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RELIANCE STEEL & ALUMINUM CO - Quarter Report: 2013 March (Form 10-Q)

Table of Contents

 

 

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 March 31, 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 Act).

Yes  ¨  No  þ

 

As of April 30, 2013, 76,690,765 shares of the registrant’s common stock, no par value, were outstanding.

 

 



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

PART I -- FINANCIAL INFORMATION

1

 

 

 

Item 1.

Unaudited Consolidated Balance Sheets at March 31, 2013 and December 31, 2012

1

 

 

 

 

Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2013 and 2012

2

 

 

 

 

Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2013 and 2012

3

 

 

 

 

Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012

4

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

5

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

24

 

 

 

Item 4.

Controls and Procedures

24

 

 

 

PART II -- OTHER INFORMATION

25

 

 

 

Item 1A.

Risk Factors

25

 

 

 

Item 6.

Exhibits

25

 

 

 

SIGNATURES

 

26

 

 

 

EXHIBIT INDEX

27

 



Table of Contents

 

PART I — FINANCIAL INFORMATION

 

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

 

ASSETS

 

 

March 31,
2013

 

December 31,
2012*

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

100.1

 

$

97.6

 

Accounts receivable, less allowance for doubtful accounts of $19.8 at March 31, 2013 and $20.5 at December 31, 2012

 

940.4

 

807.7

 

Inventories

 

1,317.6

 

1,272.3

 

Prepaid expenses and other current assets

 

34.6

 

40.9

 

Income taxes receivable

 

3.2

 

28.4

 

Deferred income taxes

 

30.5

 

30.5

 

Total current assets

 

2,426.4

 

2,277.4

 

Property, plant and equipment:

 

 

 

 

 

Land

 

155.4

 

155.6

 

Buildings

 

734.6

 

725.1

 

Machinery and equipment

 

1,136.0

 

1,124.7

 

Accumulated depreciation

 

(790.4

)

(764.7

)

 

 

1,235.6

 

1,240.7

 

 

 

 

 

 

 

Goodwill

 

1,312.4

 

1,314.6

 

Intangible assets, net

 

922.3

 

936.5

 

Cash surrender value of life insurance policies, net

 

40.7

 

45.2

 

Investments in unconsolidated entities

 

15.5

 

15.5

 

Other assets

 

28.2

 

27.8

 

Total assets

 

$

5,981.1

 

$

5,857.7

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

389.5

 

$

255.6

 

Accrued expenses

 

88.9

 

87.4

 

Accrued compensation and retirement costs

 

67.0

 

112.8

 

Accrued insurance costs

 

39.2

 

38.8

 

Current maturities of long-term debt and short-term borrowings

 

86.6

 

83.6

 

Total current liabilities

 

671.2

 

578.2

 

Long-term debt

 

1,063.8

 

1,123.8

 

Long-term retirement costs

 

95.6

 

94.9

 

Other long-term liabilities

 

27.3

 

27.1

 

Deferred income taxes

 

467.3

 

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 – 76,647,562 at March 31, 2013 and 76,042,546 at December 31, 2012, stated capital

 

760.5

 

722.2

 

Retained earnings

 

2,897.7

 

2,837.7

 

Accumulated other comprehensive loss

 

(11.4

)

(1.5

)

Total Reliance shareholders’ equity

 

3,646.8

 

3,558.4

 

Noncontrolling interests

 

9.1

 

9.0

 

Total equity

 

3,655.9

 

3,567.4

 

Total liabilities and equity

 

$

5,981.1

 

$

5,857.7

 

 

* Amounts were derived from audited financial statements.

 

See accompanying notes to unaudited consolidated financial statements.

 

1



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales

 

$

2,025.3

 

$

2,288.3

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of sales (exclusive of depreciation and amortization shown below)

 

1,496.5

 

1,710.5

 

Warehouse, delivery, selling, general and administrative

 

357.7

 

357.7

 

Depreciation and amortization

 

41.1

 

35.5

 

 

 

1,895.3

 

2,103.7

 

 

 

 

 

 

 

Operating income

 

130.0

 

184.6

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

Interest

 

(13.1

)

(14.5

)

Other income, net

 

2.9

 

6.5

 

Income before income taxes

 

119.8

 

176.6

 

Income tax provision

 

35.3

 

58.7

 

Net income

 

84.5

 

117.9

 

Less: Net income attributable to noncontrolling interests

 

0.8

 

1.7

 

