2015 ANNUAL REPORT
DEAR FELLOW STOCKHOLDERS:
When adversity comes, people and organizations can react and function in many ways. In Mike Arnold
-price deflation in
the second half of the year.
worst was going to be with us for a while, for all of 2015 in fact. The tale of the tape shows that our key
commodity benchmarks dropped by more than 40% on average while metal service center industry
shipments contracted by 8% as the industry fell into a deep recession. I am proud to say that Ryerson
acted with courage and confidence in the face of this economic adversity and had a year of significant
accomplishment despite the noted industry conditions.
During years like 2015, we come back to first principles of Ryerson
efficiency, margin expansion and profitable growth and we execute our plan. Then we go further inside
the Ryerson engine and look at the keys to our business model of speed, scale, value-add, connectivity,
analytics and culture. When you get beyond industry conditions during 2015 and realize that our industry
will see better days, you see Ryerson as an enterprise that can outperform the industry at any point in the
cycle.
around operating
In terms of operational efficiency, in a year when commodity prices were plummeting, we achieved
industry-leading working capital management. We took out non-value added costs and continued shaping
our footprint for improved efficiency, service and productivity. Because of our expertise in managing
inventories, receivables and expenses, we were able to withstand the deflationary plague of 2015 and
position Ryerson well as we move through a cyclical bottom.
In severe deflationary environments within an industry where shipments contract and end markets such as
oil & gas experience outright depression conditions, margin compression ensues as the industry
-high, sell-
does not fall as fast as spot
selling prices do. Because Ryerson turned its inventories quickly and has continued improving its supply
chain management, we stabilized margins as the year progressed while continuing to increase our
customer value-add. The amount of material we process beyond as-is distribution increased to more than
75% of all products sold. Tough times lead to the necessity that is the mother of invention. Through the
-
segmenting our customer base and stratifying our inventory so we better understand what our customers
buy, when they buy it, and at what margin and price points. Put it all together and you see a Ryerson with
a business model that is right for the times ahead.
In a year like 2015, profitable growth is eclipsed when macro conditions are so severe as to shrink income
statements and balance sheets of industry participants. Ryerson responded to this challenge of profitable
growth during a steep period of deflation and industry contraction by acquiring Southern Tool Steel to
further complement our long products transactional business in the Southern U.S. We invested in growth
CAPEX to improve the speed and quality of our distribution, processing and fabricating services through
value-added equipment purchases and investments in growth platforms in e-commerce and customer
prospecting.
The most gratifying outcome of 2015 from a commercial perspective was Ryerson achieving market share
growth versus the industry for the first time in at least six years. We accomplished this through a culture
.
is our pledge to our customers and
our core value of creating great customer experiences time after time. It means we offer a value-driven
solution to our customers with warmth, knowledge, interest, energy and professionalism. We use speed,
scale, connectivity and an understanding of supply chain maps both inside and outside of Ryerson to
configure solutions for customers in our industry.
Industry math tells us that there are more than 1 million customers in our industry placing more than 80
million orders per year. That is a lot of business and so the opportunity becomes clear. Develop an
for transactional business while managing
complex supply chains for program accounts. We made impressive strides in becoming that organization
in 2015 and we will continue that progress moving forward.
interest expense in 2015, reduced debt by 18% or $224 million and generated a free cash flow yield of
165%. We will continue our work toward deleveraging our balance sheet and position Ryerson to
generate strong shareholder returns in the coming years.
015. Ryerson lowered its cash
Finally and most importantly, I want to thank my Ryerson teammates for facing up to and meeting the
challenges of 2015 with maximum effort, intelligence, perseverance, enthusiasm and professionalism.
We used 2015 to create a stronger Company intangible of self-help driven results. I have never been
transformation in the years to come.
Edward J. Lehner
President and Chief Executive Officer
March 18, 2016
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2015
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File No. 001-34735
RYERSON HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
26-1251524
(I.R.S. Employer
Identification No.)
227 W. Monroe St., 27th Floor
Chicago, Illinois 60606
(Address of principal executive offices)
(312) 292-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock - $0.01 par value
Name of exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
No
No
No
No
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
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
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.
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
Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of a share of the registrant’s
common stock on June 30, 2015 as reported by the New York Stock Exchange on such date was approximately $98,389,000. Shares of the registrant’s common stock
held by each executive officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be
affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
As of February 29, 2016, there were 32,099,700 shares of our Common Stock, par value $0.01 per share, outstanding.
Accelerated filer
Smaller reporting company
No
The information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and incorporated by reference from, the registrant’s definitive proxy
statement for the annual meeting of stockholders (the “2015 Proxy Statement”), which will be filed with the Securities and Exchange Commission not later than 120
days after the end of the fiscal year ended December 31, 2015.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
Executive Officers of the Registrant
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Notes to Consolidated Financial Statements
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Signatures
Page
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2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains “forward-looking statements.” Such statements can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof or
other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-
looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results
may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly
impact the metals distribution industry and our business are:
cyclicality of our business, due to the cyclical nature of our customers’ businesses;
impairment of goodwill that could result from, among other things, volatility in the markets in which we operate;
remaining competitive and maintaining market share in the highly fragmented metals distribution industry, in which price
is a competitive tool and in which customers who purchase commodity products are often able to source metals from a
variety of sources;
managing the costs of purchased metals relative to the price at which we sell our products during periods of rapid price
escalation, when we may not be able to pass through pricing increases fully to our customers quickly enough to maintain
desirable gross margins, or during periods of generally declining prices, when our customers may demand that price
decreases be passed fully on to them more quickly than we are able to obtain similar discounts from our suppliers;
our substantial indebtedness and the covenants in instruments governing such indebtedness;
the failure to effectively integrate newly acquired operations;
regulatory and other operational risks associated with our operations located outside of the United States (or “U.S.”);
fluctuating operating results depending on seasonality;
potential damage to our information technology infrastructure;
work stoppages;
certain employee retirement benefit plans are underfunded and the actual costs could exceed current estimates;
future funding for postretirement employee benefits may require substantial payments from current cash flow;
prolonged disruption of our processing centers;
ability to retain and attract management and key personnel;
ability of management to focus on North American and foreign operations;
termination of supplier arrangements;
the incurrence of substantial costs or liabilities to comply with, or as a result of violations of, environmental laws;
the impact of new or pending litigation against us;
a risk of product liability claims;
our risk management strategies may result in losses;
currency fluctuations in the U.S. dollar versus the Canadian dollar and the Chinese renminbi;
management of inventory and other costs and expenses; and
consolidation in the metals producer industry in which we purchase products, which could limit our ability to effectively
negotiate and manage costs of inventory or cause material shortages, either of which would impact profitability.
These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of
various factors, including those set forth in this Annual Report under “Risk Factors” and the caption “Industry and Operating Trends”
included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual
Report. Moreover, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date
they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
3
ITEM 1.
BUSINESS.
PART I
Ryerson Holding Corporation (“Ryerson Holding”), a Delaware corporation, is the parent company of Joseph T. Ryerson &
Son, Inc. (“JT Ryerson”), a Delaware corporation. On December 17, 2014, Ryerson Inc., formerly a direct, wholly-owned subsidiary
of Ryerson Holding, merged with and into JT Ryerson, which was previously an indirect, wholly-owned subsidiary of Ryerson
Holding, with JT Ryerson as the surviving corporation. As a result of such merger, from and after December 17, 2014, JT Ryerson has
been a direct, wholly-owned subsidiary of Ryerson Holding. Affiliates of Platinum Equity, LLC (“Platinum”) own approximately
21,037,500 shares of our common stock, which is approximately 66% of our issued and outstanding common stock.
Ryerson conducts materials distribution operations in the United States through JT Ryerson, in Canada through its indirect
wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”), and in Mexico through its indirect
wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to
our North American operations, we conduct materials distribution operations in China through Ryerson China Limited (“Ryerson
China”), a company in which we have a 100% ownership percentage, and in Brazil through Açofran Aços e Metais Ltda (“Açofran”),
a company in which we have a 50% direct ownership percentage. Unless the context indicates otherwise, Ryerson Holding,
JT Ryerson, Ryerson Canada, Ryerson China, Ryerson Mexico and Açofran, together with their subsidiaries (including Ryerson Inc.
prior to its dissolution through merger), are collectively referred to herein as “Ryerson,” “we,” “us,” “our,” or the “Company.”
Our Company
We believe we are one of the largest processors and distributors of metals in North America measured in terms of sales, with
operations in North America, China and Brazil. Our industry is highly fragmented with the largest companies accounting for only a
small percentage of total market share. Our customer base ranges from local, independently owned fabricators and machine shops to
large, international original equipment manufacturers. We process and distribute a full line of over 65,000 products in stainless steel,
aluminum, carbon steel and alloy steels and a limited line of nickel and red metals in various shapes and forms. More than 75% of the
products we sell are processed to meet customer requirements. We use various processing and fabricating techniques to process
materials to a specified thickness, length, width, shape and surface quality pursuant to customer orders. For the year ended
December 31, 2015, we purchased 1.8 million tons of materials from suppliers throughout the world.
We operate over 90 facilities across North America, six facilities in China and one facility in Brazil. Our service centers are
strategically located in close proximity to our customers, which allows us to quickly process and deliver our products and services,
often within the next day of receiving an order. We own, lease or contract a fleet of tractors and trailers, allowing us to efficiently
meet our customers’ delivery demands. In addition, our scale enables us to maintain low operating costs. Our operating expenses as a
percentage of sales for the years ended December 31, 2015 were 14.5%.
We track the processing operations, if any, performed on sold material for over 95% of our total revenues. The activities we
track broadly fall into four main processing categories: (1) sheet processing (excludes fabrication activities), (2) as-is long and plate,
(3) cut long and plate, and (4) fabrication. A key metric that we track is the percentage mix of revenue that comes from our
fabrication capabilities. In 2010, the mix of revenue from fabrication activities was 6.7% of our sales, while in 2015, our mix of
revenue from fabrication activities rose to 10.4% of our sales largely due to the strategic investments we have made in value-added
processing capital expenditures.
In addition to providing a wide range of flat and long metals products, we offer numerous value-added processing and
fabrication services such as sawing, slitting, blanking, cutting to length, leveling, flame cutting, laser cutting, edge trimming, edge
rolling, roll forming, tube manufacturing, polishing, shearing, forming, stamping, punching, rolling shell plate to radius and beveling
to process materials to a specified thickness, length, width, shape and surface quality pursuant to specific customer orders. Our value
proposition also includes providing a superior level of customer service and responsiveness, technical services and inventory
management solutions. Our breadth of services allows us to create long-term partnerships with our customers and enhances our
profitability.
We serve approximately 40,000 customers across a wide range of manufacturing end markets. We believe the diverse end
markets we serve reduce the volatility of our business in the aggregate. Our geographic network and broad range of products and
services allow us to serve large, international manufacturing companies across multiple locations.
4
Industry Overview
Metals service centers serve as key intermediaries between metal producers and end users of metal products. Metal producers
offer commodity products and typically sell metals in the form of standard-sized coils, sheets, plates, structurals, bars and tubes.
Producers, mostly steel and aluminum mills, prefer large order quantities, longer lead times and limited inventory in order to
maximize capacity utilization across their typically higher capital-intensive structure. End users of metal products seek to purchase
metals with customized specifications, including value-added processing. End-market customers look for “one-stop” suppliers that can
offer processing services along with lower order volumes, shorter lead times, and more reliable delivery. As an intermediary, metals
service centers aggregate end-users’ demand, purchase metal in bulk to take advantage of economies of scale and then process and sell
metal that meets specific customer requirements. The end markets for metals service centers are highly diverse and include machinery,
manufacturing, construction and transportation.
The metals service center industry is comprised of many companies, the majority of which have limited product lines and
inventories, with customers located in a specific geographic area. The industry is highly fragmented, with a large number of small
companies and few relatively large companies. In general, competition is based on quality, service, price and geographic proximity.
The metals service center industry typically experiences cash flow trends that are counter-cyclical to the revenue and volume
growth of the industry. Companies that participate in the industry have assets that are composed primarily of working capital. During
an industry downturn, companies generally reduce working capital investments and generate cash as inventory and accounts
receivable balances decline. As a result, operating cash flow and liquidity tend to increase during a downturn, which typically
facilitates industry participants’ ability to cover fixed costs and repay outstanding debt.
The industry is divided into three major groups: general line service centers, specialized service centers, and processing centers,
each of which targets different market segments. General line service centers handle a broad line of metals products and tend to
concentrate on distribution rather than processing. General line service centers range in size from a single location to a nationwide
network of locations. For general line service centers, individual order size in terms of dollars and tons tends to be small relative to
processing centers, while the total number of orders is typically high. Specialized service centers focus their activities on a narrower
range of product and service offerings than do general line companies. Such service centers provide a narrower range of services to
their customers and emphasize product expertise and lower operating costs, while maintaining a moderate level of investment in
processing equipment. Processing centers typically process large quantities of metals purchased from primary producers for resale to
large industrial customers, such as the automotive industry. Because orders are typically large, operation of a processing center
requires a significant investment in processing equipment.
We compete with many other general line service centers, specialized service centers and processing centers on a regional and
local basis, some of which may have greater financial resources and flexibility than us. We also compete to a lesser extent with
primary metal producers. Primary metal producers typically sell to very large customers that require regular shipments of large
volumes of steel. Although these large customers sometimes use metals service centers to supply a portion of their metals needs,
metals service center customers typically are consumers of smaller volumes of metals than are customers of primary steel producers.
Although we purchase from foreign steelmakers, some of our competitors purchase a higher percentage of metals from foreign
steelmakers than we do. Such competitors may benefit from favorable exchange rates or other economic or regulatory factors that may
result in a competitive advantage. This competitive advantage may be offset somewhat by higher transportation costs and less
dependable delivery times associated with importing metals into North America.
Competitive Strengths
Leading Market Position in North America
We believe we are one of the largest service center companies for carbon and stainless steel as well as aluminum based on sales
in the North American market where we have a broad geographic presence with over 90 locations.
Our service centers are located near our customer locations, enabling us to provide timely delivery to customers across
numerous geographic markets. Additionally, our widespread network of locations in the United States, Canada and Mexico helps us to
utilize our expertise to more efficiently serve customers with complex supply chain requirements across multiple manufacturing
locations. We believe this is a key differentiator among customers who need a supplier that can reliably and consistently support them.
Our ability to transfer inventory among our facilities better enables us to more timely and profitably source and process specialized
items at regional locations throughout our network than if we were required to maintain inventory of all products and specialized
equipment at each location.
We believe with our significant footprint in the North American market, combined with our significant scale and operating
leverage, a cyclical recovery of the service center industry supported by long-term growth trends in our end markets should allow us to
5
experience higher growth rates relative to North American economic improvement, but there can be no guarantee that we will
experience such higher growth rates.
Broad Geographic Reach across Attractive End Markets.
Our operations cover a diverse range of industries, including commercial ground transportation manufacturing, metal fabrication
and machine shops, industrial machinery and equipment manufacturing, consumer durable production, HVAC manufacturing,
construction equipment manufacturing, food processing and agricultural equipment manufacturing and oil and gas. We believe the
industries we serve will provide demand for our products and services as the North American manufacturing economy continues to
grow. We also believe that the continued trend of moving manufacturing to the United States from overseas should benefit us with our
broad North American platform. In addition, we expect to benefit from continued growth in international markets that will help spur
demand at domestic manufacturing facilities that sell into the global market. We believe that our ability to quickly adjust our offering
based on regional and industry specific trends creates stability while also providing the opportunity to access specific growth markets.
Established Platform for Organic and Acquisition Growth.
Since 2011, we have opened ten new service centers in previously underserved North American regions. We have acquired
another twelve facilities to complement our existing locations and expanded the product offering in many locations based on customer
demand. A significant portion of our capital expenditures since 2011 have been made to expand our long and plate processing
capabilities. We believe that our expanded presence in select regions and products positions us well to capture further growth in these
regions and products.
Although there can be no guarantee of growth, we believe a number of our other strategies, such as improving our product mix,
pricing our products and services based on the value we provide our customers, growing our large national network, and expanding
our diverse operating capabilities, will provide us with growth opportunities.
Given the highly fragmented nature of the service center industry, we believe there are numerous additional opportunities to
acquire businesses and incorporate them into our existing infrastructure. Given our large scale and geographic reach, we believe we
can add value to these businesses in a number of ways, including providing greater purchasing power, access to additional end markets
and broadening product mix. Although we do not have any current plans to engage in any specific acquisitions, from time to time and
in the ordinary course of business, we regularly evaluate potential acquisition opportunities.
Lean Operating Structure Providing Operating Leverage.
Since 2007, we have transformed our operating model by decentralizing our operations and reducing our cost base, improving
our operating efficiency while also providing the flexibility for further growth in our target markets. In 2015, warehousing, delivery,
selling, general and administrative expenses decreased $58.4 million or 11.5% from 2014. After excluding one-time IPO-related
expenses of $32.7 million in 2014, warehousing, delivery, selling, general and administrative expenses declined 5.4% in 2015.
We have also focused on process improvements in inventory management. Average inventory days excluding LIFO decreased
from 82 days in 2014 to 80 days in 2015. Our average inventory days have improved on an overall basis from 100 days in 2006. This
reduction has decreased our exposure to metals price movements as well as increased capacity in our facilities to devote to higher
margin products. These organizational and operating changes have improved our operating structure, working capital management and
efficiency.
As a result of our initiatives, we have increased our financial flexibility and believe we have a favorable cost structure compared
to many of our peers. This will provide significant operating leverage if or when demand and/or pricing improve.
Extensive Breadth of Products and Services for Diverse Customer Base.
We carry a full range of over 65,000 products, including aluminum, carbon, stainless and alloy steels and a limited line of nickel
and red metals. In addition, we provide a broad range of processing and fabrication services to meet the needs of our approximately
40,000 customers and typically fulfill more than 1,000,000 orders per year. We also provide supply chain solutions, including just-in-
time delivery, and value-added components to many original equipment manufacturers.
We believe our broad product mix and marketing approach provides customers with a “one-stop shop” solution few other
service center companies are able to offer.
6
For the year ended December 31, 2015, no single customer accounted for more than 2% of our sales, and our top 10 customers
accounted for less than 12% of our sales.
Strong Relationships with Suppliers.
We are among the largest purchasers of metals in North America and have long-term relationships with many of our North
American suppliers. We believe we are frequently one of the largest customers of our suppliers and that concentrating our orders
among a core group of suppliers is an effective method for obtaining favorable pricing and service. We believe we have the
opportunity to further leverage this strength through continued focus on price and volume using an analytics-driven approach to
procurement. In addition, we view our strategic suppliers as supply chain partners. Our coordinated effort focused on logistics, lead
times, rolling schedules, and scrap return programs ultimately results in value-based buying that is advantageous for us. Metals
producers worldwide are consolidating, and large, geographically diversified customers, such as Ryerson, are desirable partners for
these larger suppliers. Our relationships with suppliers often provide us with access to metals when supply is constrained. Through our
knowledge of the global metals marketplace and capabilities of specific mills we believe we have developed a global purchasing
strategy that allows us to secure favorable prices across our product lines.
Experienced Management Team with Deep Industry Knowledge.
Our senior management team has extensive industry and operational experience and has been instrumental in optimizing and
implementing our strategy in the last four years. Our senior management has an average of more than 20 years of experience in the
metals or service center industries. The senior executive team’s extensive experience in international markets and outside the service
center industry provides perspective to drive profitable growth. Our CEO, Mr. Edward Lehner, who joined the Company in August
2012 as CFO and became CEO in June 2015, has nearly 30 years of experience, predominantly in the metals industry. Mr. Erich
Schnaufer, who joined the Company in 2005 and became CFO in January 2016, has over 25 years of financial and accounting
experience and over 10 years with Ryerson. Under their leadership, we have increased our focus on positioning the Company for
growth and enhanced profitability.
Industry Outlook
We believe that the United States economy has grown since the recession that began in 2008. According to the Institute for
Supply Management, the Purchasing Managers’ Index (“PMI”) was above 50% for 53 of the last 60 months, which indicates that the
U.S. manufacturing economy was generally expanding over the last five years. However, the PMI index was below 50% for each of
the last three months of 2015, indicating a contracting manufacturing economy toward the end of 2015. The PMI measures the
economic health of the manufacturing sector and is a composite index based on five indicators: new orders, inventory levels,
production, supplier deliveries and the employment environment. PMI readings can be a good indicator of industrial activity and
general economic growth.
Additionally, the overall U.S. economy is projected to continue growing as evidenced by the Federal Reserve’s midrange
forecasted real GDP growth rates of 2.4%, 2.2%, and 2.0% for 2016, 2017, and 2018, respectively.
Steel demand in North America is largely dependent on growth of the automotive, industrial equipment, consumer appliance
and construction end markets. One of our key end markets is within the industrial equipment sector and according to the latest
Livingston Survey, published by the Federal Reserve Bank of Philadelphia, U.S. industrial production grew by 1.5% in 2015 and is
expected to grow by 1.5% in 2016 and 2.7% in 2017.
China continues to be a key driver in the growth of global metals demand. According to the International Monetary Fund,
China’s GDP grew 6.9% in 2015 and is projected to grow 6.3% in 2016 and 6.0% in 2017.
Products and Services
We carry a full line of carbon steel, stainless steel, alloy steels and aluminum, and a limited line of nickel and red metals. These
materials are inventoried in a number of shapes, including coils, sheets, rounds, hexagons, square and flat bars, plates, structurals and
tubing.
7
The following table shows our percentage of sales by major product lines for 2015, 2014 and 2013:
Product Line
Carbon Steel Flat
Carbon Steel Plate
Carbon Steel Long
Stainless Steel Flat
Stainless Steel Plate
Stainless Steel Long
Aluminum Flat
Aluminum Plate
Aluminum Long
Other
Total
2015
2014
2013
25%
11
16
16
4
3
16
3
4
2
100%
25%
12
15
16
4
4
15
3
4
2
100%
26%
11
15
16
4
3
15
3
4
3
100%
More than 75% of the materials sold by us are processed. We use processing and fabricating techniques such as sawing, slitting,
blanking, cutting to length, leveling, flame cutting, laser cutting, edge trimming, edge rolling, polishing and shearing to process
materials to specified thickness, length, width, shape and surface quality pursuant to specific customer orders. Among the most
common processing techniques used by us are slitting, which involves cutting coiled metals to specified widths along the length of the
coil, and leveling, which involves flattening metals and cutting them to exact lengths. We also use third-party fabricators to outsource
certain processes that we are not able to perform internally (such as pickling, painting, forming and drilling) to enhance our value-
added services.
The plate burning and fabrication processes are particularly important to us. These processes require sophisticated and
expensive processing equipment. As a result, rather than making investments in such equipment, manufacturers have increasingly
outsourced these processes to metals service centers.
As part of securing customer orders, we also provide services to our customers to assure cost effective material application
while maintaining or improving the customers’ product quality. Our services include: just-in-time inventory programs, production of
kits containing multiple products for ease of assembly by the customer, consignment arrangements and the placement of our
employees at a customer’s site for inventory management and production and technical assistance. We also provide special stocking
programs in which products that would not otherwise be stocked by us are held in inventory to meet certain customers’ needs. These
services are designed to reduce customers’ costs by minimizing their investment in inventory and improving their production
efficiency.
Additional financial information is presented in Item 8. “Financial Statements and Supplementary Data” of this Form 10-K and
is incorporated herein by reference.
8
Customers
Our customer base is diverse, numbering approximately 40,000 and includes most metal-consuming industries, most of which
are cyclical. For the year ended December 31, 2015, no single customer accounted for more than 2% of our sales, and the top 10
customers accounted for less than 12% of our sales. Substantially all of our sales are attributable to our U.S. operations and
substantially all of our long-lived assets are located in the United States. The following table shows the Company’s percentage of sales
by end-market customer for 2015, 2014 and 2013:
End-Market Customer
Commercial ground transportation
Metal fabrication and machine shops
Industrial machinery and equipment
Consumer durable
HVAC
Construction equipment
Food processing and agricultural equipment
Oil & gas
Other
Total
2015
Percentage of Sales
2014
2013
18%
18
17
10
8
8
7
7
7
100%
17%
18
18
11
7
7
7
9
6
100%
16%
18
19
12
7
8
7
8
5
100%
Some of our largest customers have procurement programs with us, typically ranging from three months to one year in duration.
Pricing for these contracts is generally based on a pricing formula rather than a fixed price for the program duration. However, certain
customer contracts are at fixed prices; in order to minimize our financial exposure, we generally match these fixed-price sales
programs with fixed-price supply programs. In general, sales to customers are priced at the time of sale based on prevailing market
prices. In 2015, we reviewed our categorization of customers by end market. As a result, the percentages by end-market customer in
the table above for 2013 and 2014 have been reclassified to conform to the 2015 presentation.
Suppliers
For the year ended December 31, 2015, our top 25 suppliers accounted for approximately 74% of our purchase dollars. We
purchase the majority of our inventories at prevailing market prices from key suppliers with which we have established relationships
to obtain improvements in price, quality, delivery and service. We are generally able to meet our materials requirements because we
use many suppliers, because there is a substantial overlap of product offerings from these suppliers, and because there are a number of
other suppliers able to provide identical or similar products. Because of the competitive nature of the business, when metal prices
increase due to product demand, mill surcharges, supplier consolidation or other factors that in turn lead to supply constraints or
longer mill lead times, we may not be able to pass our increased material costs fully to customers. In recent years, there have been
significant consolidations among suppliers of carbon steel, stainless steel, and aluminum. Continued consolidation among suppliers
could lead to disruptions in our ability to meet our material requirements as the sources of our products become more concentrated
from fewer producers. We believe we will be able to meet our material requirements because we believe that we have good
relationships with our suppliers and believe we will continue to be among the largest customers of our suppliers.
Sales and Marketing
We maintain our own sales force. In addition to our office sales staff, we market and sell our products through the use of our
field sales force that we believe has extensive product and customer knowledge and through a comprehensive catalog of our products.
Our office and field sales staffs, which together consist of approximately 700 employees, include technical and metallurgical
personnel.
A portion of our customers experience seasonal slowdowns. Our sales, as measured in terms of tonnage, in the months of July,
November and December traditionally have been lower than in other months because of a reduced number of shipping days and
holiday or vacation closures for some customers. Consequently, our sales in the first two quarters of the year are usually higher than in
the third and fourth quarters.
Capital Expenditures
In recent years we have made capital expenditures to maintain, improve and expand processing capabilities. Additions by us to
property, plant and equipment, together with retirements for the five years ended December 31, 2015, excluding the initial purchase
9
price of acquisitions and the initial effect of fully consolidating a joint venture, are set forth below. The net capital change during such
period aggregated to an increase of $90.1 million.
2015
2014
2013
2012
2011
Additions
$
22.3
21.6
20.2
40.8
47.0
Retirements
or Sales
(In millions)
9.1
$
6.3
13.5
18.0
14.9
Net
$
13.2
15.3
6.7
22.8
32.1
We currently anticipate capital expenditures, excluding acquisitions, of up to approximately $20 million for 2016. We expect
capital expenditures will be funded from cash generated by operations and available borrowings.
Employees
As of December 31, 2015, we employed approximately 3,200 persons in North America, 350 persons in China, and 50 persons
in Brazil. Our North American workforce was comprised of approximately 1,500 office employees and approximately 1,700 plant
employees. Twenty-five percent of our plant employees were members of various unions, including the United Steel Workers and the
International Brotherhood of Teamsters. Our relationship with the various unions has generally been good.
Eight renewal contracts covering approximately 182 employees were successfully negotiated in 2015. We also were successful
in negotiating the effects of the plant closure of our unionized facility in Etobicoke, Ontario, Canada in 2015. Three contracts covering
66 employees are currently scheduled to expire in 2016.
Environmental, Health and Safety Matters
Our facilities and operations are subject to many foreign, federal, state and local laws and regulations relating to the protection
of the environment and to health and safety. In particular, our operations are subject to extensive requirements relating to waste
disposal, recycling, air and water emissions, the handling of regulated materials, remediation, underground storage tanks, asbestos-
containing building materials, workplace exposure and other matters. We believe that our operations are currently in substantial
compliance with all such laws and do not presently anticipate substantial expenditures in the foreseeable future in order to meet
environmental, workplace health or safety requirements or to pay for any investigations, corrective action or claims. Claims,
enforcement actions, or investigations regarding personal injury, property damage, or violation of environmental laws could result in
substantial costs to us, divert our management’s attention and result in significant liabilities, fines, or the suspension or interruption of
our facilities.
We continue to analyze and implement safeguards to mitigate any environmental, health and safety risks we may face. As a
result, additional costs and liabilities may be incurred to comply with future requirements or to address newly discovered conditions,
which costs and liabilities could have a material adverse effect on the results of operations, financial condition or cash flows. For
example, there is increasing likelihood that additional regulation of greenhouse gas emissions will occur at the foreign, federal, state
and local level, which could affect us, our suppliers, and our customers. While the costs of compliance could be significant, given the
uncertain outcome and timing of future action by the U.S. federal government and states on this issue, we cannot accurately predict the
financial impact of future greenhouse gas regulations on our operations or our customers at this time. We do not currently anticipate
any new programs disproportionately impacting us compared to our competitors.
Some of the properties currently or previously owned or leased by us are located in industrial areas or have a long history of
heavy industrial use. We may incur environmental liabilities with respect to these properties in the future including cost of
investigations, corrective action, claims for natural resource damages, claims by third parties relating to property damages or claims
relating to contamination at sites where we have sent waste for treatment or disposal. Based on currently available information we do
not expect any investigation or remediation matters or claims related to properties presently or formerly owned or operated or to which
we have sent waste for treatment or disposal would have a material adverse effect on our financial condition, results of operations or
cash flows.
In October 2011, the United States Environmental Protection Agency (the “EPA”) named us as one of more than 100 businesses
that may be a potentially responsible party for the Portland Harbor Superfund Site (“Portland Harbor”). On February 9, 2016, we
received correspondence from the EPA stating that its initial Remedial Investigation and Feasibility Study will be completed in “early
2016,” a Proposed Plan for the site should be released in April 2016, and a final cleanup decision for the site should be published in
10
the Record of Decision by December 31, 2016. We do not currently have sufficient information available to us to determine the total
cost of any required investigation or remediation of the Portland Harbor site and therefore, management cannot predict the ultimate
outcome of this matter or estimate a range of potential loss at this time.
Excluding any potential additional remediation costs resulting from any corrective action for the properties described above, we
expect spending for pollution control projects to remain at historical levels below $500,000 per year.
Our United States operations are also subject to the Department of Transportation Federal Motor Carrier Safety Regulations. We
operate a private trucking motor fleet for making deliveries to some of our customers. Our drivers do not carry any material quantities
of hazardous materials. Our foreign operations are subject to similar regulations. Future regulations could increase maintenance,
replacement, and fuel costs for our fleet. These costs could have a material adverse effect on our results of operations, financial
condition or cash flows.
Intellectual Property
We own several U.S. and foreign trademarks, service marks and copyrights. Certain of the trademarks are registered with the
U.S. Patent and Trademark Office and, in certain circumstances, with the trademark offices of various foreign countries. We consider
certain other information owned by us to be trade secrets. We protect our trade secrets by, among other things, entering into
confidentiality agreements with our employees regarding such matters and implementing measures to restrict access to sensitive data
and computer software source code on a need-to-know basis. We believe that these safeguards adequately protect our proprietary
rights and vigorously defend these rights. While we consider all of our intellectual property rights as a whole to be important, we do
not consider any single right to be essential to our operations as a whole. The $570 million outstanding under the 9% Senior Secured
Notes due 2017 (the “2017 Notes”) is secured by our intellectual property.
Foreign Operations
Our foreign operations as a percentage of total sales for the years ended December 31, 2015, 2014 and 2013 were as follows:
Foreign Location
Canada
China
Mexico
Brazil
Year Ended December 31,
2014
2013
2015
8%
4
< 1
< 1
8%
4
< 1
< 1
9%
4
< 1
< 1
Our foreign assets as a percentage of consolidated assets at December 31, 2015, 2014, and 2013 were as follows:
Foreign Location
Canada
China
Mexico
Brazil
2015
At December 31,
2014
2013
10%
5
1
< 1
9%
5
1
< 1
10%
5
< 1
< 1
See Note 14 “Segment Information” of Part II, Item 8 "Financial Statements and Supplementary Data" for further information
on U.S. and foreign revenues and long-lived assets.
Ryerson Canada
Ryerson Canada, an indirect wholly-owned Canadian subsidiary of Ryerson Holding, is a metals service center and processor.
Ryerson Canada has facilities in Calgary (AB), Edmonton (AB), Richmond (BC), Winnipeg (MB), Saint John (NB), Brampton (ON),
Burlington (ON) (includes Canadian headquarters), Vaudreuil (QC) and Saskatoon (SK), Canada.
Ryerson China
In 2006, Ryerson Inc., formerly the direct subsidiary of Ryerson Holding, and VSC and its subsidiary, CAMP BVI, formed
Ryerson China to enable us, through this foreign operation, to provide metals distribution services in China. We invested $28.3
11
million in Ryerson China for a 40% equity interest. We increased ownership of Ryerson China from 40% to 80% in the fourth quarter
of 2008 for a total purchase cost of $18.5 million. We consolidated the operations of Ryerson China as of October 31, 2008. On
July 12, 2010, we acquired VSC’s remaining 20% equity interest in Ryerson China for $17.5 million. As a result, Ryerson China is
now an indirect wholly owned subsidiary of Ryerson. Ryerson China is based in Kunshan and operates six processing and service
centers in Guangzhou, Dongguan, Kunshan and Tianjin.
Ryerson Mexico
Ryerson Mexico, an indirect wholly owned subsidiary of Ryerson Holding, operates as a metals service center and processor.
Ryerson Holding formed Ryerson Mexico in 2010 to expand operations into the Mexican market. Ryerson Mexico has service centers
in Monterrey, Tijuana, and Hermosillo.
Brazil
In February 2012, we acquired 50% of the issued and outstanding capital stock of Açofran. As of such date, we, through
Açofran, lease one service center in São Paulo, Brazil.
