6 |
| |||||
Other current assets |
|
109.1 |
|
|
|
41.2 |
|
|
|
11.4 |
|
|
|
(78.2 |
) |
|
|
83.5 |
| |||||
Total current assets |
|
349.5 |
|
|
|
2,388.1 |
|
|
|
334.3 |
|
|
|
(139.4 |
) |
|
|
2,932.5 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investments in subsidiaries |
|
4,399.0 |
|
|
|
1,139.3 |
|
|
|
|
|
|
|
(5,538.3 |
) |
|
|
|
| |||||
Property, plant and equipment, net |
|
99.9 |
|
|
|
1,274.5 |
|
|
|
211.9 |
|
|
|
|
|
|
|
1,586.3 |
| |||||
Goodwill |
|
23.8 |
|
|
|
1,525.5 |
|
|
|
109.5 |
|
|
|
|
|
|
|
1,658.8 |
| |||||
Intangible assets, net |
|
19.0 |
|
|
|
1,172.7 |
|
|
|
122.2 |
|
|
|
|
|
|
|
1,313.9 |
| |||||
Intercompany receivables |
|
1,461.0 |
|
|
|
18.1 |
|
|
|
871.6 |
|
|
|
(2,350.7 |
) |
|
|
|
| |||||
Other assets |
|
18.6 |
|
|
|
61.8 |
|
|
|
3.7 |
|
|
|
|
|
|
|
84.1 |
| |||||
Total assets |
|
$ |
6,370.8 |
|
|
|
$ |
7,580.0 |
|
|
|
$ |
1,653.2 |
|
|
|
$ |
(8,028.4 |
) |
|
|
$ |
7,575.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities & Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
|
$ |
41.6 |
|
|
|
$ |
305.7 |
|
|
|
$ |
93.6 |
|
|
|
$ |
(21.6 |
) |
|
|
$ |
419.3 |
|
Accrued compensation and retirement costs |
|
13.5 |
|
|
|
74.3 |
|
|
|
10.8 |
|
|
|
|
|
|
|
98.6 |
| |||||
Income taxes payable |
|
|
|
|
|
33.5 |
|
|
|
6.1 |
|
|
|
(39.6 |
) |
|
|
|
| |||||
Other current liabilities |
|
52.2 |
|
|
|
133.9 |
|
|
|
36.5 |
|
|
|
(78.3 |
) |
|
|
144.3 |
| |||||
Current maturities of long-term debt and short-term borrowings |
|
100.3 |
|
|
|
|
|
|
|
14.3 |
|
|
|
|
|
|
|
114.6 |
| |||||
Total current liabilities |
|
207.6 |
|
|
|
547.4 |
|
|
|
161.3 |
|
|
|
(139.5 |
) |
|
|
776.8 |
| |||||
Long-term debt |
|
2,165.6 |
|
|
|
5.7 |
|
|
|
48.6 |
|
|
|
|
|
|
|
2,219.9 |
| |||||
Intercompany borrowings |
|
|
|
|
|
2,269.4 |
|
|
|
81.3 |
|
|
|
(2,350.7 |
) |
|
|
|
| |||||
Other long-term liabilities |
|
284.1 |
|
|
|
526.1 |
|
|
|
45.9 |
|
|
|
|
|
|
|
856.1 |
| |||||
Total Reliance shareholders equity |
|
3,713.5 |
|
|
|
4,225.3 |
|
|
|
1,312.9 |
|
|
|
(5,538.2 |
) |
|
|
3,713.5 |
| |||||
Noncontrolling interests |
|
|
|
|
|
6.1 |
|
|
|
3.2 |
|
|
|
|
|
|
|
9.3 |
| |||||
Total equity |
|
3,713.5 |
|
|
|
4,231.4 |
|
|
|
1,316.1 |
|
|
|
(5,538.2 |
) |
|
|
3,722.8 |
| |||||
Total liabilities and equity |
|
$ |
6,370.8 |
|
|
|
$ |
7,580.0 |
|
|
|
$ |
1,653.2 |
|
|
|
$ |
(8,028.4 |
) |
|
|
$ |
7,575.6 |
|
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Condensed Unaudited Consolidating Balance Sheet