Net income attributable to Reliance

 

$

83.7

 

$

116.2

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Diluted earnings per common share attributable to Reliance shareholders

 

$

1.09

 

$

1.54

 

 

 

 

 

 

 

Basic earnings per common share attributable to Reliance shareholders

 

$

1.10

 

$

1.55

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.30

 

$

0.15

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

2



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net income

 

$

84.5

 

$

117.9

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

Foreign currency translation (loss) gain

 

(10.1

)

7.6

 

Unrealized gain on investments, net of tax

 

0.2

 

0.2

 

Total other comprehensive (loss) income

 

(9.9

)

7.8

 

Comprehensive income

 

74.6

 

125.7

 

Less: comprehensive income attributable to noncontrolling interests

 

0.8

 

1.7

 

Comprehensive income attributable to Reliance

 

$

73.8

 

$

124.0

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

3



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

Operating activities:

 

 

 

 

 

Net income

 

$

84.5

 

$

117.9

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization expense

 

41.1

 

35.5

 

Deferred income tax provision (benefit)

 

1.6

 

(1.2

)

Loss (gain) on sales of property, plant and equipment

 

0.2

 

(0.1

)

Equity in earnings of unconsolidated entities

 

(0.3

)

(0.5

)

Dividends received from unconsolidated entities

 

0.3

 

0.3

 

Share-based compensation expense

 

6.7

 

4.9

 

Tax deficit from share-based compensation

 

0.8

 

0.1

 

Net gain from life insurance policies

 

(2.4

)

(1.2

)

Changes in operating assets and liabilities (excluding effect of business acquired):

 

 

 

 

 

Accounts receivable

 

(134.8

)

(143.6

)

Inventories

 

(48.2

)

(182.2

)

Prepaid expenses and other assets

 

31.3

 

9.0

 

Accounts payable and other liabilities

 

91.4

 

97.9

 

Net cash provided by (used in) operating activities

 

72.2

 

(63.2

)

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

 

(26.8

)

(34.6

)

Acquisition of a metals service center

 

¾

 

(10.0

)

Proceeds from sales of property, plant and equipment

 

0.4

 

0.2

 

Net proceeds from redemptions of life insurance policies

 

6.9

 

2.8

 

Net cash used in investing activities

 

(19.5

)

(41.6

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Net short-term debt borrowings (repayments)

 

3.1

 

(0.4

)

Proceeds from long-term debt borrowings

 

50.0

 

221.0

 

Principal payments on long-term debt

 

(110.0

)

(122.2

)

Payments to noncontrolling interest holders

 

(0.7

)

(0.7

)

Dividends paid

 

(22.9

)

(11.2

)

Tax deficit from share-based compensation

 

(0.8

)

(0.1

)

Exercise of stock options

 

31.6

 

4.6

 

Net cash (used in) provided by financing activities

 

(49.7

)

91.0

 

Effect of exchange rate changes on cash

 

(0.5

)

(0.8

)

Increase (decrease) in cash and cash equivalents

 

2.5

 

(14.6

)

Cash and cash equivalents at beginning of year

 

97.6

 

84.6

 

Cash and cash equivalents at end of period

 

$

100.1

 

$

70.0

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Interest paid during the period

 

$

4.4

 

$

5.2

 

Income taxes paid during the period

 

$

9.8

 

$

32.6

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

4



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 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 three months ended March 31, 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 Acquisition

 

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 carbon steel, stainless steel, aluminum, red metals, 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. Metals USA’s total assets as of December 31, 2012 and sales for the year then ended were approximately $1.0 billion and $2.0 billion, respectively, as included in Metals USA’s 2012 Annual Report on Form 10-K.

 

The purchase price for Metals USA of $786.0 million along with assumed debt of $466.0 million represents a total transaction value of approximately $1.25 billion. We funded the transaction and refinanced all but $12.3 million of Metals USA’s 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 $1.5 billion credit facility (see Note 7). Through March 31, 2013 we incurred approximately $3.0 million in transaction related costs which were included in warehouse, delivery, selling, general and administrative expenses.

 

5



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

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 $14.4 million for the three months ended March 31, 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 $10.9 million for the three months ended March 31, 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 $0.7 million for the three months ended March 31, 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 $0.7 million for the three months ended March 31, 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 $20.2 million for the three months ended March 31, 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 $4.8 million for the three months ended March 31, 2013.