Available Information
All periodic and current reports and other filings that we are required to file with the Securities and Exchange Commission
(“SEC”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant Section 15(d) of the Securities Exchange Act of 1934, as amended, are available free of
charge from the SEC’s website (http://www.sec.gov) or public reference room at 100 F Street N.E., Washington, D.C. 20549 (1-800-
SEC-0330) or through our website at http://www.ryerson.com. Such documents are available as soon as reasonably practicable after
electronic filing of the material with the SEC. Copies of these reports (excluding exhibits) may also be obtained free of charge, upon
written request to: Investor Relations, Ryerson Holding Corporation, 227 W. Monroe St., 27th Floor, Chicago, Illinois 60606.
The Company also posts its Code of Ethics on the website. See “Directors, Executive Officers and Corporate Governance—
Code of Ethics” for more information regarding our Code of Ethics.
Our website address is included in this report for information purposes only. Our website and the information contained therein
or connected thereto are not incorporated into this annual report on Form 10-K.
ITEM 1A. RISK FACTORS.
Our business faces many risks. You should carefully consider the risks and uncertainties described below, together with the
other information in this report, including the consolidated financial statements and notes to consolidated financial statements.
We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a
material and adverse impact on our business, results of operations, financial condition and cash flows.
We service industries that are highly cyclical, and any downturn in our customers’ industries could reduce our sales and
profitability.
Many of our products are sold to industries that experience significant fluctuations in demand based on economic conditions,
energy prices, seasonality, consumer demand and other factors beyond our control. These industries include manufacturing, electrical
production and transportation. We do not expect the cyclical nature of our industry to change.
The volatility of the market could result in a material impairment of goodwill.
We evaluate goodwill annually on October 1 and whenever events or changes in circumstances indicate potential impairment.
Events or changes in circumstances that could trigger an impairment review include significant underperformance relative to our
historical or projected future operating results, significant changes in the manner or the use of our assets or the strategy for our overall
business, and significant negative industry or economic trends. We test for impairment of goodwill by calculating the fair value of a
reporting unit using a combination of an income approach based on discounted future cash flows and a market approach at the date of
valuation. Under the discounted cash flow method, the fair value of each reporting unit is estimated based on expected future
economic benefits discounted to a present value at a rate of return commensurate with the risk associated with the investment.
Projected cash flows are discounted to present value using an estimated weighted average cost of capital, which considers both returns
to equity and debt investors. Significant changes in any one of the assumptions made as part of our analysis, which could occur as a
12
result of actual events, or further declines in the market conditions for our products, could significantly impact our impairment
analysis. An impairment charge, if incurred, could be material.
A substantial decline in the value of our available-for-sale security may result in additional “other than temporary” impairment
charges.
We recognized an other-than-temporary impairment charge of $12.3 million in the first quarter of 2015 related to our investment
in one available-for-sale security. This investment has continued to decline in value and has unrealized losses of $2.9 million as of
December 31, 2015. We may be required to record additional impairment charges on our investment if further declines in value are
considered other-than-temporary. Such other-than-temporary impairment charges would adversely affect our earnings. Considerations
used to determine other-than-temporary impairment status to investment securities available-for-sale include, but are not limited to, an
increase in the severity of the unrealized loss on a particular security, an increase in the length of time unrealized losses continue
without an improvement in value, a change in our intent or ability to hold the security for a period of time sufficient to allow for the
forecasted recovery, or changes in market conditions or industry or issuer specific factors that would render us unable to forecast a full
recovery in value.
The metals distribution business is very competitive and increased competition could reduce our revenues and gross margins.
The principal markets that we serve are highly competitive. The metals distribution industry is fragmented and competitive,
consisting of a large number of small companies and a few relatively large companies. Competition is based principally on price,
service, quality, production capabilities, inventory availability and timely delivery. Competition in the various markets in which we
participate comes from companies of various sizes, some of which have greater financial resources than we have and some of which
have more established brand names in the local markets served by us. Increased competition could reduce our market share, force us
to lower our prices or to offer increased services at a higher cost, which could reduce our profitability.
The economic downturn within the metals industry has reduced metals prices. Changing metals prices may have a significant
impact on our liquidity, net sales, gross margins, operating income and net income.
The metals industry as a whole is cyclical and, at times, pricing and availability of metal can be volatile due to numerous factors
beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition, levels of
inventory held by other metals service centers, consolidation of metals producers, higher raw material costs for the producers of
metals, import duties and tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of
materials for us.
We, like many other metals service centers, maintain substantial inventories of metal to accommodate the short lead times and
just-in-time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain our inventory at levels
that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, contracts with
customers and market conditions. When metals prices decline, as they did in 2015, customer demands for lower prices and our
competitors’ responses to those demands result in lower sale prices and, consequently, lower margins as we use existing metals
inventory. Metal prices may further decline in 2016, and declines in those prices or further reductions in sales volumes could
adversely impact our ability to maintain our liquidity and to remain in compliance with certain financial covenants under our $1.0
billion revolving credit facility (the “Ryerson Credit Facility”), as well as result in us incurring inventory or goodwill impairment
charges. Changing metals prices therefore could significantly impact our liquidity, net sales, gross margins, operating income and net
income.
We have a substantial amount of indebtedness, which could adversely affect our financial position and prevent us from
fulfilling our financial obligations.
We currently have a substantial amount of indebtedness. As of December 31, 2015, our total indebtedness was approximately
$1,034.5 million and we had approximately $185 million of unused capacity under the Ryerson Credit Facility. Our substantial
indebtedness may:
make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on
our outstanding notes and our other indebtedness;
limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate
and other purposes;
limit our ability to use our cash flow for future working capital, capital expenditures, acquisitions or other general
corporate purposes;
13
require us to use a substantial portion of our cash flow from operations to make debt service payments;
limit our flexibility to plan for, or react to, changes in our business and industry;
place us at a competitive disadvantage compared to our less leveraged competitors; and
increase our vulnerability to the impact of adverse economic and industry conditions.
We may also incur additional indebtedness in the future. The terms of the Ryerson Credit Facility and the indentures governing
our outstanding notes restrict but do not prohibit us from doing so, and the indebtedness incurred in compliance with these restrictions
could be substantial. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.
The covenants in the Ryerson Credit Facility and the indentures governing our notes impose, and covenants contained in
agreements governing indebtedness that we incur in the future may impose, restrictions that may limit our operating and financial
flexibility.
The Ryerson Credit Facility and the indentures governing our outstanding notes contain a number of significant restrictions and
covenants that limit our ability and the ability of our restricted subsidiaries, including JT Ryerson, to:
incur additional debt;
pay dividends on our capital stock or repurchase our capital stock;
make certain investments or other restricted payments;
create liens or use assets as security in other transactions;
merge, consolidate or transfer or dispose of substantially all of our assets; and
engage in transactions with affiliates.
The terms of the Ryerson Credit Facility require that, in the event availability under the facility declines to a certain level, we
maintain a minimum fixed charge coverage ratio at the end of each fiscal quarter. Total credit availability is limited by the amount of
eligible accounts receivable, inventory, and qualified cash pledged as collateral under the agreement insofar as the Company is subject
to a borrowing base comprised of the aggregate of these two amounts, less applicable reserves. As of December 31, 2015, total credit
availability was $185 million.
Additionally, subject to certain exceptions, the indentures governing the outstanding notes restrict JT Ryerson’s ability to pay
Ryerson Holding dividends to the extent of 50% of future net income, once prior losses are offset. Future net income is defined in the
indenture governing the notes as net income adjusted for, among other things, the inclusion of dividends from joint ventures actually
received in cash by JT Ryerson, and the exclusion of: (i) all extraordinary gains or losses; (ii) a certain portion of net income allocable
to minority interest in unconsolidated persons or investments in unrestricted subsidiaries; (iii) gains or losses in respect of any asset
sale on an after tax basis; (iv) the net income from any disposed or discontinued operations or any net gains or losses on disposed or
discontinued operations, on an after-tax basis; (v) any gain or loss realized as a result of the cumulative effect of a change in
accounting principles; (vi) any fees and expenses paid in connection with the issuance of the notes; (vii) non-cash compensation
expense incurred with any issuance of equity interest to an employee; and (viii) any net after-tax gains or losses attributable to the
early extinguishment of debt. Our future indebtedness may contain covenants more restrictive in certain respects than the restrictions
contained in the Ryerson Credit Facility and the indentures governing the notes. Operating results below current levels or other
adverse factors, including a significant increase in interest rates, could result in our being unable to comply with financial covenants
that are contained in the Ryerson Credit Facility or that may be contained in any future indebtedness. In addition, complying with
these covenants may also cause us to take actions that are not favorable to holders of our notes and may make it more difficult for us
to successfully execute our business strategy and compete against companies that are not subject to such restrictions.
We may not be able to generate sufficient cash to service all of our indebtedness.
Our ability to make payments on our indebtedness depends on our ability to generate cash in the future. Our outstanding notes,
the Ryerson Credit Facility and our other outstanding indebtedness are expected to account for significant cash interest expenses.
Accordingly, we will have to generate significant cash flows from operations to meet our debt service requirements. If we do not
generate sufficient cash flow to meet our debt service and working capital requirements, we may be required to sell assets, seek
additional capital, reduce capital expenditures, restructure or refinance all or a portion of our existing indebtedness, or seek additional
financing. Moreover, insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or
at all.
14
We may not be able to refinance our 2017 Notes and 2018 Notes on acceptable terms, or at all.
As of December 31, 2015, we had $569.9 million outstanding principal of our 2017 Notes and $170.4 million outstanding
principal of our 11 1
4% Senior Notes due 2018 (the “2018 Notes”). Our ability to refinance, restructure, extend the maturities of or
otherwise enter into transactions to satisfy our obligations under our 2017 Notes and 2018 Notes will be affected by various factors
existing at the relevant time, such as the state of the capital markets, our financial condition, the terms of our debt agreements that may
restrict us from pursuing certain refinancing transactions, and business, economic and other factors, many of which we cannot control.
In order to refinance the 2017 Notes and 2018 Notes, we may be required to reduce or delay investments, capital expenditures or
potentially accretive acquisitions, to sell assets or issue equity or equity rights to raise funds, or to borrow more funds, which could
have an adverse effect on our financial condition, liquidity or business operations.
We may not be able to accomplish a refinancing of the 2017 Notes or 2018 Notes on terms as favorable as the current terms of
the 2017 Notes or 2018 Notes, on other terms acceptable to us, or at all. If we are unable to fulfill our payment or other obligations on
the 2017 Notes or 2018 Notes, defaults under, or acceleration of, our other existing debt may occur. If we are unable to accomplish a
refinancing of the 2017 Notes and 2018 Notes, we may be forced to consider alternative options. For additional information about the
2017 Notes and 2018 Notes, refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Total Debt—2017 and 2018 Notes” and the notes to the consolidated financial statements located in Part II, Item 8 of
this Annual Report on Form 10-K.
Because a portion of our indebtedness bears interest at rates that fluctuate with changes in certain prevailing short-term interest
rates, we are vulnerable to interest rate increases.
A portion of our indebtedness, including the Ryerson Credit Facility, bears interest at rates that fluctuate with changes in certain
short-term prevailing interest rates. As of December 31, 2015, we had approximately $272.2 million of outstanding borrowings under
the Ryerson Credit Facility, with an additional $185 million available for borrowing under such facility. Assuming a consistent level
of debt, a 100 basis point change in the interest rate on our floating rate debt effective from the beginning of the year would increase
or decrease our interest expense under the Ryerson Credit Facility by approximately $3.8 million on an annual basis. If interest rates
increase dramatically, we could be unable to service our debt, which could have a material adverse effect on our business, financial
condition, results of operations or cash flows.
We may not be able to successfully consummate and complete the integration of future acquisitions, and if we are unable to do so,
we may be unable to increase our growth rates.
We have grown through a combination of internal expansion, acquisitions and joint ventures. We intend to continue to grow
through selective acquisitions, but we may not be able to identify appropriate acquisition candidates, obtain financing on satisfactory
terms, consummate acquisitions or integrate acquired businesses effectively and profitably into our existing operations. Restrictions
contained in the agreements governing our notes, the Ryerson Credit Facility or our other existing or future debt may also inhibit our
ability to make certain investments, including acquisitions and participations in joint ventures.
Our future success will depend on our ability to complete the integration of these future acquisitions successfully into our
operations. After any acquisition, customers may choose to diversify their supply chains to reduce reliance on a single supplier for a
portion of their metals needs. We may not be able to retain all of our and an acquisition’s customers, which may adversely affect our
business and sales. Integrating acquisitions, particularly large acquisitions, requires us to enhance our operational and financial
systems and employ additional qualified personnel, management and financial resources, and may adversely affect our business by
diverting management away from day-to-day operations. Further, failure to successfully integrate acquisitions may adversely affect
our profitability by creating significant operating inefficiencies that could increase our operating expenses as a percentage of sales and
reduce our operating income. In addition, we may not realize expected cost savings from acquisitions, which may also adversely affect
our profitability.
We may not be able to retain or expand our customer base if the North American manufacturing industry continues to erode
through moving offshore or through acquisition and merger or consolidation activity in our customers’ industries.
Our customer base primarily includes manufacturing and industrial firms. Some of our customers operate in industries that are
undergoing consolidation through acquisition and merger activity; some are considering or have considered relocating production
operations overseas or outsourcing particular functions overseas; and some customers have closed as they were unable to compete
successfully with overseas competitors. Our facilities are predominately located in the United States and Canada. To the extent that
our customers cease U.S. operations, relocate or move operations overseas to regions in which we do not have a presence, we could
lose their business. Acquirers of manufacturing and industrial firms may have suppliers of choice that do not include us, which could
impact our customer base and market share.
15
Certain of our operations are located outside of the United States, which subjects us to risks associated with international activities.
Certain of our operations are located outside of the United States, primarily in Canada, China, Mexico and Brazil. We are
subject to the Foreign Corrupt Practices Act (“FCPA”), which generally prohibits U.S. companies and their intermediaries from
making corrupt payments or otherwise corruptly giving any other thing of value to foreign officials for the purpose of obtaining or
keeping business or otherwise obtaining favorable treatment, and requires companies to maintain adequate record-keeping and internal
accounting practices. The FCPA applies to covered companies, individual directors, officers, employees and agents. Under the FCPA,
U.S. companies may be held liable for some actions taken by strategic or local partners or representatives. If we or our intermediaries
fail to comply with the requirements of the FCPA, governmental authorities in the United States could seek to impose civil and/or
criminal penalties.
The Chinese government exerts substantial influence over the manner in which we must conduct our business activities,
particularly with regards to the land our facilities are located on.
The Chinese government has exercised and continues to exercise substantial control over the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that
our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local
governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations
that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Moreover, the Chinese court system does not provide the same property and contract right guarantees as do courts in the United States
and, accordingly, disputes may be protracted and resolution of claims may result in significant economic loss.
Additionally, although in recent years the Chinese government has implemented measures emphasizing the utilization of market
forces for economic reform, there is no private ownership of land in China and all land ownership is held by the government of China,
its agencies, and collectives, which issue land use rights that are generally renewable. We lease the land where our Chinese facilities
are located from the Chinese government. Although we believe our relationship with the Chinese government is sound, if the Chinese
government decided to terminate our land use rights agreements, our assets could become impaired and our ability to meet customer
orders could be impacted.
Our revenue and operating results may fluctuate, which could result in a decline in our profitability and make it more difficult for
us to grow our business.
Our revenue and operating results have historically varied from quarter to quarter. Periods of decline could result in an overall
decline in profitability and make it more difficult for us to make payments on our indebtedness and grow our business. We expect our
quarterly results to continue to fluctuate in the future due to a number of factors, including:
general economic conditions in the markets where we operate; and
the cyclical nature of our customers’ business
Damage to our information technology infrastructure could harm our business.
The unavailability of any of our computer-based systems for any significant period of time could have a material adverse effect
on our operations. In particular, our ability to manage inventory levels successfully largely depends on the efficient operation of our
computer hardware and software systems. We use management information systems to track inventory information at individual
facilities, communicate customer information and aggregate daily sales, margin and promotional information. Difficulties associated
with upgrades, installations of major software or hardware, and integration with new systems could have a material adverse effect on
results of operations. We will be required to expend substantial resources to integrate our information systems with the systems of
companies we have acquired. The integration of these systems may disrupt our business or lead to operating inefficiencies. In addition,
these systems are vulnerable to, among other things, damage or interruption from fire, flood, tornado and other natural disasters,
power loss, computer system and network failures, operator negligence, physical and electronic loss of data, or security breaches and
computer viruses.
Any significant work stoppages can harm our business.
As of December 31, 2015, we employed approximately 3,200 persons in North America, 350 persons in China, and 50 persons
in Brazil. Our North American workforce was comprised of approximately 1,500 office employees and approximately 1,700 plant
employees. Twenty-five percent of our plant employees were members of various unions, including the United Steel Workers and the
International Brotherhood of Teamsters. Our relationship with the various unions has generally been good.
16
Eight renewal contracts covering approximately 182 employees were successfully negotiated in 2015. We also were successful
in negotiating the effects of the plant closure of our unionized facility in Etobicoke, Ontario, Canada in 2015. Three contracts covering
66 employees are currently scheduled to expire in 2016.
Certain employee retirement benefit plans are underfunded and the actual cost of those benefits could exceed current estimates,
which would require us to fund the shortfall.
As of December 31, 2015, our pension plan had an unfunded liability of $238 million. Our actual costs for benefits required to
be paid may exceed those projected and future actuarial assessments to the extent that those costs exceed the current assessment.
Under those circumstances, the adjustments required to be made to our recorded liability for these benefits could have a material
adverse effect on our results of operations and financial condition and cash payments to fund these plans could have a material adverse
effect on our cash flows. We may be required to make substantial future contributions to improve the plan’s funded status.
Future funding for postretirement employee benefits other than pensions also may require substantial payments from current cash
flow.
We provide postretirement life insurance and medical benefits to eligible retired employees. Our unfunded postretirement
benefit obligation as of December 31, 2015 was $82 million. Our actual costs for benefits required to be paid may exceed those
projected and future actuarial assessments to the extent that those costs exceed the current assessment. Under those circumstances,
adjustments will be required to be made to our recorded liability for these benefits.
Any prolonged disruption of our processing centers could harm our business.
We have dedicated processing centers that permit us to produce standardized products in large volumes while maintaining low
operating costs. We may suffer prolonged disruption in the operations of any of these facilities, whether due to labor or technical
difficulties, destruction or damage to any of the facilities or otherwise.
If we are unable to retain and attract management and key personnel, it may adversely affect our business.
We believe that our success is due, in part, to our experienced management team. Losing the services of one or more members
of our management team such as our CEO, Edward J. Lehner, could adversely affect our business and possibly prevent us from
improving our operational, financial and information management systems and controls. In the future, we may need to retain and hire
additional qualified sales, marketing, administrative, operating and technical personnel, and to train and manage new personnel. Our
ability to implement our business plan is dependent on our ability to retain and hire a large number of qualified employees each year.
Our existing international operations and potential joint ventures may cause us to incur costs and risks that may distract
management from effectively operating our North American business, and such operations or joint ventures may not be profitable.
We maintain foreign operations in Canada, China, Mexico and Brazil. International operations are subject to certain risks
inherent in conducting business in, and with, foreign countries, including price controls, exchange controls, export controls, economic
sanctions, duties, tariffs, limitations on participation in local enterprises, nationalization, expropriation and other governmental action,
and changes in currency exchange rates. While we believe that our current arrangements with local partners provide us with
experienced business partners in foreign countries, events or issues, including disagreements with our partners, may occur that require
attention of our senior executives and may result in expenses or losses that erode the profitability of our foreign operations or cause
our capital investments abroad to be unprofitable.
Lead time and the cost of our products could increase if we were to lose one of our primary suppliers.
If, for any reason, our primary suppliers of aluminum, carbon steel, stainless steel or other metals should curtail or discontinue
their delivery of such metals in the quantities needed and at prices that are competitive, our business could suffer. The number of
available suppliers could be reduced by factors such as industry consolidation and bankruptcies affecting steel and metal producers.
For the year ended December 31, 2015, our top 25 suppliers represented approximately 74% of our purchases. We could be
significantly and adversely affected if delivery were disrupted from a major supplier. If, in the future, we were unable to obtain
sufficient amounts of the necessary metals at competitive prices and on a timely basis from our traditional suppliers, we may not be
able to obtain such metals from alternative sources at competitive prices to meet our delivery schedules, which could have a material
adverse effect on our sales and profitability.
17
We could incur substantial costs related to environmental, health and safety laws.
Our operations are subject to increasingly stringent environmental, health and safety laws. These include laws that impose
limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of
regulated materials and the investigation and remediation of contaminated soil, surface water and groundwater. Failure to maintain or
achieve compliance with these laws or with the permits required for our operations could result in substantial increases in operating
costs and capital expenditures. In addition, we may be subject to fines and civil or criminal sanctions, third party claims for property
damage or personal injury, worker’s compensation or personal injury claims, cleanup costs or temporary or permanent discontinuance
of operations. Certain of our facilities are located in industrial areas, have a history of heavy industrial use and have been in operation
for many years and, over time, we and other predecessor operators of these facilities have generated, used, handled and disposed of
hazardous and other regulated wastes. Environmental liabilities could exist, including cleanup obligations at these facilities or at off-
site locations where materials from our operations were disposed of, which could result in future expenditures that cannot be currently
quantified and which could have a material adverse effect on our financial position, results of operations or cash flows. Such liabilities
may be imposed without regard to fault or the legality of a party’s conduct and may, in certain circumstances, be joint and several.
Future changes to environmental, health and safety laws, including those related to climate change, could result in material liabilities
and costs, constrain operations or make such operations more costly for us, our suppliers and our customers. In October 2011, the EPA
named us as one of more than 100 businesses that may be a potentially responsible party for the Portland Harbor Superfund Site. We
do not currently have sufficient information available to us to determine the total cost of any required investigation or remediation of
the Portland Harbor site and therefore, management cannot predict the ultimate outcome of this matter or estimate a range of potential
loss at this time.
Regulations related to conflict-free minerals may force us to incur additional expenses and place us at a competitive disadvantage.
On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”),
the United States Securities and Exchange Commission (“SEC”) adopted new requirements for reporting companies that use certain
minerals and metals, known as “conflict minerals”, in their products, whether or not these products are manufactured by third parties.
These requirements require companies to diligence, disclose and report whether or not such minerals originate from the Democratic
Republic of Congo and adjoining countries. Since our supply chain is complex, we may not be able to conclusively verify the origins
for all metals used in our products and we may face reputational challenges with our customers. Additionally, as there may be only a
limited number of suppliers offering “conflict free” metals, we cannot be sure that we will be able to obtain necessary metals from
such suppliers in sufficient quantities or at competitive prices. Accordingly, we could incur significant cost related to the compliance
process, including potential difficulty or added costs in satisfying the disclosure requirements. Moreover, we may encounter
challenges to satisfy those customers who require that all of the components of our products be certified as conflict free which could
place us at a competitive disadvantage if we are unable to do so.
We are subject to litigation that could strain our resources and distract management.
From time to time, we are involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business.
These suits concern issues including product liability, contract disputes, employee-related matters and personal injury matters. It is not
feasible to predict the outcome of all pending suits and claims, and the ultimate resolution of these matters as well as future lawsuits
could have a material adverse effect on our business, financial condition, results of operations or cash flows or reputation.
We may face product liability claims that are costly and create adverse publicity.
If any of the products that we sell cause harm to any of our customers, we could be exposed to product liability lawsuits. If we
were found liable under product liability claims, we could be required to pay substantial monetary damages. Further, even if we
successfully defended ourselves against this type of claim, we could be forced to spend a substantial amount of money in litigation
expenses, our management could be required to spend valuable time in the defense against these claims and our reputation could
suffer.
Our risk management strategies may result in losses.
From time to time, we may use fixed-price and/or fixed-volume supplier contracts to offset contracts with customers.
Additionally, we may use foreign exchange contracts and interest rate swaps to hedge Canadian dollar and floating rate debt
exposures. These risk management strategies pose certain risks, including the risk that losses on a hedge position may exceed the
amount invested in such instruments. Moreover, a party in a hedging transaction may be unavailable or unwilling to settle our
obligations, which could cause us to suffer corresponding losses. A hedging instrument may not be effective in eliminating all of the
risks inherent in any particular position. Our profitability may be adversely affected during any period as a result of use of such
instruments.
18
We may be adversely affected by currency fluctuations in the U.S. dollar versus the Canadian dollar and the Chinese renminbi.
We have significant operations in Canada which incur the majority of their metal supply costs in U.S. dollars but earn the
majority of their sales in Canadian dollars. Additionally, we have significant assets in China. We may from time to time experience
losses when the value of the U.S. dollar strengthens against the Canadian dollar or the Chinese renminbi, which could have a material
adverse effect on our results of operations. In addition, we will be subject to translation risk when we consolidate our Canadian and
Chinese subsidiaries’ net assets into our balance sheet. Fluctuations in the value of the U.S. dollar versus the Canadian dollar or
Chinese renminbi could reduce the value of these assets as reported in our financial statements, which could, as a result, reduce our
stockholders’ equity.
We are subject to cybersecurity risks and may incur increasing costs in an effort to minimize those risks.
We depend on the proper functioning and availability of our information technology platform, including communications and
data processing systems, in operating our business. These systems include software programs that are integral to the efficient operation
of our business. We have established security measures, controls and procedures to safeguard our information technology systems and
to prevent unauthorized access to such systems and any data processed or stored in such systems, and we periodically evaluate and test
the adequacy of such systems, measures, controls and procedures; however, there can be no guarantee that such systems, measures,
controls and procedures will be effective. Security breaches could expose us to a risk of loss or misuse of our information, litigation
and potential liability. In addition, cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning
of these systems could have a significant impact on our operations, and potentially on our results. We may not have the resources or
technical sophistication to anticipate or prevent rapidly evolving types of cyberattacks. A significant cyber incident, including system
failure, security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of
applicable privacy and other laws, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties,
which could be significant.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
19
ITEM 2.
PROPERTIES.
As of December 31, 2015, the Company’s facilities are set forth below:
Operations in the United States
JT Ryerson maintains 82 operational facilities, including 6 locations that are dedicated to administration services. All of our
metals service center facilities are in good condition and are adequate for JT Ryerson’s existing operations. Approximately 48% of
these facilities are leased. The lease terms expire at various times through 2025. Owned properties noted as vacated below have been
closed and are in the process of being sold. JT Ryerson’s properties and facilities are adequate to serve its present and anticipated
needs.
Location
Birmingham, AL
Mobile, AL
Fort Smith, AR
Hickman, AR**
Little Rock, AR
Little Rock, AR
Phoenix, AZ
Dos Palos, CA
Fresno, CA
Livermore, CA
Vernon, CA
Commerce City, CO
South Windsor, CT
Wilmington, DE
Wilmington, DE
Jacksonville, FL
Tampa Bay, FL
Norcross, GA
Norcross, GA
Des Moines, IA
Eldridge, IA
Marshalltown, IA
Boise, ID
Chicago, IL (Headquarters)*
Chicago, IL(2)
Dekalb, IL
Elgin, IL
Lisle, IL*
Burns Harbor, IN
Indianapolis, IN
Wichita, KS
Shelbyville, KY**
Shreveport, LA
St. Rose, LA
Devens, MA
Grand Rapids, MI*
Jenison, MI
Lansing, MI
Minneapolis, MN
Plymouth, MN
Maryland Heights, MO
North Kansas City, MO
Jackson, MS
20
Own/Lease
Owned
Owned
Owned
Leased
Owned
Owned/Vacated
Owned
Leased
Leased
Leased
Owned
Owned
Leased/Vacated
Leased
Owned
Owned
Owned
Leased
Owned
Owned
Leased
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Leased
Owned/Vacated
Leased
Owned
Owned
Leased
Owned
Owned
Owned
Owned/Vacated
Leased
Owned
Leased
Leased
Owned
Owned
Leased
Leased
Leased
Owned
Leased
Owned
Owned
Leased
Owned
Leased
Leased
Owned
Owned
Owned
Leased
Leased
Leased
Owned
Leased
Owned
Leased
Owned
Leased
Leased
Leased/Vacated
Leased
Owned
Owned
Owned
Owned
Leased
Leased
Owned
Owned
Charlotte, NC
Charlotte, NC
Charlotte, NC
Greensboro, NC
Pikeville, NC
Youngsville, NC
Omaha, NE
Lancaster, NY
Columbus, OH
Hamilton, OH*
Streetsboro, OH
Strongsville, OH
Warren, OH
Oklahoma City, OK
Tulsa, OK
Tigard, OR
Ambridge, PA**
Fairless Hills, PA
Pittsburgh, PA*
Charleston, SC
Greenville, SC
Chattanooga, TN
Chattanooga, TN
Gallatin, TN
Knoxville, TN*
Memphis, TN
Cooper, TX
Dallas, TX
El Paso, TX
Houston, TX
Houston, TX(2)
McAllen, TX
Odessa, TX
Salt Lake City, UT
Pounding Mill, VA
Richmond, VA
Renton, WA
Spokane, WA
Baldwin, WI
Green Bay, WI
Green Bay, WI
Milwaukee, WI
*
**
Office space only
Processing centers
21
Operations in Canada
Ryerson Canada, a wholly-owned indirect Canadian subsidiary of Ryerson Holding, has 10 operational facilities in Canada. All
of the metals service center facilities are in good condition and are adequate for Ryerson Canada’s existing and anticipated operations.
Four facilities are leased. The lease terms expire at various times through 2025.
Location
Calgary, AB
Edmonton, AB
Richmond, BC
Winnipeg, MB
Winnipeg, MB
Saint John, NB
Brampton, ON
Burlington, ON (includes Canadian Headquarters)
Laval, QC
Vaudreuil, QC
Saskatoon, SK
Operations in China
Own/Lease
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Leased
Leased/Vacated
Leased
Owned
Ryerson China, an indirect wholly owned subsidiary of Ryerson Holding, has six service and processing centers in China, at
Guangzhou, Dongguan, Kunshan and Tianjin, performing coil processing, sheet metal fabrication and plate processing. Ryerson
China’s headquarters office building is located in Kunshan. We own three buildings in China and have purchased the related land use
rights. The remainder of our facilities are leased. All of the facilities are in good condition and are adequate for Ryerson China’s
existing and anticipated operations.
Operations in Mexico
Ryerson Mexico, an indirect wholly owned subsidiary of Ryerson Holding, has three facilities in Mexico. We have service
centers in Monterrey, Tijuana, and Hermosillo, all of which are leased. The facilities are in good condition and are adequate for
Ryerson Mexico’s existing and anticipated operations.
Operations in Brazil
On February 17, 2012, we acquired 50% of the issued and outstanding capital stock of Açofran. We, through Açofran, lease one
service center in São Paulo, Brazil. The facility is in good condition and is adequate for its existing and anticipated operations.
ITEM 3.
LEGAL PROCEEDINGS.
Information concerning our legal proceedings is set forth in Note 12, “Commitments and Contingencies” of the Notes to
Consolidated Financial Statements in Item 8.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
22
EXECUTIVE OFFICERS OF THE REGISTRANT
Our executive officers are elected by the Board of Directors and hold office until a successor is chosen or qualified or until their
earlier resignation or removal. The following lists our executive officers and gives a brief description of their business experience as
of February 29, 2016:
Edward J. Lehner, 50, has been our President and Chief Executive Officer since June 2015. Previously, he had served as our
Executive Vice President and Chief Financial Officer since August 2012. Prior to joining the Company, he served as chief financial
officer and chief administrative officer for PSC Metals, Inc. from 2009 to 2012. PSC Metals is a North American ferrous and non-
ferrous scrap processor. Mr. Lehner earned a bachelor’s degree in accounting from the University of Cincinnati.
Erich S. Schnaufer, 48, has been our Chief Financial Officer since January 2016. From August 2015 until that time, he had
served as our Interim Chief Financial Officer & Chief Accounting Officer. Previously, he had served the Company as its Interim
Chief Financial Officer, Controller & Chief Accounting Officer from June 2015 until August 2015, and as its Controller and Chief
Accounting Officer from 2007 until June 2015. Mr. Schnaufer received a bachelor's degree in accounting from the University of
Illinois and an MBA from DePaul University.
Michael J. Burbach, 55, has been our President, North-West Region since October 2013. Prior to that time he had served the
Company as its President, Midwest Region since 2007. Mr. Burbach began his metals career as an inside sales representative at
Vincent Metals in 1984 and has held procurement, sales and product management roles in the metals industry as well as roles in
operations and senior management. Mr. Burbach received his Bachelor of Science degree from the University of Wisconsin-La
Crosse.
Roger W. Lindsay, 59, is our Chief Human Resources Officer, a position he has held since August 2013. From August 2013 until
June 2015 he also served as our President, Canada Region. Previously, Mr. Lindsay served the Company as its Senior Vice President,
Human Resources from October 2011 until August 2013. Prior to joining the Company, Mr. Lindsay was president of rail and Latin
America for The Timken Company from 2010 until October 2011. He holds a bachelor’s degree in economics and sociology from the
University of Southampton and a master’s degree in management from the Massachusetts Institute of Technology.
Kevin D. Richardson, 54, has been our President, South-East Region since October 2007. Mr. Richardson started his metals
career in 1985 and held a series of commercial and sales management roles before being named a Vice President of the Company in
2000. Mr. Richardson received a bachelor’s degree in business management and economics from North Carolina State University and
an MBA from Case Western Reserve University.
Mark S. Silver, 45, has served as our Executive Vice President, General Counsel & Secretary since February 2016. Previously,
he had served as our Vice President, Managing Counsel & Secretary from December 2014 until February 2016 and as our Vice
President & Managing Counsel from January 2013 until December 2014. Prior to his time at the Company, from 2006 until 2012, Mr.
Silver served as Vice President and Assistant General Counsel of Sara Lee Corporation, a consumer goods company. Mr. Silver
earned a bachelor’s degree in political science from the University of Illinois and a juris doctor from Harvard University.