As of December 31, 2012
(in millions)
|
|
Parent |
|
|
Guarantor |
|
Non- |
|
Consolidating |
|
Consolidated | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
|
$ |
28.1 |
|
|
|
$ |
13.1 |
|
|
|
$ |
56.4 |
|
|
|
$ |
|
|
|
|
$ |
97.6 |
|
Accounts receivable, less allowance for doubtful accounts |
|
67.4 |
|
|
|
658.3 |
|
|
|
82.0 |
|
|
|
|
|
|
|
807.7 |
| |||||
Inventories |
|
50.3 |
|
|
|
1,068.4 |
|
|
|
153.6 |
|
|
|
|
|
|
|
1,272.3 |
| |||||
Intercompany receivables |
|
0.2 |
|
|
|
16.7 |
|
|
|
2.4 |
|
|
|
(19.3 |
) |
|
|
|
| |||||
Income taxes receivable |
|
28.2 |
|
|
|
|
|
|
|
0.2 |
|
|
|
|
|
|
|
28.4 |
| |||||
Other current assets |
|
113.3 |
|
|
|
26.5 |
|
|
|
6.8 |
|
|
|
(75.2 |
) |
|
|
71.4 |
| |||||
Total current assets |
|
287.5 |
|
|
|
1,783.0 |
|
|
|
301.4 |
|
|
|
(94.5 |
) |
|
|
2,277.4 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investments in subsidiaries |
|
3,722.7 |
|
|
|
257.8 |
|
|
|
|
|
|
|
(3,980.5 |
) |
|
|
|
| |||||
Property, plant and equipment, net |
|
100.8 |
|
|
|
1,044.1 |
|
|
|
95.8 |
|
|
|
|
|
|
|
1,240.7 |
| |||||
Goodwill |
|
23.7 |
|
|
|
1,183.9 |
|
|
|
107.0 |
|
|
|
|
|
|
|
1,314.6 |
| |||||
Intangible assets, net |
|
11.0 |
|
|
|
794.6 |
|
|
|
130.9 |
|
|
|
|
|
|
|
936.5 |
| |||||
Intercompany receivables |
|
969.7 |
|
|
|
26.2 |
|
|
|
3.7 |
|
|
|
(999.6 |
) |
|
|
|
| |||||
Other assets |
|
18.3 |
|
|
|
68.1 |
|
|
|
2.1 |
|
|
|
|
|
|
|
88.5 |
| |||||
Total assets |
|
$ |
5,133.7 |
|
|
|
$ |
5,157.7 |
|
|
|
$ |
640.9 |
|
|
|
$ |
(5,074.6 |
) |
|
|
$ |
5,857.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities & Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
|
$ |
25.7 |
|
|
|
$ |
195.2 |
|
|
|
$ |
54.0 |
|
|
|
$ |
(19.3 |
) |
|
|
$ |
255.6 |
|
Accrued compensation and retirement costs |
|
22.8 |
|
|
|
84.0 |
|
|
|
6.0 |
|
|
|
|
|
|
|
112.8 |
| |||||
Other current liabilities |
|
48.5 |
|
|
|
146.8 |
|
|
|
6.1 |
|
|
|
(75.2 |
) |
|
|
126.2 |
| |||||
Current maturities of long-term debt and short-term borrowings |
|
75.3 |
|
|
|
|
|
|
|
8.3 |
|
|
|
|
|
|
|
83.6 |
| |||||
Total current liabilities |
|
172.3 |
|
|
|
426.0 |
|
|
|
74.4 |
|
|
|
(94.5 |
) |
|
|
578.2 |
| |||||
Long-term debt |
|
1,123.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,123.8 |
| |||||
Intercompany borrowings |
|
|
|
|
|
864.3 |
|
|
|
135.3 |
|
|
|
(999.6 |
) |
|
|
|
| |||||
Other long-term liabilities |
|