 

The combined transaction value of our 2012 acquisitions was $226.5 million, which included the assumption and repayment of $59.4 million of debt. We funded these acquisitions with borrowings on our revolving credit facility.

 

4.  Goodwill

 

The change in the carrying amount of goodwill for the three months ended March 31, 2013 is as follows:

 

 

 

(in millions)

 

Balance as of December 31, 2012

 

$

1,314.6

 

Effect of foreign currency translation

 

(2.2

)

Balance as of March 31, 2013

 

$

1,312.4

 

 

We had no accumulated impairment losses related to goodwill as of March 31, 2013.

 

6



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

5.  Intangible Assets, net

 

The following table summarizes our intangible assets, net:

 

 

 

 

March 31, 2013

 

 

 

December 31, 2012

 

 

 

 

Gross
Carrying
Amount

 

 

 

Accumulated
Amortization

 

 

 

Gross
Carrying
Amount

 

 

 

Accumulated
Amortization

 

 

 

 

(in millions)

 

Intangible assets subject to amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covenants not to compete

 

 

$

8.0

 

 

 

$

(7.2

)

 

 

$

8.0

 

 

 

$

(7.1

)

Loan fees

 

 

31.2

 

 

 

(20.8

)

 

 

31.2

 

 

 

(20.2

)

Customer lists/relationships

 

 

522.0

 

 

 

(163.2

)

 

 

524.0

 

 

 

(153.3

)

Software – internal use

 

 

8.1

 

 

 

(5.7

)

 

 

8.1

 

 

 

(5.5

)

Other

 

 

6.4

 

 

 

(2.6

)

 

 

6.4

 

 

 

(2.5

)

 

 

 

575.7

 

 

 

(199.5

)

 

 

577.7

 

 

 

(188.6

)

Intangible assets not subject to amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

546.1

 

 

 

 

 

 

547.4

 

 

 

 

 

 

 

$

1,121.8

 

 

 

$

(199.5

)

 

 

$

1,125.1

 

 

 

$

(188.6

)

 

We recognized amortization expense for intangible assets of $11.3 million and $10.2 million for the three months ended March 31, 2013 and 2012, respectively. Other changes in intangible assets, net, during the three months ended March 31, 2013 are due to foreign currency translation losses of $2.9 million.

 

The following is a summary of estimated aggregated amortization expense for the remaining nine months of 2013 and each of the succeeding five years:

 

 

 

(in millions)

 

2013

 

$

33.7

 

2014

 

42.9

 

2015

 

41.4

 

2016

 

39.6

 

2017

 

34.2

 

2018

 

29.9

 

 

6.  Income Taxes

 

Our effective income tax rates for the three months ended March 31, 2013 and 2012 were 29.5% and 33.2%, respectively.  Our 2013 three-month period effective income tax rate was favorably impacted from the settlement of certain tax matters.

 

7.  Debt

 

Debt consists of the following:

 

 

 

March 31,

 

 

 

December 31,

 

 

 

2013

 

 

 

2012

 

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

Unsecured revolving credit facility due April 4, 2018

 

$

465.0

 

 

 

$

525.0

 

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 November 15, 2036

 

250.0

 

 

 

250.0

 

Other notes and revolving credit facilities

 

11.9

 

 

 

8.9

 

Total

 

1,151.9

 

 

 

1,208.9

 

Less: unamortized discount

 

(1.5

)

 

 

(1.5

)

Less: amounts due within one year and short-term borrowings

 

(86.6

)

 

 

(83.6

)

Total long-term debt

 

$

1,063.8

 

 

 

$

1,123.8

 

 

7



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

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, expiring 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 after the closing date, 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. We intend to use the credit facility for working capital and general corporate purposes, including, but not limited to, capital expenditures, dividend payments, repayment of debt, stock repurchases, internal growth initiatives and acquisitions, including the recent acquisition of Metals USA on April 12, 2013. 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 1.45% and 1.46% as of March 31, 2013 and December 31, 2012, respectively. As of March 31, 2013, we had $31.6 million of letters of credit outstanding under the revolving credit facility with availability to issue an additional $218.4 million of letters of credit.

 

Revolving Credit Facilities – Foreign Operations

 

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 $11.3 million and $8.3 million as of March 31, 2013 and December 31, 2012, respectively.

 

Senior Unsecured Notes – Private Placements

 

We have $75.0 million of outstanding senior unsecured notes issued in private placements of debt as of March 31, 2013. The outstanding senior notes bear interest at a fixed rate of 5.35% and mature in July 2013.