23
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information for Common Stock
Our common stock has been listed on the New York Stock Exchange (“NYSE”) since our initial public offering on August 13,
2014. Prior to that date, there was no public market for our common stock. The following table sets forth the high and low sale prices
of our common stock as reported by the NYSE.
First Quarter
Second Quarter
Third Quarter (1)
Fourth Quarter
2015
2014
High
Low
High
Low
$
10.13 $
9.55
9.61
6.99
5.24 $
5.30
4.96
3.93
— $
—
14.28
13.56
—
—
10.01
9.00
(1) The third quarter 2014 represents the period from August 13, 2014, the date of our IPO, through September 30, 2014, the end of
the quarter.
On February 29, 2016, the closing price of our common stock on the NYSE was $3.70 per share.
Holders
As of February 29, 2016, there were 2 stockholders of record of our common stock. Because many shares of our common stock
are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial
stockholders represented by these record holders.
Dividend Policy
We have not declared any cash dividends for the past two years and we do not anticipate declaring or paying any regular cash
dividends on our common stock in the foreseeable future. Any payment of cash dividends on our common stock in the future will be at
the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial
condition, future prospects, contractual restrictions, including under the Ryerson Credit Facility and our outstanding notes, and other
factors deemed relevant by our Board of Directors.
24
Performance Graph
The following graph and accompanying table show the cumulative total return to stockholders of Ryerson Holding’s common
stock relative to the cumulative total returns of the S&P 500 and a metals service center peer group (the “Peer Group”). The graph
tracks the performance of a $100 investment in each of the indices (with reinvestment of dividends) from August 13, 2014 to
December 31, 2015. As of December 31, 2015 the Peer Group consisted of Reliance Steel & Aluminum Co., and Olympic Steel Inc.,
each of which has securities listed for trading on the NASDAQ; A.M. Castle & Co. which has securities listed for trading on the
NYSE; and Russel Metals Inc., which has securities listed for trading on the Toronto Stock Exchange. The returns of each member of
the Peer Group are weighted according to that member’s stock market capitalization. The stock price performance included in this
graph is not necessarily indicative of future stock price performance.
Comparison of 17 Month Cumulative Total Return
Assumes Initial Investment of $100
December 2015
140
120
100
80
60
40
20
8/13/2014
9/30/2014
12/31/2014
3/31/2015
6/30/2015
9/30/2015
12/31/2015
Ryerson Holding
S&P 500
Peer Group
Ryerson Holding
S&P 500
Peer Group
8/13/2014
100
$
100
$
100
$
9/30/2014
$ 124.27
$ 102.06
$ 100.10
12/31/2014
$
96.41
$ 106.89
86.39
$
3/31/2015
$
61.84
$ 107.38
83.10
$
6/30/2015
$
88.35
$ 107.13
82.90
$
9/30/2015
50.97
$
99.75
$
73.23
$
12/31/2015
$
45.34
$ 106.15
77.14
$
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Recent Sale of Unregistered Securities and Use of Proceeds
None.
25
ITEM 6.
SELECTED FINANCIAL DATA.
The following table sets forth our selected historical consolidated financial information. Our selected historical Consolidated
Statements of Operations data for the years ended December 31, 2013, 2014 and 2015 and the summary historical balance sheet data
as of December 31, 2014 and 2015 have been derived from our audited consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data.” The selected historical Consolidated Statements of Operations data for the years
ended December 31, 2011 and 2012 and the summary historical balance sheet data as of December 31, 2011, 2012, and 2013 were
derived from the audited financial statements and related notes thereto, which are not included in this Form 10-K.
The following consolidated financial information should be read together with Item 7. “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the audited Consolidated Financial Statements of Ryerson Holding Corporation
and the Notes thereto included in Item 8. “Financial Statements and Supplementary Data.”
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA AND OPERATING RESULTS
(Dollars in millions, except per ton and per share data)
2011
Year Ended December 31,
2013
2014
2012
2015
Statements of Operations Data:
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and administrative (1)
Gain on sale of assets
Restructuring and other charges
Impairment charges on assets
Pension and other postretirement benefits curtailment gain
Operating profit
Other income and (expense), net (2)
Interest and other expense on debt (3)
Income (loss) before income taxes
Provision (benefit) for income taxes (4)
Net income (loss)
Less: Net loss attributable to noncontrolling interest
Net income (loss) attributable to Ryerson Holding Corporation
Earnings (loss) per share of common stock:
Basic earnings (loss) per share
Diluted earnings (loss) per share
Weighted average shares outstanding — Basic
Weighted average shares outstanding — Diluted
Balance Sheet Data (at period end):
Cash and cash equivalents
Restricted cash
Working capital
Property, plant and equipment, net
Total assets
Long-term debt, including current maturities
Total equity (deficit)
Other Financial Data:
Cash flows provided by (used in) operations
Cash flows used in investing activities
Cash flows provided by (used in) financing activities
Capital expenditures
Depreciation and amortization
Volume and Per Ton Data:
Tons shipped (000)
Average selling price per ton
Gross profit per ton
Operating expenses per ton
Operating profit per ton
$
$
$
$
$
$
$
4,024.7
3,315.1
709.6
508.9
—
1.1
1.0
(1.7)
200.3
(33.5)
(126.5)
40.3
(5.5)
45.8
(1.3)
47.1
2.22
2.22
21.3
21.3
71.2
3.9
920.3
474.7
1,915.5
1,305.4
(291.5)
186.5
(35.3)
(143.4)
40.8
47.0
2,149
1,873
330
237
93
$
$
$
$
$
$
$
3,460.3
2,843.7
616.6
480.1
—
1.9
10.0
—
124.6
(0.2)
(110.5)
13.9
(112.3)
126.2
(1.1)
127.3
5.99
5.99
21.3
21.3
74.4
1.8
900.9
444.1
1,856.8
1,294.8
(107.7)
48.1
(13.5)
(26.6)
20.2
46.6
2,038
1,698
302
241
61
$
3,622.2
3,028.4
593.8
509.2
(1.8)
—
—
—
86.4
(5.9)
(107.4)
(26.9)
(0.7)
(26.2)
(0.5)
(25.7) $
(1.01) $
(1.01) $
25.4
25.4
$
60.0
2.0
846.0
428.2
1,872.6
1,259.1
(124.5)
(73.3) $
(34.0)
100.5
21.6
45.6
$
2,024
1,790
293
250
43
3,167.2
2,599.5
567.7
450.8
(1.9)
2.5
7.7
—
108.6
(10.4)
(96.3)
1.9
3.7
(1.8)
(1.3)
(0.5)
(0.02)
(0.02)
32.1
32.1
63.2
1.2
643.0
400.3
1,556.2
1,034.5
(140.9)
259.1
(18.0)
(232.2)
22.3
43.7
1,897
1,670
299
242
57
$
$
$
$
$
$
$
$
4,729.8
4,071.0
658.8
539.7
—
11.1
9.3
—
98.7
4.6
(123.1)
(19.8)
(11.0)
(8.8)
(0.7)
(8.1) $
(0.38) $
(0.38) $
21.3
21.3
$
$
$
61.7
5.3
939.1
479.7
2,021.1
1,316.2
(267.6)
54.5
(115.0)
57.9
47.0
43.0
2,433
1,944
271
230
41
26
(1) The year ended December 31, 2014 includes $32.7 million of one-time IPO-related expenses.
(2)
(3)
(4)
The year ended December 31, 2011 includes a $5.8 million gain on bargain purchase related to our Singer Steel Company (“Singer”) acquisition. The
year ended December 31, 2012 includes a $32.8 million loss on the retirement of debt related to the redemption of our Floating Rate Senior Secured
Senior Discount Notes due 2015. The year
Notes due November 1, 2014, the 12% Senior Secured Notes due November 1, 2015, and the 14
ended December 31, 2014 includes $11.2 million of expense related to the premium paid to redeem $99.5 million of 2018 Notes. The year ended
December 31, 2015 includes an other-than-temporary impairment charge of $12.3 million in the first quarter of 2015 related to our investment in one
available-for-sale security and a $0.3 million gain on the retirement of debt related to the purchases of a portion of our 2017 Notes and 2018 Notes.
The year ended December 31, 2011 includes a $1.1 million write off of debt issuance costs associated with our prior credit facility upon entering into
an amended revolving credit facility on March 14, 2011. The year ended December 31, 2015 includes a $2.9 million write off of debt issuance costs
associated with our prior credit facility upon entering into a new revolving credit facility on July 24, 2015.
The year ended December 31, 2011 includes income tax benefits of $18.0 million relating to the purchase accounting impact of the Turret Steel
Industries Inc., Sunbelt-Turret Steel, Inc., Wilcox-Turret Cold Drawn, Inc., Imperial Trucking Company, LLC (collectively, “Turret”) and Singer
acquisitions. The year ended December 31, 2012 includes an income tax benefit of $15.2 million related to the release of valuation allowance
associated with certain state deferred tax assets. The year ended December 31, 2013 includes a $124.2 million reduction in the valuation allowance
recorded against deferred tax assets.
27
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion and analysis should be read in conjunction with Item 6. “Selected Financial Data” and the audited
Consolidated Financial Statements of Ryerson Holding Corporation and Subsidiaries and the Notes thereto in Item 8. “Financial
Statements and Supplementary Data.” This discussion contains forward-looking statements that involve risks and uncertainties. See
the section entitled “Special Note Regarding Forward-Looking Statements.” Our actual results and the timing of selected events could
differ materially from those discussed in these forward-looking statements as a result of certain factors, including those discussed in
Item 1A. “Risk Factors” and elsewhere in this Form 10-K.
Business
Overview
Ryerson Holding Corporation (“Ryerson Holding”), a Delaware corporation, is the parent company of Joseph T. Ryerson &
Son, Inc. (“JT Ryerson”), a Delaware corporation. On December 17, 2014, Ryerson Inc., formerly a direct, wholly-owned subsidiary
of Ryerson Holding, merged with and into JT Ryerson, which was previously an indirect, wholly-owned subsidiary of Ryerson
Holding, with JT Ryerson as the surviving corporation. As a result of such merger, from and after December 17, 2014, JT Ryerson has
been a direct, wholly-owned subsidiary of Ryerson Holding. Affiliates of Platinum Equity, LLC (“Platinum”) own approximately
21,037,500 shares of our common stock, which is approximately 66% of our issued and outstanding common stock.
Ryerson conducts materials distribution operations in the United States through JT Ryerson, in Canada through its indirect
wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”), and in Mexico through its indirect
wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to
our North American operations, we conduct materials distribution operations in China through Ryerson China Limited (“Ryerson
China”), a company in which we have a 100% ownership percentage, and in Brazil through Açofran Aços e Metais Ltda (“Açofran”),
a company in which we have a 50% direct ownership percentage. Unless the context indicates otherwise, Ryerson Holding,
JT Ryerson, Ryerson Canada, Ryerson China, Ryerson Mexico and Açofran, together with their subsidiaries (including Ryerson Inc.
prior to its dissolution through merger), are collectively referred to herein as “Ryerson,” “we,” “us,” “our,” or the “Company.”
On July 23, 2014, our Board of Directors approved a 4.25 for 1.00 stock split of the Company’s common stock effective
August 5, 2014. Per share and share amounts presented herein have been adjusted for all periods presented to give retroactive effect to
4.25 for 1.00 stock split.
On August 13, 2014, Ryerson Holding completed an initial public offering of 11 million shares of common stock at a price to
the public of $11.00 per share. Net proceeds from the offering totaled $112.4 million, after deducting the underwriting discount and
offering expenses, and were used to (i) redeem $99.5 million in aggregate principal amount of the 11 1
“2018 Notes”), (ii) pay Platinum Equity Advisors LLC (“Platinum Advisors”), and its affiliates $15.0 million of the $25.0 million
owed as consideration for terminating the advisory services agreement between JT Ryerson and Platinum Advisors, an affiliate of
Platinum (the remaining $10.0 million was paid in August 2015) and (iii) pay related transaction fees, expenses and debt redemption
premiums in connection with the offering, which were approximately $11.2 million. We borrowed an additional $23.3 million under
our then existing $1.35 billion revolving credit facility (the “Old Credit Facility”) as part of the funding of these transactions.
4% Senior Notes due 2018 (the
Industry and Operating Trends
We purchase large quantities of metal products from primary producers and sell these materials in smaller quantities to a wide
variety of metals-consuming industries. More than one-half of the metals products sold are processed by us by burning, sawing,
slitting, blanking, cutting to length or other techniques. We sell our products and services to many industries, including commercial
ground transportation manufacturing, metal fabrication and machine shops, industrial machinery and equipment manufacturing,
consumer durable production, HVAC manufacturing, construction equipment manufacturing, food processing and agricultural
equipment manufacturing and oil and gas. Revenue is recognized upon delivery of product to customers. The timing of shipment is
substantially the same as the timing of delivery to customers given the proximity of our distribution sites to our customers.
Sales, cost of materials sold, gross profit and operating expense control are the principal factors that impact our profitability:
Net Sales. Our sales volume and pricing is driven by market demand, which is largely determined by overall industrial
production and conditions in specific industries in which our customers operate. Sales prices are also primarily driven by market
factors such as overall demand and availability of product. Our net sales include revenue from product sales, net of returns,
allowances, customer discounts and incentives.
28
Cost of materials sold. Cost of materials sold includes metal purchase and in-bound freight costs, third-party processing costs
and direct and indirect internal processing costs. The cost of materials sold fluctuates with our sales volume and our ability to purchase
metals at competitive prices. Increases in sales volume generally enable us both to improve purchasing leverage with suppliers, as we
buy larger quantities of metals inventories, and to reduce operating expenses per ton sold.
Gross profit. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are
subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring metals at competitive prices,
our ability to manage the impact of changing prices and efficiently managing our internal and external processing costs.
Operating expenses. Optimizing business processes and asset utilization to lower fixed expenses such as employee, facility and
truck fleet costs which cannot be rapidly reduced in times of declining volume, and maintaining low fixed cost structure in times of
increasing sales volume, have a significant impact on our profitability. Operating expenses include costs related to warehousing and
distributing our products as well as selling, general and administrative expenses.
The metals service center industry is generally considered cyclical with periods of strong demand and higher prices followed by
periods of weaker demand and lower prices due to the cyclical nature of the industries in which the largest consumers of metals
operate. However, domestic metals prices are volatile and remain difficult to predict due to its commodity nature and the extent which
prices are affected by interest rates, foreign exchange rates, energy prices, international supply/demand imbalances, surcharges and
other factors.
Results of Operations
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and
administrative expenses
Gain on sale of assets
Restructuring and other charges
Impairment charges on assets
Operating profit
Other expenses
Income (loss) before income taxes
Provision (benefit) for income taxes
Net income (loss)
Less: Net loss attributable to noncontrolling interest
Net income (loss) attributable to Ryerson Holding
Corporation
Basic and diluted earnings (loss) per share
% of Net
Sales
100.0% $
Year Ended
December 31,
2013
3,460.3
2,843.7
616.6
Year Ended
December 31,
2015
3,167.2
2,599.5
567.7
$
% of Net
Sales
Year Ended
December 31,
2014
3,622.2
3,028.4
593.8
100.0% $
82.1
17.9
450.8
(1.9)
2.5
7.7
108.6
(106.7)
1.9
3.7
(1.8)
(1.3)
14.3
(0.1)
0.1
0.2
3.4
(3.3)
0.1
0.2
(0.1)
(0.1)
509.2
(1.8)
—
—
86.4
(113.3)
(26.9)
(0.7)
(26.2)
(0.5)
83.6
16.4
14.1
(0.1)
—
—
2.4
(3.1)
(0.7)
—
(0.7)
—
% of Net
Sales
100.0%
82.2
17.8
13.8
—
0.1
—
3.6
(3.2)
0.4
(3.2)
3.6
(0.1)
3.7%
480.1
—
1.9
—
124.6
(110.7)
13.9
(112.3)
126.2
(1.1)
$
$
(0.5)
(0.02)
— $
$
(25.7)
(1.01)
(0.7)% $
$
127.3
5.99
Comparison of the year ended December 31, 2015 with the year ended December 31, 2014
Net Sales
Net sales decreased 12.6% to $3.2 billion in 2015 as compared to $3.6 billion in 2014. Average selling price decreased 6.7%
while tons sold decreased 6.3% reflecting weaker economic conditions in the metals market in 2015 compared to 2014. The average
selling price per ton decreased in 2015 to $1,670 from $1,790 in 2014. Average selling prices per ton decreased for all of our product
lines in 2015 with the largest decrease in our stainless steel plate, carbon steel flat and stainless steel flat product lines. Tons sold in
2015 decreased for most of our product lines, with the largest decrease in our carbon steel long, stainless steel long and carbon plate
product lines, partially offset by increased tons sold for our aluminum plate product line. Tons sold per ship day were 7,528 in 2015 as
compared to 8,032 in 2014.
29
Cost of Materials Sold
Cost of materials sold decreased 14.2% to $2.6 billion in 2015 compared to $3.0 billion in 2014. The decrease in cost of
materials sold in 2015 compared to 2014 was primarily due to a decrease in the average cost of materials sold per ton in addition to the
decrease in tons sold. The average cost of materials sold per ton decreased to $1,371 in 2015 from $1,497 in 2014. The average cost of
materials sold for our stainless steel plate, carbon steel flat and carbon steel plate product lines decreased more than our other
products, in line with the change in average selling price per ton.
During 2015, LIFO income was $97 million related to decreases in pricing for all product lines. As a result of falling average
selling prices, LIFO income in 2015 was partially offset by a $38 million charge to record inventory at the lower of cost or market.
During 2014, LIFO expense was $42 million related to increases in pricing for all product lines. In 2015, we also recorded a credit to
cost of materials sold of $4 million related to the settlement of litigation regarding the price of materials that we were charged.
Gross Profit
Gross profit as a percentage of sales increased to 17.9% in 2015 compared to 16.4% in 2014 due to, among other things, a
decrease in cost of materials sold, as discussed above. Gross profit decreased 4.4% to $567.7 million in 2015 as compared to $593.8
million in 2014.
Operating Expenses
Operating expenses as a percentage of sales increased to 14.5% in 2015 from 14.0% in 2014. Operating expenses in 2015 were
$459.1 million, a decrease of $48.3 million from $507.4 million in 2014 primarily due to the following reasons:
a $25.0 million charge in 2014 to terminate the advisory service agreement with Platinum Advisors in connection with the
completion of our initial public offering on August 13, 2014, which is described in Note 13, “Related Parties” of the Notes
to Consolidated Financial Statements in this Annual Report on Form 10-K,
transaction-related compensation expense of $7.7 million associated with the initial public offering in 2014,
lower incentive compensation expense of $16.1 million, and
lower delivery expense of $6.9 million due to lower volume.
These changes were partially offset by:
impairment charges on assets of $7.7 million in 2015, primarily due to fixed asset impairments, and
a restructuring charge of $2.5 million in 2015.
On a per ton basis, operating expenses decreased to $242 per ton in 2015 from $250 per ton in 2014.
Operating Profit
As a result of the factors above, in 2015 we reported an operating profit of $108.6 million, or 3.4% of sales, compared to an
operating profit of $86.4 million, or 2.4% of sales, in 2014.
Other Expenses
Interest and other expense on debt decreased to $96.3 million in 2015 from $107.4 million in 2014 primarily due to a lower
principal amount outstanding of our 9.0% Senior Notes due 2017 (the “2017 Notes”) and the 2018 Notes after the redemption of $99.5
million of the 2018 Notes in September of 2014 and the purchases of $30.1 million of the 2018 Notes as well as the purchases of
$30.1 million of the 2017 Notes in 2015. Partially offsetting the reduction in debt was a $2.9 million charge in 2015 to write-off a
portion of the issuance costs associated with the Company’s old revolving credit facility agreement upon entering into a new revolving
credit facility agreement. Other income and (expense), net was expense of $10.4 million in 2015 compared to expense of $5.9 million
in 2014. The year 2015 net expense is primarily related to a $12.3 million charge due to an other-than-temporary impairment
recognized on an available-for-sale investment, partially offset by foreign currency gains of $1.5 million. The year 2014 net expense
was primarily related to a $11.2 million loss on the early redemption premium on the redemption of the $99.5 million principal
amount of the 2018 Notes, partially offset by $5.3 million of foreign currency gains.
30
Provision for Income Taxes
The Company recorded an income tax expense of $3.7 million in 2015 compared to an income tax benefit of $0.7 million in
2014. The $3.7 million income tax expense in 2015 results predominantly from tax expense on earnings in the U.S. and the inability to
benefit losses in our foreign subsidiaries due to valuation allowances. The $0.7 million income tax benefit in 2014 results from a tax
benefit in the U.S. and the impact of certain initial public offering related transactions that are recognized differently for U.S. tax
purposes, offset by tax expense in foreign subsidiaries.
Noncontrolling Interest
Ryerson China’s and Açofran’s results of operations was a loss in 2015 and 2014. The portion of the loss attributable to the
noncontrolling interest in Ryerson China and Açofran was $1.3 million for 2015 and $0.5 million for 2014.
Earnings Per Share
Basic and diluted earnings (loss) per share was a loss of $0.02 in 2015 and a loss of $1.01 in 2014. The changes in earnings
(loss) per share are due to the results of operations discussed above as well as an increase of 6.7 million in average shares outstanding
in 2015 compared to 2014 after the issuance of 11.0 million shares of common stock in an initial public offering on August 8, 2014.
Comparison of the year ended December 31, 2014 with the year ended December 31, 2013
Net Sales
Net sales increased 4.7% to $3.6 billion in 2014 as compared to $3.5 billion in 2013. Average selling price increased 5.4% while
tons sold decreased 0.7% reflecting stable economic conditions in the metals market in 2014 compared to 2013. The average selling
price per ton increased in 2014 to $1,790 from $1,698 in 2013. Average selling prices per ton increased for most of our product lines
in 2014 with the largest increase in our stainless steel plate, carbon steel plate and carbon steel flat product lines. Tons sold in 2014
decreased for our carbon steel flat and aluminum long product lines, offset by increased tons sold for our aluminum sheet and
aluminum plate product lines. Tons sold per ship day were 8,032 in 2014 as compared to 8,087 in 2013.
Cost of Materials Sold
Cost of materials sold increased 6.5% to $3.0 billion in 2014 compared to $2.8 billion in 2013. The increase in cost of materials
sold in 2014 compared to 2013 was primarily due to an increase in the average cost of materials sold per ton. The average cost of
materials sold per ton increased to $1,497 in 2014 from $1,396 in 2013. The average cost of materials sold for our carbon steel flat,
carbon steel plate and stainless steel flat product lines increased more than our other products, in line with the change in average
selling price per ton.
During 2014, LIFO expense was $42 million related to increases in pricing for all product lines. During 2013, LIFO income was
$33 million related to decreases in pricing for all product lines.
Gross Profit
Gross profit as a percentage of sales decreased to 16.4% in 2014 compared to 17.8% in 2013 due to, among other things, an
increase in cost of materials sold, as discussed above. Gross profit decreased 3.7% to $593.8 million in 2014 as compared to $616.6
million in 2013.
Operating Expenses
Operating expenses as a percentage of sales decreased to 14.0% in 2014 from 14.2% in 2013. Operating expenses in 2014
increased $15.4 million from $492.0 million in 2013 primarily due to the following reasons:
•
a $25.0 million charge to terminate the advisory service agreement with Platinum Advisors in connection with the
completion of our initial public offering on August 13, 2014, which is described in Note 13, “Related Parties” of
the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K,
• we also recognized $7.7 million of transaction-related compensation expense associated with the initial public
offering, and
•
higher incentive compensation expense of $14.5 million.
31
These changes were partially offset by:
•
•
•
•
•
impairment charges on assets of $10.0 million in 2013, primarily due to a goodwill impairment charge of $6.8
million related to one of our reporting units,
lower salaries and wages of $7.1 million resulting from lower employment levels in 2014 and lower benefit costs
of $6.7 million primarily due to lower net periodic benefit cost for pensions in 2014,
lower reorganization expense in 2014 of $4.7 million,
a restructuring charge of $1.9 million in 2013, and
a gain on sale of assets of $1.8 million in 2014.
On a per ton basis, operating expenses increased to $250 per ton in 2014 from $241 per ton in 2013.
Operating Profit
As a result of the factors above, in 2014 we reported an operating profit of $86.4 million, or 2.4% of sales, compared to an
operating profit of $124.6 million, or 3.6% of sales, in 2013.
Other Expenses
Interest and other expense on debt decreased to $107.4 million in 2014 from $110.5 million in 2013 primarily due to a lower
level of debt outstanding in 2014 after we used a portion of the proceeds from our initial public offering to redeem $99.5 million
principal amount of the 2018 Notes in September of 2014. Other income and (expense), net was expense of $5.9 million in 2014
compared to expense of $0.2 million in 2013. The year 2014 net expense was primarily related to a $11.2 million loss on the early
redemption premium on the redemption of the $99.5 million principal amount of the 2018 Notes, partially offset by $5.3 million of
foreign currency gains.
Provision for Income Taxes
The Company recorded an income tax benefit of $0.7 million in 2014 compared to an income tax benefit of $112.3 million in
2013. The $0.7 million income tax benefit in 2014 results from a tax benefit in the U.S. and the impact of certain initial public offering
related transactions that are recognized differently for U.S. tax purposes, offset by tax expense in foreign subsidiaries. The $112.3
million income tax benefit in 2013 primarily relates to a reduction in valuation allowance previously recorded against U.S. deferred
tax assets.
Noncontrolling Interest
Ryerson China’s and Açofran’s results of operations was a loss in 2014 and 2013. The portion of the loss attributable to the
noncontrolling interest in Ryerson China and Açofran was $0.5 million for 2014 and $1.1 million for 2013.
Earnings Per Share
Basic and diluted earnings (loss) per share was a loss of $1.01 in 2014 and earnings of $5.99 in 2013. The changes in earnings
(loss) per share are due to the results of operations discussed above as well as an increase of 4.1 million in average shares outstanding
in 2014 compared to 2013 after the issuance of 11.0 million shares of common stock in an initial public offering on August 8, 2014.
Liquidity and Capital Resources
The Company’s primary sources of liquidity are cash and cash equivalents, cash flows from operations and borrowing
availability under the $1.0 billion revolving credit facility (the “Ryerson Credit Facility”) that matures on the earlier of (a) July 24,
2020 and (b) 60 days prior to the stated maturity of any outstanding indebtedness with a principal amount of $50,000,000 or more. Its
principal source of operating cash is from the sale of metals and other materials. Its principal uses of cash are for payments associated
with the procurement and processing of metals and other materials inventories, costs incurred for the warehousing and delivery of
inventories and the selling and administrative costs of the business, capital expenditures, and for interest payments on debt.
32
The following table summarizes the Company’s cash flows:
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of exchange rates on cash
Net increase (decrease) in cash and cash equivalents
2015
Year Ended December 31,
2014
(In millions)
2013
$
$
259.1
(18.0)
(232.2)
(5.7)
3.2
$
$
(73.3) $
(34.0)
100.5
(7.6)
(14.4) $
48.1
(13.5)
(26.6)
(4.8)
3.2
The Company had cash and cash equivalents at December 31, 2015 of $63.2 million, compared to $60.0 million at
December 31, 2014 and $74.4 million at December 31, 2013. The Company had $1,035 million, $1,259 million and $1,295 million of
total debt outstanding, a debt-to-capitalization ratio of 116%, 111% and 109% and $185 million, $245 million and $234 million
available under the revolving credit facility at December 31, 2015, 2014 and 2013, respectively. The Company had total liquidity
(defined as cash and cash equivalents, marketable securities and availability under the Ryerson Credit Facility, the Old Credit Facility,
and foreign debt facilities) of $273 million, $328 million and $351 million at December 31, 2015, 2014 and 2013, respectively. Total
liquidity is not a U.S. generally accepted accounting principles (“GAAP”) financial measure. We believe that total liquidity provides
additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a
substitute for, net income or cash flows from operations as determined in accordance with GAAP and total liquidity is not necessarily
an indication of whether cash flow will be sufficient to fund our cash requirements.
Below is a reconciliation of cash and cash equivalents to total liquidity:
Cash and cash equivalents
Marketable securities
Availability under Ryerson Credit Facility and foreign debt
facilities
Total liquidity
December 31,
2015
December 31,
2014
(In millions)
December 31,
2013
$
$
63
2
208
273
$
$
60
11
257
328
$
$
74
21
256
351
Of the total cash and cash equivalents as of December 31, 2015, $57 million was held in subsidiaries outside the United States
which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate funds from its non-U.S.
subsidiaries. Although the Company has historically satisfied needs for more capital in the U.S. through debt or equity issuances, it
could elect to repatriate funds held in foreign jurisdictions which could result in higher effective tax rates. The Company has not
recorded a deferred tax liability for the effect of a possible repatriation of these assets as management intends to permanently reinvest
these assets outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of
existing international operations.
During the year ended December 31, 2015, net cash provided by operating activities was $259.1 million. During the year ended
December 31, 2014, net cash used in operating activities was $73.3 million. During the year ended December 31, 2013, net cash
provided by operating activities was $48.1 million. Net income (loss) was a loss of $1.8 million and $26.2 million in 2015 and 2014,
respectively, and income of $126.2 million in 2013. Cash provided by operating activities of $259.1 million during the year ended
December 31, 2015 was primarily due to a decrease in inventory of $178.1 million as we reduced inventory as metal prices weakened
during the year. In addition, accounts receivable declined $88.0 million reflecting lower average selling prices and tons sold in 2015,
non-cash depreciation and amortization expense was $43.7 million and we recorded a non-cash charge of $12.3 million due to an
other-than-temporary impairment charge recognized on an available-for-sale investment. Partially offsetting the cash inflows were
pension contributions of $42.5 million and lower accrued liabilities of $20.0 million primarily due to a lower accrual for incentive
compensation in 2015. Cash used in operating activities of $73.3 million during the year ended December 31, 2014 was primarily the
result of pension contributions of $55.4 million, the net loss in 2014 of $26.2 million, a decrease in accounts payable of $22.4 million
and an increase in accounts receivable of $19.5 million reflecting higher sales in 2014, partially offset by non-cash depreciation and
amortization expense of $45.6 million. Cash provided by operating activities of $48.1 million during the year ended December 31,
2013 was primarily the result of the $126.2 million of net income in 2013, non-cash depreciation and amortization expense of $46.6
million, an increase in accounts payable of $15.7 million, non-cash impairment charges on assets of $10.0 million and a decrease in
33
accounts receivable of $9.9 million reflecting lower sales in 2013, partially offset by the non-cash reduction in the valuation allowance
recorded against deferred tax assets of $124.2 million and pension contributions of $48.0 million.
Net cash used in investing activities was $18.0 million, $34.0 million and $13.5 million in 2015, 2014 and 2013, respectively.
Capital expenditures for the years ended December 31, 2015, 2014 and 2013, were $22.3 million, $21.6 million and $20.2 million,
respectively. On August 3, 2015, the Company paid $7.7 million, net of cash acquired, to acquire all of the issued and outstanding
capital stock of Southern Tool Steel, Inc. On December 31, 2014, the Company paid $20.1 million to acquire all of the issued and
outstanding capital stock of Fay Industries, Inc. and the membership interests of Fay Group, Ltd. In 2015, the Company paid an
additional $1.1 million in deferred consideration owed to the sellers of Fay Industries, Inc. The Company sold property, plant and
equipment and assets held for sale generating cash proceeds of $10.4 million, $7.3 million and $4.6 million during the years ended
December 31, 2015, 2014 and 2013, respectively.
Net cash used in financing activities was $232.2 million for the year ended December 31, 2015. In 2015, net cash used in
financing activities was primarily related to the purchases of $30.1 million principal amount of the 2017 Notes repurchased for $29.4
million and the purchases of $30.1 million principal amount of the 2018 Notes repurchased for $30.5 million, and $164.4 million of
repayments of credit facility borrowings with cash provided by operations discussed above. Net cash provided by financing activities
was $100.5 million for the year ended December 31, 2014. In 2014, we received $112.4 million in proceeds from the issuance of stock
in an initial public offering and used $110.7 million of the proceeds to redeem $99.5 million principal amount of our 2018 Notes and
pay a $11.2 million redemption premium. In addition, credit facility borrowings in 2014 increased $63.8 million primarily to fund
cash used in operating activities as well as capital expenditures and book overdrafts increased $36.0 million. Net cash used in
financing activities was $26.6 million for the year ended December 31, 2013. In 2013, credit facility borrowings decreased $10.6
million, we paid $6.6 million to purchase 50,000 shares of our common stock and we paid $3.7 million in fees to amend our credit
facility. We believe that cash flow from operations and proceeds from the Ryerson Credit Facility will provide sufficient funds to meet
our contractual obligations and operating requirements in the normal course of business.
Total Debt
Total debt at December 31, 2015 decreased $224.6 million to $1,034.5 million from $1,259.1 million at December 31, 2014 as a
result of net cash provided by operating activities.
Total debt outstanding as of December 31, 2015 consisted of the following amounts: $272.2 million borrowing under the
Ryerson Credit Facility, $569.9 million under the 2017 Notes, $170.4 million under the 2018 Notes, and $22.0 million of foreign debt.
Availability at December 31, 2015 under the Ryerson Credit Facility was $185 million and at December 31, 2014 was $245 million
under the Old Credit Facility. Discussion of our outstanding debt follows.
Ryerson Credit Facility
On July 24, 2015, Ryerson terminated its $1.35 billion Old Credit Facility and entered into its $1.0 billion Ryerson Credit
Facility. Borrowings under the Ryerson Credit Facility were used to repay indebtedness under the Old Credit Facility. The Ryerson
Credit Facility has a maturity date of the earlier of (a) July 24, 2020 or (b) 60 days prior to the stated maturity of any outstanding
indebtedness with a principal amount of $50,000,000 or more. As a result of the refinancing, the Company recorded a $2.9 million
charge in the third quarter of 2015 to write-off a portion of the issuance costs associated with the Old Credit Facility.
At December 31, 2015, Ryerson had $272.2 million of outstanding borrowings, $17 million of letters of credit issued and
$185 million available under the Ryerson Credit Facility compared to $435.0 million of outstanding borrowings, $20 million of letters
of credit issued and $245 million available at December 31, 2014 under the Old Credit Facility. Total credit availability is limited by
the amount of eligible accounts receivable, inventory, and qualified cash pledged as collateral under the agreement insofar as Ryerson
is subject to a borrowing base comprised of the aggregate of these three amounts, less applicable reserves. Eligible accounts
receivable, at any date of determination, is comprised of the aggregate value of all accounts directly created by a borrower (and in the
case of Canadian accounts, a Canadian guarantor) in the ordinary course of business arising out of the sale of goods or the rendering of
services, each of which has been invoiced, with such receivables adjusted to exclude various ineligible accounts, including, among
other things, those to which a borrower (or guarantor, as applicable) does not have sole and absolute title and accounts arising out of a
sale to an employee, officer, director, or affiliate of a borrower (or guarantor, as applicable). Eligible inventory, at any date of
determination, is comprised of the aggregate value of all inventory owned by a borrower (and in the case of Canadian accounts, a
Canadian guarantor), with such inventory adjusted to exclude various ineligible inventory, including, among other things, (i) any
inventory that is classified as “supplies” or is unsaleable in the ordinary course of business, (ii) 50% of the value of any inventory that
(A) has not been sold or processed within a 180 day period and (B) which is calculated to have more than 365 days of supply based
upon the immediately preceding 6 months consumption, and (iii) 50% of the value of inventory classified as partial inventory pieces
34
on the basis that the inventory has been cut below sales lengths customary for such inventory. Qualified cash consists of cash in an
eligible deposit account that is subject to customary restrictions and liens in favor of the lenders. The weighted average interest rate on
the borrowings was 2.1 percent under the Ryerson Credit Facility at December 31, 2015 and 2.0 percent under the Old Credit Facility
at December 31, 2014.
The total $1.0 billion revolving credit facility has an allocation of $940 million to the Company’s subsidiaries in the United
States and an allocation of $60 million to Ryerson Holding’s Canadian subsidiary that is a borrower. Amounts outstanding under the
Ryerson Credit Facility bear interest at (i) a rate determined by reference to (A) the base rate (the highest of the Federal Funds Rate
plus 0.50%, Bank of America, N.A.’s prime rate and the one-month LIBOR rate plus 1.00%) or (B) a LIBOR rate or, (ii) for Ryerson
Holding’s Canadian subsidiary that is a borrower, (A) a rate determined by reference to the Canadian base rate (the greatest of the
Federal Funds Rate plus 0.50%, Bank of America-Canada Branch’s “base rate” for pricing loans in U.S. Dollars made at its “base
rate” and the 30 day LIBOR rate plus 1.00%), (B) the prime rate (the greatest of the Bank of Canada overnight rate plus 0.50%, Bank
of America-Canada Branch’s “prime rate” for commercial loans made by it in Canada in Canadian Dollars and the one-month
Canadian bankers’ acceptance rate plus 1.00%) or (C) the bankers’ acceptance rate. The spread over the base rate and prime rate is
between 0.25% and 0.75% and the spread over the LIBOR and for the bankers’ acceptances is between 1.25% and 1.75%, depending
on the amount available to be borrowed under the Ryerson Credit Facility. Overdue amounts and all amounts owed during the
existence of a default bear interest at 2% above the rate otherwise applicable thereto. Ryerson also pays commitment fees on amounts
not borrowed at a rate of 0.25%.
Borrowings under the Ryerson Credit Facility are secured by first-priority liens on all of the inventory, accounts receivables,
lockbox accounts and related assets of the borrowers and the guarantors.
The Ryerson Credit Facility also contains covenants that, among other things, restrict Ryerson Holding and its restricted
subsidiaries with respect to the incurrence of debt, the creation of liens, transactions with affiliates, mergers and consolidations, sales
of assets and acquisitions. The Ryerson Credit Facility also requires that, if availability under the Ryerson Credit Facility declines to a
certain level, Ryerson maintain a minimum fixed charge coverage ratio as of the end of each fiscal quarter, and includes defaults upon
(among other things) the occurrence of a change of control of Ryerson and a cross-default to other financing arrangements.
The Ryerson Credit Facility contains events of default with respect to, among other things, default in the payment of principal
when due or the payment of interest, fees and other amounts due thereunder after a specified grace period, material misrepresentations,
failure to perform certain specified covenants, certain bankruptcy events, the invalidity of certain security agreements or guarantees,
material judgments and the occurrence of a change of control of Ryerson. If such an event of default occurs, the lenders under the
Ryerson Credit Facility will be entitled to various remedies, including acceleration of amounts outstanding under the Ryerson Credit
Facility and all other actions permitted to be taken by secured creditors.
The lenders under the Ryerson Credit Facility have the ability to reject a borrowing request if any event, circumstance or
development has occurred that has had or could reasonably be expected to have a material adverse effect on the Company. If Ryerson
Holding, JT Ryerson, any of the other borrowers or any restricted subsidiaries of JT Ryerson becomes insolvent or commences
bankruptcy proceedings, all amounts borrowed under the Ryerson Credit Facility will become immediately due and payable.
Proceeds from borrowings under the Ryerson Credit Facility and repayments of borrowings thereunder that are reflected in the
Condensed Consolidated Statements of Cash Flows represent borrowings under the Company’s revolving credit agreement with
original maturities greater than three months. Net proceeds (repayments) under the Ryerson Credit Facility represent borrowings under
the Ryerson Credit Facility with original maturities less than three months.
2017 and 2018 Notes
On October 10, 2012, JT Ryerson issued $600 million in aggregate principal amount of the 2017 Notes and $300 million in
aggregate principal amount of the 2018 Notes (together with the 2017 Notes, the “2017 and 2018 Notes”). The 2017 Notes bear
interest at a rate of 9% per annum. The 2018 Notes bear interest at a rate of 11.25% per annum. The 2017 Notes are fully and
unconditionally guaranteed on a senior secured basis and the 2018 Notes are fully and unconditionally guaranteed on a senior
unsecured basis by all of our existing and future domestic subsidiaries that are co-borrowers or that have guarantee obligations under
the Ryerson Credit Facility.
35
The 2017 Notes and related guarantees are secured by a first-priority lien on substantially all of our and our guarantors’ present
and future assets located in the United States (other than receivables, inventory, related general intangibles, certain other assets and
proceeds thereof), subject to certain exceptions and customary permitted liens. The 2017 Notes and related guarantees are secured on a
second-priority basis by a lien on the assets that secure our obligations under the Ryerson Credit Facility. The 2018 Notes are not
secured. The 2017 and 2018 Notes contain customary covenants that, among other things, limit, subject to certain exceptions, our
ability, and the ability of our restricted subsidiaries, to incur additional indebtedness, pay dividends on our capital stock or repurchase
our capital stock, make investments, sell assets, engage in acquisitions, mergers or consolidations or create liens or use assets as
security in other transactions. Subject to certain exceptions, JT Ryerson may only pay dividends to Ryerson Holding to the extent of
50% of future net income, once prior losses are offset.
The 2017 Notes became redeemable by the Company, in whole or in part on April 15, 2015 (the “2017 Redemption Date”) and
the 2018 Notes became redeemable, in whole or in part, on October 15, 2015 (the “2018 Redemption Date”), in each case at specified
redemption prices. On August 13, 2014, Ryerson Holding completed an initial public offering of 11 million shares of common stock at
a price to the public of $11.00 per share. Net proceeds from the offering were used to redeem $99.5 million in aggregate principal
amount of the 2018 Notes and pay redemption premiums of $11.2 million, which were recorded within other income and (expense),
net on the Consolidated Statements of Operations. If a change of control occurs, JT Ryerson must offer to purchase the 2017 and 2018
Notes at 101% of their principal amount, plus accrued and unpaid interest.
As of December 31, 2015, $569.9 million and $170.4 million of the original outstanding principal amount of the 2017 and 2018
Notes remain outstanding, respectively. The Company has repurchased and in the future may repurchase 2017 and 2018 Notes in the
open market. During the year 2015, a principal amount of $30.1 million of the 2017 Notes were repurchased for $29.4 million and
retired, resulting in the recognition of a $0.7 million gain within other income and (expense), net on the Consolidated Statements of
Operations. During the year 2015, a principal amount of $30.1 million of the 2018 Notes were repurchased for $30.5 million and
retired, resulting in the recognition of a $0.4 million loss within other income and (expense), net on the Consolidated Statements of
Operations.
Foreign Debt
At December 31, 2015, Ryerson China’s total foreign borrowings were $21.8 million, which were owed to banks in Asia at a
weighted average interest rate of 4.3% per annum and secured by inventory and property, plant and equipment. At December 31,
2014, Ryerson China’s total foreign borrowings were $23.6 million, which were owed to banks in Asia at a weighted average interest
rate of 4.4% per annum and secured by inventory and property, plant and equipment. Açofran’s total foreign borrowings were $0.2
million and zero at December 31, 2015 and December 31, 2014, respectively.
Availability under the foreign credit lines was $23 million and $12 million at December 31, 2015 and December 31, 2014,
respectively. Letters of credit issued by our foreign subsidiaries totaled $2 million at December 31, 2015 and 2014.
Pension Funding
The Company made contributions of $42.5 million in 2015, $55.4 million in 2014 and $48.0 million in 2013 to improve the
Company’s pension plans funded status. At December 31, 2015, as reflected in Note 11 to the Consolidated Financial Statements,
pension liabilities exceeded plan assets by $238 million. The Company anticipates that it will have a minimum required pension
contribution of approximately $22 million in 2016 under the Employee Retirement Income Security Act of 1974 (“ERISA”), Pension
Protection Act in the U.S and the Ontario Pension Benefits Act in Canada. Future contribution requirements depend on the investment
returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. The Company is
unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have
a material adverse effect on the Company’s financial position or cash flows. The Company believes that cash flow from operations
and the Ryerson Credit Facility described above will provide sufficient funds to make the minimum required contribution in 2016.
The Company made income tax payments of $3.2 million, $1.6 million and $1.2 million in 2015, 2014 and 2013, respectively.
Income Tax Payments
In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such
as letters of credit, which totaled $19 million as of December 31, 2015. Additionally, other than normal course long-term operating
Off-Balance Sheet Arrangements
36
leases included in the following Contractual Obligations table, we do not have any material off-balance sheet financing arrangements.
None of these off-balance sheet arrangements are likely to have a material effect on our current or future financial condition, results of
operations, liquidity or capital resources.
The following table presents contractual obligations at December 31, 2015:
Contractual Obligations
Payments Due by Period
Total
Less than
1 year
Contractual Obligations(1)(2)
2017 Notes
2018 Notes
Ryerson Credit Facility
Foreign Debt
Interest on 2017 Notes, 2018 Notes, Foreign Debt and
Ryerson Credit Facility(3)
Purchase Obligations(4)
Operating Leases
Pension Withdrawal Liability
Capital Leases
Total
$
$
570
170
272
22
155
26
98
1
15
1,329
$
$
1 – 3
years
(In millions)
570
170
272
—
— $
—
—
22
76
25
25
—
5
153
$
79
1
35
—
7
1,134
4 – 5
years
After
5
years
$
$
— $
—
—
—
—
—
21
—
3
24
$
—
—
—
—
—
—
17
1
—
18
(1)
The contractual obligations disclosed above do not include our potential future pension funding obligations (see previous
discussion under “Pension Funding” caption).
(2) Due to uncertainty regarding the completion of tax audits and possible outcomes, we do not know the timing of when our
obligations related to unrecognized tax benefits will occur, if at all. See Note 18 “Income Taxes” of the notes to our
consolidated financial statements for additional detail.
Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the Ryerson Credit
Facility.
The purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers.
(3)
(4)
Capital Expenditures
Capital expenditures during 2015, 2014 and 2013 totaled $22.3 million, $21.6 million and $20.2 million, respectively. Capital
expenditures were primarily for machinery and equipment.
The Company anticipates capital expenditures, excluding acquisitions, to be approximately $20 million in 2016. The spending
includes maintenance expenditures and improvements to maintain, upgrade, and add to the Company’s North American processing
capabilities.
2015
Restructuring
In 2015, the Company recorded a charge of $2.2 million for employee costs related to expense reduction actions taken in the
fourth quarter of 2015. The charge consists primarily of severance costs for 140 employees in addition to $0.2 million of non-cash
pensions and other post-retirement benefit costs. During 2015, the Company paid $0.8 million in costs related to this expense
reduction initiative. The remaining employee-related costs of $1.2 million are expected to be paid in 2016.
In 2015, the Company also recorded a $0.3 million charge to increase the reserve for tenancy-related costs for a facility
closed in 2013. During 2015, the Company paid $0.4 million in tenancy costs related to this facility. The remaining $0.5 million of
tenancy-related costs are expected to be paid through 2019.
37
2014
In 2014, the Company paid $0.7 million in tenancy costs related to a facility closed in 2013. In 2014, the Company also
recorded a $0.1 million reduction to the reserve for tenancy-related costs and credited warehousing, delivery, selling, general and
administrative expense in the Consolidated Statements of Operations. During 2014, the Company also paid the remaining $0.1 million
of employee costs related to the closure of this facility.
2013
In 2013, the Company recorded a charge of $2.1 million related to a facility closure. The charge consists of tenancy-related
costs, primarily future lease payments. In 2013, the Company also recorded a $0.2 million reduction to the reserve for employee-
related costs and credited restructuring and other charges in the Consolidated Statements of Operations. During 2013, the Company
paid $0.7 million for employee-related costs and $0.5 million for tenancy-related costs for this facility closure.
Deferred Tax Amounts
At December 31, 2015, the Company had a net deferred tax asset of $22 million comprised primarily of a deferred tax asset of
$95 million related to pension liabilities, a deferred tax asset related to postretirement benefits other than pensions of $30 million, $30
million of Alternative Minimum Tax (“AMT”) credit carryforwards and deferred tax assets of $89 million related to federal, local and
foreign tax loss carryforwards, offset by a valuation allowance of $22 million and deferred tax liabilities of $88 million related to fixed
assets and $121 million related to inventory.
The Company’s deferred tax assets include $67 million related to U.S. federal net operating loss (“NOL”) carryforwards, $10
million related to state NOL carryforwards and $12 million related to foreign NOL carryforwards, available at December 31, 2015.
In accordance with FASB ASC 740, “Income Taxes,” the Company assesses the realizability of its deferred tax assets. The
Company records a valuation allowance when, based upon the evaluation of all available evidence, it is more-likely-than-not that all
or a portion of the deferred tax assets will not be realized. In making this determination, we analyze, among other things, our recent
history of earnings, the nature and timing of reversing book-tax temporary differences, tax planning strategies and future income.
After considering both the positive and negative evidence available, in the second quarter of 2009, the Company determined that it
was more-likely-than-not that it would not realize a portion of its U.S. deferred tax assets. As a result, the Company established a
valuation allowance against a portion of its U.S. deferred tax assets. The Company released a portion of the valuation allowance
related to one of its U.S. subsidiaries, JT Ryerson, during 2012. The Company released most of the remaining U.S. related valuation
allowance during 2013. As of December 31, 2013, the Company had a valuation allowance of $23.1 million, a decrease of $124.2
million from the prior year. Of the $124.2 million decrease in 2013, $124.2 million was credited to the income tax provision and none
was charged to other comprehensive income. As of December 31, 2014, the Company had a valuation allowance of $22.5 million, a
decrease of $0.6 million from the prior year. Of the $0.6 million decrease in 2014, $0.6 million was credited to the income tax
provision and none was charged to other comprehensive income. As of December 31, 2015, the Company had a valuation allowance
of $22.5 million, unchanged from the prior year.
During 2013, the Company recognized a total net tax benefit of $124.2 million related to changes in valuation allowance
predominately related to the release of valuation allowance related to certain U.S. federal and state deferred tax assets at December 31,
2013. This release of valuation allowance produced a deferred tax benefit that is not expected to recur.
As described in Note 1 to the Consolidated Financial Statements, the Company assesses the need for a valuation allowance
considering all available positive and negative evidence, including past operating results, projections of future taxable income and the
feasibility of ongoing tax planning strategies. The fourth quarter of 2013 was the first quarter in which the Company’s overall U.S.
operations had sustained an operating profit in both the preceding cumulative three fiscal year period and in each of its two preceding
fiscal years, providing objective evidence of the Company’s ability to earn future profits. Combined with the Company’s projections
of future income providing additional subjective evidence of the Company’s ability to earn future profits and management’s judgment,
the Company determined that these deferred tax assets were more likely than not realizable and accordingly the valuation allowance
was no longer required.
The Company will continue to maintain a valuation allowance on certain U.S. federal and state deferred tax assets until such
time as in management’s judgment, considering all available positive and negative evidence, the Company determines that these
deferred tax assets are more likely than not realizable.
38
Critical Accounting Estimates
Preparation of this Form 10-K requires us to make estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of sales and
expenses during the reporting period. Our critical accounting policies, including the assumptions and judgments underlying them, are
disclosed in Item 8 within Note 1: Summary of Accounting and Financial Policies. These policies have been consistently applied and
address such matters as revenue recognition, depreciation methods, inventory valuation, asset impairment recognition and pension and
postretirement expense. While policies associated with estimates and judgments may be affected by different assumptions or
conditions, we believe our estimates and judgments associated with the reported amounts are appropriate in the circumstances. Actual
results may differ from those estimates.
We consider the policies discussed below as critical to an understanding of our financial statements, as application of these
policies places the most significant demands on management’s judgment, with financial reporting results relying on estimation of
matters that are uncertain.
Provision for allowances, claims and doubtful accounts: We perform ongoing credit evaluations of customers and set credit
limits based upon review of the customers’ current credit information and payment history. We monitor customer payments and
maintain a provision for estimated credit losses based on historical experience and specific customer collection issues that we have
identified. Estimation of such losses requires adjusting historical loss experience for current economic conditions and judgments about
the probable effects of economic conditions on certain customers. We cannot guarantee that the rate of future credit losses will be
similar to past experience. Provisions for allowances and claims are based upon historical rates, expected trends and estimates of
potential returns, allowances, customer discounts and incentives. We consider all available information when assessing the adequacy
of the provision for allowances, claims and doubtful accounts.
Inventory valuation: Our inventories are stated at the lower of cost or market. The valuation of our inventories at the lower of
cost or market could be subject to certain estimates; however the measurement is primarily based on historical purchasing and sales
information rather than forecasted metals pricing. Inventory costs reflect metal and in-bound freight purchase costs, third-party
processing costs and internal direct and allocated indirect processing costs. Cost is primarily determined by the LIFO method. We
regularly review inventory on hand and record provisions for obsolete and slow-moving inventory based on historical and current
sales trends. Changes in product demand and our customer base may affect the value of inventory on hand which may require higher
provisions for obsolete inventory.
Income Taxes: Our income tax expense, deferred tax assets and liabilities and reserve for uncertain tax positions reflect our best
estimate of taxes to be paid. The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The determination
of the consolidated income tax expense requires judgment and estimation by management. It is possible that actual results could differ
from the estimates that management has used to determine its consolidated income tax expense.
We record operating loss and tax credit carryforwards and the estimated effect of temporary differences between the tax basis of
assets and liabilities and the reported amounts in the Consolidated Balance Sheet. We follow detailed guidelines in each tax
jurisdiction when reviewing tax assets recorded on the balance sheet and provide for valuation allowances as required. Deferred tax
assets are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax
planning strategies and on forecasts of future taxable income. The forecasts of future taxable income require assumptions regarding
volume, selling prices, margins, expense levels and industry cyclicality. If we are unable to generate sufficient future taxable income
in certain tax jurisdictions, we may be required to record additional valuation allowances against our deferred tax assets related to
those jurisdictions.
The Company’s income tax provisions are based on calculations and assumptions that are subject to examination by the IRS and
other tax authorities. Although the Company believes that the positions taken on filed tax returns are reasonable, it has established tax
and interest reserves in recognition that various taxing authorities may challenge the positions taken. For uncertain tax positions, the
Company applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to
the recognition and derecognition of tax positions. The Company’s ongoing assessments of the more likely than not outcomes of tax
authority examinations and related tax positions require significant judgment and can increase or decrease the Company’s effective tax
rate.
Long-lived Assets and Other Intangible Assets: Long-lived assets held and used are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We estimate the future cash flows
expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, an impairment is recognized. Determining whether an
impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows
39
are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset’s
residual value, if any. Any related impairment loss is calculated based upon comparison of the fair value to the carrying value of the
asset. Separate intangible assets that have finite useful lives are amortized over their useful lives. An impaired long-lived or intangible
asset would be written down to fair value, based on various available valuation techniques, including the discounted cash flow
method.
Goodwill: We assess the recoverability of the carrying value of recorded goodwill annually in the fourth quarter of each year or
whenever indicators of potential impairment exist. We test for impairment of goodwill by assessing various qualitative factors with
respect to developments in our business and the overall economy and calculating the fair value of a reporting unit using the discounted
cash flow method, as necessary. Factors that may be considered indicators of impairment include: deterioration in general economic
conditions; declines in the market conditions of our products, including metals prices; a sustained significant decline in our share price
and market capitalization; reduced future cash flow estimates; and slower growth rates in our industry, among others. If we determine
that it is more likely than not that the fair value of a reporting unit is less than the carrying value based on our qualitative assessment,
we will proceed to the two-step goodwill impairment test. In step one, we compare the fair value of the reporting unit in which
goodwill resides to its carrying value. If the carrying amount exceeds the fair value, the second step of the goodwill impairment test is
performed to measure the amount of the impairment loss, if any. In the second step, the implied fair value of the goodwill is estimated
as the fair value of the reporting unit used in the first step less the fair value of all other net tangible and intangible assets of the
reporting unit. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal
to that excess, not to exceed the carrying amount of the goodwill. The fair value of the reporting units are estimated using a
combination of an income approach and a market approach as this combination is deemed to be the most indicative of our fair value in
an orderly transaction between market participants. An income approach based on discounted future cash flows requires us to estimate
income from operations based on projected results and discount rates based on a weighted average cost of capital of comparable
companies. A market approach estimates fair value using market multiples of various financial measures of comparable public
companies. If these estimates or their related assumptions for commodity prices and demand change in the future, we may be required
to record impairment charges for these assets.
Based on the impairment test performed on October 1, 2015, the Company concluded that the fair value of the reporting unit
tested for impairment exceeded the carrying value. The discount rate for the reporting unit was estimated to be 14.5% at October 1,
2015. The Company determines a discount rate based on an estimate of a reasonable risk-adjusted return an investor would expect to
realize on an investment in the reporting unit. The reporting unit’s fair value exceeded its carrying value by more than 25%.
Deterioration in market conditions in our industry or products, changes in expected future cash flows, expected growth rates or to
discount rates could result in impairment charges in future periods.
Purchase Price Accounting: Business combinations are accounted for using the acquisition method of accounting. This method
requires the Company to record assets and liabilities of the business acquired at their estimated fair market values as of the acquisition
date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. The Company uses
valuation specialists, where necessary, to perform appraisals and assist in the determination of the fair values of the assets acquired
and liabilities assumed. These valuations require management to make estimates and assumptions that are critical in determining the
fair values of the assets and liabilities.
Pension and postretirement benefit plan assumptions: We sponsor various benefit plans covering a portion of our employees for
pension and postretirement medical costs. Statistical methods are used to anticipate future events when calculating expenses and
liabilities related to the plans. The statistical methods include assumptions about, among other things, the discount rate, expected
return on plan assets, rate of increase of health care costs and the rate of future compensation increases. Our actuarial consultants also
use subjective factors such as withdrawal and mortality rates when estimating expenses and liabilities. The discount rate used for U.S.
plans reflects the market rate for high-quality fixed-income investments on our annual measurement date (December 31) and is subject
to change each year. The discount rate was determined by matching, on an approximate basis, the coupons and maturities for a
portfolio of corporate bonds (rated Aa or better by Moody’s Investor Services or AA or better by Standard and Poor’s) to the expected
plan benefit payments defined by the projected benefit obligation. The discount rates used for plans outside the U.S. are based on a
combination of relevant indices regarding corporate and government securities, the duration of the liability and appropriate judgment.
When calculating pension expense for 2015, we assumed the pension plans’ assets would generate a long-term rate of return of
7.40% for the U.S. plan, and between 5.75% and 6.00% for the Canadian plans. The expected long-term rate of return assumption was
developed based on historical experience and input from the trustee managing the plans’ assets. The expected long-term rate of return
on plan assets is based on a target allocation of assets, which is based on a goal of earning the highest rate of return while maintaining
risk at acceptable levels. Our projected long-term rate of return for the U.S. pension plan is slightly higher than some market indices
due to the active management of our plans’ assets, and is supported by the historical returns on our plans’ assets. The plans strive to
have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental
impact on the entire portfolio. We regularly review actual asset allocation and the pension plans’ investments are periodically
40
rebalanced to the targeted allocation when considered appropriate. Pension expense increases as the expected rate of return on plan
assets decreases. Lowering the expected long-term rate of return on plan assets by 50 basis points would have increased 2015 pension
expense by approximately $3 million.
Future pension obligations for the U.S. plans were discounted using weighted average rates between 4.28% and 4.41% at
December 31, 2015. Future pension obligations for the Canadian plans were discounted using weighted average rates between 3.51%
and 3.87% at December 31, 2015. Lowering the discount rate by 50 basis points would increase the pension liability at
December 31, 2015 by approximately $49 million.
The calculation of other postretirement benefit expense and obligations requires the use of a number of assumptions, including
the assumed discount rate for measuring future payment obligations and the health care cost trend rate. A one percentage point
increase (decrease) in assumed health care trend rates would increase (decrease) our total service and interest cost for the year ended
December 31, 2015 by $0.2 million and $(0.2) million, respectively. A decrease in the weighted average discount rate of 50 basis
points would increase the postretirement benefit liability by approximately $4 million.
The assumptions used in the actuarial calculation of expenses and liabilities may differ materially from actual results due to
changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These
differences may result in a significant impact on the amount of pension or postretirement benefit expense we may record in the future.
Legal contingencies: We are involved in a number of legal and regulatory matters including those discussed in Note 12 in the
Consolidated Financial Statements. We determine whether an estimated loss from a loss contingency should be accrued by assessing
whether a loss is deemed probable and can be reasonably estimated. We analyze our legal matters based on available information to
assess potential liability. We consult with outside counsel involved in our legal matters when analyzing potential outcomes. We cannot
determine at this time whether any potential liability related to this litigation would materially affect our financial position, results of
operations or cash flows.
Recent accounting pronouncements are discussed within Note 1 in the Consolidated Financial Statements.
Recent Accounting Pronouncements
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest rate risk
We are exposed to market risk related to our fixed-rate and variable-rate long-term debt. Market risk is the potential loss arising
from adverse changes in market rates and prices, such as interest rates. Changes in interest rates may affect the market value of our
fixed-rate debt. The estimated fair value of our long-term debt and the current portions thereof using quoted market prices of
Company debt securities recently traded and market-based prices of similar securities for those securities not recently traded was $866
million at December 31, 2015 and $1,289 million at December 31, 2014 as compared with the carrying value of $1,035 million and
$1,259 million at December 31, 2015 and 2014, respectively.
A hypothetical 1% increase in interest rates on variable rate debt would have increased interest expense in 2015 by
approximately $3.8 million.
Foreign exchange rate risk
We are subject to exposure from fluctuations in foreign currencies. We use foreign currency exchange contracts to hedge our
Canadian subsidiaries’ variability in cash flows from the forecasted payment of currencies other than the functional currency. The
Canadian subsidiaries’ foreign currency contracts were principally used to purchase U.S. dollars. We had foreign currency contracts
with a U.S. dollar notional amount of $1.6 million outstanding at December 31, 2015 and an asset value of $0.1 million. We do not
currently account for these contracts as hedges but rather mark these contracts to market with a corresponding offset to current
earnings. For the year ended December 31, 2015, the Company recognized a gain of $0.1 million associated with its foreign currency
contracts. A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts
from the market rate as of December 31, 2015 would not have a material effect to the financial statements.
The currency effects of translating the financial statements of our foreign subsidiaries are included in accumulated other
comprehensive loss and will not be recognized in the statement of operations until there is a liquidation or sale of those foreign
subsidiaries.
41
Commodity price risk
Metal prices can fluctuate significantly due to several factors including changes in foreign and domestic production capacity,
raw material availability, metals consumption and foreign currency rates. Declining metal prices could reduce our revenues, gross
profit and net income. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory
components. We may enter into metal commodity futures and options contracts to reduce volatility in the price of these metals.
As of December 31, 2015, we had 177 tons of nickel futures or option contracts, 15,120 tons of hot roll coil swaps and 13,878
tons of aluminum price swaps outstanding with a net liability value $0.2, a liability value of $1.9 million and a net liability value of
$1.1 million, respectively. We do not currently account for these contracts as hedges, but rather mark these contracts to market with a
corresponding offset to current earnings. For the year ended December 31, 2015, the Company recognized a loss of $11.9 million
associated with its metal commodity derivatives.
As of December 31, 2015, we had diesel fuel price swaps with respect to the purchase of 533,000 gallons of diesel fuel in order
to fix the prices at which we purchase that volume of fuel for our trucking fleet. We do not currently account for these contracts as
hedges, but rather mark these contracts to market with a corresponding offset to current earnings. As of December 31, 2015, our diesel
fuel hedges outstanding had a liability value of $0.3 million. For the year ended December 31, 2015, the Company recognized a loss
of $0.4 million associated with its diesel fuel commodity derivatives.
A hypothetical strengthening or weakening of 10% in the commodity prices underlying the commodity derivative contracts from
the market rate as of December 31, 2015 would increase or decrease the fair value of the commodity derivative contracts by $2.9
million.
42
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Consolidated Financial Statements
Financial Statements
Management’s Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Consolidated Balance Sheets at December 31, 2015 and 2014
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Financial Statements Schedule
I—Condensed Financial Information of Registrant
II—Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable. The required information is shown in the Financial
Statements or Notes thereto.
Page
44
45
47
48
49
50
51
52
91
96
43
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Ryerson Holding Corporation (“the Company”) is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the
Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements under all potential
conditions. Therefore, effective internal control over financial reporting provides only reasonable, and not absolute, assurance with
respect to the preparation and presentation of financial statements.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the COSO criteria). Based on its assessment under that framework and the criteria
established therein, the Company’s management concluded that the Company’s internal control over financial reporting was effective
as of December 31, 2015.
Ernst & Young LLP, an independent registered public accounting firm, has audited the Company’s internal control over financial
reporting as of December 31, 2015, as stated in their report, which is included herein.
44
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of Ryerson Holding Corporation
We have audited the accompanying consolidated balance sheets of Ryerson Holding Corporation and Subsidiary Companies (“the
Company”) as of December 31, 2015 and 2014 and the related consolidated statements of operations, comprehensive income,
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the
financial statement schedules listed in the index to the consolidated financial statements. These financial statements and schedules are
the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
the Company at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows, for each of the three
years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our
report dated March 9, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Chicago, Illinois
March 9, 2016
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
The Board of Directors and Stockholders of Ryerson Holding Corporation
We have audited Ryerson Holding Corporation and Subsidiary Companies’ (“the Company”) internal control over financial reporting
as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). The Company's management is
responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2015, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of the Company as of December 31, 2015 and 2014, and the related consolidated statements of operations,
comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2015, and
our report dated March 9, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Chicago, Illinois
March 9, 2016
46
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and
administrative
Gain on sale of assets
Restructuring and other charges
Impairment charges on assets
Operating profit
Other expense:
Other income and (expense), net
Interest and other expense on debt
Income (loss) before income taxes
Provision (benefit) for income taxes
Net income (loss)
Less: Net loss attributable to noncontrolling interest
Net income (loss) attributable to Ryerson Holding
Corporation
Basic and diluted earnings (loss) per share
2015
Year Ended December 31,
2014
2013
$
$
3,167.2
2,599.5
567.7
$
3,622.2
3,028.4
593.8
450.8
(1.9)
2.5
7.7
108.6
(10.4)
(96.3)
1.9
3.7
(1.8)
(1.3)
509.2
(1.8)
—
—
86.4
(5.9)
(107.4)
(26.9)
(0.7)
(26.2)
(0.5)
$
$
(0.5) $
(0.02) $
(25.7) $
(1.01) $
3,460.3
2,843.7
616.6
480.1
—
1.9
10.0
124.6
(0.2)
(110.5)
13.9
(112.3)
126.2
(1.1)
127.3
5.99
See Notes to Consolidated Financial Statements
47
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net income (loss)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments
Loss on intra-entity foreign currency transactions
Unrealized loss on available-for-sale investment
Other-than-temporary impairment on available-for-sale investment
Changes in defined benefit pension and other
post-retirement benefit plans
Other comprehensive income (loss), before tax
Income tax provision (benefit) related to items of other
comprehensive income (loss)
Comprehensive income (loss), after tax
Less: comprehensive loss attributable to the
noncontrolling interest
Comprehensive income (loss) attributable to Ryerson
Holding Corporation
2015
Year Ended December 31,
2014
2013
$
(1.8) $
(26.2) $
126.2
(12.9)
(8.6)
(8.9)
12.3
7.8
(10.3)
5.8
(17.9)
(1.8)
(16.3)
—
(9.5)
—
(130.3)
(156.1)
(52.8)
(129.5)
(0.6)
(12.9)
—
—
—
126.2
113.3
49.5
190.0
(1.2)
$
(16.1) $
(128.9) $
191.2
See Notes to Consolidated Financial Statements
48
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
See Notes to Consolidated Financial Statements
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization
Stock-based compensation
Deferred income taxes
Provision for allowances, claims and doubtful accounts
Restructuring and other charges
Gain on sale of assets
Impairment charges on assets
Other-than-temporary impairment charge on available-for-sale investments
(Gain) Loss on retirement of debt
Other items
Change in operating assets and liabilities, net of effects of acquisitions:
Receivables
Inventories
Other assets
Accounts payable
Accrued liabilities
Accrued taxes payable/receivable
Deferred employee benefit costs
Net adjustments
Net cash provided by (used in) operating activities
Investing activities:
Acquisitions, net of cash acquired
(Increase) decrease in restricted cash
Capital expenditures
Proceeds from sale of property, plant and equipment
Proceeds from insurance settlement
Other investing activities
Net cash used in investing activities
Financing activities:
Net proceeds from issuance of common stock
Repayment of debt
Net proceeds/(repayments) of short-term borrowings
Long-term debt issuance costs
Credit facility issuance costs
Net increase (decrease) in book overdrafts
Principal payments on capital lease obligations
Proceeds from sale leaseback transactions
Acquisition of treasury stock
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents—beginning of period
Cash and cash equivalents—end of period
Supplemental disclosures:
Cash paid during the period for:
Interest paid to third parties
Income taxes, net
Noncash investing activities:
Asset additions under capital leases
2015
Year Ended December 31,
2014
2013
$
(1.8)
$
(26.2)
$
126.2
43.7
0.7
3.2
2.3
2.5
(1.9)
7.7
12.3
(0.3)
(0.2)
88.0
178.1
9.1
(12.4)
(20.0)
(1.7)
(50.2)
260.9
259.1
(8.8)
0.8
(22.3)
10.4
0.6
1.3
(18.0)
—
(59.9)
(164.4)
—
(4.0)
(3.5)
(2.1)
1.7
—
(232.2)
8.9
(5.7)
3.2
60.0
63.2
86.5
3.2
11.5
$
$
$
45.6
—
(3.5)
0.7
—
(1.8)
—
—
11.2
0.1
(19.5)
(6.4)
2.8
(22.4)
10.3
3.2
(67.4)
(47.1)
(73.3)
(20.1)
(0.2)
(21.6)
7.3
0.6
—
(34.0)
112.4
(110.7)
63.8
—
—
36.0
(1.0)
—
—
100.5
(6.8)
(7.6)
(14.4)
74.4
60.0
100.3
1.6
5.1
$
$
$
46.6
—
(112.7)
(0.7 )
1.9
—
10.0
—
—
0.8
9.9
4.4
6.3
15.7
(3.8 )
0.8
(57.3)
(78.1)
48.1
—
2.1
(20.2)
4.6
—
—
(13.5)
—
—
(10.6)
(0.9 )
(3.7 )
(4.4 )
(0.4 )
—
(6.6 )
(26.6)
8.0
(4.8 )
3.2
71.2
74.4
103.3
1.2
1.5
$
$
$
49
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares)
At December 31,
2015
2014
Assets
Current assets:
Cash and cash equivalents
Restricted cash (Note 4)
Receivables less provision for allowances, claims and doubtful accounts of $5.2 in
2015 and $5.3 in 2014
Inventories (Note 5)
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net of accumulated depreciation (Note 6)
Deferred income taxes (Note 18)
Other intangible assets (Note 7)
Goodwill (Note 8)
Deferred charges and other assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued liabilities:
Salaries, wages and commissions
Interest on debt
Other accrued liabilities
Short-term debt (Note 10)
Current portion of deferred employee benefits
Total current liabilities
Long-term debt (Note 10)
Deferred employee benefits (Note 11)
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 12)
Redeemable noncontrolling interest (Note 15)
Equity
Ryerson Holding Corporation stockholders’ equity (deficit):
Preferred stock, $0.01 par value; 7,000,000 shares authorized and no shares issued
at 2015 and 2014
Common stock, $0.01 par value; 100,000,000 shares authorized and 32,312,200
shares issued at 2015; 100,000,000 shares authorized and 32,250,000 issued
at 2014
Capital in excess of par value
Accumulated deficit
Treasury stock at cost – Common stock of 212,500 shares in 2015 and 2014
Accumulated other comprehensive loss
Total Ryerson Holding Corporation stockholders’ equity (deficit)
Noncontrolling interest
Total equity (deficit)
Total liabilities and equity
See Notes to Consolidated Financial Statements
50
$
$
$
$
$
63.2
1.2
$
$
305.7
555.8
32.8
958.7
400.3
31.8
46.2
103.2
16.0
1,556.2
206.3
26.3
15.6
36.4
22.0
9.1
315.7
1,012.5
327.7
41.1
1,697.0
0.1
—
0.3
302.6
(130.9)
(6.6)
(307.0)
(141.6)
0.7
(140.9)
1,556.2
$
60.0
2.0
400.8
738.9
39.7
1,241.4
428.2
27.4
50.9
102.7
22.0
1,872.6
220.8
45.1
17.1
34.8
66.6
11.1
395.5
1,192.5
385.2
22.9
1,996.1
1.0
—
0.3
302.0
(130.4)
(6.6)
(291.4)
(126.1)
1.6
(124.5)
1,872.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Summary of Accounting and Financial Policies
Business Description and Basis of Presentation. Ryerson Holding Corporation (“Ryerson Holding”), a Delaware corporation, is
the parent company of Joseph T. Ryerson & Son, Inc. (“JT Ryerson”), a Delaware corporation. On December 17, 2014, Ryerson Inc.,
formerly a direct, wholly-owned subsidiary of Ryerson Holding, merged with and into JT Ryerson which was previously an indirect,
wholly-owned subsidiary of Ryerson Holding, with JT Ryerson as the surviving corporation. As a result of such merger, from and
after December 17, 2014, JT Ryerson has been a direct, wholly-owned subsidiary of Ryerson Holding. Affiliates of Platinum Equity,
LLC (“Platinum”) own approximately 21,037,500 shares of our common stock, which is approximately 66% of our issued and
outstanding common stock. Ryerson conducts materials distribution operations in the United States through JT Ryerson, in Canada
through its indirect wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”) and in Mexico
through its indirect wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson
Mexico”). In addition to our North American operations, we conduct materials distribution operations in China through Ryerson
China Limited (“Ryerson China”), a company in which we have a 100% ownership percentage, and in Brazil through Açofran Aços e
Metais Ltda (“Açofran”), a company in which we have a 50% direct ownership percentage. Unless the context indicates otherwise,
Ryerson Holding, JT Ryerson, Ryerson Canada, Ryerson China, Ryerson Mexico and Açofran together with their subsidiaries
(including Ryerson Inc. prior to its dissolution through merger), are collectively referred to herein as “Ryerson,” “we,” “us,” “our,” or
the “Company.”
On July 23, 2014, our Board of Directors approved a 4.25 for 1.00 stock split of the Company’s common stock effective
August 5, 2014. Per share and share amounts presented herein have been adjusted for all periods presented to give retroactive effect to
4.25 for 1.00 stock split.
On August 13, 2014, Ryerson Holding completed an initial public offering of 11 million shares of common stock at a price to
the public of $11.00 per share. Net proceeds from the offering totaled $112.4 million, after deducting the underwriting discount and
offering expenses, and were used to (i) redeem $99.5 million in aggregate principal amount of the 11 1
“2018 Notes”), (ii) pay Platinum Equity Advisors LLC (“Platinum Advisors”), and its affiliates $15.0 million of the $25.0 million
owed as consideration for terminating the advisory services agreement between JT Ryerson and Platinum Advisors, an affiliate of
Platinum (the remaining $10.0 million was paid in August 2015) and (iii) pay related transaction fees, expenses and debt redemption
premiums in connection with the offering, which were approximately $11.2 million. We borrowed an additional $23.3 million under
our then existing $1.35 billion revolving credit facility (the “Old Credit Facility”) as part of the funding of these transactions.
4% Senior Notes due 2018 (the
Principles of Consolidation. The Company consolidates entities in which it owns or controls more than 50% of the voting
shares. All significant intercompany balances and transactions have been eliminated in consolidation.
Business Segments. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280,
“Segment Reporting” (“ASC 280”), establishes standards for reporting information on operating segments in interim and annual
financial statements. Our Chief Executive Officer, together with our Board of Directors, serve as our Chief Operating Decision Maker
(“CODM”). Our CODM reviews our financial information for purposes of making operational decisions and assessing financial
performance. The CODM views our business globally as metals service centers. We have one operating and reportable segment, metal
service centers, in accordance with the criteria set forth in ASC 280.
Use of Estimates. The preparation of financial statements in conformity with Generally Accepted Accounting Principles
(“GAAP”) in the United States requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and related notes to the financial statements. Changes in such estimates may affect amounts reported
in future periods.
Reclassifications. Certain deferred tax balances have been reclassified to conform to the 2015 presentation in accordance with
Accounting Standards Update (“ASU”) 2015-17, “Income Taxes, (Topic 740): Balance Sheet Classification of Deferred Taxes.”
Equity Investments. Investments in affiliates in which the Company’s ownership is 20% to 50% are accounted for by the equity
method. Equity income is reported in “Other income and (expense), net” in the Consolidated Statements of Operations. Equity income
during the years ended December 31, 2015, 2014 and 2013 totaled $0.2 million, $0.3 million, and $0.3 million, respectively.
Revenue Recognition. Revenue is recognized in accordance with FASB ASC 605, “Revenue Recognition.” Revenue is
recognized upon delivery of product to customers. Revenue is recorded net of returns, allowances, customer discounts and incentives.
Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues)
basis.
52
Provision for allowances, claims and doubtful accounts. We perform ongoing credit evaluations of customers and set credit
limits based upon review of the customers’ current credit information and payment history. The Company monitors customer
payments and maintains a provision for estimated credit losses based on historical experience and specific customer collection issues
that the Company has identified. Estimation of such losses requires adjusting historical loss experience for current economic
conditions and judgments about the probable effects of economic conditions on certain customers. The Company cannot guarantee
that the rate of future credit losses will be similar to past experience. Provisions for allowances and claims are based upon historical
rates, expected trends and estimates of potential returns, allowances, customer discounts and incentives. The Company considers all
available information when assessing the adequacy of the provision for allowances, claims and doubtful accounts.
Shipping and Handling Fees and Costs. Shipping and handling fees billed to customers are classified in “Net Sales” in our
Consolidated Statement of Operations. Shipping and handling costs, primarily distribution costs, are classified in “Warehousing,
delivery, selling, general and administrative” expenses in our Consolidated Statement of Operations. These costs totaled $77.8 million,
$84.5 million and $84.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Benefits for Retired Employees. The Company recognizes the funded status of its defined benefit pension and other
postretirement plans in the Consolidated Balance Sheets, with changes in the funded status recognized through accumulated other
comprehensive income (loss), net of tax, in the year in which the changes occur. The estimated cost of the Company’s defined benefit
pension plan and its postretirement medical benefits are determined annually after considering information provided by consulting
actuaries. Key factors used in developing estimates of these liabilities include assumptions related to discount rates, rates of return on
investments, future compensation costs, healthcare cost trends, benefit payment patterns and other factors. The cost of these benefits
for retirees is accrued during their term of employment. Pensions are funded primarily in accordance with the requirements of the
Employee Retirement Income Security Act (“ERISA”) of 1974 and the Pension Protection Act of 2006 into a trust established for the
Ryerson Pension Plan. Costs for retired employee medical benefits are funded when claims are submitted. Certain salaried employees
are covered by a defined contribution plan, for which the cost is expensed in the period earned.
Cash Equivalents. Cash equivalents reflected in the financial statements are highly liquid, short-term investments with original
maturities of three months or less. Checks issued in excess of funds on deposit at the bank represent “book” overdrafts and are
reclassified to accounts payable. Amounts reclassified totaled $65.7 million and $69.1 million at December 31, 2015 and 2014,
respectively.
Inventory Valuation. Inventories are stated at the lower of cost or market value. We use the last-in, first-out (“LIFO”) method
for valuing our domestic inventories. We use the weighted-average cost and the specific cost methods for valuing our foreign
inventories.
Property, Plant and Equipment. Property, plant and equipment, including land use rights, are depreciated for financial reporting
purposes using the straight-line method over the estimated useful lives of the assets. The provision for depreciation in all periods
presented is based on the following estimated useful lives of the assets:
Land improvements
Buildings
Machinery and equipment
Furniture and fixtures
Transportation equipment
Land use rights
20 years
45 years
10-15 years
10 years
3-6 years
50 years
Expenditures for normal repairs and maintenance are charged against income in the period incurred.
Goodwill. In accordance with FASB ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”), goodwill is reviewed at least
annually for impairment or whenever indicators of potential impairment exist. We test for impairment of goodwill by assessing
various qualitative factors with respect to developments in our business and the overall economy and calculating the fair value of a
reporting unit using the discounted cash flow method, as necessary. If we determine that it is more likely than not that the fair value of
a reporting unit is less than the carrying value based on our qualitative assessment, we will proceed to the two-step goodwill
impairment test. In step one, we compare the fair value of the reporting unit in which goodwill resides to its carrying value. If the
carrying amount exceeds the fair value, the second step of the goodwill impairment test is performed to measure the amount of the
impairment loss, if any. In the second step, the implied fair value of the goodwill is estimated as the fair value of the reporting unit
used in the first step less the fair value of all other net tangible and intangible assets of the reporting unit. If the carrying amount of
goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying
53
amount of the goodwill. The fair value of the reporting units are estimated using a combination of an income approach and a market
approach as this combination is deemed to be the most indicative of fair value in an orderly transaction between market participants.
Long-lived Assets and Other Intangible Assets. Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company
estimates the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected
future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment is
recognized. Any related impairment loss is calculated based upon comparison of the fair value to the carrying value of the asset.
Separate intangible assets that have finite useful lives are amortized over their useful lives. An impaired intangible asset would be
written down to fair value, using the discounted cash flow method.
Deferred Financing Costs. Deferred financing costs associated with the issuance of debt are being amortized using the effective
interest method over the life of the debt.
Income Taxes. Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for
financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect
when the temporary differences reverse. A valuation allowance is established to offset any deferred tax assets if, based upon the
available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The determination of the
amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and
amount of the reversal of taxable temporary differences, (2) expected future taxable income, (3) the impact of tax planning strategies
and (4) the ability to carry back tax losses to offset prior taxable income. In assessing the need for a valuation allowance, the Company
considers all available positive and negative evidence, including past operating results, projections of future taxable income and the
feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions
regarding volume, pricing, costs and industry cyclicality.
Significant judgment is required in determining income tax provisions and in evaluating tax positions. In the normal course of
business, the Company and its subsidiaries are examined by various federal, state and foreign tax authorities. The Company records
the impact of a tax position, if that position is more likely than not to be sustained on audit, based on the technical merits of the
position. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or
prior years in determining the adequacy of our provision for income taxes. The Company continually assesses the likelihood and
amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which
the facts that give rise to a revision become known.
The Company recognizes the benefit of tax positions when a benefit is more likely than not (i.e., greater than 50% likely) to be
sustained on its technical merits. Recognized tax benefits are measured at the largest amount that is more likely than not to be
sustained, based on cumulative probability, in final settlement of the position. The Company recognizes interest and penalties related
to unrecognized tax benefits as a component of income tax expense.
Earnings Per Share Data. Basic earnings (loss) per share (“EPS”) is computed by dividing net earnings (loss) available to
common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share
is computed by giving effect to all dilutive potential common shares that were outstanding during the period. Basic earnings (loss) per
share excludes the dilutive effect of common stock equivalents such as stock options and warrants, while diluted earnings (loss) per
share, assuming dilution, includes such dilutive effects.
Foreign Currency. The Company translates assets and liabilities of its foreign subsidiaries, where the functional currency is the
local currency, into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are
translated at the average monthly exchange rates prevailing during the year.
For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange
rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a
foreign exchange transaction gain or loss results which is included in determining net income (loss) for the year. The Company
recognized $3.3 million, $5.3 million, and $3.7 million of exchange gains for the years ended December 31, 2015, 2014 and 2013,
respectively. These amounts are primarily classified in “Other income and (expense), net” in our Consolidated Statements of
Operations.
54
Recent Accounting Pronouncements
In April 2014, the FASB issued ASU 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity.” This update amends the criteria for reporting discontinued operations to, among other things, raise the
threshold for disposals to qualify as discontinued operations. Under the revised standard, a discontinued operation must represent a
strategic shift that has or will have a major effect on an entity’s operations and financial results. The revised standard will also allow
an entity to have certain continuing cash flows or involvement with the component after the disposal. This update is effective for
interim and annual reporting periods, beginning after December 15, 2014, with early adoption permitted. We adopted this guidance for
our fiscal year beginning January 1, 2015. The adoption did not have a material impact on our financial statements.
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers”, which creates ASC 606 “Revenue
from Contracts with Customers” and supersedes the revenue recognition requirements in ASC 605 “Revenue Recognition”. The
update outlines a comprehensive model for all entities to use in accounting for revenue arising from contracts with customers as well
as required disclosures. Entities have the option of using either a full retrospective or modified approach to adopt the new guidance.
This update is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. We will adopt
this guidance for our fiscal year beginning January 1, 2018. We are still assessing the impact of adoption on our consolidated financial
statements.
In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements – Going Concern (Subtopic 205-40),
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The guidance in ASU 2014-15 sets forth
management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as
well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial
statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s
ability to continue as a going concern one year from the date the financial statements are issued or are available to be issued. This
evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the
financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address the
substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-
15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early adoption is
permitted. We will adopt this guidance for our fiscal year ending December 31, 2016. The adoption of this guidance is not expected to
have an impact on our financial statements.
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs.” The update requires debt issuance costs related to a recognized debt liability to be presented in
the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset.
Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective
application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15,
2015. Early adoption is permitted for financial statements that have not been previously issued. If the Company adopted this guidance
as of December 31, 2015, the impact of the ASU would result in the reclassification of approximately $11 million of capitalized debt
issuance costs from non-current deferred charges and other assets to long-term debt. We will adopt this guidance for our fiscal year
beginning January 1, 2016.
In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this update provide guidance to
customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a
software license, the update specifies that the customer should account for the software license element of the arrangement consistent
with the acquisition of other software licenses. The update further specifies that the customer should account for a cloud computing
arrangement as a service contract if the arrangement does not include a software license. ASU 2015-05 is effective for annual periods,
including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. We will adopt
this guidance for our fiscal year beginning January 1, 2016. The adoption of this guidance is not expected to have an impact on our
financial statements.
55
In May 2015, the FASB issued ASU 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value
per Share (or Its Equivalent).” The update removes the requirement within ASC 820 “Fair Value Measurement” to categorize
investments for which the fair value is measured using the net asset value per share within the fair value hierarchy. Disclosure of the
fair value of the investments measured using the net asset value per share is still required in order to permit reconciliation of the fair
value of investments included in the fair value hierarchy to the line items presented in the financial statements. ASU 2015-07 is
effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The ASU
requires retrospective application and early adoption is permitted. We adopted this guidance for our annual period ending December
31, 2015. The guidance impacted our disclosures by removing the categorization of our pension investments valued using the net
asset value per share from the fair value hierarchy.
In September 2015, the FASB issued ASU 2015-16, “Business Combinations: Simplifying the Accounting for Measurement-
Period Adjustments.” The amendment eliminates the requirement that an acquirer in a business combination account for
measurement-period adjustments retrospectively. Instead the acquirer will recognize a measurement-period adjustment during the
period in which it determines the amount of the adjustment. The update is effective for fiscal years beginning after December 15,
2015. Early adoption is permitted. We will adopt this guidance for our fiscal year beginning January 1, 2016. The adoption of this
guidance is not expected to have a material impact on our financial statements on prior acquisitions.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred
Taxes.” Current generally accepted accounting principles requires an entity to separate deferred income tax liabilities and assets into
current and noncurrent amounts in a classified statement of financial position. The amendment requires that deferred tax liabilities
and assets be classified as noncurrent in a classified statement of financial position. The update is effective for annual periods,
including interim periods within those annual periods beginning after December 15, 2016, and interim periods within those annual
periods. The amendment may be early adopted and may be applied either prospectively to all deferred tax liabilities and assets or
retrospectively to all periods presented. We adopted this guidance on a retrospective basis to the annual period ended December 31,
2014. This adoption resulted in the reclassification of $106.7 million of current deferred tax liabilities to noncurrent deferred tax
assets.
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall: Recognition and Measurement of Financial
Assets and Financial Liabilities." The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments
that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in net income.
Under current guidance, changes in fair value for investments of this nature are recognized in accumulated other comprehensive
income as a component of stockholders’ equity. Additionally, ASU 2016-01 simplifies the impairment assessment of equity
investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial
instruments; and modifies various presentation disclosure requirements for financial instruments. The update is effective for interim
and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We will adopt this guidance for our
fiscal year beginning January 1, 2018. We are still assessing the impact of adoption on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases” codified in ASC 842, “Leases”. The guidance requires that lessees
will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of
more than 12 months. The amendment also will require disclosures designed to give financial statement users information on the
amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative information.
The update is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We
will adopt this guidance for our fiscal year beginning January 1, 2019. We are still assessing the impact of adoption on our
consolidated financial statements.
Note 2: Revision of Prior Period Consolidated Financial Statements
The Company identified an error related to the depreciation expense of property, plant and equipment associated with the
acquisition of one of our foreign subsidiaries. The error resulted in the overstatement of depreciation expense and the understatement
of net income. In addition, our property, plant and equipment, net of accumulated depreciation was understated and our accumulated
deficit balance in equity was overstated.
The Company assessed the materiality of the accumulated depreciation error on its consolidated financial statements for the year
ended December 31, 2015 in accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”) and
concluded that the impact of such adjustments would have been material to its consolidated financial statements had they been
corrected in their entirety in 2015. The Company also concluded that, had the error been corrected within its consolidated financial
statements for the years ended December 31, 2014 and 2013, the impact of the adjustment would not have been material to those
periods.
56
Therefore, the cumulative error as of January 1, 2013 has been recorded as an opening adjustment of $2.4 million on the
Consolidated Statements of Stockholders’ Equity.
The impact of the error on the Consolidated Statements of Stockholders’ Equity at December 31, 2012, 2013 and 2014 is as
follows:
Changes to accumulated deficit
Balance at December 31, 2012
Balance at December 31, 2013
Balance at December 31, 2014
Previously
Reported
Adjustment
(In millions)
As Revised
$
$
(234.4)
(107.1)
(132.8)
$
2.4
2.4
2.4
(232.0)
(104.7)
(130.4)
Additionally, the impact of the error on the December 31, 2014 Consolidated Balance Sheet is as follows:
Property, plant and equipment, net of accumulated
depreciation
Total assets
Accumulated deficit
Total equity (deficit)
Total liabilities and equity
Previously
Reported
December 31, 2014
Adjustment
(In millions)
As Revised
$
425.8
$
2.4
$
428.2
1,870.2
(132.8)
(126.9)
1,870.2
2.4
2.4
2.4
2.4
1,872.6
(130.4)
(124.5)
1,872.6
The Consolidated Statements of Operations for the years ended December 31, 2014 and 2013 have not been adjusted as the
impact of the correction of the error on net income (loss) is not material to those consolidated financial statements and would not have
changed their trend. Thus, the impact of those years was corrected in the Consolidated Statement of Operations for the year ended
December 31, 2015. In considering whether the Company should amend its previously filed Form 10-K for 2013 and 2014, the
Company’s evaluation of SAB 99 considered that the aggregate impact of the accumulated depreciation adjustment was not material
to the Company’s income (loss) before income taxes and net income (loss), had no impact on operating cash flows, and had an
insignificant impact on the Consolidated Balance Sheets. In aggregate, the Company does not believe it is probable that the views of a
reasonable investor would have changed by the correction of this item in the 2014 or 2013 consolidated financial statements in an
amended Form 10-K. Accordingly, the correction of the error was made to the December 31, 2014 Consolidated Balance Sheet and
the Consolidated Statement of Stockholders’ Equity as described above using the SAB 108 approach.
Note 3: Acquisitions
Southern Tool Steel
On August 3, 2015, the Company acquired all of the issued and outstanding capital stock of Southern Tool Steel, Inc.
(“Southern Tool”). Southern Tool is a distributor of long products, predominantly processed bars and tool steel, and is based in
Chattanooga, TN. The acquisition is not material to our consolidated financial statements.
Fay Industries
On December 31, 2014, the Company acquired all of the issued and outstanding capital stock of Fay Industries, Inc. and the
membership interests of Fay Group, Ltd. (collectively, “Fay”). Fay is a distributor of long products, predominantly processed bars, and
is based in Strongsville, Ohio. The acquisition is not material to our consolidated financial statements.
Note 4: Restricted Cash
We have cash restricted for purposes of covering letters of credit that can be presented for potential insurance claims, which
totaled $1.1 million and $1.4 million as of December 31, 2015 and 2014, respectively. As part of one of our note indentures, proceeds
from the sale of property, plant, and equipment are deposited in a restricted cash account. Cash can be withdrawn from this restricted
account upon meeting certain requirements. The balance in this account was zero and $0.6 million at December 31, 2015 and 2014,
57
respectively. Certain of our derivative agreements require cash deposits until the derivative is settled. The amount of cash held related
to derivative agreements was $0.1 million and zero at December 31, 2015 and 2014, respectively.
Note 5: Inventories
Inventories, at stated LIFO value, were classified at December 31, 2015 and 2014 as follows:
In process and finished products
At December 31,
2015
2014
$
(In millions)
555.8
$
738.9
If current cost had been used to value inventories, such inventories would have been $122 million lower and $25 million lower
than reported at December 31, 2015 and 2014, respectively. Approximately 91% and 90% of inventories are accounted for under the
LIFO method at December 31, 2015 and 2014, respectively. Non-LIFO inventories consist primarily of inventory at our foreign
facilities using the weighted-average cost and the specific cost methods. Substantially all of our inventories consist of finished
products.
Inventories are stated at the lower of cost or market value. We record amounts required, if any, to reduce the carrying value of
inventory to its lower of cost or market as a charge to cost of materials sold. Due to the decline in metals prices we recorded a lower of
cost or market charge of $37.9 million to cost of materials sold to reflect this lower value at December 31, 2015. There was no lower
of cost or market charge recorded in 2014.
The Company has consignment inventory at certain customer locations, which totaled $9.9 million and $10.0 million at
December 31, 2015 and 2014, respectively.
Note 6: Property, Plant and Equipment
Property, plant and equipment consisted of the following at December 31, 2015 and 2014:
At December 31,
2015
2014
Land and land improvements
Buildings and leasehold improvements
Machinery, equipment and other
Construction in progress
Total
Less: Accumulated depreciation
Net property, plant and equipment
$
$
$
(In millions)
90.8
190.8
367.5
5.4
654.5
(254.2)
400.3
$
98.2
195.9
356.0
4.4
654.5
(226.3)
428.2
The Company recorded $7.5 million, zero, and $3.2 million of impairment charges in 2015, 2014 and 2013, respectively, related
to fixed assets. Of the $7.5 million of impairment charges recorded in 2015, $4.6 million related to certain assets that we determined
did not have a recoverable carrying value based on projected undiscounted cash flows and $2.9 million related to certain assets held
for sale in order to recognize the assets at their fair value less cost to sell in accordance with FASB ASC 360-10-35-43, “Property,
Plant and Equipment – Other Presentation Matters.” The $3.2 million of impairment charges recorded in 2013 related to certain
assets held for sale in order to recognize the assets at their fair value less cost to sell. The fair values of each property were determined
based on appraisals obtained from a third party, pending sales contracts or recent listing agreements with third party brokerage firms.
The Company recognized gains on the sale of assets classified as held for sale of $1.9 million and $1.8 million for the years ended
December 31, 2015 and 2014, respectively. The Company had $4.2 million and $2.5 million of assets held for sale, classified within
“Prepaid expenses and other current assets” as of December 31, 2015 and 2014, respectively.
58
Note 7: Intangible Assets
The following summarizes the components of intangible assets at December 31, 2015 and 2014:
Amortized intangible assets
Customer relationships
Developed technology / product know-how
Non-compete agreements
Trademarks
Licenses
Total intangible assets
At December 31, 2015
At December 31, 2014
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
(In millions)
$
$
51.6
1.9
1.6
21.9
0.5
77.5
$
$
(21.6) $
(1.9)
(1.3)
(6.2)
(0.3)
(31.3) $
30.0
—
0.3
15.7
0.2
46.2
$
$
50.7
1.9
1.5
21.3
0.5
75.9
$
$
(17.4) $
(1.7)
(1.1)
(4.6)
(0.2)
(25.0) $
33.3
0.2
0.4
16.7
0.3
50.9
Amortization expense related to intangible assets for the years ended December 31, 2015, 2014 and 2013 was $6.3 million, $5.8
million and $6.1 million, respectively. Included within the $6.3 million of amortization expense in 2015 is $0.2 million of impairment
charges the Company recorded in accordance with FASB ASC 360-10, “Impairment and Disposal of Long-Lived Assets,” as the
carrying amount of certain intangible assets was not recoverable and the carrying amount exceeded fair value.
Intangible assets are amortized over a period between 2 and 20 years (weighted average of 13 years). Estimated amortization
expense related to intangible assets at December 31, 2015, for each of the years in the five year period ending December 31, 2020 and
thereafter is as follows:
For the year ended December 31, 2016
For the year ended December 31, 2017
For the year ended December 31, 2018
For the year ended December 31, 2019
For the year ended December 31, 2020
For the years ended thereafter
Estimated
Amortization Expense
(In millions)
$
5.4
5.1
4.9
4.7
4.4
21.7
Note 8: Goodwill
The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014:
Balance at January 1, 2014
Acquisitions
Balance at December 31, 2014
Acquisitions
Changes in purchase price allocation
Balance at December 31, 2015
Cost
Accumulated
Impairment
(In millions)
Carrying
Amount
$
$
$
99.9
11.1
111.0
1.8
(1.3)
111.5
$
$
$
(8.3) $
— $
(8.3) $
—
—
(8.3) $
91.6
11.1
102.7
1.8
(1.3)
103.2
In 2015, the Company recognized $1.8 million of goodwill related to the Southern Tool acquisition, which will be deductible for
income tax purposes. In 2015, the Company made $1.3 million of adjustments related to the Fay acquisition.
In 2014, the Company recognized $11.1 million of goodwill related to the Fay acquisition, which is not deductible for income
tax purposes.
59
Pursuant to ASC 350, “Intangibles – Goodwill and Other,” we review the recoverability of goodwill annually as of October 1
or whenever significant events or changes occur which might impair the recovery of recorded amounts. Based on our October 1, 2015
annual goodwill impairment test, we determined there was no goodwill impairment in 2015.
Note 9: Restructuring and Other Charges
The following summarizes restructuring accrual activity for the years ended December 31, 2015, 2014 and 2013:
Employee
Related
Costs
Tenancy
and Other
Costs
(In millions)
Total
Restructuring
Costs
Balance at January 1, 2013
Restructuring charges
Reduction to reserve
Cash payments
Balance at December 31, 2013
Reduction to reserve
Cash payments
Changes due to foreign currency translations
Balance at December 31, 2014
Restructuring charges
Cash payments
Adjustments for pension and other post-retirement termination non-cash
charges
Changes due to foreign currency translations
Balance at December 31, 2015
$
$
$
$
2015
$
$
1.0
—
(0.2)
(0.7)
0.1
—
(0.1)
—
— $
2.2
(0.8)
$
— $
2.1
—
(0.5)
1.6
(0.1)
(0.7)
(0.1)
0.7
0.3
(0.4)
$
(0.2)
—
1.2
$
—
(0.1)
0.5
$
1.0
2.1
(0.2)
(1.2)
1.7
(0.1)
(0.8)
(0.1)
0.7
2.5
(1.2)
(0.2)
(0.1)
1.7
In 2015, the Company recorded a charge of $2.2 million for employee costs related to expense reduction actions taken in the
fourth quarter of 2015. The charge consists primarily of severance costs for 140 employees in addition to $0.2 million of non-cash
pensions and other post-retirement benefit costs. During 2015, the Company paid $0.8 million in costs related to this expense
reduction initiative. The remaining employee-related costs of $1.2 million are expected to be paid in 2016.
In 2015, the Company also recorded a $0.3 million charge to increase the reserve for tenancy-related costs for a facility
closed in 2013. During 2015, the Company paid $0.4 million in tenancy costs related to this facility. The remaining $0.5 million of
tenancy-related costs are expected to be paid through 2019.
2014
In 2014, the Company paid $0.7 million in tenancy costs related to a facility closed in 2013. In 2014, the Company also
recorded a $0.1 million reduction to the reserve for tenancy-related costs and credited warehousing, delivery, selling, general and
administrative expense in the Consolidated Statements of Operations. During 2014, the Company also paid the remaining $0.1 million
of employee costs related to the closure of this facility.
2013
In 2013, the Company recorded a charge of $2.1 million related to a facility closure. The charge consists of tenancy-related
costs, primarily future lease payments. In 2013, the Company also recorded a $0.2 million reduction to the reserve for employee-
related costs and credited restructuring and other charges in the Consolidated Statements of Operations. During 2013, the Company
paid $0.7 million for employee-related costs and $0.5 million for tenancy-related costs for this facility closure.
60
Note 10: Debt
Long-term debt consisted of the following at December 31, 2015 and 2014:
Ryerson Credit Facility
9% Senior Secured Notes due 2017
11.25% Senior Notes due 2018
Foreign debt
Total debt
Less:
Short-term credit facility borrowings
Short-term foreign debt
Total long-term debt
At December 31,
2015
2014
(In millions)
$
$
272.2
569.9
170.4
22.0
1,034.5
—
22.0
1,012.5
$
$
435.0
600.0
200.5
23.6
1,259.1
43.0
23.6
1,192.5
The principal payments required to be made on debt during the next five fiscal years are shown below:
For the year ended December 31, 2016
For the year ended December 31, 2017
For the year ended December 31, 2018
For the year ended December 31, 2019
For the year ended December 31, 2020
For the years ended thereafter
$
Amount
(In millions)
22.0
842.1
170.4
—
—
—
Ryerson Credit Facility
On July 24, 2015, Ryerson terminated its $1.35 billion revolving credit facility agreement and entered into a new $1.0 billion
revolving credit agreement (the “Ryerson Credit Facility”). Borrowings under the Ryerson Credit Facility were used to repay
indebtedness under the Old Credit Facility. The Ryerson Credit Facility has a maturity date of the earlier of (a) July 24, 2020 or (b) 60
days prior to the stated maturity of any outstanding indebtedness with a principal amount of $50,000,000 or more. As a result of the
Ryerson Credit Facility, the Company recorded a $2.9 million charge in the third quarter of 2015 to write-off a portion of the issuance
costs associated with the Old Credit Facility.
At December 31, 2015, Ryerson had $272.2 million of outstanding borrowings, $17 million of letters of credit issued and $185
million available under the Ryerson Credit Facility compared to $435.0 million of outstanding borrowings, $20 million of letters of
credit issued and $245 million available at December 31, 2014 under the Old Credit Facility. Total credit availability is limited by the
amount of eligible accounts receivable, inventory, and qualified cash pledged as collateral under the agreement insofar as Ryerson is
subject to a borrowing base comprised of the aggregate of these three amounts, less applicable reserves. Eligible accounts receivable,
at any date of determination, is comprised of the aggregate value of all accounts directly created by a borrower (and in the case of
Canadian accounts, a Canadian guarantor) in the ordinary course of business arising out of the sale of goods or the rendering of
services, each of which has been invoiced, with such receivables adjusted to exclude various ineligible accounts, including, among
other things, those to which a borrower (or guarantor, as applicable) does not have sole and absolute title and accounts arising out of a
sale to an employee, officer, director, or affiliate of a borrower (or guarantor, as applicable). Eligible inventory, at any date of
determination, is comprised of the aggregate value of all inventory owned by a borrower (and in the case of Canadian accounts, a
Canadian guarantor), with such inventory adjusted to exclude various ineligible inventory, including, among other things, (i) any
inventory that is classified as “supplies” or is unsaleable in the ordinary course of business, (ii) 50% of the value of any inventory that
(A) has not been sold or processed within a 180 day period and (B) which is calculated to have more than 365 days of supply based
upon the immediately preceding 6 months consumption, and (iii) 50% of the value of inventory classified as partial inventory pieces
on the basis that the inventory has been cut below sales lengths customary for such inventory. Qualified cash consists of cash in an
eligible deposit account that is subject to customary restrictions and liens in favor of the lenders. The weighted average interest rate on
the borrowings was 2.1 percent under the Ryerson Credit Facility at December 31, 2015 and 2.0 percent under the Old Credit Facility
at December 31, 2014.
61
The total $1.0 billion revolving credit facility has an allocation of $940 million to the Company’s subsidiaries in the United
States and an allocation of $60 million to Ryerson Holding’s Canadian subsidiary that is a borrower. Amounts outstanding under the
Ryerson Credit Facility bear interest at (i) a rate determined by reference to (A) the base rate (the highest of the Federal Funds Rate
plus 0.50%, Bank of America, N.A.’s prime rate and the one-month LIBOR rate plus 1.00%) or (B) a LIBOR rate or, (ii) for Ryerson
Holding’s Canadian subsidiary that is a borrower, (A) a rate determined by reference to the Canadian base rate (the greatest of the
Federal Funds Rate plus 0.50%, Bank of America-Canada Branch’s “base rate” for pricing loans in U.S. Dollars made at its “base
rate” and the 30 day LIBOR rate plus 1.00%), (B) the prime rate (the greatest of the Bank of Canada overnight rate plus 0.50%, Bank
of America-Canada Branch’s “prime rate” for commercial loans made by it in Canada in Canadian Dollars and the one-month
Canadian bankers’ acceptance rate plus 1.00%) or (C) the bankers’ acceptance rate. The spread over the base rate and prime rate is
between 0.25% and 0.75% and the spread over the LIBOR and for the bankers’ acceptances is between 1.25% and 1.75%, depending
on the amount available to be borrowed under the Ryerson Credit Facility. Overdue amounts and all amounts owed during the
existence of a default bear interest at 2% above the rate otherwise applicable thereto. Ryerson also pays commitment fees on amounts
not borrowed at a rate of 0.25%.
Borrowings under the Ryerson Credit Facility are secured by first-priority liens on all of the inventory, accounts receivables,
lockbox accounts and related assets of the borrowers and the guarantors.
The Ryerson Credit Facility also contains covenants that, among other things, restrict Ryerson Holding and its restricted
subsidiaries with respect to the incurrence of debt, the creation of liens, transactions with affiliates, mergers and consolidations, sales
of assets and acquisitions. The Ryerson Credit Facility also requires that, if availability under the Ryerson Credit Facility declines to a
certain level, Ryerson maintain a minimum fixed charge coverage ratio as of the end of each fiscal quarter, and includes defaults upon
(among other things) the occurrence of a change of control of Ryerson and a cross-default to other financing arrangements.
The Ryerson Credit Facility contains events of default with respect to, among other things, default in the payment of principal
when due or the payment of interest, fees and other amounts due thereunder after a specified grace period, material misrepresentations,
failure to perform certain specified covenants, certain bankruptcy events, the invalidity of certain security agreements or guarantees,
material judgments and the occurrence of a change of control of Ryerson. If such an event of default occurs, the lenders under the
Ryerson Credit Facility will be entitled to various remedies, including acceleration of amounts outstanding under the Ryerson Credit
Facility and all other actions permitted to be taken by secured creditors.
The lenders under the Ryerson Credit Facility have the ability to reject a borrowing request if any event, circumstance or
development has occurred that has had or could reasonably be expected to have a material adverse effect on the Company. If Ryerson
Holding, JT Ryerson, any of the other borrowers or any restricted subsidiaries of JT Ryerson becomes insolvent or commences
bankruptcy proceedings, all amounts borrowed under the Ryerson Credit Facility will become immediately due and payable.
Proceeds from borrowings under the Ryerson Credit Facility and repayments of borrowings thereunder that are reflected in the
Condensed Consolidated Statements of Cash Flows represent borrowings under the Company’s revolving credit agreement with
original maturities greater than three months. Net proceeds (repayments) under the Ryerson Credit Facility represent borrowings under
the Ryerson Credit Facility with original maturities less than three months.
2017 and 2018 Notes
On October 10, 2012, JT Ryerson issued $600 million in aggregate principal amount of the 2017 Notes (the “2017 Notes”) and
$300 million in aggregate principal amount of the 2018 Notes (together with the 2017 Notes, the “2017 and 2018 Notes”). The 2017
Notes bear interest at a rate of 9% per annum. The 2018 Notes bear interest at a rate of 11.25% per annum. The 2017 Notes are fully
and unconditionally guaranteed on a senior secured basis and the 2018 Notes are fully and unconditionally guaranteed on a senior
unsecured basis by all of our existing and future domestic subsidiaries that are co-borrowers or that have guarantee obligations under
the Ryerson Credit Facility.
The 2017 Notes and related guarantees are secured by a first-priority lien on substantially all of our and our guarantors’ present
and future assets located in the United States (other than receivables, inventory, related general intangibles, certain other assets and
proceeds thereof), subject to certain exceptions and customary permitted liens. The 2017 Notes and related guarantees are secured on a
second-priority basis by a lien on the assets that secure our obligations under the Ryerson Credit Facility. The 2018 Notes are not
secured. The 2017 and 2018 Notes contain customary covenants that, among other things, limit, subject to certain exceptions, our
ability, and the ability of our restricted subsidiaries, to incur additional indebtedness, pay dividends on our capital stock or repurchase
our capital stock, make investments, sell assets, engage in acquisitions, mergers or consolidations or create liens or use assets as
security in other transactions. Subject to certain exceptions, JT Ryerson may only pay dividends to Ryerson Holding to the extent of
50% of future net income, once prior losses are offset.
62
The 2017 Notes became redeemable by the Company, in whole or in part on April 15, 2015 (the “2017 Redemption Date”) and
the 2018 Notes became redeemable, in whole or in part, on October 15, 2015 (the “2018 Redemption Date”), in each case at specified
redemption prices. On August 13, 2014, Ryerson Holding completed an initial public offering of 11 million shares of common stock at
a price to the public of $11.00 per share. Net proceeds from the offering were used to redeem $99.5 million in aggregate principal
amount of the 2018 Notes and pay redemption premiums of $11.2 million, which were recorded within other income and (expense),
net. If a change of control occurs, JT Ryerson must offer to purchase the 2017 and 2018 Notes at 101% of their principal amount, plus
accrued and unpaid interest.
As of December 31, 2015, $569.9 million and $170.4 million of the original outstanding principal amount of the 2017 and 2018
Notes remain outstanding, respectively. The Company has repurchased and in the future may repurchase 2017 and 2018 Notes in the
open market. During the year 2015, a principal amount of $30.1 million of the 2017 Notes were repurchased for $29.4 million and
retired, resulting in the recognition of a $0.7 million gain within other income and (expense), net on the Consolidated Statements of
Operations. During the year 2015, a principal amount of $30.1 million of the 2018 Notes were repurchased for $30.5 million and
retired, resulting in the recognition of a $0.4 million loss within other income and (expense), net on the Consolidated Statements of
Operations.
Foreign Debt
At December 31, 2015, Ryerson China’s total foreign borrowings were $21.8 million, which were owed to banks in Asia at a
weighted average interest rate of 4.3% per annum and secured by inventory and property, plant and equipment. At December 31,
2014, Ryerson China’s total foreign borrowings were $23.6 million, which were owed to banks in Asia at a weighted average interest
rate of 4.4% per annum and secured by inventory and property, plant and equipment. Açofran’s total foreign borrowings were $0.2
million and zero at December 31, 2015 and December 31, 2014, respectively.
Availability under the foreign credit lines was $23 million and $12 million at December 31, 2015 and December 31, 2014,
respectively. Letters of credit issued by our foreign subsidiaries totaled $2 million at December 31, 2015 and 2014.
Note 11: Employee Benefits
The Company accounts for its pension and postretirement plans in accordance with FASB ASC 715, “Compensation –
Retirement Benefits” (“ASC 715”). In addition to requirements for an employer to recognize in its Consolidated Balance Sheet an
asset for a plan’s overfunded status or a liability for a plan’s underfunded status and to recognize changes in the funded status of a
defined benefit postretirement plan in the year in which the changes occur, ASC 715 requires an employer to measure a plan’s assets
and its obligations that determine its funded status as of the end of the employer’s fiscal year.
Prior to January 1, 1998, the Company’s non-contributory defined benefit pension plan covered certain employees, retirees and
their beneficiaries. Benefits provided to participants of the plan were based on pay and years of service for salaried employees and
years of service and a fixed rate or a rate determined by job grade for all wage employees, including employees under collective
bargaining agreements.
Effective January 1, 1998, the Company froze the benefits accrued under its defined benefit pension plan for certain salaried
employees and instituted a defined contribution plan. Effective March 31, 2000, benefits for certain salaried employees of J. M. Tull
Metals Company and AFCO Metals, subsidiaries that were merged into JT Ryerson, were similarly frozen, with the employees
becoming participants in the Company’s defined contribution plan. Salaried employees who vested in their benefits accrued under the
defined benefit plan at December 31, 1997 and March 31, 2000, are entitled to those benefits upon retirement. For the years ended
December 31, 2015, 2014 and 2013, expense recognized for its defined contribution plans was $5.9 million, $6.8 million and $6.9
million, respectively.
In September 2014, the Company amended the plan design of one of its post-retirement medical plans for a significant number
of its U.S. retirees, effectively moving a number of participants from a company-sponsored group plan to a defined contribution plan.
We completed a remeasurement of the plan as of the announcement date as a result of the plan amendment. The effect of the plan
amendment was a reduction of $5.1 million in the accumulated postretirement benefit obligation.
In the fourth quarter of 2015, we changed the method we use to estimate the service and interest components of net periodic
benefit cost for the pension and other postretirement benefits starting in 2016. This change compared to the previous method will
result in a decrease of $8.4 million in the service and interest components for pension cost in 2016. Historically, we estimated these
service and interest cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure
the benefit obligation at the beginning of the period. We have elected to utilize a full yield curve approach in the estimation of these
63
components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant
projected cash flows. We have made this change to provide a more precise measurement of service and interest costs by improving the
correlation between projected benefit cash flows to the corresponding spot yield curve rates. This change does not affect the
measurement of our total benefit obligations. We have accounted for this change as a change in accounting estimate that is inseparable
from a change in accounting principle and accordingly have accounted for it prospectively.
The Company has other deferred employee benefit plans, including supplemental pension plans, the liability for which totaled
$17.1 million and $18.5 million at December 31, 2015 and 2014, respectively.
Summary of Assumptions and Activity
The tables included below provide reconciliations of benefit obligations and fair value of plan assets of the Company plans as
well as the funded status and components of net periodic benefit costs for each period related to each plan. The Company uses a
December 31 measurement date to determine the pension and other postretirement benefit information. The Company had an
additional measurement date of September 9, 2014 for our U.S. other postretirement benefit due to the plan amendment discussed
above. The expected rate of return on plan assets is determined based on the market-related value of the assets, recognizing any gains
or losses over a four year period. The method we have chosen for amortizing actuarial gains and losses is to recognize amounts in
excess of a 10% corridor (10% of the greater of the projected benefit obligation or plan assets) and are amortized over the average
expected remaining lifetime of the participants in the pension plan and over the average expected remaining service period for the
other postretirement benefits.
The assumptions used to determine benefit obligations at the end of the periods and net periodic benefit costs for the Pension
Benefits for U.S. plans were as follows:
Discount rate for calculating obligations
Discount rate for calculating net periodic benefit cost
Expected rate of return on plan assets
Rate of compensation increase – benefit obligations
Rate of compensation increase – net periodic benefit cost
The expected rate of return on U.S. plan assets is 7.10% for 2016.
2015
Year Ended December 31,
2014
2013
4.41%
4.05
7.40
2.80
2.80
4.05%
4.80
8.00
2.80
2.80
4.80%
4.00
8.20
2.80
3.00
The assumptions used to determine benefit obligations at the end of the periods and net periodic benefit costs for the Other
Postretirement Benefits, primarily health care, for U.S. plans were as follows:
Discount rate for calculating obligations
Discount rate for calculating net periodic benefit cost
Rate of compensation increase – benefit obligations
Rate of compensation increase – net periodic benefit cost
4.21%
3.80
2.80
2.80
3.80%
4.00
2.80
2.80
N/A
4.35%
N/A
2.80
4.35%
3.60
2.80
3.00
Year Ended
December 31,
2015
September 10
to December 31,
2014
January 1 to
September 9,
2014
Year Ended
December 31,
2013
The assumptions used to determine benefit obligations at the end of the periods and net periodic benefit costs for the Pension
Benefits for Canadian plans were as follows:
Discount rate for calculating obligations
Discount rate for calculating net periodic benefit cost
Expected rate of return on plan assets
Rate of compensation increase
Year Ended December 31,
2015
2014
2013
Salaried
3.70%
3.80
6.00
3.25
Bargaining
3.87%
3.80
5.75
3.25
3.80%
4.60
6.50
3.50
4.60%
4.20
6.50
3.50
The expected rate of return on Canadian plan assets for 2016 is 5.75% for the Ryerson Salaried Plan (approximately 77% of
total Canadian plan assets) and 5.50% for the Ryerson Bargaining Unit Plan (approximately 23% of total Canadian plan assets).
64
The assumptions used to determine benefit obligations at the end of the periods and net periodic benefit costs for the Other
Postretirement Benefits, primarily healthcare, for Canadian plans were as follows:
Discount rate for calculating obligations
Discount rate for calculating net periodic benefit cost
Rate of compensation increase
Year Ended December 31,
2014
2013
2015
3.64%
3.80
3.25
3.80%
4.40
3.50
4.40%
4.10
3.50
Change in Benefit Obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Plan amendments
Actuarial (gain) loss
Effect of changes in exchange rates
Lump sums paid
Benefits paid (net of participant contributions and
Medicare subsidy)
Benefit obligation at end of year
Accumulated benefit obligation at end of year
Change in Plan Assets
Plan assets at fair value at beginning of year
Actual return on plan assets
Employer contributions
Effect of changes in exchange rates
Lump sums paid
Benefits paid (net of participant contributions)
Plan assets at fair value at end of year
Reconciliation of Amount Recognized
Funded status
Amounts recognized in balance sheet consist of:
Current liabilities
Non-current liabilities
Net benefit liability at the end of the year
Year Ended December 31,
Pension Benefits
2015
2014
Other Benefits
2015
2014
(In millions)
$
$
$
$
$
$
$
$
957
2
37
—
(58)
(7)
(29)
(56)
846
843
680
(23)
43
(7)
(29)
(56)
608
$
$
$
$
$
842
2
39
—
133
(5)
—
(54)
957
954
639
44
55
(4)
—
(54)
680
$
$
$
$
$
101
—
4
(3)
(10)
(2)
—
(8)
82
N/A
$
— $
—
8
—
—
(8)
— $
114
—
5
(6)
(1)
(1)
—
(10)
101
N/A
—
—
11
—
—
(11)
—
(238) $
(277) $
(82) $
(101)
— $
(238)
(238) $
— $
(277)
(277) $
(8) $
(74)
(82) $
(10)
(91)
(101)
Canadian benefit obligations represented $43 million of the Company’s total Pension Benefits obligations at December 31, 2015
and $55 million at December 31, 2014. Canadian plan assets represented $38 million of the Company’s total plan assets at fair value at
December 31, 2015 and $47 million at December 31, 2014. In addition, Canadian benefit obligations represented $12 million of the
Company’s total Other Benefits obligation at December 31, 2015 and $15 million at December 31, 2014.
The pension benefit obligation decreased $58 million during the year ended December 31, 2015 due to the increase in the
discount rate year over year as well as updated mortality rates based on updated mortality tables released by the Society of Actuaries
in 2015. The pension benefit obligation increased $133 million during the year ended December 31, 2014 due to the decrease in the
discount rate year over year as well as updated mortality rates based on the updated mortality tables released by the Society of
Actuaries in 2014.
65
Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2015 and 2014 consist of the
following:
Amounts recognized in accumulated other
comprehensive income (loss), pre–tax, consist of
Net actuarial loss (gain)
Prior service cost (credit)
Net loss (gain)
At December 31,
Pension Benefits
2015
2014
Other Benefits
2015
2014
(In millions)
$
$
397
1
398
$
$
402
1
403
$
$
(69) $
(15)
(84) $
(66)
(15)
(81)
Net actuarial losses of $12.4 million and prior service costs of $0.1 million for pension benefits and net actuarial gains of $8.0
million and prior service credits of $3.1 million for other postretirement benefits are expected to be amortized from accumulated other
comprehensive income (loss) into net periodic benefit cost in 2016.
Amounts recognized in other comprehensive income (loss) for the years ended December 31, 2015 and 2014 consist of the
following:
Amounts recognized in other comprehensive
income (loss), pre–tax, consist of
Net actuarial loss (gain)
Amortization of net actuarial loss (gain)
Prior service credit
Amortization of prior service cost (credit)
Net loss (gain)
Year Ended December 31,
Pension Benefits
2015
2014
Other Benefits
2015
2014
(In millions)
$
$
$
13
(14)
—
(1)
(2) $
136
(10)
—
—
126
$
$
(10) $
8
(3)
2
(3) $
(1)
8
(6)
2
3
For benefit obligation measurement purposes for U.S. plans at December 31, 2015, the annual rate of increase in the per capita
cost of covered health care benefits for participants under 65 was 7.0 percent, grading down to 4.5 percent in 2026, the level at which
it is expected to remain. At December 31, 2015, the rate for participants over 65 was 9.0 percent, grading down to 4.5 percent in 2026,
plus a risk adjustment of 0.65 percent grading down to zero percent in 2022, the level at which it is expected to remain. For
measurement purposes for U.S. plans at December 31, 2014, the annual rate of increase in the per capita cost of covered health care
benefits for participants under 65 was 7.5 percent, grading down to 4.5 percent in 2025, the level at which it is expected to remain. At
December 31, 2014, the rate for participants over 65 was 7.5 percent, grading down to 4.5 percent in 2024, plus a risk adjustment of
0.6 percent grading down to zero percent in 2062, the level at which it is expected to remain.
For benefit obligation measurement purposes for Canadian plans at December 31, 2015 and 2014, the annual rate of increase in
the per capita cost of covered health care benefits was 8 percent per annum, grading down to 4.5 percent in 2033, the level at which it
is expected to remain.
66
The components of the Company’s net periodic benefit cost for the years ended December 31, 2015, 2014 and 2013 are as
follows:
Components of net periodic benefit cost
Service cost
Interest cost
Expected return on assets
Recognized actuarial loss (gain)
Amortization of prior service credit
Curtailment loss
Net periodic benefit cost (credit)
Year Ended December 31,
Pension Benefits
2014
2015
2013
2015
(In millions)
Other Benefits
2014
2013
$
$
2 $
37
(48)
14
—
1
6 $
2 $
3 $
39
(48)
10
—
—
36
(45)
14
—
—
3 $
8 $
— $
4
—
(8)
(2)
—
(6) $
— $
5
—
(8)
(2)
—
(5) $
1
4
—
(7)
(2)
—
(4)
The assumed health care cost trend rate has an effect on the amounts reported for the health care plans. For purposes of
determining net periodic benefit cost for U.S plans, the annual rate of increase in the per capital cost of covered health care benefits
for participants under 65 was 7.5 percent, grading down to 4.5 percent in 2025, the level at which it is expected to remain. The rate for
participants over 65 was 7.5 percent, grading down to 4.5 percent in 2024, plus a risk adjustment of 0.6 percent grading down to zero
percent in 2062, the level at which it is expected to remain. For purposes of determining net periodic benefit cost for Canadian plans,
the annual rate of increase in the per capita cost of covered health care benefits was 8 percent per annum, grading down to 4.5 percent
in 2033, the level at which it is expected to remain.
A one-percentage-point change in the assumed health care cost trend rate would have the following effects:
Effect on service cost plus interest cost
Effect on postretirement benefit obligation
Pension Trust Assets
1% increase
1% decrease
$
(In millions)
0.2
4.0
$
(0.2)
(3.5)
The expected long-term rate of return on pension trust assets is 5.75% to 7.10% based on the historical investment returns of the
trust, the forecasted returns of the asset classes and a survey of comparable pension plan sponsors.
The Company’s pension trust weighted-average asset allocations at December 31, 2015 and 2014, by asset category are as
follows:
Equity securities
Debt securities
Real Estate
Other
Total
Trust Assets at
December 31,
2015
2014
62%
21
4
13
100%
65%
20
3
12
100%
The Board of Directors of JT Ryerson has general supervisory authority over the Pension Trust Fund and approves the
investment policies and plan asset target allocation. An internal management committee provides on-going oversight of plan assets in
accordance with the approved policies and asset allocation ranges and has the authority to appoint and dismiss investment managers.
The investment policy objectives are to maximize long-term return from a diversified pool of assets while minimizing the risk of large
losses, and to maintain adequate liquidity to permit timely payment of all benefits. The policies include diversification requirements
and restrictions on concentration in any one single issuer or asset class. The currently approved asset investment classes are cash;
fixed income; domestic equities; international equities; real estate; private equities and hedge funds of funds. Company management
allocates the plan assets among the approved investment classes and provides appropriate directions to the investment managers
pursuant to such allocations.
67
The approved target ranges and allocations as of the December 31, 2015 measurement date were as follows:
Equity securities
Debt securities
Real estate
Other
Total
Range
Target
33-70%
15-50
2-8
7-19
64%
21
7
8
100%
The fair value of our pension plan assets at December 31, 2015 by asset category are as follows. See Note 16 for the definitions
of Level 1, 2, and 3 fair value measurements.
Asset Category
Cash and cash equivalents
Equity securities:
US large cap
US small/mid cap
Canadian large cap
Canadian small cap
International companies
Global companies
Fixed income securities:
Investment grade debt
Other types of investments:
Commodity funds
Multi-strategy funds
Fair Value Measurements at
December 31, 2015
Total
Level 1
Level 2
Level 3
$
9
$
(In millions)
9
$
— $
104
32
4
1
142
95
129
3
3
62
24
608
$
—
—
—
—
—
—
—
—
—
—
—
9
$
104
32
4
1
142
95
129
3
3
—
24
537
$
Investments valued at net asset value
Real estate
Total
$
The fair value of our pension plan assets at December 31, 2014 by asset category are as follows:
Asset Category
Cash and cash equivalents
Equity securities:
US large cap
US small/mid cap
Canadian large cap
Canadian small cap
International companies
Global companies
Fixed income securities:
Investment grade debt
Other types of investments:
Commodity funds
Multi-strategy funds
Investments valued at net asset value
Real estate
Total
Fair Value Measurements at
December 31, 2014
Total
Level 1
Level 2
Level 3
$
34
$
(In millions)
34
$
— $
129
43
5
1
150
109
133
4
3
45
24
680
$
—
—
—
—
—
—
—
—
—
—
—
34
$
129
43
5
1
150
109
133
4
3
—
24
601
$
$
68
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The pension assets classified as Level 2 investments in both 2015 and 2014 are part of common collective trust investments.
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been
classified in the fair value hierarchy in accordance with ASU 2015-07. The fair value amounts presented above are intended to permit
reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.
Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of
valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the
valuation date.
Corporate and government bonds which are not listed or admitted to trading on any securities exchanges are valued at the
average mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by
reputable broker dealers.
The non-publicly traded securities, other securities or instruments for which reliable market quotations are not available are
valued at each investment manager’s discretion. Valuations will depend on facts and circumstances known as of the valuation date and
application of certain valuation methods.
Contributions
The Company contributed $42.5 million, $55.4 million, and $48.0 million for the years ended December 31, 2015, 2014 and
2013, respectively, to improve the funded status of the plans. The Company anticipates that it will have a minimum required pension
contribution funding of approximately $22 million in 2016.
Estimated Future Benefit Payments
2016
2017
2018
2019
2020
2021-2025
$
Pension
Benefits
Other
Benefits
$
(In millions)
56
56
56
57
57
278
8
8
7
7
6
27
Multiemployer Pension and Other Postretirement Plans
We participate in two multiemployer pension plans covering 56 employees at 4 locations. Total contributions to the plans were
$0.4 million, $0.5 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Our contributions
represent less than 5% of the total contributions to the plans. The Company maintains positive employee relations at all locations.
During 2012, the Company exited and reentered the pension plan at one of the covered locations in an effort to reduce the overall
pension liability. The transaction resulted in a withdrawal liability of $1.0 million, which will be paid over a period of 25 years. The
balance of the withdrawal liability as of December 31, 2015 and 2014 was $0.5 million. The Company’s participation in these plans is
not material to our financial statements.
Note 12: Commitments and Contingencies
Lease Obligations & Other
The Company leases buildings and equipment under noncancellable operating leases expiring in various years through 2025.
Future minimum rental commitments are estimated to total $98.1 million, including approximately $24.9 million in 2016, $20.2
million in 2017, $15.0 million in 2018, $12.1 million in 2019, $9.1 million in 2020, and $16.8 million thereafter.
Rental expense under operating leases totaled $31.8 million, $33.2 million, and $32.9 million for the years ended December 31,
2015, 2014 and 2013, respectively.
69
To fulfill contractual requirements for certain customers in 2015, the Company has entered into certain fixed-price
noncancellable contractual obligations. These purchase obligations aggregated to $25.8 million at December 31, 2015 with $25.4
million to be paid in 2016.
Concentrations of Various Risks
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, available-for-sale investments,
derivative instruments, accounts payable, and notes payable. In the case of cash, accounts receivable and accounts payable, the
carrying amount on the balance sheet approximates the fair values due to the short-term nature of these instruments. The available-for-
sale investments in common stock are adjusted to fair value each period with unrealized gains and losses recorded within accumulated
other comprehensive income. The derivative instruments are marked to market each period. The fair value of notes payable is
disclosed in Note 16.
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of derivative financial
instruments and trade accounts receivable. Our derivative financial instruments are contracts placed with major financial institutions.
Credit is generally extended to customers based upon an evaluation of each customer’s financial condition, with terms consistent in
the industry and no collateral required. Concentrations of credit risk with respect to trade accounts receivable are limited due to the
large number of customers and their dispersion across geographic areas.
The Company has signed supply agreements with certain vendors which may obligate the Company to make cash deposits based
on the spot price of aluminum at the end of each month. These cash deposits offset amounts payable to the vendor when inventory is
received. We made no cash deposits for the year ended December 31, 2015. We have no exposure as of December 31, 2015.
Approximately 12% of our total labor force is covered by collective bargaining agreements. There are collective bargaining
agreements that will expire in fiscal 2016, which covers 2% of our total labor force. We believe that our overall relationship with our
employees is good.
Litigation
From time to time, we are named as a defendant in legal actions incidental to our ordinary course of business. We do not believe
that the resolution of these claims will have a material adverse effect on our financial position, results of operations or cash flows. We
maintain liability insurance coverage to assist in protecting our assets from losses arising from or related to activities associated with
business operations.
In October 2011, the United States Environmental Protection Agency (the “EPA”) named us as one of more than 100 businesses
that may be a potentially responsible party for the Portland Harbor Superfund Site (“Portland Harbor”). On February 9, 2016, we
received correspondence from the EPA stating that its initial Remedial Investigation and Feasibility Study will be completed in “early
2016,” a Proposed Plan for the site should be released in April 2016, and a final cleanup decision for the site should be published in
the Record of Decision by December 31, 2016. We do not currently have sufficient information available to us to determine the total
cost of any required investigation or remediation of the Portland Harbor site and therefore, management cannot predict the ultimate
outcome of this matter or estimate a range of potential loss at this time.
There are various claims and pending actions against the Company. The amount of liability, if any, for those claims and actions
at December 31, 2015 is not determinable but, in the opinion of management, such liability, if any, will not have a material adverse
effect on the Company’s financial position, results of operations or cash flows.
Note 13: Related Parties
JT Ryerson, one of our subsidiaries, was party to a corporate advisory services agreement with Platinum Advisors, an affiliate of
Platinum, pursuant to which Platinum Advisors provided JT Ryerson certain business, management, administrative and financial
advice. On July 23, 2014, JT Ryerson’s Board of Directors approved the termination of this services agreement contingent on the
closing of the initial public offering of Ryerson Holding common stock, which occurred on August 13, 2014. As consideration for
terminating the advisory fee payable thereunder, Platinum Advisors and its affiliates were paid $15.0 million in August 2014, with an
additional $10.0 million paid in August 2015. The Company recognized the $25.0 million termination fee within Warehousing,
delivery, selling, general and administrative expense during the third quarter of 2014. The total advisory fee recorded was zero, $28.3
million, and $5.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.
70
Note 14: Segment Information
We have one operating and reportable segment, metals service centers.
The Company derives substantially all of its sales from the distribution of metals. The following table shows the Company’s
percentage of sales by major product line:
Product Line
Carbon Steel Flat
Carbon Steel Plate
Carbon Steel Long
Stainless Steel Flat
Stainless Steel Plate
Stainless Steel Long
Aluminum Flat
Aluminum Plate
Aluminum Long
Other
Total
2015
Year Ended December 31,
2014
(Percentage of Sales)
25%
12
15
16
4
4
15
3
4
2
100%
25%
11
16
16
4
3
16
3
4
2
100%
2013
26%
11
15
16
4
3
15
3
4
3
100%
No customer accounted for more than 2 percent of Company sales for the years ended December 31, 2015, 2014 and 2013. The
top ten customers accounted for less than 12 percent of its sales for the year ended December 31, 2015. A significant majority of the
Company’s sales are attributable to its U.S. operations and a significant majority of its long-lived assets are located in the United
States. The only operations attributed to foreign countries relate to the Company’s subsidiaries in Canada, China, Mexico and Brazil,
which in aggregate comprised 13 percent, 13 percent, and 14 percent of the Company’s sales during the years ended December 31,
2015, 2014 and 2013, respectively. Canadian, Chinese, Mexican and Brazilian long-lived assets were 7 percent, 10 percent, and 12
percent of total Company long-lived assets at December 31, 2015, 2014 and 2013, respectively.
The following tables summarize consolidated financial information of our operations by geographic location based on where
sales originated from:
Net Sales
United States
Foreign countries
Total
Long-Lived Assets
United States
Foreign countries
Total
Note 15: Other Matters
Equity Investment
$
$
$
$
2015
Year Ended December 31,
2014
(In millions)
3,166.1
$
456.1
3,622.2
$
$
$
2,770.3
397.0
3,167.2
2013
2,989.9
470.4
3,460.3
2015
373.9
26.4
400.3
At December 31,
2014
(In millions)
383.7
$
44.5
428.2
$
$
$
2013
392.1
52.0
444.1
Automated Laser Fabrication Co., LLC. In 2011, the Company invested $0.8 million in Automated Laser Fabrication Co., LLC
(“ALF”) for a 38 percent equity interest. ALF is a steel processing company located in Streetsboro, Ohio. The Company accounts for
this investment under the equity method of accounting. The Company’s investment in this joint venture is not considered material to
the Company’s consolidated financial position or results of operations.
71
Açofran
On February 17, 2012, the Company acquired 50% of the issued and outstanding capital stock of Açofran, a long products
distributor located in São Paulo, Brazil. The Company fully consolidates Açofran based on voting control. The Company is party to a
put option arrangement with respect to the securities that represent the noncontrolling interest of Açofran. The put is exercisable by
the minority shareholders outside of the Company’s control by requiring the Company to redeem the minority shareholders’ equity
stake in the subsidiary at a put price based on earnings before interest, income tax, depreciation and amortization expense and net debt.
The redeemable noncontrolling interest is classified as mezzanine equity and measured at the greater of estimated redemption value at
the end of each reporting period or the historical cost basis of the noncontrolling interest adjusted for earnings and foreign currency
allocations. The resulting increase or decrease in the estimated redemption amount is adjusted with a corresponding charge against
retained earnings, or in the absence of retained earnings, additional paid-in-capital. The acquisition is not material to our consolidated
financial statements.
Note 16: Derivatives and Fair Value Measurements
Derivatives
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using
derivative instruments are interest rate risk, foreign currency risk, and commodity price risk. Interest rate swaps are entered into to
manage interest rate risk associated with the Company’s floating-rate borrowings. We use foreign currency exchange contracts to
hedge our Canadian subsidiaries’ variability in cash flows from the forecasted payment of currencies other than the functional
currency. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory components.
We may enter into metal commodity futures and options contracts periodically to reduce volatility in the price of metals. We may also
enter into natural gas and diesel fuel price swaps to manage the price risk of forecasted purchases of natural gas and diesel fuel. The
Company currently does not account for its derivative contracts as hedges but rather marks them to market with a corresponding offset
to current earnings. The Company regularly reviews the creditworthiness of its derivative counterparties and does not expect to incur a
significant loss from the failure of any counterparties to perform under any agreements.
The following table summarizes the location and fair value amount of our derivative instruments reported in our Consolidated
Balance Sheet as of December 31, 2015 and 2014:
Asset Derivatives
December 31, 2015
Balance
Sheet
Location
Fair
Value
December 31, 2014
Balance
Sheet
Location
Fair
Value
(In millions)
Liability Derivatives
December 31, 2015
Balance
Sheet
Location
Fair
Value
December 31, 2014
Balance
Sheet
Location
Fair
Value
Prepaid expenses
and other current
assets
Prepaid expenses
and other current
assets
$
0.1
—
0.1
$
Prepaid expenses
and other current
assets
Prepaid expenses
and other current
assets
Other
accrued
liabilities $ —
Other
accrued
liabilities $ —
Other
accrued
liabilities
3.5
3.5
$
Other
accrued
liabilities
1.3
1.3
$
$ —
0.1
0.1
$
Derivatives not designated as
hedging instruments under
ASC 815
Foreign exchange contracts
Commodity contracts
Total derivatives
As of December 31, 2015 and 2014 the Company’s foreign currency exchange contracts had a U.S. dollar notional amount of
$1.6 million and $3.2 million, respectively. As of December 31, 2015 and 2014, the Company had 177 tons and 144 tons, respectively,
of nickel futures or option contracts related to forecasted purchases. As of December 31, 2015 and 2014, the Company had 15,120
tons and 14,700 tons, respectively, of hot roll coil option contracts related to forecasted purchases. The Company has aluminum price
swaps related to forecasted purchases, which had a notional amount of 13,878 tons and 6,366 tons as of December 31, 2015 and 2014,
respectively. As of December 31, 2015 and 2014, the Company has 533,000 gallons and 624,000 gallons, respectively, of diesel fuel
hedge contracts related to forecasted purchases.
72
The following table summarizes the location and amount of gains and losses reported in our Consolidated Statements of
Operations for the years ended December 31, 2015, 2014 and 2013:
Location of Gain/(Loss)
Recognized in Income
on
Derivatives
Other income and (expense), net
Cost of materials sold
Warehousing, delivery, selling,
general and administrative
Amount of Gain/
(Loss) Recognized in Income on Derivatives
Year Ended December 31,
2015
2014
(In millions)
2013
$
$
$
0.1
(11.8)
(0.4)
(12.1) $
— $
(0.1)
(0.2)
(0.3) $
—
(0.6)
—
(0.6)
Derivatives not designated as hedging
instruments under ASC 815
Foreign exchange contracts
Commodity contracts
Diesel fuel commodity contracts
Total
Fair Value Measurements
To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
1.
2.
3.
Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to
access as of the reporting date.
Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or
indirectly observable through corroboration with observable market data.
Level 3—unobservable inputs, such as internally-developed pricing models for the asset or liability due to little or no
market activity for the asset or liability.
The following table presents assets and liabilities measured and recorded at fair value on our Consolidated Balance Sheets on a
recurring basis and their level within the fair value hierarchy as of December 31, 2015:
Assets
Cash equivalents:
Commercial paper
Prepaid and other current assets:
Common stock – available-for-sale investment
Mark-to-market derivatives:
Foreign exchange contracts
Liabilities
Mark-to-market derivatives:
Commodity contracts
Level 1
At December 31, 2015
Level 2
(In millions)
Level 3
$
$
$
$
36.6
2.2
$
$
— $
— $
— $
0.1
$
— $
3.5
$
—
—
—
—
73
The following table presents assets and liabilities measured and recorded at fair value on our Consolidated Balance Sheets on a
recurring basis and their level within the fair value hierarchy as of December 31, 2014:
Assets
Prepaid and other current assets:
Common stock – available-for-sale investment
Mark-to-market derivatives:
Commodity contracts
Liabilities
Mark-to-market derivatives:
Commodity contracts
Level 1
At December 31, 2014
Level 2
(In millions)
Level 3
$
$
$
11.2
$
— $
— $
0.1
$
— $
1.3
$
—
—
—
The fair value of each derivative contract is determined using Level 2 inputs and the market approach valuation technique, as
described in ASC 820. The Company has various commodity derivatives to lock in nickel prices for varying time periods. The fair
value of these derivatives is determined based on the spot price each individual contract was purchased at and compared with the one-
month daily average actual spot price on the London Metals Exchange for nickel on the valuation date. The Company also has
commodity derivatives to lock in hot roll coil and aluminum prices for varying time periods. The fair value of hot roll coil and
aluminum derivatives is determined based on the spot price each individual contract was purchased at and compared with the one-
month daily average actual spot price on the New York Mercantile Exchange and the London Metals Exchange, respectively, for the
commodity on the valuation date. The Company has various commodity derivatives to lock in diesel prices for varying time periods.
The fair value of these derivatives is determined based on the spot price each individual contract was purchased at and compared with
the one-month daily average actual spot price of the Platts Index for Gulf Coast Ultra Low Sulfur Diesel on the valuation date. In
addition, the Company has numerous foreign exchange contracts to hedge our Canadian subsidiaries’ variability in cash flows from
the forecasted payment of currencies other than the functional currency, the Canadian dollar. The Company defines the fair value of
foreign exchange contracts as the amount of the difference between the contracted and current market value at the end of the period.
The Company estimates the current market value of foreign exchange contracts by obtaining month-end market quotes of foreign
exchange rates and forward rates for contracts with similar terms. The Company uses the exchange rates provided by Reuters. Each
contract term varies in the number of months, but on average is between 3 to 12 months in length.
The following table presents assets and liabilities measured and recorded at fair value on the Consolidated Balance Sheets on a
non-recurring basis and their level within the fair value hierarchy as of December 31, 2015:
Assets
Prepaid expenses and other current assets - assets held for
sale (Note 6)
$
— $
4.2
$
—
Level 1
At December 31, 2015
Level 2
(In millions)
Level 3
The following table presents assets and liabilities measured and recorded at fair value on the Consolidated Balance Sheets on a
non-recurring basis and their level within the fair value hierarchy as of December 31, 2014:
Assets
Prepaid expenses and other current assets - assets held for
sale (Note 6)
$
— $
2.5
$
—
Level 1
At December 31, 2014
Level 2
(In millions)
Level 3
74
The carrying and estimated fair values of the Company’s financial instruments at December 31, 2015 and 2014 were as follows:
Cash and cash equivalents
Restricted cash
Receivables less provision for allowances, claims and
doubtful accounts
Accounts payable
Long-term debt, including current portion
At December 31, 2015
At December 31, 2014
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$
$
63.2
1.2
(In millions)
63.2
1.2
$
$
60.0
2.0
305.7
206.3
1,034.5
305.7
206.3
866.3
400.8
220.8
1,259.1
60.0
2.0
400.8
220.8
1,288.7
The estimated fair value of the Company’s cash and cash equivalents, receivables less provision for allowances, claims and
doubtful accounts and accounts payable approximate their carrying amounts due to the short-term nature of these financial
instruments. The estimated fair value of the Company’s long-term debt and the current portions thereof is determined by using quoted
market prices of Company debt securities (Level 2 inputs).
Available-For-Sale Investments
The Company has classified investments made during 2010 and 2012 as available-for-sale at the time of their purchase.
Investments classified as available-for-sale are recorded at fair value with the related unrealized gains and losses included in
accumulated other comprehensive income. Management evaluates investments in an unrealized loss position on whether an other-
than-temporary impairment has occurred on a periodic basis. Factors considered by management in assessing whether an other-than-
temporary impairment has occurred include: the nature of the investment; whether the decline in fair value is attributable to specific
adverse conditions affecting the investment; the financial condition of the investee; the severity and the duration of the impairment;
and whether we intend to sell the investment or will be required to sell the investment before recovery of its amortized cost basis.
When it is determined that an other-than-temporary impairment has occurred, the investment is written down to its fair value at the
end of the period in which it is determined that an other-than-temporary decline has occurred. The investment was in a gross
unrealized loss position for twelve months as of March 31, 2015. Based on the duration and severity of our unrealized loss,
management determined that an other-than-temporary impairment occurred and thus recognized a $12.3 million impairment charge
within other income and (expense), net in the first quarter of 2015. As of December 31, 2015, the investment has been in an unrealized
loss position from its adjusted cost basis for six months. Management does not currently intend to sell the investment before recovery
of its amortized cost basis. Realized gains and losses are recorded within the Consolidated Statements of Operations upon sale of the
security and are based on specific identification.
The Company’s available-for-sale securities as of December 31, 2015 can be summarized as follows:
Common stock
At December 31, 2015
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In millions)
— $
(2.9) $
2.2
Cost
$
5.1
$
The Company’s available-for-sale securities as of December 31, 2014 can be summarized as follows:
Common stock
At December 31, 2014
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In millions)
— $
(6.2) $
11.2
Cost
$
17.4
$
There is no maturity date for this investment and there have been no sales for the years ended December 31, 2015, 2014, and
2013.
75
Note 17: Accumulated Other Comprehensive Income
The following tables detail the changes in accumulated other comprehensive income (loss) for the years ended December 31,
2015 and December 31, 2014:
Balance at January 1, 2014
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive income (loss)
Net current-period other comprehensive income (loss)
Balance at December 31, 2014
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive income (loss)
Net current-period other comprehensive income (loss)
Balance at December 31, 2015
Changes in Accumulated Other Comprehensive
Income (Loss) by Component
Foreign
Currency
Translation
Benefit
Plan
Liabilities
(In millions)
Unrealized
Gain (Loss) on
Available-
For-Sale
Investments
$
$
$
(16.6) $
(174.9) $
(16.2)
(80.3)
—
(16.2)
(32.8) $
(0.6)
(80.9)
(255.8) $
(21.0)
6.3
—
(21.0)
(53.8) $
(3.0)
3.3
(252.5) $
3.3
(6.1)
—
(6.1)
(2.8)
(5.5)
7.6
2.1
(0.7)
The following tables detail the reclassifications out of accumulated other comprehensive income (loss) for the years ended
December 31, 2015 and December 31, 2014:
Details about Accumulated Other
Comprehensive Income (Loss)
Components
Other-than-temporary impairment
Other-than-temporary impairment charge
Tax benefit
Net of tax
Amortization of defined
benefit pension and other
post-retirement benefit
plan items
Actuarial gain
Prior service cost
Total before tax
Tax provision
Net of tax
$
$
$
$
Reclassifications Out of Accumulated Other Comprehensive Income (Loss)
Amount reclassified from
Accumulated Other
Comprehensive Income
(Loss)
For the Year Ended
December 31, 2015
(In millions)
Affected line item in the Condensed
Consolidated Statements of
Comprehensive Income
12.3 Other income and (expense) net
(4.7)
7.6
Warehousing, delivery, selling,
general and administrative
Warehousing, delivery, selling,
general and administrative
(6.5)
2.0
(4.5)
1.5
(3.0)
76
Details about Accumulated Other
Comprehensive Income (Loss)
Components
Amortization of defined
benefit pension and other
post-retirement benefit
plan items
Actuarial gain
Prior service cost
Total before tax
Tax provision
Net of tax
Reclassifications Out of Accumulated Other Comprehensive Income (Loss)
Amount reclassified from
Accumulated Other
Comprehensive Income
(Loss)
For the Year Ended
December 31, 2014
(In millions)
Affected line item in the Condensed
Consolidated Statements of
Comprehensive Income (Loss)
$
$
Warehousing, delivery, selling,
general and administrative
Warehousing, delivery, selling,
general and administrative
(2.5)
1.7
(0.8)
0.2
(0.6)
Note 18: Income Taxes
The elements of the provision (benefit) for income taxes were as follows:
Income (loss) before income tax:
U.S.
Foreign
Current income taxes:
Federal
Foreign
State
Deferred income taxes
Total income tax provision (benefit)
2015
Year Ended December 31,
2014
(In millions)
2013
$
$
$
$
13.2
(11.3)
1.9
$
$
(34.4) $
7.5
(26.9) $
(0.3) $
1.2
(0.4)
0.5
3.2
3.7
$
(1.0) $
3.3
0.5
2.8
(3.5)
(0.7) $
35.5
(21.6)
13.9
(0.1)
(0.1)
0.6
0.4
(112.7)
(112.3)
77
Income taxes differ from the amounts computed by applying the federal tax rate as follows:
2015
Year Ended December 31,
2014
(In millions)
2013
Federal income tax expense (benefit) computed at statutory
tax rate of 35%
Additional taxes or credits from:
State and local income taxes, net of federal income tax
effect
Non-deductible expenses and non-taxable income (1)
Foreign income (expense) not includable in federal
taxable income
Effect of acquisition related elections and settlements
Valuation allowance changes (net)
All other, net
Total income tax provision (benefit)
$
$
0.7
$
(9.4) $
(0.5)
1.8
0.8
—
0.1
0.8
3.7
$
(0.6)
9.3
(1.0)
—
(0.6)
1.6
(0.7) $
4.9
3.0
5.1
1.9
(2.2)
(124.2)
(0.8)
(112.3)
(1)
The 2014 charge includes $8.2 million related to the nonrecurring fee to terminate the advisory services agreement with
Platinum Advisors (See Note 13).
The components of the deferred income tax assets and liabilities arising under FASB ASC 740, “Income Taxes” (“ASC 740”)
were as follows:
Deferred tax assets:
AMT tax credit carryforwards
Post-retirement benefits other than pensions
Federal and foreign net operating loss carryforwards
State net operating loss carryforwards
Pension liability
Other deductible temporary differences
Less: valuation allowances
Deferred tax liabilities:
Fixed asset basis difference
Inventory basis difference
Other intangibles
Net deferred tax asset
At December 31,
2015
2014
(In millions)
$
$
$
$
30
30
79
10
95
23
(22)
245
88
121
14
223
22
$
$
$
$
30
37
86
11
106
21
(22)
269
97
130
15
242
27
During 2013, the Company recognized a total net tax benefit of $124.2 million related to changes in valuation allowance. As
described in Note 1, the Company assesses the need for a valuation allowance considering all available positive and negative
evidence, including past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies.
The fourth quarter of 2013 was the first quarter in which the Company’s overall U.S. operations had sustained an operating profit in
both the preceding cumulative three fiscal year period and in each of its two preceding fiscal years, providing objective evidence of
the Company’s ability to earn future profits. Combined with the Company’s projections of future income providing additional
subjective evidence of the Company’s ability to earn future profits and management’s judgment, the Company determined that these
deferred tax assets were more likely than not realizable and accordingly the valuation allowance was no longer required.
78
The Company will continue to maintain a valuation allowance on certain U.S. federal and state deferred tax assets until such
time as in management’s judgment, considering all available positive and negative evidence, the Company determines that these
deferred tax assets are more likely than not realizable.
The Company had available at December 31, 2015, federal AMT credit carryforwards of approximately $30 million, which may
be used indefinitely to reduce regular federal income taxes.
The Company’s deferred tax assets also include $67 million related to U.S. federal net operating loss (“NOL”) carryforwards
which expire in 15 years, $10 million related to state NOL carryforwards which expire generally in 1 to 20 years and $12 million
related to foreign NOL carryforwards which expire in 1 to 5 years, available at December 31, 2015.
Earnings from the Company’s foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for
U.S. federal and state income taxes or foreign withholding tax has been made in our consolidated financial statements related to the
indefinitely reinvested earnings. At December 31, 2015, the Company had approximately $100 million of undistributed foreign
earnings on which no U.S. tax expense has been recorded, predominately in Canada and China. A distribution of these non-U.S.
earnings in the form of dividends or otherwise would subject the Company to both U.S. federal and state income taxes, as adjusted for
tax credits and foreign withholding taxes. A determination of the amount of any unrecognized deferred income tax liability on the
undistributed earnings is predominately dependent upon the availability of tax credits in the U.S., which is dependent on a number of
factors including the timing of future distributions, the mix of distributions and the amount of both U.S. and non-U.S. source income
in future years. Modeling of the many future potential scenarios and the related unrecognized deferred tax liability is therefore not
practicable. None of the Company’s other foreign subsidiaries have a material amount of assets available for repatriation.
The Company accounts for uncertain income tax positions in accordance with ASC 740. A reconciliation of the beginning and
ending amount of unrecognized tax benefits is as follows:
Unrecognized tax benefits balance at January 1, 2013
Gross increases – tax positions in current periods
Settlements and closing of statute of limitations
Unrecognized tax benefits balance at December 31, 2013
Gross increases – tax positions in current periods
Settlements and closing of statute of limitations
Unrecognized tax benefits balance at December 31, 2014
Gross increases – tax positions in current periods
Settlements and closing of statute of limitations
Unrecognized tax benefits balance at December 31, 2015
Unrecognized
Tax Benefits
(In millions)
9.0
0.4
(0.6)
8.8
0.3
(1.5)
7.6
—
—
7.6
$
$
$
$
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign
jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2009. Substantially all
state and local income tax matters have been concluded through 2006. The Company has substantially concluded foreign income tax
matters through 2009 for all significant foreign jurisdictions.
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and
2014, we had approximately $1.5 million and $1.3 million of accrued interest related to uncertain tax positions, respectively. Total
amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $5.6 million as of December 31, 2015 and
2014.
Note 19: Earnings Per Share
On July 16, 2007, Ryerson Holding was capitalized with 21,250,000 shares of common stock by Platinum Equity, LLC. On
August 13, 2014, Ryerson Holding completed an initial public offering of 11 million shares of common stock at a price to the public
of $11.00 per share. All shares outstanding are common shares and have equal voting, liquidation and preference rights.
Basic earnings (loss) per share attributable to Ryerson Holding’s common stock is determined based on earnings (loss) for the
period divided by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share
attributable to Ryerson Holding’s common stock considers the effect of potential common shares, unless inclusion of the potential
79
common shares would have an antidilutive effect. Potentially dilutive securities whose effect would have been antidilutive were not
significant for 2015, 2014, and 2013.
The following table sets forth the calculation of basic and diluted earnings (loss) per share:
Basic and diluted earnings (loss) per share
Numerator:
Net income (loss) attributable to Ryerson Holding Corporation
Denominator:
Weighted average shares outstanding
Dilutive effect of stock-based awards
Weighted average shares outstanding adjusted for dilutive securities
Earnings (loss) per share
Basic
Diluted
Years Ended December 31,
2014
2015
(In millions, except share and per share data)
2013
$
$
$
(0.5) $
(25.7) $
127.3
32,057,764
—
32,057,764
25,437,500
—
25,437,500
21,249,418
—
21,249,418
(0.02) $
(0.02) $
(1.01) $
(1.01) $
5.99
5.99
Note 20: Condensed Consolidating Financial Statements
On October 10, 2012, JT Ryerson issued the 2017 and 2018 Notes. The 2017 Notes are fully and unconditionally guaranteed on
a senior secured basis and the 2018 Notes are fully and unconditionally guaranteed on a senior unsecured basis by all of our existing
and future domestic subsidiaries that are co-borrowers or guarantee obligations under the Ryerson Credit Facility. On December 30,
2014, Ryerson Holding entered into agreements with JT Ryerson, as issuer, Wells Fargo Bank, as trustee, and each of the guarantors
party to the 2017 and 2018 Notes, whereby Ryerson Holding provided unconditional guarantees of the 2017 and 2018 Notes, jointly
and severally with the other guarantors of the 2017 and 2018 Notes. Each guarantor of the 2017 and 2018 Notes is 100% owned by
Ryerson Holding and the guarantees are joint and several. JT Ryerson may only pay dividends to Ryerson Holding to the extent of
50% of future net income, once prior losses are offset. Presented below is the condensed consolidating financial information of
Ryerson Holding and its subsidiaries as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and 2013.
80
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2015
(In millions)
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and
administrative expenses
Restructuring and other charges
Impairment charges on assets
Gain on the sale of assets
Operating profit (loss)
Other income and (expense), net
Interest and other expense on debt
Interest expense on intercompany loans
Interest income on intercompany loans
Income (loss) before income taxes
Provision (benefit) for income taxes
Equity in (earnings) loss of subsidiaries
Net income (loss)
Less: Net loss attributable to noncontrolling
interest
Net income (loss) attributable to Ryerson
Holding Corporation
Parent
$
Joseph T.
Ryerson
— $ 2,702.6
2,232.3
—
470.3
—
Guarantor
$ 2,010.9
1,974.6
36.3
Non-guarantor
397.6
$
336.5
61.1
Eliminations
$ (1,943.9) $
(1,943.9)
—
Consolidated
3,167.2
2,599.5
567.7
0.9
—
—
—
(0.9)
—
—
—
—
(0.9)
9.8
(10.2)
(0.5)
368.2
0.9
1.3
—
99.9
0.3
(93.5)
(5.6)
—
1.1
10.5
(19.6)
10.2
21.5
—
—
(1.3)
16.1
(12.3)
—
—
9.3
13.1
(16.8)
9.5
20.4
—
—
—
60.2
1.6
6.4
(0.6)
(6.5)
1.6
(2.8)
(3.7)
—
(11.4)
0.2
—
(11.6)
(1.3)
—
—
—
—
—
—
9.3
(9.3)
—
—
20.3
(20.3)
450.8
2.5
7.7
(1.9)
108.6
(10.4)
(96.3)
—
—
1.9
3.7
—
(1.8)
—
(1.3)
$
(0.5) $
10.2
$
20.4
$
(10.3) $
(20.3) $
(0.5)
81
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(In millions)
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and
administrative expenses
Gain on sale of assets
Operating profit (loss)
Other income and (expense), net
Interest and other expense on debt
Intercompany transactions:
Interest expense on intercompany loans
Interest income on intercompany loans
Income (loss) before income taxes
Provision (benefit) for income taxes
Equity in (earnings) loss of subsidiaries
Net income (loss)
Less: Net loss attributable to noncontrolling
interest
Net income (loss) attributable to Ryerson
Holding Corporation
Joseph T.
Ryerson
Guarantor
Non-guarantor
Parent
$
— $
—
—
3,078.5 $
2,608.2
470.3
2,584.5 $
2,533.8
50.7
456.4 $ (2,497.2) $
383.6
72.8
Eliminations Consolidated
3,622.2
3,028.4
593.8
(2,497.2)
—
0.2
—
(0.2)
—
—
—
—
(0.2)
8.2
17.3
(25.7)
415.7
(0.5)
55.1
(10.9)
(104.5)
(6.6)
—
(66.9)
(12.1)
(37.5)
(17.3)
—
—
24.8
—
25.9
—
—
—
6.8
32.7
(0.7)
(4.2)
37.6
—
68.5
(1.3)
5.6
5.0
(2.9)
(0.2)
—
7.5
3.9
—
3.6
(0.5)
—
—
—
—
—
6.8
(6.8)
—
—
24.4
(24.4)
509.2
(1.8)
86.4
(5.9)
(107.4)
—
—
(26.9)
(0.7)
—
(26.2)
—
(0.5)
$
(25.7) $
(17.3) $
37.6 $
4.1 $
(24.4) $
(25.7)
82
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2013
(In millions)
Net sales
Cost of materials sold
Gross profit
Warehousing, delivery, selling, general and
administrative expenses
Restructuring and other charges
Impairment charges on assets
Operating profit (loss)
Other income and (expense), net
Interest and other expense on debt
Interest expense on intercompany loans
Interest income on intercompany loans
Income (loss) before income taxes
Provision (benefit) for income taxes
Equity in (earnings) loss of subsidiaries
Net income (loss)
Less: Net loss attributable to noncontrolling
interest
Net income (loss) attributable to Ryerson
Holding Corporation
Parent
$
Joseph T.
Ryerson
— $ 2,916.0
2,412.8
—
503.2
—
Guarantor
$ 2,387.0
2,341.2
45.8
Non-guarantor
471.4
$
403.8
67.6
Eliminations
$ (2,314.1) $
(2,314.1)
—
Consolidated
3,460.3
2,843.7
616.6
0.9
—
—
(0.9)
—
—
—
—
(0.9)
(47.7)
(80.5)
127.3
373.3
—
3.2
126.7
(4.1)
(107.5)
(7.0)
—
8.1
(70.3)
(2.1)
80.5
—
—
24.7
—
—
21.1
—
—
—
7.0
28.1
5.9
19.8
2.4
—
81.2
1.9
6.8
(22.3)
3.9
(3.0)
—
—
(21.4)
(0.2)
—
(21.2)
(1.1)
—
—
—
—
—
—
7.0
(7.0)
—
—
62.8
(62.8)
480.1
1.9
10.0
124.6
(0.2)
(110.5)
—
—
13.9
(112.3)
—
126.2
—
(1.1)
$
127.3
$
80.5
$
2.4
$
(20.1) $
(62.8) $
127.3
83
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 2015
(In millions)
Comprehensive income (loss)
Less: Comprehensive loss attributable to
noncontrolling interest
Comprehensive income (loss) attributable to
Ryerson Holding Corporation
Parent
$
(16.1) $
Joseph T.
Ryerson
Guarantor
22.4
Non-guarantor
$
(23.0) $
Eliminations
4.3
Consolidated
(17.9)
$
(5.5) $
—
—
—
(1.8)
—
(1.8)
$
(16.1) $
(5.5) $
22.4
$
(21.2) $
4.3
$
(16.1)
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 2014
(In millions)
Comprehensive income (loss)
Less: Comprehensive loss attributable to
noncontrolling interest
Comprehensive income (loss) attributable to
Ryerson Holding Corporation
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
$
(128.9) $
(120.5) $
31.4 $
(14.4) $
Eliminations Consolidated
(129.5)
102.9 $
—
—
—
(0.6)
—
(0.6)
$
(128.9) $
(120.5) $
31.4 $
(13.8) $
102.9 $
(128.9)
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 2013
(In millions)
Comprehensive income (loss)
Less: Comprehensive loss attributable to
noncontrolling interest
Comprehensive income (loss) attributable to
Ryerson Holding Corporation
$
$
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
191.2 $
144.5 $
2.4 $
(32.2) $
Eliminations Consolidated
190.0
(115.9) $
—
—
—
(1.2)
—
(1.2)
191.2 $
144.5 $
2.4 $
(31.0) $
(115.9) $
191.2
84
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2015
(In millions)
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
Eliminations
Consolidated
(11.6) $
11.3
—
15.8
27.1
(20.3) $
—
20.3
—
20.3
(1.8)
70.0
—
190.9
260.9
259.1
(8.8)
(22.3)
—
—
10.4
2.7
—
—
—
79.8
11.8
—
—
91.6
(18.0)
—
(79.8)
—
(11.8)
—
(59.9)
—
(164.4)
—
(7.9)
(91.6)
(232.2)
—
—
—
—
— $
8.9
(5.7)
3.2
60.0
63.2
15.5
—
(2.3)
—
(0.1)
7.9
0.2
5.7
—
—
(1.6)
0.2
(0.4)
(1.8)
19.4
(5.4)
14.0
43.6
57.6
$
OPERATING ACTIVITIES:
Net income (loss)
Non-cash expenses
Equity in (earnings) loss of subsidiaries
Changes in working capital
Net adjustments
Net cash provided by operating
activities
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired
Capital expenditures
Loan to related companies
Investment in subsidiaries
Proceeds from sale of property, plant and
equipment
Other investing activities
Net cash provided by (used in) investing
activities
FINANCING ACTIVITIES:
Repayment of debt
Repayment of intercompany borrowings
Net proceeds/(repayments) of short-term
borrowings
Capital contribution
Other financing activities
Net cash used in financing
activities
Net increase (decrease) in cash and cash
equivalents
Effect of exchange rates
Net change in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
$
(0.5) $
9.3
(10.2)
1.7
0.8
$
10.2
39.9
(19.6)
129.1
149.4
0.3
159.6
—
—
—
(11.4)
—
—
(8.8)
(19.2)
—
(0.2)
2.5
1.2
20.4
9.5
9.5
44.3
63.3
83.7
—
(0.8)
(79.8)
(0.1)
—
1.3
(11.4)
(24.5)
(79.4)
—
—
—
—
—
—
(11.1)
—
(11.1)
11.1
$
— $
(59.9)
79.8
(162.8)
11.4
(2.7)
(134.2)
0.9
(0.3)
0.6
4.6
5.2
$
—
—
—
0.2
(4.8)
(4.6)
(0.3)
—
(0.3)
0.7
0.4
$
$
85
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2014
(In millions)
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
Eliminations
Consolidated
$
(25.7) $
8.4
17.3
9.0
34.7
(17.3) $
35.1
(37.5)
(58.0)
(60.4)
$
37.6
3.1
(4.2)
(29.6)
(30.7)
9.0
(77.7)
6.9
$
3.6
5.7
—
(20.8)
(15.1)
(11.5)
(24.4) $
—
24.4
—
24.4
—
—
—
110.8
40.3
(40.3)
—
110.8
(26.2)
52.3
—
(99.4)
(47.1)
(73.3)
(20.1)
(21.6)
—
—
—
7.7
(34.0)
—
—
112.4
(110.7)
—
—
(110.8)
—
63.8
36.0
—
(1.0)
—
(2.3)
—
—
—
3.0
0.7
—
—
(2.1)
—
0.1
—
—
—
(110.7)
—
—
—
(20.1)
(18.8)
(0.1)
—
40.3
4.7
(110.7)
6.0
112.4
—
—
—
—
—
—
(110.7)
65.9
3.6
110.7
(1.0)
112.4
68.5
—
(0.5)
—
(40.3)
—
—
(40.8)
—
—
—
32.4
—
—
32.4
OPERATING ACTIVITIES:
Net income (loss)
Non-cash expenses
Equity in (earnings) loss of subsidiaries
Changes in working capital
Net adjustments
Net cash provided by (used in) operating
activities
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired
Capital expenditures
Investment in subsidiaries
Loan to related companies
Loan repayment from related companies
Other investing activities
Net cash provided by (used in) investing
activities
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock
Repayment of debt
Net proceeds/(repayments) of short-term
borrowings
Net increase in book overdrafts
Capital contribution
Other financing activities
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Effect of exchange rates
Net change in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
(2.0)
(110.8)
100.5
10.7
—
10.7
0.4
11.1
$
(3.2)
—
(3.2)
7.8
4.6
$
(1.5)
(0.2)
(1.7)
2.4
0.7
$
$
(12.8)
(7.4)
(20.2)
63.8
43.6
$
—
—
—
—
— $
(6.8)
(7.6)
(14.4)
74.4
60.0
86
OPERATING ACTIVITIES:
Net income (loss)
Non-cash expenses
Equity in (earnings) loss of subsidiaries
Changes in working capital
Net adjustments
Net cash provided by (used in) operating
activities
INVESTING ACTIVITIES:
Capital expenditures
Investment in subsidiaries
Loan repayment from related parties
Dividend received from subsidiary
Other investing activities
Net cash provided by (used in) investing
activities
FINANCING ACTIVITIES:
Net proceeds/(repayments) of short-term
borrowings
Repayment of intercompany borrowings
Dividends paid
Capital contribution
Acquisition of treasury stock
Other financing activities
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Effect of exchange rates
Net change in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2013
(In millions)
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
Eliminations Consolidated
$
127.3 $
(48.1)
(80.5)
1.3
(127.3)
80.5 $
(30.4)
(2.1)
256.2
223.7
2.4 $
8.0
19.8
(301.4)
(273.6)
(21.2) $
16.4
—
19.9
36.3
(62.8) $
—
62.8
—
62.8
126.2
(54.1)
—
(24.0)
(78.1)
304.2
(271.2)
15.1
—
48.1
(3.1)
—
—
—
2.1
(1.0)
3.8
—
(1.7)
—
—
(0.5)
1.6
—
173.2
(127.1)
(35.3)
—
(20.2)
—
—
—
6.7
10.8
(13.5)
—
127.1
35.3
(173.2)
—
—
(10.6)
—
—
—
(6.6)
(9.4)
(10.8)
(26.6)
—
—
—
—
— $
8.0
(4.8)
3.2
71.2
74.4
—
—
—
—
6.6
—
6.6
—
—
—
—
(6.6)
—
(16.5)
(173.2)
—
28.7
4.6
(0.6)
—
127.1
—
—
(156.4)
126.5
(14.4)
(127.1)
(6.6)
—
—
(7.4)
—
—
(27.0)
173.2
—
(1.5)
(6.6)
(155.5)
144.7
—
—
—
0.4
0.4 $
(7.7)
—
(7.7)
15.5
7.8 $
—
0.5
0.5
1.9
2.4 $
$
15.7
(5.3)
10.4
53.4
63.8 $
87
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2015
(In millions)
ASSETS
Cash and cash equivalents
Receivables less provision for allowances,
claims and doubtful accounts
Inventories
Intercompany receivable
Other current assets
Total current assets
Investments in subsidiaries
Intercompany notes receivable
Property, plant and equipment net of
accumulated depreciation
Deferred charges
Other noncurrent assets
Total assets
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable
Intercompany payable
Long-term debt due within one year
Salaries, wages, and commissions
Other current liabilities
Total current liabilities
Dividends in excess of investment in
subsidiaries
Long-term debt
Long-term debt – intercompany
Deferred employee benefits
Other noncurrent liabilities
Total liabilities
Redeemable noncontrolling interest
Ryerson Holding Corporation stockholders’
equity
Noncontrolling interest
Total liabilities and equity
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
Eliminations
Consolidated
$
— $
5.2
$
0.4
$
57.6
$
— $
63.2
$
$
—
—
—
—
—
—
—
228.7
488.2
—
17.0
739.1
462.0
—
—
—
29.9
29.9
370.3
14.4
91.5
$ 1,677.3
— $
—
—
—
0.6
0.6
170.9
—
—
—
—
171.5
—
45.0
111.8
—
24.8
48.0
229.6
—
1,012.5
257.6
308.2
40.3
1,848.2
—
$
$
(141.6)
—
29.9
(170.9)
—
$ 1,677.3
$
$
6.6
13.5
132.7
2.3
155.5
287.4
301.0
3.7
—
60.1
807.7
132.4
—
—
0.5
0.6
133.5
—
—
—
—
0.7
134.2
—
673.5
—
807.7
$
$
$
70.4
54.1
—
12.2
194.3
0.1
—
26.3
1.6
4.1
226.4
28.9
20.9
22.0
1.0
9.8
82.6
—
—
43.4
19.5
4.1
149.6
0.1
76.0
0.7
226.4
—
—
(132.7)
2.5
(130.2)
(749.5)
(301.0)
—
—
(4.4)
$ (1,185.1) $
$
— $
(132.7)
—
—
2.1
(130.6)
(170.9)
—
(301.0)
—
(4.0)
(606.5)
—
(578.6)
—
$ (1,185.1) $
305.7
555.8
—
34.0
958.7
—
—
400.3
16.0
181.2
1,556.2
206.3
—
22.0
26.3
61.1
315.7
—
1,012.5
—
327.7
41.1
1,697.0
0.1
(141.6)
0.7
1,556.2
88
RYERSON HOLDING CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2014
(In millions)
ASSETS
Cash and cash equivalents
Receivables less provision for allowances,
claims and doubtful accounts
Inventories
Intercompany receivable
Other current assets
Total current assets
Investments in subsidiaries
Intercompany notes receivable
Property, plant and equipment net of
accumulated depreciation
Deferred income taxes
Other noncurrent assets
Total assets
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable
Intercompany payable
Deferred income taxes
Other current liabilities
Total current liabilities
Dividends in excess of investment in
subsidiaries
Long-term debt
Long-term debt – intercompany
Deferred employee benefits
Other noncurrent liabilities
Total liabilities
Redeemable noncontrolling interest
Ryerson Holding Corporation stockholders’
equity
Noncontrolling interest
Total liabilities and equity
Parent
Joseph T.
Ryerson
Guarantor
Non-guarantor
Eliminations
Consolidated
$
11.1
$
4.6
$
0.7
$
43.6
$
— $
60.0
$
$
—
—
11.4
0.2
22.7
—
—
—
39.2
—
61.9
10.0
—
—
0.5
10.5
177.5
—
—
—
—
188.0
—
303.3
633.5
—
12.5
953.9
471.6
—
373.2
—
95.3
$ 1,894.0
$
38.0
147.3
—
135.6
320.9
—
1,192.5
169.6
359.5
29.0
2,071.5
—
$
$
(126.1)
—
61.9
(177.5)
—
$ 1,894.0
$
$
14.0
32.0
157.3
14.4
218.4
316.5
221.3
8.1
—
77.7
842.0
137.1
—
—
1.9
139.0
—
—
—
—
8.4
147.4
—
694.6
—
842.0
$
$
$
83.5
73.4
—
17.4
217.9
—
—
46.9
3.1
3.0
270.9
35.4
21.6
—
36.2
93.2
—
—
51.7
25.7
4.2
174.8
1.0
93.5
1.6
270.9
—
—
(168.7)
(2.8)
(171.5)
(788.1)
(221.3)
—
(14.9)
(0.4)
$ (1,196.2) $
$
$
0.3
(168.9)
—
0.5
(168.1)
(177.5)
—
(221.3)
—
(18.7)
(585.6)
—
(610.6)
—
$ (1,196.2) $
400.8
738.9
—
41.7
1,241.4
—
—
428.2
27.4
175.6
1,872.6
220.8
—
—
174.7
395.5
—
1,192.5
—
385.2
22.9
1,996.1
1.0
(126.1)
1.6
1,872.6
89
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
SUMMARY BY QUARTER
(In millions except per share data)
2014
First Quarter
Second Quarter
Third Quarter (1)
Fourth Quarter
Year
2015
First Quarter (2)
Second Quarter (3)
Third Quarter (4)
Fourth Quarter (5)
Year
Income (Loss)
Before
Income
Taxes
Gross
Profit
Net Income
(Loss)
Net Income
(Loss)
Attributable
to Ryerson
Holding
Corporation
Basic and
Diluted
Earnings
(Loss) per
Share
147.7
154.4
149.5
142.2
593.8
150.0
165.8
150.3
101.6
567.7
$
$
$
$
$
4.5
5.0
(39.7)
3.3
(26.9) $
(3.0) $
25.8
12.8
(33.7)
1.9
$
$
1.4
2.5
(34.8)
4.7
(26.2) $
(2.8) $
15.6
6.7
(21.3)
(1.8) $
$
1.6
2.6
(34.7)
4.8
(25.7) $
(2.5) $
15.8
6.7
(20.5)
(0.5) $
0.08
0.13
(1.26)
0.15
(1.01)
(0.08)
0.49
0.21
(0.64)
(0.02)
Net Sales
$
874.4
931.5
947.9
868.4
$ 3,622.2
$
868.0
840.4
790.0
668.8
$ 3,167.2
$
$
$
$
(1)
(2)
(3)
(4)
(5)
Included in third quarter 2014 results is a $25.0 million charge to terminate the advisory services with Platinum Equity
Advisors, LLC in connection with our initial public offering on August 13, 2014. The third quarter of 2014 results also
includes the recognition of $7.7 million of transaction compensation expense associated with the initial public offering. The
Company also recognized $11.2 million of expense related to the premium paid to redeem $99.5 million of the 2018 Notes as
well as $1.2 million of expense to write-off unamortized debt issuance costs associated with the Notes. The third quarter
2014 results also includes a gain on sale of assets of $1.3 million.
Included in the first quarter 2015 results is a $12.3 million charge due to an other-than-temporary-impairment recognized on
an available-for-sale investment.
Included in the second quarter 2015 results is a $1.4 million impairment charge on assets held for sale to recognize the assets
at their fair value less cost to sell.
Included in the third quarter 2015 results is a $0.5 million impairment charge on assets held for sale to recognize the assets at
their fair value less cost to sell. The third quarter of 2015 results also includes a $2.9 million charge to write-off a portion of
the debt issuance costs associated with the Old Credit Facility.
Included in the fourth quarter 2015 results are:
- $4.6 million impairment charge related to certain assets that we determined did not have a recoverable carrying value based
on projected undiscounted cash flows;
- $4.0 million credit related to the settlement of litigation regarding the price of materials that we were charged;
- $2.5 million restructuring charge;
- $1.9 million gain related to the gain on sale of assets;
- $1.0 million impairment charge on assets held for sale to recognize the assets at their fair value less cost to sell; and,
- $0.2 million impairment charge as the carrying amount of certain intangible assets was not recoverable and the carrying
amount exceeded fair value.
90
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RYERSON HOLDING CORPORATION
(Parent Company Only)
STATEMENTS OF OPERATIONS
(In millions)
Administrative and other expenses
Equity in income (loss) of subsidiaries
Income (loss) before income taxes
Provision (benefit) for income taxes
Net income (loss)
2015
Year ended December 31,
2014
2013
(0.9) $
10.2
9.3
9.8
(0.5) $
(0.2) $
(17.3)
(17.5)
8.2
(25.7) $
(0.9)
80.5
79.6
(47.7)
127.3
$
$
See Notes to Condensed Financial Statements.
91
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RYERSON HOLDING CORPORATION
(Parent Company Only)
STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net income (loss)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments
Loss on intra-entity foreign currency transactions
Unrealized loss on available-for-sale investment
Other-than-temporary impairment on available-for-sale investment
Changes in defined benefit pension and other post-retirement benefit
plans
Other comprehensive income (loss), before tax
Income tax provision (benefit) related to items of other comprehensive
income (loss)
Comprehensive income (loss), after tax
2015
Year Ended December 31,
2014
2013
$
(0.5) $
(25.7) $
127.3
(12.4)
(8.6)
(8.9)
12.3
7.8
(9.8)
5.8
$
(16.1) $
(16.2)
—
(9.5)
—
(130.3)
(156.0)
(52.8)
(128.9) $
(12.8)
—
—
—
126.2
113.4
49.5
191.2
See Notes to Condensed Financial Statements.
92
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RYERSON HOLDING CORPORATION
(Parent Company Only)
STATEMENTS OF CASH FLOWS
(In millions)
Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Equity in (earnings) losses of subsidiaries
Deferred income taxes
(Increase) decrease in receivables from subsidiaries
(Increase) decrease in other assets
Increase (decrease) in accounts payable
Increase (decrease) in accrued liabilities
Net adjustments
Net cash provided by operating activities
Investing Activities:
Investment in subsidiaries
Dividends received from subsidiaries
Net cash provided by (used in) investing activities
Financing activities:
Net proceeds from issuance of common stock
Acquisition of treasury stock
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of period
Cash and cash equivalents—end of period
2015
Year ended December 31,
2014
2013
$
(0.5) $
(25.7) $
127.3
(10.2)
9.3
11.4
0.2
(10.0)
0.1
0.8
0.3
(11.4)
—
(11.4)
—
—
—
(11.1)
11.1
$
— $
17.3
8.5
(1.0)
(0.2)
10.0
0.1
34.7
9.0
(110.7)
—
(110.7)
112.4
—
112.4
10.7
0.4
11.1
$
(80.5)
(47.7)
1.0
—
—
(0.1)
(127.3)
—
—
6.6
6.6
—
(6.6)
(6.6)
—
0.4
0.4
See Notes to Condensed Financial Statements.
93
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RYERSON HOLDING CORPORATION
(Parent Company Only)
BALANCE SHEETS
(In millions, except shares)
Assets
Current assets:
Cash and cash equivalents
Prepaid expenses and other assets
Receivable from subsidiaries
Total current assets
Deferred income taxes
Total assets
Liabilities
Accounts payable
Accrued liabilities
Total current liabilities
Dividends in excess of investment in subsidiaries
Total liabilities
Ryerson Holding Corporation Stockholders’ equity (deficit)
Preferred stock, $0.01 par value; 7,000,000 shares authorized and no shares issued at
2015 and 2014
Common stock, $0.01 par value; 100,000,000 shares authorized and 32,312,200
shares issued at 2015; 100,000,000 shares authorized and 32,250,000 issued at 2014
Capital in excess of par value
Accumulated deficit
Treasury stock at cost – Common stock of 212,500 shares in 2015 and 2014
Accumulated other comprehensive loss
Total Ryerson Holding Corporation stockholders’ equity (deficit)
Total liabilities and stockholders’ equity
See Notes to Condensed Financial Statements.
At December 31,
2015
2014
— $
—
—
—
29.9
29.9
$
— $
0.6
0.6
170.9
171.5
—
0.3
302.6
(130.9)
(6.6)
(307.0)
(141.6)
29.9
$
11.1
0.2
11.4
22.7
39.2
61.9
10.0
0.5
10.5
177.5
188.0
—
0.3
302.0
(130.4)
(6.6)
(291.4)
(126.1)
61.9
$
$
$
$
94
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RYERSON HOLDING CORPORATION
(Parent Company Only)
NOTES TO FINANCIAL STATEMENTS
(In millions)
Note 1: Basis of presentation
In the parent company only financial statements, Ryerson Holding’s investment in subsidiaries is stated at cost plus equity in
undistributed earnings of subsidiaries since the date of acquisition. Ryerson Holding’s share of net income of its unconsolidated
subsidiaries is included in consolidated income using the equity method. The parent company only financial statements should be read
in conjunction with the Company’s consolidated financial statements.
On July 23, 2014, Ryerson Holding’s Board of Directors approved a 4.25 for 1.00 stock split of Ryerson Holding’s common
stock to be effected prior to the closing of Ryerson Holding’s initial public offering. Per share and share amounts presented herein
have been adjusted for all periods to give retroactive effect to the 4.25 for 1.00 stock split.
Note 2: Guarantees
On December 30, 2014, Ryerson Holding entered into agreements with JT Ryerson, as issuer, Wells Fargo Bank, as trustee, and
each of the guarantors party to the 2017 and 2018 Notes, whereby Ryerson Holding provided unconditional guarantees of the 2017
and 2018 Notes, jointly and severally with the other guarantors of the 2017 and 2018 Notes.
Until their repayment in 2014, Ryerson Holding had guaranteed $35 million of loans made between three of its wholly-owned
subsidiaries.
Note 3: Dividends from subsidiaries
Cash dividends paid to Ryerson Holding from its consolidated subsidiaries were zero, zero, and $6.6 million for the years ended
December 31, 2015, 2014 and 2013, respectively.
95
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013
(In millions)
Balance at
Beginning
of Period
Acquisition of
Business
Provision for Allowances
Additions
Charged
to Other
Comprehensive
Income (Loss)
Additions
Charged
(Credited)
to Income
Deductions
from
Reserves
Balance
at End
of Period
Year Ended December 31, 2015
Allowance for doubtful accounts
Valuation allowance—deferred tax assets
Year Ended December 31, 2014
Allowance for doubtful accounts
Valuation allowance—deferred tax assets
Year Ended December 31, 2013
Allowance for doubtful accounts
Valuation allowance—deferred tax assets
NOTES:
(A) Bad debts written off during the year.
$
$
$
5.3 $
22.5
5.4 $
23.1
— $
—
2.3 $
0.1
— $
—
0.7 $
(0.6)
7.1 $
147.3
— $
—
(0.7) $
(124.2)
— $
—
— $
—
— $
—
(2.4)(A) $
—
(0.8)(A) $
—
(1.0)(A) $
—
5.2
22.6
5.3
22.5
5.4
23.1
96
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures pursuant to SEC Rule 13a-15 as of the end of the period covered by this report. Based on the
foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2015.
Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of Independent
Registered Public Accounting Firm
The report of management on our internal control over financial reporting as of December 31, 2015 and the attestation report of
our independent registered public accounting firm on our internal control over financial reporting are set forth in Part II, "Item 8.
Financial Statements and Supplementary Data" in this report.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting that has materially affected or is
reasonably likely to materially affect the Company’s internal controls over financial reporting during the quarter ended December 31,
2015.
ITEM 9B. OTHER INFORMATION.
None.
97
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Except as set forth below, the information required by this item will be contained in our 2016 Proxy Statement and is
incorporated herein by reference.
Information concerning directors and nominees for director is presented under the caption “Board of Directors” in our proxy
statement and is incorporated herein by reference.
Information concerning our executive officers is presented under the caption “Executive Officers of the Registrant” in Part 1 of
this Form 10-K and is incorporated herein by reference.
Information concerning our Audit Committee and our Audit Committee financial expert is set forth under the caption “Audit
Committee” in our proxy statement and is incorporated herein by reference.
Information concerning the procedures by which security holders may recommend nominees to our Board of Directors is set
forth under the caption “Other Information—Stockholder Nominations for Directors” in our proxy statement and is incorporated
herein by reference.
Information concerning compliance with Section 16 of the Securities Exchange Act of 1934 is set forth under the caption “Stock
Ownership—Section 16(a) Beneficial Ownership Reporting Compliance” in our proxy statement and is incorporated herein by
reference.
Code of Ethics
Our Board of Directors has adopted a Code of Ethics that contains the ethical principles by which our chief executive officer,
chief financial officer and general counsel, among others, are expected to conduct themselves when carrying out their duties and
responsibilities. A copy of our Code of Ethics may be found on our website at www.ryerson.com. Our website is not incorporated by
reference into this Annual Report. We will provide a copy of our Code of Ethics to any person, without charge, upon request, by
writing to the Compliance Officer, Ryerson Holding Corporation, 227 West Monroe Street, 27th Floor, Chicago, Illinois 60606
(telephone number (312) 292-5000). We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an
amendment to, or waiver from, a provision of our Code of Ethics by posting such information on our website at www.ryerson.com or
by filing a Form 8-K with the SEC.
ITEM 11.
EXECUTIVE COMPENSATION.
Information concerning compensation of our executive officers and directors for the year ended December 31, 2015, is
presented under the captions “Executive Compensation,” “Compensation Tables,” and “Director Compensation” in our proxy
statement. This information is incorporated herein by reference.
Information concerning compensation committee interlocks is presented under the caption “Compensation Committee—
Compensation Committee Interlocks and Insider Participation” in our proxy statement and is incorporated herein by reference.
The report of our Compensation Committee can be found under the caption “Compensation Committee Report” in our proxy
statement and is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
Information concerning the security ownership of certain beneficial owners as of February 29, 2016, is set forth under the
caption “Stock Ownership—Ownership of More Than 5% of Ryerson Stock” in our proxy statement and is incorporated herein by
reference.
Information concerning the security ownership of our directors and executive officers as of February 29, 2016, is set forth under
the caption “Stock Ownership—Directors and Executive Officers” in our proxy statement and is incorporated herein by reference.
98
Securities Authorized for Issuance under Equity Compensation Plans
Our stockholders have approved our 2014 Omnibus Incentive Plan, which is the Company’s only equity compensation plan.
Securities Authorized for Issuance under Equity Compensation Plans
The table below presents our equity compensation plan information as of December 31, 2015:
Plan Category
Equity compensation plans approved by
security holders (1)
Equity compensation plans not approved by
security holders
Total
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted-
average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in first column)
246,800 (2) $
—
246,800
$
—
—
—
1,386,000
—
1,386,000
(1) Consists of the Company’s “2014 Omnibus Incentive Plan,” which is described in Amendment No. 23 to our registration
statement on Form S-1, filed on August 7, 2014.
(2) Includes (i) 146,244 shares of our common stock subject to performance units, which vest depending on continued
employment or service and the level of attainment of certain performance metrics and (ii) 100,556 shares of our common
stock subject to restricted stock units, which vest depending on continued employment or service.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Information concerning the independence of our directors, certain relationships and related transactions during 2015 and our
policies with respect to such transactions is set forth under the captions “Board of Directors” and “Related Party Transactions” in our
proxy statement and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Information concerning principal accountant fees and services is set forth under the captions “Items You May Vote On—
Ratification of the Appointment of Independent Registered Public Accounting Firm,” “Audit Committee—Audit, Audit-Related, and
Other Nonaudit Services,” and “Audit Committee—Pre-approval Policies” in our proxy statement and is incorporated herein by
reference.
99
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Financial Statements and Schedules
PART IV
The following financial statements and schedules listed below are included in this Form 10-K.
Financial Statements (See Item 8)
Schedule I
Schedule II
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require
submission of the schedules.
(b) Exhibits
The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index, which is attached hereto, and
incorporated by reference herein.
100
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Ryerson Holding Corporation has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RYERSON HOLDING CORPORATION
By:
/s/ Erich S. Schnaufer
Erich S. Schnaufer
Chief Financial Officer (duly authorized
signatory and principal financial officer of the
registrant)
Date: March 9, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Edward J. Lehner
Edward J. Lehner
/s/ Erich S. Schnaufer
Erich S. Schnaufer
/s/ Kirk K. Calhoun
Kirk K. Calhoun
/s/ Court D. Carruthers
Court D. Carruthers
/s/ Eva M. Kalawski
Eva M. Kalawski
/s/ Jacob Kotzubei
Jacob Kotzubei
/s/ Stephen P. Larson
Stephen P. Larson
/s/ Philip E. Norment
Philip E. Norment
/s/ Mary Ann Sigler
Mary Ann Sigler
President and Chief Executive Officer (Principal
March 9, 2016
Executive Officer)
Chief Financial Officer (Principal Financial Officer
March 9, 2016
and Principal Accounting Officer)
March 9, 2016
March 9, 2016
March 9, 2016
March 9, 2016
March 9, 2016
March 9, 2016
March 9, 2016
Director
Director
Director
Director
Director
Director
Director
101
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
10.1
10.2
EXHIBIT INDEX
Exhibit Description
Form of Third Amended and Restated Certificate of Incorporation of Ryerson Holding Corporation.(a)
Form of Amended and Restated Bylaws of Ryerson Holding Corporation.(b)
Form of Common Stock Certificate of Ryerson Holding Corporation.*
Indenture, dated as of October 10, 2012, by and among Joseph T. Ryerson & Son, Inc., as Issuer, the Guarantors party
thereto, and Wells Fargo Bank, National Association, as the Trustee, relating to the Issuer’s 9% Senior Secured Notes
due 2017.(c)
First Supplemental Indenture, dated as of December 30, 2014, by and among Joseph T. Ryerson & Son, Inc., as Issuer,
the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, relating to Ryerson Holding
Corporation’s guarantee of the Issuer’s 9% Senior Secured Notes due 2017.(c)
Indenture, dated as of October 10, 2012, by and among Joseph T. Ryerson & Son, Inc., as Issuer, the Guarantors party
thereto and Wells Fargo Bank, National Association, as the Trustee, relating to the Issuer’s 11 1
2018.(c)
4% Senior Notes due
First Supplemental Indenture, dated as of December 30, 2014, by and among Joseph T. Ryerson & Son, Inc., as Issuer,
the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, relating to Ryerson Holding
Corporation’s guarantee of the Issuer’s 11 1
4% Senior Notes due 2018.(c)
Second Supplemental Indenture, dated as of January 21, 2015, by and among Joseph T. Ryerson & Son, Inc., as Issuer,
the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, relating to the guarantee by Fay
Industries, Inc. and Fay Group, Ltd. of the Issuer’s 9% Senior Secured Notes due 2017. (n)
Second Supplemental Indenture, dated as of January 21, 2015, by and among Joseph T. Ryerson & Son, Inc., as Issuer,
the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, relating to the guarantee by Fay
Industries, Inc. and Fay Group, Ltd. of the Issuer’s 11 1
4% Senior Notes due 2018. (n)
Form of Investor Rights Agreement, by and among Ryerson Holding Corporation, Platinum Equity Capital Partners,
L.P., Platinum Equity Capital Partners-PF, L.P., Platinum Equity Capital Partners-A, L.P., Platinum Equity Capital
Partners II, L.P., Platinum Equity Capital Partners-PF II, L.P., Platinum Equity Capital Partners-A II, L.P. and Platinum
Rhombus Principals, LLC.(b)
Amended and Restated Stockholders’ Agreement, dated as of March 31, 2009, by and among Rhombus Holding
Corporation, Platinum Equity Capital Partners, L.P., Platinum Equity Capital Partners-A, L.P., Platinum Equity Capital
Partners-PF, L.P., Platinum Equity Capital Partners II, L.P., Platinum Equity Capital Partners-A II, L.P., Platinum Equity
Capital Partners-PF II, L.P., Platinum Rhombus Principals, LLC, and the stockholders party thereto.(m)
Amendment to Amended and Restated Stockholders’ Agreement, dated as of April 1, 2009, by and among Rhombus
Holding Corporation, Platinum Equity Capital Partners, L.P., Platinum Equity Capital Partners-A, L.P., Platinum Equity
Capital Partners-PF, L.P., Platinum Equity Capital Partners II, L.P., Platinum Equity Capital Partners-A II, L.P.,
Platinum Equity Capital Partners-PF II, L.P., Platinum Rhombus Principals, LLC, Moelis Capital Partners Opportunity
Fund I, LP and Moelis Capital Partners Opportunity Fund I-A, LP.(m)
Credit Agreement, dated as of October 19, 2007, by and among Rhombus Merger Corporation, Joseph T. Ryerson &
Son, Inc., Banc of America Securities LLC, as sole lead arranger and book manager, Ryerson Canada, Inc., as Canadian
borrower, Wachovia Capital Finance Corporation (Central), as co-documentation agents, Wells Fargo Foothill, LLC,
General Electric Capital Corporation, as co-syndication agents, ABN AMRO Bank N.V., Bank of America, N.A. (acting
through its Canada branch), as Canadian agent, Bank of America, N.A., as administrative agent, and the lenders named
therein.(d)
Amendment No. 1, dated as of March 14, 2011, to the Credit Agreement, dated as of October 19, 2007, by and among
Rhombus Merger Corporation, Joseph T. Ryerson & Son, Inc., Bank of America Securities LLC, as sole lead arranger
and book manager, Ryerson Canada, Inc., as Canadian borrower, Wachovia Capital Finance Corporation (Central), as
co-documentation agents, Wells Fargo Foothill, LLC, General Electric Capital Corporation, as co-syndication agents,
ABN AMRO Bank N.V., Bank of America, N.A. (acting through its Canada branch), as Canadian agent, Bank of
America, N.A., as administrative agent, and the lenders named therein.(e)
102
Exhibit
Number
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
Exhibit Description
Amendment No. 2, dated as of September 25, 2012, to the Credit Agreement, dated as of October 19, 2007, by and
among Rhombus Merger Corporation, Joseph T. Ryerson & Son, Inc., Bank of America Securities LLC, as sole lead
arranger and book manager, Ryerson Canada, Inc., as Canadian borrower, Wachovia Capital Finance Corporation
(Central), as co-documentation agents, Wells Fargo Foothill, LLC, General Electric Capital Corporation, as co-
syndication agents, ABN AMRO Bank N.V., Bank of America, N.A. (acting through its Canada branch), as Canadian
agent, Bank of America, N.A., as administrative agent, and the lenders named therein.(k)
Amendment No. 3, dated as of April 3, 2013, to the Credit Agreement, dated as of October 19, 2007, by and among
Rhombus Merger Corporation, Joseph T. Ryerson & Son, Inc., Bank of America Securities LLC, as sole lead arranger
and book manager, Ryerson Canada, Inc., as Canadian borrower, Wachovia Capital Finance Corporation (Central), as
co-documentation agents, Wells Fargo Foothill, LLC, General Electric Capital Corporation, as co-syndication agents,
ABN AMRO Bank N.V., Bank of America, N.A. (acting through its Canada branch), as Canadian agent, Bank of
America, N.A., as administrative agent, and the lenders named therein.(b)
Amendment No. 4, dated as of March 11, 2015, to the Credit Agreement, dated as of October 19, 2007, by and among
Rhombus Merger Corporation and Joseph T. Ryerson & Son, Inc., as U.S. Borrowers, Bank of America Securities LLC,
as sole lead arranger and book manager, Ryerson Canada, Inc., as Canadian borrower, Wells Fargo Foothill, LLC and
Wachovia Capital Finance Corporation (Central), as co-documentation agents, ABN AMRO Bank N.V. and General
Electric Capital Corporation, as co-syndication agents, Bank of America, N.A. (acting through its Canada branch), as
Canadian agent, Bank of America, N.A., as administrative agent, and the lenders named therein. (n)
Amendment No. 5, dated as of May 26, 2015, to the Credit Agreement, dated as of October 19, 2007, by and among
Rhombus Merger Corporation and Joseph T. Ryerson & Son, Inc., as U.S. Borrowers, Bank of America Securities LLC,
as sole lead arranger and book manager, Ryerson Canada, Inc., as Canadian borrower, Wells Fargo Foothill, LLC and
Wachovia Capital Finance Corporation (Central), as co-documentation agents, ABN AMRO Bank N.V. and General
Electric Capital Corporation, as co-syndication agents, Bank of America, N.A. (acting through its Canada branch), as
Canadian agent, Bank of America, N.A., as administrative agent, and the lenders named therein.(q)
Guarantee and Security Agreement, dated as of October 19, 2007, by and among Rhombus Merger Corporation, the
pledgors and guarantors party thereto and Bank of America, N.A., as administrative agent.(d)
General Security Agreement, dated October 19, 2007, by and between Ryerson Canada, Inc. and Bank of America, N.A.,
as Canadian Agent.(d)
Ryerson Nonqualified Savings Plan.(f)
Offer Letter Agreement, dated November 9, 2010, between Ryerson Inc. and Michael C. Arnold.(e)
Offer Letter Agreement, dated June 29, 2012, between Ryerson Inc. and Edward J. Lehner.(g)
Ryerson Holding Corporation Retention Bonus Plan.(h)
Ryerson Annual Incentive Plan (as amended through June 14, 2007).(i)
Ryerson Holding Corporation 2014 Omnibus Incentive Plan.(j)
Offer Letter Agreement, dated May 7, 2015, by and between Ryerson Holding Corporation and Edward J. Lehner.(p)
Confidentiality, Non-Competition and Non-Solicitation Agreement, dated June 1, 2015, by and between Ryerson
Holding Corporation and Edward J. Lehner.(r)
Form of 2015 Restricted Stock Unit Agreement. (o)
Form of 2015 Performance Unit Agreement. (o)
Form of Director and Officer Indemnification Agreement.(l)
Form of Participation Agreement for the Ryerson Holding Corporation Retention Bonus Plan.(h)
Form of Incentive Compensation Award Agreement by and between Ryerson Holding Corporation and Michael C.
Arnold.(h)
Employment Agreement, dated December 10, 2004, between Ryerson Tull, Inc. and Kevin D. Richardson, as amended.
(n)
103
Exhibit
Number
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
Employment Agreement, dated January 3, 2005, between Ryerson Tull, Inc. and Michael Burbach, as amended. (n)
Exhibit Description
Offer Letter Agreement, dated August 30, 2013, between Ryerson Inc. and Roger W. Lindsay. (n)
Directors Compensation Summary Sheet.*
Offer Letter Agreement, dated November 9, 2010, by and between Ryerson Inc. and Michael C. Arnold. (e)
Intercreditor Agreement by and between Bank of America, N.A. as ABL Collateral Agent and Wells Fargo Bank,
National Association, as Notes Collateral Agent Dated as of October 10, 2012.*
Amendment No. 1, dated as of March 11, 2015, to the Intercreditor Agreement dated as of October 10, 2012, by and
between Bank of America, N.A. as ABL Collateral Agent and Wells Fargo Bank, National Association, as Notes
Collateral Agent.*
Joinder Agreement dated as of July 24, 2015, to Intercreditor Agreement dated as of October 10, 2012 and amended as
of March 11, 2015 by and between Bank of America, N.A. as ABL Collateral Agent and Wells Fargo Bank, National
Association, as Notes Collateral Agent.*
Credit Agreement, dated as of July 24, 2015, among Ryerson Holding Corporation, Joseph T. Ryerson & Son, Inc.,
Sunbelt-Turret Steel, Inc., Turret Steel Industries, Inc., Imperial Trucking Company, LLC, Wilcox-Turret Cold Drawn,
Inc., Fay Industries, Inc., Ryerson Procurement Corporation, Ryerson Canada, Inc., and each of the other borrowers and
guarantors, the lenders party thereto from time to time, and Bank of America, N.A., as the administrative agent and
collateral agent.(s)
Security Agreement, dated as of July 24, 2015, Ryerson Holding Corporation, Joseph T. Ryerson & Son, Inc.
(“Ryerson”), and the domestic subsidiaries of Ryerson from time to time party thereto in their capacities as pledgors,
assignors and debtors thereunder in favor of Bank of America, N.A., in its capacity as collateral agent, as pledgee,
assignee and secured party for the benefit of the secured parties.(s)
Canadian Security Agreement dated as of July 24, 2015 between Ryerson Canada, Inc. and Bank of America, N.A., in its
capacity as collateral agent.(s)
Canadian Security Agreement dated as of July 24, 2015 between Turret Steel Canada, ULC, and Bank of America, N.A.,
in its capacity as collateral agent.(s)
10.34
Employment Agreement, dated September 8, 2005, between Ryerson Tull, Inc. and Erich Schnaufer, as amended.*
21.1
23.1
31.1
31.2
32.1
32.2
List of Subsidiaries of Ryerson Holding Corporation.*
Consent of Independent Registered Public Accounting Firm.*
Certificate of the Principal Executive Officer of the Company, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
Certificate of the Principal Financial Officer of the Company, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
Written Statement of Edward J. Lehner, President and Chief Executive Officer of the Company pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
Written Statement of Erich S. Schnaufer, Chief Financial Officer, of the Company pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS
XBRL Instance Document*
101.SCH
XBRL Taxonomy Extension Schema Document*
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document*
*
(a)
Filed herewith.
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-22 filed on August 6, 2014 (File No. 333-164484).
104
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-15 filed on May 6, 2013 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form 8-K filed on January 5, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Inc.’s Form S-4 filed on July 3, 2008 (File No. 333-152102).
Incorporated by reference to Ryerson Holding Corporation’s Annual Report on Form 10-K for the year ended December 31,
2010 filed on March 15, 2011 (File No. 001-34735).
Incorporated by reference to Ryerson Inc.’s Form S-4/A-2 filed on February 24, 2009 (File No. 333-152102).
Incorporated by reference to Ryerson Inc.’s Form 8-K filed on July 3, 2012 (File No. 001-09117).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-19 filed on June 24, 2014 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1 filed on January 22, 2010 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-21 filed on July 24, 2014 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-16 filed on May 28, 2013 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-18 filed on March 27, 2014 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Form S-1/A-4 filed on April 16, 2010 (File No. 333-164484).
Incorporated by reference to Ryerson Holding Corporation’s Quarterly Report for the period ended March 31, 2015 on Form 10-
Q filed on May 7, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Holding Corporation’s Quarterly Report for the period ended June 30, 2015 on Form 10-Q
filed on August 12, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Holding Corporation’s Form 8-K filed on May 8, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Holding Corporation’s Form 8-K filed on June 1, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Holding Corporation’s Form 8-K filed on June 5, 2015 (File No. 001-34735).
Incorporated by reference to Ryerson Holding Corporation’s Form 8-K filed on July 29, 2015 (File No. 001-34735).
105
Board of Directors
Executive Officers
Stockholder Information
Edward J. Lehner
President & Chief Executive
Officer
Erich S. Schnaufer
Chief Financial Officer
Michael J. Burbach
President, North-West Region
Roger W. Lindsay
Chief Human Resources Officer
Kevin D. Richardson
President, South-East Region
Mark S. Silver
Executive Vice President,
General Counsel & Secretary
Investor Relations
227 W. Monroe St., 27th Floor
Chicago, Illinois 60606
312.292.5052
Stock Market Listing
Ryerson’s common stock is
listed on the New York Stock
Exchange (symbol RYI).
Transfer Agent
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Independent Registered Public
Accounting Firm
Ernst & Young LLP
Kirk K. Calhoun
Retired. Former partner at the
public accounting firm Ernst &
Young, LLP
Court D. Carruthers
Adviser to companies in the
distribution, eCommerce, and
supply chain sectors. Former
executive of W.W. Grainger,
Inc., a leading industrial supplier
Eva M. Kalawski
Partner, General Counsel and
Secretary at Platinum Equity
Advisors, LLC (“Platinum”)
Jacob Kotzubei
Partner at Platinum
Stephen P. Larson
Interim Chief Executive Officer,
Neovia Logistics Services, LLC,
an industrial contract logistics
company; former executive of
Caterpillar Inc., a leading
manufacturer
Philip E. Norment
Partner at Platinum
Mary Ann Sigler
Chief Financial Officer and
Chief Compliance Officer at
Platinum
BR783754-0316-AR