279.2 |
|
|
|
284.0 |
|
|
|
25.1 |
|
|
|
|
|
|
|
588.3 |
| |||||
Total Reliance shareholders equity |
|
3,558.4 |
|
|
|
3,577.4 |
|
|
|
403.1 |
|
|
|
(3,980.5 |
) |
|
|
3,558.4 |
| |||||
Noncontrolling interests |
|
|
|
|
|
6.0 |
|
|
|
3.0 |
|
|
|
|
|
|
|
9.0 |
| |||||
Total equity |
|
3,558.4 |
|
|
|
3,583.4 |
|
|
|
406.1 |
|
|
|
(3,980.5 |
) |
|
|
3,567.4 |
| |||||
Total liabilities and equity |
|
$ |
5,133.7 |
|
|
|
$ |
5,157.7 |
|
|
|
$ |
640.9 |
|
|
|
$ |
(5,074.6 |
) |
|
|
$ |
5,857.7 |
|
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Condensed Unaudited Consolidating Statement of Income
For the three months ended June 30, 2013
(in millions)
|
|
Parent |
|
|
Guarantor |
|
Non- |
|
Consolidating |
|
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 |
|
RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Condensed Unaudited Consolidating Statement of Income
For the three months ended June 30, 2012
(in millions)
|
|
Parent |
|
|
Guarantor |
|
Non- |
|
Consolidating |
|
Consolidated | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
189.7 |
|
|
|
$ |
1,924.1 |
|
|
|
$ |
154.3 |
|
|
|
$ |
(58.4 |
) |
|
|
$ |
2,209.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of sales (exclusive of depreciation and amortization shown below) |
|
132.9 |
|
|
|
1,457.1 |
|
|
|
108.7 |
|
|
|
(58.4 |
) |
|
|
1,640.3 |
| |||||
Warehouse, delivery, selling, general and administrative |
|
16.2 |
|
|
|
326.2 |
|
|
|
24.4 |
|
|
|
(20.1 |
) |
|
|
346.7 |
| |||||
Depreciation and amortization |
|
3.4 |
|
|
|
29.8 |
|
|
|
3.3 |
|
|
|
|
|
|
|
36.5 |
| |||||
|
|
152.5 |
|
|
|
1,813.1 |
|
|
|
136.4 |
|
|
|
(78.5 |
) |
|
|
2,023.5 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income |
|
37.2 |
|
|
|
111.0 |
|
|
|
17.9 |
|
|
|
20.1 |
|
|
|
186.2 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest |
|
(14.8 |
) |
|
|
(4.7 |
) |
|
|
(0.5 |
) |
|
|
5.0 |
|
|
|
(15.0 |
) | |||||
Other income (expense), net |
|
22.8 |
|
|
|
(0.7 |
) |
|
|
(0.5 |
) |
|
|
(25.1 |
) |
|
|
(3.5 |
) | |||||
Income before equity in earnings of subsidiaries and income taxes |
|
45.2 |
|
|
|
105.6 |
|
|
|
16.9 |
|
|
|
|
|
|
|
167.7 |
| |||||
Equity in earnings of subsidiaries |
|
60.1 |
|
|
|
7.9 |
|
|
|
|
|
|
|
(68.0 |
) |
|
|
|
| |||||
Income before income taxes |
|
105.3 |
|
|
|
113.5 |
|
|
|
16.9 |
|
|
|
(68.0 |
) |
|
|
167.7 |
| |||||
Income tax (benefit) provision |
|
(3.5 |
) |
|
|
57.4 |
|
|
|
3.6 |
|
|
|
|
& |