 

Senior Unsecured Notes – Publicly Traded

 

On November 20, 2006 we entered into an 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 (together with the November 20, 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, due in 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 credit agreement. 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.

 

8



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Covenants

 

The amended and restated revolving credit facility and the senior unsecured note agreements 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. Our interest coverage ratio for the twelve-month period ended March 31, 2013 was approximately 10.6 times compared to the debt covenant minimum requirement of 3.0 times (interest coverage ratio is calculated as net income attributable to Reliance plus interest expense and provision for income taxes and plus or minus any non-operating non-recurring loss or gain, respectively, divided by interest expense). Our leverage ratio as of March 31, 2013 calculated in accordance with the terms of the revolving credit facility was 24.5% compared to the financial covenant maximum amount of 60% (leverage ratio is calculated as total debt, inclusive of capital lease obligations and outstanding letters of credit, divided by Reliance shareholders’ equity plus total debt). The minimum net worth requirement as of March 31, 2013 was $1.19 billion compared to Reliance shareholders’ equity balance of $3.65 billion as of March 31, 2013.

 

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. Reliance and the subsidiary guarantors accounted for approximately 91% of our total consolidated EBITDA for the last twelve months and approximately 89% of total consolidated tangible assets as of March 31, 2013.

 

We were in compliance with all debt covenants as of March 31, 2013.

 

8.  Equity

 

Common Stock

 

During the three months ended March 31, 2013, we issued 605,016 shares of common stock in connection with the exercise of employee stock options for total proceeds of approximately $31.6 million.

 

Share-Based Compensation

 

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.  Additionally, 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 March 31, 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.

 

9



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Accumulated Other Comprehensive Loss

 

Accumulated other comprehensive loss included the following:

 

 

 

 

Foreign Currency
Translation Gain

 

 

 

Unrealized Loss
on Investments,
Net of Tax

 

 

 

Minimum Pension
Liability, Net of
Tax

 

 

 

Accumulated
Other
Comprehensive
Loss

 

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2012

 

 

$

21.0

 

 

 

$

(0.2

)

 

 

$

(22.3

)

 

 

$

(1.5

)

Current-period change

 

 

(10.1

)

 

 

0.2

 

 

 

 

 

 

(9.9

)

Balance as of March 31, 2013

 

 

$

10.9

 

 

 

$

 

 

 

$

(22.3

)

 

 

$

(11.4

)

 

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 March 31, 2013 and December 31, 2012.

 

9.  Commitments and Contingencies

 

We are currently involved with certain environmental remediation projects related to activities at former manufacturing operations of our 100%-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
March 31,

 

 

 

 

2013

 

 

 

2012

 

 

 

 

(in millions except for share
and per share amounts)

 

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Reliance

 

 

$

83.7

 

 

 

$

116.2

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Denominator for basic earnings per share –
Weighted average shares

 

 

76,297,108

 

 

 

74,922,487

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

Stock options and restricted shares

 

 

783,595

 

 

 

504,065

 

 

 

 

 

 

 

 

 

 

Denominator for dilutive earnings per share:

 

 

 

 

 

 

 

 

Adjusted weighted average shares and assumed conversions

 

 

77,080,703

 

 

 

75,426,552

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Reliance
shareholders – diluted

 

 

$

1.09

 

 

 

$

1.54

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Reliance
shareholders – basic

 

 

$

1.10

 

 

 

$

1.55

 

 

10



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

The computations of earnings per share for the three months ended March 31, 2013 and 2012 do not include 483,680 and 2,475,395 shares reserved for issuance upon exercise of stock options or vesting of restricted shares, respectively, because their inclusion would have been anti-dilutive.

 

11. Subsequent Events

 

On April 12, 2013, we acquired Metals USA for a total transaction value of $1.25 billion (see Note 3).

 

On April 30, 2013 we acquired 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 $40.5 million of net indebtedness. The cash portion of the purchase price was funded with borrowings on our revolving credit facility.

 

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 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.

 

11



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Condensed Unaudited Consolidating Balance Sheet
As of March 31, 2013

(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
Adjustments 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

33.7

 

 

 

$

13.2

 

 

 

$

53.2

 

 

 

$

 

 

 

$

100.1

 

Accounts receivable, less allowance for doubtful accounts

 

 

77.4

 

 

 

767.4

 

 

 

95.6

 

 

 

 

 

 

940.4

 

Inventories

 

 

58.8

 

 

 

1,123.4

 

 

 

135.4

 

 

 

 

 

 

1,317.6

 

Intercompany receivables

 

 

0.5

 

 

 

18.9

 

 

 

2.5

 

 

 

(21.9

)

 

 

 

Income taxes receivable

 

 

38.8

 

 

 

 

 

 

1.8

 

 

 

(37.4

)

 

 

3.2

 

Other current assets

 

 

103.8

 

 

 

29.3

 

 

 

8.8

 

 

 

(76.8

)

 

 

65.1

 

Total current assets

 

 

313.0

 

 

 

1,952.2

 

 

 

297.3

 

 

 

(136.1

)

 

 

2,426.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in subsidiaries

 

 

3,524.7

 

 

 

257.8

 

 

 

 

 

 

(3,782.5

)

 

 

 

Property, plant and equipment, net

 

 

100.5

 

 

 

1,040.5

 

 

 

94.6

 

 

 

 

 

 

1,235.6

 

Goodwill

 

 

23.8

 

 

 

1,183.9

 

 

 

104.7

 

 

 

 

 

 

1,312.4

 

Intangible assets, net

 

 

10.3

 

 

 

785.6

 

 

 

126.4

 

 

 

 

 

 

922.3

 

Intercompany receivables

 

 

1,186.3

 

 

 

20.4

 

 

 

3.5

 

 

 

(1,210.2

)

 

 

 

Other assets

 

 

18.6

 

 

 

63.7

 

 

 

2.1

 

 

 

 

 

 

84.4

 

Total assets

 

 

$

5,177.2

 

 

 

$

5,304.1

 

 

 

$

628.6

 

 

 

$

(5,128.8

)

 

 

$

5,981.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

39.9

 

 

 

$

319.0

 

 

 

$

52.5

 

 

 

$

(21.9

)

 

 

$

389.5

 

Accrued compensation and retirement costs

 

 

9.4

 

 

 

53.7

 

 

 

3.9

 

 

 

 

 

 

67.0

 

Income taxes payable

 

 

 

 

 

37.4

 

 

 

 

 

 

(37.4

)

 

 

 

Other current liabilities

 

 

58.6

 

 

 

46.7

 

 

 

24.5

 

 

 

(1.7

)

 

 

128.1

 

Deferred income taxes

 

 

 

 

 

75.2

 

 

 

 

 

 

(75.2

)

 

 

 

Current maturities of long-term debt and short-term borrowings

 

 

75.3

 

 

 

 

 

 

11.3

 

 

 

 

 

 

86.6

 

Total current liabilities

 

 

183.2

 

 

 

532.0

 

 

 

92.2

 

 

 

(136.2

)

 

 

671.2

 

Long-term debt

 

 

1,063.8

 

 

 

 

 

 

 

 

 

 

 

 

1,063.8

 

Intercompany borrowings

 

 

 

 

 

1,104.5

 

 

 

105.7

 

 

 

(1,210.2

)

 

 

 

Other long-term liabilities

 

 

283.4

 

 

 

282.4

 

 

 

24.4

 

 

 

 

 

 

590.2

 

Total Reliance shareholders’ equity

 

 

3,646.8

 

 

 

3,379.2

 

 

 

403.2

 

 

 

(3,782.4

)

 

 

3,646.8

 

Noncontrolling interests

 

 

 

 

 

6.0

 

 

 

3.1

 

 

 

 

 

 

9.1

 

Total equity

 

 

3,646.8

 

 

 

3,385.2

 

 

 

406.3

 

 

 

(3,782.4

)

 

 

3,655.9

 

Total liabilities and equity

 

 

$

5,177.2

 

 

 

$

5,304.1

 

 

 

$

628.6

 

 

 

$

(5,128.8

)

 

 

$

5,981.1

 

 

12



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Condensed Unaudited Consolidating Balance Sheet
As of December 31, 2012

(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
Adjustments

 

 

 

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

 

 

 

71.6

 

 

 

6.1

 

 

 

 

 

 

126.2

 

Deferred income taxes

 

 

 

 

 

75.2

 

 

 

 

 

 

(75.2

)

 

 

 

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

 

 

13



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Condensed Unaudited Consolidating Statement of Income
For the three months ended March 31, 2013
(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
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

 

 

14



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Condensed Unaudited Consolidating Statement of Income
For the three months ended March 31, 2012

(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
Adjustments

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

$

192.7

 

 

 

$

1,972.1

 

 

 

$

191.6

 

 

 

$

(68.1

)

 

 

$

2,288.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation and amortization shown below)

 

 

153.7

 

 

 

1,487.8

 

 

 

137.2

 

 

 

(68.2

)

 

 

1,710.5

 

Warehouse, delivery, selling, general and administrative

 

 

15.0

 

 

 

344.4

 

 

 

24.8

 

 

 

(26.5

)

 

 

357.7

 

Depreciation and amortization

 

 

3.5

 

 

 

29.2

 

 

 

2.8

 

 

 

 

 

 

35.5

 

 

 

 

172.2

 

 

 

1,861.4

 

 

 

164.8

 

 

 

(94.7

)

 

 

2,103.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

20.5

 

 

 

110.7

 

 

 

26.8

 

 

 

26.6

 

 

 

184.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

(14.4

)

 

 

(3.9

)

 

 

(0.7

)

 

 

4.5

 

 

 

(14.5

)

Other income, net

 

 

33.9

 

 

 

2.7

 

 

 

1.0

 

 

 

(31.1

)

 

 

6.5

 

Income before equity in earnings of subsidiaries and income taxes

 

 

40.0

 

 

 

109.5

 

 

 

27.1

 

 

 

 

 

 

176.6

 

Equity in earnings of subsidiaries

 

 

68.0

 

 

 

9.9

 

 

 

 

 

 

(77.9

)

 

 

 

Income before income taxes

 

 

108.0

 

 

 

119.4

 

 

 

27.1

 

 

 

(77.9

)

 

 

176.6

 

Income tax (benefit) provision

 

 

(8.2

)

 

 

62.2

 

 

 

4.7

 

 

 

 

 

 

58.7

 

Net income

 

 

116.2

 

 

 

57.2

 

 

 

22.4

 

 

 

(77.9

)

 

 

117.9

 

Less: Net income attributable to noncontrolling interests

 

 

 

 

 

1.5

 

 

 

0.2

 

 

 

 

 

 

1.7

 

Net income attributable to Reliance

 

 

$

116.2

 

 

 

$

55.7

 

 

 

$

22.2

 

 

 

$

(77.9

)

 

 

$

116.2

 

 

15



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

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

(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
Adjustments

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

83.7

 

 

 

$

78.1

 

 

 

$

10.1

 

 

 

$

(87.4

)

 

 

$

84.5

 

Equity in earnings of subsidiaries

 

 

(82.6

)

 

 

(5.1

)

 

 

 

 

 

87.4

 

 

 

(0.3

)

Other operating activities, net

 

 

111.8

 

 

 

(139.5

)

 

 

15.7

 

 

 

 

 

 

(12.0

)

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

 

Proceeds 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

 

 

16



Table of Contents

 

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

 

Condensed Unaudited Consolidating Cash Flow Statement
For the three months ended March 31, 2012

(in millions)

 

 

 

 

Parent

 

 

 

Guarantor
Subsidiaries

 

 

 

Non-
Guarantor
Subsidiaries

 

 

 

Consolidating
Adjustments

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

116.2

 

 

 

$

57.2

 

 

 

$

22.4

 

 

 

$

(77.9

)

 

 

$

117.9

 

Equity in earnings of subsidiaries

 

 

(68.0

)

 

 

(10.4

)

 

 

 

 

 

77.9

 

 

 

(0.5

)

Other operating activities, net

 

 

(26.5

)

 

 

(125.1

)

 

 

(29.0

)

 

 

 

 

 

(180.6

)

Cash provided by (used in) operating activities

 

 

21.7

 

 

 

(78.3

)

 

 

(6.6

)

 

 

 

 

 

(63.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(2.7

)

 

 

(28.7

)

 

 

(3.2

)

 

 

 

 

 

(34.6

)

Acquisition of a metal service center

 

 

 

 

 

(10.0

)

 

 

 

 

 

 

 

 

(10.0

)

Net advances to subsidiaries

 

 

(112.5

)

 

 

 

 

 

 

 

 

112.5

 

 

 

 

Other investing activities, net

 

 

 

 

 

3.0

 

 

 

 

 

 

 

 

 

3.0

 

Cash used in investing activities

 

 

(115.2

)

 

 

(35.7

)

 

 

(3.2

)

 

 

112.5

 

 

 

(41.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities: