~~Table~~UNITED ofSTATES ~~Contents~~

~~Index~~SECURITIES toAND ~~Financial~~EXCHANGE ~~Statements~~COMMISSION

~~UNITED~~Washington, ~~STATES~~D.C. 20549

~~SECURITIES~~FORM ~~AND EXCHANGE COMMISSION~~ 10-K

~~Washington,~~ANNUAL ~~D.C.~~REPORT ~~20549~~PURSUANT TO SECTION 13 OR 15(d) OF THE

~~FORM~~SECURITIES ~~10-K~~ EXCHANGE ACT OF 1934

~~ANNUAL~~For ~~REPORT~~the ~~PURSUANT~~fiscal TOyear ~~SECTION~~ended December 31, 132011 ~~OR 15(d) OF THE~~

~~SECURITIES~~Commission ~~EXCHANGE~~File ~~ACT~~Number OF333-132918 ~~1934~~

~~For~~FLAG ~~the~~INTERMEDIATE ~~fiscal~~HOLDINGS ~~year~~CORPORATION ~~ended December 31, 2010~~

~~Commission~~(Exact ~~File~~name ~~Number~~of ~~333-132918~~Registrant as Specified in its Charter)

FLAG INTERMEDIATE HOLDINGS CORPORATION


Delaware		20-3779375
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2400 E. Commercial Blvd., Suite 905 Fort Lauderdale, Florida		33308
(Address of Principal Executive Offices)		(Zip Code)

~~(Exact~~Commission ~~name~~File ofNumber ~~Registrant~~1-13123 ~~as Specified in its Charter)~~

Delaware		20-3779375
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2400 E. Commercial Blvd., Suite 905 Fort Lauderdale, Florida		33308
(Address of Principal Executive Offices)		(Zip Code)

METALS USA, INC.

~~Commission~~(Exact ~~File~~name ~~Number~~of ~~1-13123~~Registrant as Specified in its Charter)

METALS USA, INC.


Delaware		76-0533626
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2400 E. Commercial Blvd., Suite 905 Fort Lauderdale, Florida		33308
(Address of Principal Executive Offices)		(Zip Code)

~~(Exact name of~~ Registrant’s astelephone ~~Specified~~number, inincluding ~~its~~area ~~Charter~~code: (954) 202-4000

Delaware		76-0533626
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2400 E. Commercial Blvd., Suite 905 Fort Lauderdale, Florida		33308
(Address of Principal Executive Offices)		(Zip Code)

Securities registered pursuant to Section 12(b) of the Act: None

~~Registrant’s~~Securities ~~telephone~~registered ~~number,~~pursuant ~~including~~to ~~area~~Section 12(g) ~~code~~of the Act: ~~(954) 202-4000~~None

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12(b)~~if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:. Yes ¨ No x ~~None~~

~~Securities~~Indicate ~~registered~~by check mark if the registrant is not required to file reports pursuant to Section 1213 or Section 15(gd) of the Exchange Act:. Yes x No ¨ ~~None~~

Indicate by check mark ifwhether the ~~Registrant~~registrant is(1) has afiled ~~well-known~~all ~~seasoned~~reports ~~issuer,~~required asto ~~defined~~be infiled ~~Rule~~by ~~405~~Section 13 or 15(d) of the ~~Securities~~ 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 ¨ No x¨

Indicate by check mark ifwhether the Registrant issubmitted ~~not~~electronically and posted on its corporate Website, if any, every Interactive Data File required to ~~file~~be ~~reports~~submitted and posted pursuant to ~~Section 13~~Rule or405 ~~Section 15~~of Regulation S-T during the preceding 12 months (d)or offor such shorter period that the ~~Exchange Act~~registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~Registrant~~of ~~(1) has~~delinquent ~~filed~~filers ~~all~~pursuant ~~reports required~~ to ~~be filed by Section~~Item 13405 orof ~~15(d)~~Regulation ofS-K ~~the Securities~~is ~~Exchange~~not ~~Act~~contained ofherein, ~~1934~~and ~~during~~will ~~the~~not ~~preceding~~be 12contained, ~~months~~to ~~(or~~the ~~for~~best ~~such~~of ~~shorter~~Registrant’s ~~period~~knowledge, ~~that~~in definitive ~~the~~proxy ~~Registrant~~or ~~was~~information ~~required~~statements toincorporated ~~file~~by ~~such~~reference ~~reports),~~in ~~and~~Part ~~(2) has~~III ~~been~~of ~~subject~~this toForm ~~such~~10-K ~~filing~~or ~~requirements~~any ~~for~~amendment ~~the~~to ~~past~~this ~~90 days~~Form 10-K. ~~Yes~~ ~~¨ No ¨~~x

Indicate by check mark whether the ~~Registrant~~registrant ~~submitted~~is ~~electronically~~a ~~and~~large ~~posted~~accelerated onfiler, ~~its~~an ~~corporate~~accelerated ~~Website~~filer, ifa ~~any,~~non-accelerated ~~every~~filer ~~Interactive~~or ~~Data~~a smaller ~~File~~reporting ~~required~~company. toSee bethe ~~submitted~~definitions ~~and posted pursuant to Rule 405~~ of ~~Regulation~~“large ~~S-T~~accelerated ~~during~~filer,” ~~the~~“accelerated ~~preceding~~filer” 12and ~~months~~“smaller ~~(or~~reporting ~~for~~company” ~~such~~in ~~shorter~~Rule ~~period~~12b-2 ~~that~~of the ~~registrant~~Exchange ~~was required to submit and post such files)~~Act. ~~Yes ¨ No ¨~~

~~Indicate by check mark if disclosure of delinquent filers pursuant to Item~~Large ~~405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in~~accelerated filer ¨ Accelerated ~~definitive proxy or information statements incorporated by reference in Part III of this Form 10~~filer ¨ Non-Kaccelerated orfiler x Smaller ~~any amendment to this Form~~reporting ~~10-K.~~company x¨

Indicate by check mark whether the ~~Registrant~~registrant is a ~~large~~shell ~~accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting~~ company. ~~See~~(as ~~the~~defined ~~definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”~~ in Rule 12b-2 of the Exchange Act). Yes ¨ No x ~~(Check one):~~

~~Large~~There is no market for the Registrant’s common stock. As of March ~~accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller~~14, ~~reporting~~2012, ~~company ¨~~100 shares of the Registrant’s common stock were outstanding.

~~Indicate~~DOCUMENTS byINCORPORATED ~~check~~BY ~~mark~~REFERENCE ~~whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x~~

~~There is no market for the Registrant’s common stock~~None. ~~As of March 11, 2011, 100 shares of the Registrant’s common stock were outstanding.~~

~~DOCUMENTS~~OMISSION OF ~~INCORPORATED~~CERTAIN BYINFORMATION ~~REFERENCE~~

~~None~~Flag Intermediate Holdings Corporation and Metals USA, Inc. meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I(2) to Form 10-K.

~~OMISSION~~ TABLE OF ~~CERTAIN~~CONTENTS ~~INFORMATION~~

Flag Intermediate Holdings Corporation and Metals USA, Inc. meet the conditions set forth in General Instruction 1(1)(a) and (b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I(2) to Form 10-K.


	Part I

Item 1.	Business	4

Item 1A.	Risk Factors	16

Item 1B.	Unresolved Staff Comments	23

Item 2.	Properties	24

Item 3.	Legal Proceedings	26

Item 4.	Mine Safety Disclosures.	26

	Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities	27

Item 6.	Selected Financial Data	28

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 8.	Financial Statements and Supplementary Data	51

	Report of Independent Registered Public Accounting Firm	51

	Consolidated Balance Sheets	52

	Consolidated Statements of Operations	53

	Consolidated Statements of Stockholder’s Equity and Comprehensive Income (Loss)	54

	Consolidated Statements of Cash Flows	55

	Notes to Consolidated Financial Statements	56

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	95

Item 9A.	Controls and Procedures	95

Item 9B.	Other Information

	Part III

Item 10.	Directors, Executive Officers and Corporate Governance	97

Item 11.	Executive Compensation	97

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	97

Item 13.	Certain Relationships and Related Transactions, and Director Independence	97

Item 14.	Principal Accounting Fees and Services	97

	Part IV

Item 15.	Exhibits, Financial Statement Schedules	99

Signatures		100

Index of Exhibits		102

~~Table~~1 ~~of Contents~~

~~Index~~FORWARD-LOOKING toSTATEMENTS ~~Financial Statements~~

~~TABLE~~This OFAnnual ~~CONTENTS~~Report on Form 10-K contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Annual Report, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements appear in a number of places, including Item 1. “Business,” Item 1A. “Risk Factors,” Item 3. “Legal Proceedings” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “should,” “plan,” “project” and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:

	Part I
Item 1.	Business	5
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	24
Item 2.	Properties	25
Item 3.	Legal Proceedings	27
Item 4.	[Removed and Reserved]	27
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities	28
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 8.	Financial Statements and Supplementary Data	50
	Report of Independent Registered Public Accounting Firm	50
	Consolidated Balance Sheets	51
	Consolidated Statements of Operations	52
	Consolidated Statements of Stockholder’s Equity and Comprehensive Income (Loss)	53
	Consolidated Statements of Cash Flows	54
	Notes to Consolidated Financial Statements	55
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	87
Item 9A.	Controls and Procedures	87
Item 9B.	Other Information	87
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	88
Item 11.	Executive Compensation	88
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	88
Item 13.	Certain Relationships and Related Transactions, and Director Independence	88
Item 14.	Principal Accounting Fees and Services	88
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	89
Signatures		90
Index of Exhibits		92

•

our projected operating or financial results, including anticipated cash flows from operations and asset sale proceeds for 2012;

2• our expectations regarding capital expenditures, interest expense and other payments;

~~Table~~• ofour ~~Contents~~beliefs and assumptions relating to our liquidity position, including our ability to adapt to changing market conditions; and

~~Index~~• our ability to ~~Financial~~compete ~~Statements~~effectively for market share with industry participants.

~~FORWARD~~Any or all of our forward-~~LOOKING~~looking ~~STATEMENTS~~statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors including, among others:

~~This~~• ~~Annual Report on Form 10-K contains statements reflecting assumptions~~supply, ~~expectations~~demand, ~~projections,~~prices intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Annual Report, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements appear in a number of places, including Item 1. “Business,” Item 1.A “Risk Factors,” Item 3. “Legal Proceedings” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other ~~factors~~market ~~that~~conditions ~~could~~for ~~cause~~steel ~~our actual results~~ and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “should,” “plan,” “project” and other ~~words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:~~ commodities;

• ~~our~~the ~~projected~~timing ~~operating or financial results, including anticipated cash flows from operations~~ and ~~asset~~extent ~~sale~~of ~~proceeds~~changes ~~for~~in ~~2011~~commodity prices;

• ~~our~~the ~~expectations~~effects ~~regarding~~of ~~capital~~competition ~~expenditures,~~in ~~interest~~our ~~expense~~business ~~and other payments~~lines;

• ~~our~~the ~~beliefs~~condition ~~and~~of ~~assumptions~~the ~~relating~~steel toand ~~our~~metal ~~liquidity~~markets ~~position~~generally, ~~including~~which ~~our~~will ~~ability~~be toaffected ~~adapt~~by tointerest ~~changing~~rates, ~~market~~foreign ~~conditions;~~currency fluctuations and general economic conditions;

• ~~our~~the ability toof ~~compete~~our ~~effectively~~counterparties ~~for~~to ~~market~~satisfy ~~share~~their ~~with~~financial ~~industry participants.~~commitments;

~~Any~~• ortariffs ~~all~~and ofother ~~our~~government ~~forward-looking~~regulations ~~statements~~relating ~~may turn out~~ to beour ~~wrong.~~products ~~They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties~~ and ~~other factors including, among others:~~ services;

• ~~supply,~~adverse ~~demand,~~developments ~~prices~~in ~~and~~our ~~other~~relationship ~~market~~with ~~conditions~~both ~~for~~our ~~steel~~key employees and ~~other~~unionized ~~commodities~~employees;

• operational factors affecting the ~~timing~~ongoing ~~and~~commercial ~~extent~~operations of our facilities, including catastrophic weather-related damage, regulatory approvals, permit issues, unscheduled blackouts, outages or repairs, unanticipated changes in ~~commodity~~fuel ~~prices~~costs or availability of fuel emission credits or workforce issues;

• ~~the~~our ~~effects~~ability ofto ~~competition~~operate in our ~~business~~businesses ~~lines~~efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;

• ~~the~~restrictive ~~condition~~covenants ofin ~~the~~our ~~steel~~indebtedness ~~and~~that ~~metal~~may ~~markets~~adversely ~~generally,~~affect ~~which~~our ~~will~~operational ~~be affected by interest rates, foreign currency fluctuations and general economic conditions~~flexibility;

• general political conditions and developments in the ~~ability~~United ofStates ~~our~~and ~~counterparties~~in toforeign ~~satisfy~~countries ~~their~~whose ~~financial~~affairs ~~commitments~~affect supply, demand and markets for steel, metals and metal products;

• ~~tariffs~~our ~~and~~ability ~~other government regulations relating~~ to ~~our~~retain ~~products~~key ~~and services~~employees; and

• ~~adverse developments in~~ our ~~relationship~~expectations with ~~both~~respect to our ~~key~~acquisition ~~employees and unionized employees;~~activity.

•2 operational factors affecting the ongoing commercial operations of our facilities, including catastrophic weather-related damage, regulatory approvals, permit issues, unscheduled blackouts, outages or repairs, unanticipated changes in fuel costs or availability of fuel emission credits or workforce issues;

•In addition, there may be other factors that could cause our ~~ability~~actual results to ~~operate~~be materially ~~our~~different ~~businesses~~from ~~efficiently~~the results referenced in the forward-looking statements, ~~manage~~some ~~capital~~of ~~expenditures~~which ~~and~~are ~~costs~~included (elsewhere in this Form 10-K, including ~~general~~in Item 1A. “Risk Factors,” and ~~administrative~~in ~~expenses)~~Item 7. “Management’s Discussion and ~~generate~~Analysis ~~earnings~~of Financial Condition and ~~cash~~Results ~~flow;~~of Operations.” Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements contained in this Form 10-K are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made, and we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this Form 10-K, except as otherwise required by applicable law.

•3 ~~restrictive covenants in our indebtedness that may adversely affect our operational flexibility;~~

•PART ~~general~~I ~~political conditions and developments in the United States and in foreign countries whose affairs affect supply, demand and markets for steel, metals and metal products;~~

•Item ~~our~~1. ~~ability to retain key employees; and~~Business

•Overview ~~our expectations with respect to our acquisition activity.~~

3Flag Intermediate Holdings Corporation is a corporation formed under the laws of the state of Delaware (“Flag Intermediate”). Flag Intermediate and its wholly owned subsidiary, Metals USA, Inc. (“Metals USA”), are referred to collectively herein as the “Company.” Flag Intermediate and Metals USA are wholly owned subsidiaries of Metals USA Holdings Corp. (“Metals USA Holdings”).

~~Table~~As one of ~~Contents~~the largest metal service center businesses in the United States, we believe that we are a leading provider of value-added processed carbon steel, stainless steel, aluminum, red metals, manufactured metal components and inventory management services. We believe that we serve an important function as an intermediary between primary metal producers that generally sell large volumes in limited sizes and configurations and end-users that generally require more services and smaller quantities of customized products. Operating 46 facilities comprising approximately 5.9 million square feet of industrial space, our metal service center business sold more than 1,396 thousand tons of metal products in 2011. We sell our products and services to a diverse customer base and broad range of end-user markets, including the aerospace, automotive industry manufacturing, defense, heavy equipment, marine transportation, commercial construction, office furniture manufacturing, and energy and oilfield service industries, among several others, throughout the United States. We strive to earn a margin over the cost of metal. Management’s strategy, manifested through organic growth initiatives and our acquisitions of metal service center businesses, focuses on maximizing the margin we earn over the cost of metal by offering additional value-added processing services and diversifying our product mix. We believe our growth and acquisition strategy, in combination with management’s demonstrated ability to manage metal purchasing and inventories to consistently meet our customers’ high expectations for service and reliability, serves as a foundation for future revenue growth and stable operating profit per ton through the economic cycle.

~~Index~~We operate in three reportable business segments: Plates and Shapes Group, Flat Rolled and Non-Ferrous Group, and Building Products Group. Our Plates and Shapes and Flat Rolled and Non-Ferrous Groups perform customized, value-added processing services to ~~Financial~~unimproved ~~Statements~~steel and other metals required to meet specifications provided by our customers in addition to offering inventory management and just-in-time delivery services, among others. These services enable our customers to reduce material costs, decrease capital required for raw materials inventory and processing equipment, and save time, labor, warehouse space and other expenses. The customers of our Plates and Shapes and Flat Rolled and Non-Ferrous Groups are in the aerospace, automotive industry manufacturing, defense, heavy equipment, marine transportation, commercial construction, office furniture manufacturing, and energy and oilfield services industries. Our Building Products Group manufactures finished building products for distributors and contractors engaged in the residential remodeling industry.

InOn ~~addition~~April 14, ~~there~~2010, ~~may~~Metals beUSA ~~other~~Holdings ~~factors~~completed ~~that~~its ~~could~~initial ~~cause~~public ~~our~~offering ~~actual~~of ~~results~~11,426,315 toshares beof its ~~materially~~common ~~different~~stock ~~from~~at $21.00 ~~the~~per ~~results~~share ~~referenced in~~ (the ~~forward-looking statements~~“IPO”), ~~some~~as ofdescribed ~~which~~in ~~are~~Metals ~~included~~USA ~~elsewhere~~Holdings’ inRegistration ~~this~~Statement on Form 10S-K1, ~~including~~as inamended ~~Item 1A,~~(File ~~“Risk Factors,” and in Item~~No. 7333-150999). ~~“Management’s~~As ~~Discussion and~~a ~~Analysis~~result of ~~Financial~~the ~~Condition~~IPO, ~~and~~the ~~Results~~percentage of ~~Operations.”~~the ~~Many~~Metals ofUSA ~~these~~Holdings’ outstanding ~~factors~~capital ~~will~~stock beheld ~~important~~by innon-affiliates ~~determining~~as ~~our~~of ~~actual future results. Consequently~~December 31, no2011 ~~forward-looking~~is ~~statement~~approximately ~~can be guaranteed~~31%. ~~Our~~Investment ~~actual~~funds ~~future~~associated ~~results~~with ~~may~~Apollo ~~vary materially~~Management ~~from~~V ~~those expressed or implied in any forward-looking statements~~L.P. ~~All~~(“Apollo ~~forward-looking~~Management” ~~statements~~and ~~contained~~together inwith ~~this~~its ~~Form~~affiliated ~~10-K~~investment ~~are~~entities, “Apollo” ~~qualified~~or in“Apollo ~~their~~V”) ~~entirety~~own byapproximately ~~this~~64% ~~cautionary~~of ~~statement.~~the ~~Forward-looking~~capital ~~statements~~stock ~~speak only as~~ of ~~the date~~Metals ~~they~~USA ~~are made~~Holdings, ~~and~~with wethe ~~disclaim~~remainder ~~any~~held ~~obligation~~by tomembers ~~update any forward-looking statements to reflect events or circumstances after the date~~ of ~~this~~Metals ~~Form~~USA ~~10-K,~~Holdings’ ~~except as otherwise required by applicable law~~management.

4On May 18, 2005, Metals USA Holdings and its wholly owned subsidiary, Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Metals USA. On November 30, 2005, Flag Acquisition, then a wholly owned subsidiary of Flag Intermediate, merged with and into Metals USA (the “Merger”), with Metals USA being the surviving

~~Table~~4 ~~of Contents~~

~~Index~~ corporation. Flag Intermediate and Flag Acquisition conducted no operations during the period from May 9, 2005 (date of inception) to ~~Financial~~November 30, ~~Statements~~2005. As a result of the Merger, all of Metals USA’s issued and outstanding common stock is held indirectly by Metals USA Holdings through Flag Intermediate, its wholly owned subsidiary. Metals USA Holdings was formed by Apollo.

~~PART~~Flag IIntermediate and its wholly owned subsidiary, Metals USA, are also referred to collectively herein as the “Successor Company” and Metals USA prior to the Merger is referred to as the “Predecessor Company.”

~~Item~~Growth 1.Through ~~Business~~Acquisitions

~~Overview~~Strategic acquisitions of metal service center businesses that complement our overall product and service base are an important element to our growth strategy. The following acquisitions occurred over the last six years.

~~Flag Intermediate~~In ~~Holdings~~May ~~Corporation~~2006, iswe abought Port ~~corporation~~City ~~formed~~Metal ~~under~~Services ~~the laws of the state of Delaware~~ (“~~Flag~~Port ~~Intermediate~~City”). ~~Flag~~in ~~Intermediate and its wholly owned subsidiary~~Tulsa, ~~Metals~~Oklahoma. ~~USA,~~Port ~~Inc.~~City ~~(“Metals~~increased ~~USA”)~~our ~~are~~plate ~~referred~~processing capabilities to ~~collectively~~ ~~herein~~customers asserving the ~~“Company.”~~oil ~~Flag~~field, ~~Intermediate~~construction equipment and ~~Metals~~refining ~~USA are wholly owned subsidiaries of Metals USA Holdings Corp~~industries. ~~(“Metals USA Holdings”).~~

AsIn ~~one~~June ~~of the largest metal service center businesses in the United States~~2007, we ~~believe~~acquired ~~that~~Lynch ~~we are a leading provider of value-added processed carbon steel~~Metals, ~~stainless steel, aluminum, red metals, manufactured metal components and inventory management services~~Inc. We(“Lynch ~~believe~~Metals”) ~~that~~with welocations ~~serve an important function as an intermediary between primary metal producers that generally sell large volumes~~ in limited sizes and configurations and end-users that generally require more services and smaller quantities of customized products. Operating 39 facilities comprising approximately 5.1 million square feet of industrial spaceUnion, ~~our~~New ~~metal~~Jersey ~~service center business sold more than 1,059 thousand tons of metal products in 2010. We sell our products~~ and ~~services to a diverse customer base and broad range of end-user markets~~Anaheim, including the land and marine transportation, energy, aerospace, defense, electrical and appliance manufacturing, fabrication, furniture, commercial construction, and machinery and equipment industries, among several others, throughout the United StatesCalifornia. ~~We strive to earn a margin over the cost of metal. Management’s strategy, manifested~~ ~~through~~Lynch ~~organic~~Metals ~~growth~~provides ~~initiatives and our acquisitions of metal service center businesses, focuses on maximizing the margin we earn over the cost of metal by offering additional~~ value-added ~~processing services and diversifying our product mix. We believe our growth and acquisition strategy~~, inspecialized ~~combination~~aluminum ~~with~~products ~~management’s demonstrated ability~~ to ~~manage~~customers ~~metal~~who ~~purchasing~~are ~~and~~predominantly ~~inventories~~manufacturers toof ~~consistently~~air/heat ~~meet~~transfer ~~our~~products ~~customers’~~specifically ~~high~~focused ~~expectations~~on ~~for~~aerospace ~~service and reliability~~equipment, ~~serves~~industrial ~~as a foundation for future revenue growth~~ and ~~stable~~automotive ~~operating profit per ton through the economic cycle~~applications.

WeIn ~~operate~~February in2009, ~~three reportable~~we ~~business~~acquired ~~segments:~~VR ~~Plates~~Laser ~~and~~Services ~~Shapes Group~~USA, ~~Flat Rolled and Non-Ferrous Group, and Building Products Group~~Inc. ~~Our Plates and Shapes and Flat Rolled and Non-Ferrous Groups perform customized~~, ~~value-added~~which ~~processing~~we ~~services~~subsequently torenamed ~~unimproved steel~~Philadelphia ~~and~~Plate ~~other metals required to meet specifications provided by our customers in addition to offering inventory management and just-in-time delivery services~~(“Philadelphia Plate”), ~~among~~which ~~others.~~further ~~These~~expanded ~~services enable~~ our ~~customers~~existing ~~to reduce material costs, decrease capital required for raw materials inventory and~~ processing ~~equipment,~~capabilities ~~and~~in ~~save~~the ~~time,~~northeast ~~labor,~~region ~~warehouse space and other expenses. The customers~~ of ~~our~~the ~~Plates~~United ~~and~~States ~~Shapes~~focused ~~and~~primarily ~~Flat~~on ~~Rolled and Non-Ferrous Groups are in~~ the ~~electrical and appliance manufacturing, fabrication, furniture, commercial construction, machinery and equipment, land and~~ marine ~~transportation, energy~~ and ~~aerospace~~defense industries. ~~Our Building Products Group manufactures finished building products for distributors and contractors engaged in the residential remodeling industry.~~

OnIn ~~April 14,~~June 2010, ~~Metals~~we ~~USA~~acquired ~~Holdings~~J. ~~completed its initial public offering of 11,426,315 shares of its common stock at~~Rubin ~~$21~~& Co.00 ~~per share~~ (~~the~~ “~~IPO~~J. Rubin”), asa ~~described~~metal inservice ~~Metals~~center ~~USA~~business ~~Holdings’~~that ~~Registration~~operates ~~Statement~~in ~~on Form S-1~~Illinois, asWisconsin ~~amended~~and ~~(File~~Minnesota ~~No. 333-150999).~~with As a ~~result~~broad ofmix ~~the IPO, the percentage~~ of ~~the~~products Metals USA Holdings’ outstanding capital stock held by non-affiliates as of December 31, 2010, is approximately 31%. Investment funds associated with Apollo Management V L.P. (“Apollo Management” and ~~together~~processing ~~with~~services ~~its~~that ~~affiliated~~are ~~investment~~provided ~~entities~~to ~~“Apollo”~~a ordiverse ~~“Apollo~~range ~~V”) own approximately 64%~~ of ~~the~~customer ~~capital~~end ~~stock of Metals USA Holdings, with the remainder held by members of Metals USA Holdings’ management~~markets.

OnIn ~~May 18,~~December ~~2005~~2010, ~~Metals~~we ~~USA~~completed ~~Holdings~~the ~~and~~acquisition ~~its~~of ~~wholly~~Ohio River ~~owned~~Metal ~~subsidiary,~~Services ~~Flag Acquisition Corporation, a Delaware corporation~~ (“~~Flag Acquisition~~ORMS”), ~~entered~~located ~~into~~in anJeffersonville, ~~Agreement and Plan of Merger (the “Merger Agreement”) with Metals USA~~Indiana. OnORMS ~~November 30,~~operates ~~2005, Flag Acquisition, then~~ a ~~wholly~~flat ~~owned~~rolled ~~subsidiary~~metal ofservice ~~Flag~~center ~~Intermediate,~~that ~~merged~~provides ~~with~~metal products and ~~into Metals~~processing ~~USA~~services ~~(the~~to ~~“Merger”),~~customers ~~with~~throughout ~~Metals USA being~~ the ~~surviving~~Ohio ~~corporation~~Valley. ~~Flag Intermediate and Flag Acquisition conducted no operations during the period from May 9, 2005~~

5In March 2011, we completed the acquisition of The Richardson Trident Company (“Trident”). Trident is a general line metal service center with fabricating capabilities designed to service the oil and gas industry, and is also a wholesale distributor of metals, plastics and electronic parts. The Company operates under The Trident Company and The Altair Company trade names. Trident’s principal facility is in Richardson, Texas with branch locations in Houston, Austin, El Paso, Harlingen and Odessa, Texas; Tulsa, Oklahoma; Olathe, Kansas; Los Angeles, California; Boston, Massachusetts and Thomasville, Georgia.

~~Table~~Trident provides a broad range of ~~Contents~~metals and processing services with a product mix that emphasizes aluminum, stainless steel and nickel. The majority of Trident’s customer base operates in the oil and gas services sector. Processing services include precision sawing, boring, honing, slitting, sheeting, shearing and tuning. Trident also offers supply chain solutions such as just-in-time delivery and value-added components required by original equipment manufacturers (“OEMs”).

~~Index~~Products toand ~~Financial~~Services, ~~Statements~~Markets and Industry Information

~~(date~~The ofCompany’s ~~inception)~~businesses toare ~~November 30,~~managed ~~2005.~~on As a ~~result~~decentralized ofbasis ~~the~~operating ~~Merger,~~in ~~all~~business ofsegments ~~Metals~~based ~~USA’s~~on ~~issued~~product ~~and~~groups. ~~outstanding~~We ~~common~~believe ~~stock~~this isproduct-oriented ~~held~~organizational ~~indirectly~~structure byfacilitates ~~Metals~~the efficient ~~USA~~advancement ~~Holdings~~of ~~through~~our ~~Flag Intermediate,~~goals ~~its~~and ~~wholly~~objectives ~~owned~~to ~~subsidiary~~achieve operational synergies and focused capital investment. ~~Metals~~Operational ~~USA~~activities ~~Holdings~~and ~~was~~policies ~~formed~~are managed by ~~Apollo.~~corporate officers and key product group executives who, on average, have over 29

~~Metals~~5 USA was incorporated in Delaware on July 3, 1996, and began operations upon completion of an initial public offering on July 11, 1997. On November 14, 2001, our predecessor company filed for voluntary protection from its creditors under Chapter 11 of the United States Bankruptcy laws. We emerged from bankruptcy as a public company on October 31, 2002.

~~Flag~~ years ~~Intermediate~~of experience and ~~its wholly~~are ~~owned~~supported ~~subsidiary~~by finance, ~~Metals~~purchasing ~~USA,~~and ~~are~~sales ~~also~~and ~~referred~~marketing tostaff. ~~collectively~~For ~~herein~~additional asindustry ~~the~~segment information, see “~~Successor~~Management’s ~~Company”~~Discussion and ~~Metals~~Analysis ~~USA~~of Financial ~~prior~~Condition toand ~~the~~Results ~~Merger~~of isOperations—Results ~~referred~~of Operations by Segment,” and Note 13 to asour consolidated financial statements for the ~~“Predecessor~~year ~~Company~~ended December 31, 2011 included elsewhere in this report.”

~~Growth~~Metal ~~Through~~Processing/Metal ~~Acquisitions~~Service Center Businesses: Plates and Shapes and Flat Rolled and Non-Ferrous Groups

~~The~~Industry ~~Company~~Overview. ~~has~~Companies ~~grown~~operating ~~primarily~~in ~~through~~ the ~~strategic~~metals ~~acquisition~~industry ofcan generally be characterized as primary metal producers, metal processors/metal service ~~center~~centers ~~businesses~~or ~~that~~end-users. ~~complement~~Our ~~its~~Plates ~~overall~~and ~~product~~Shapes and Flat Rolled and Non-Ferrous Groups are metals processors/metal service ~~base~~centers. ~~The~~As ~~following~~such, ~~acquisitions~~we ~~occurred~~purchase ~~over~~carbon steel, stainless steel, aluminum, brass, copper and other metals from producing mills and then sell our metal processing services and the ~~last~~metal to our customers, who are generally end-users. We believe that both primary metal producers and end-users increasingly seek to have their metals processing and ~~five~~inventory ~~years~~management requirements met by value-added oriented metal processors/metal service centers like us.

InMetal ~~May~~service centers ~~2006,~~function weas ~~bought~~key ~~Port~~intermediaries ~~City~~between ~~Metal~~the ~~Services~~primary ~~(“Port~~metals ~~City”)~~producers that produce and sell larger volumes of metals in ~~Tulsa~~a limited number of sizes and configurations and end-users, ~~Oklahoma.~~such ~~Port~~as ~~City~~fabricators, ~~increased~~contractors and OEMs that require smaller ~~our~~quantities ~~plate~~of ~~processing~~more ~~capabilities~~customized toproducts ~~customers~~delivered ~~serving~~on ~~the~~a ~~oil~~just-in-time ~~field~~basis. End-users incorporate processed metals into finished products, ~~construction~~in ~~equipment~~some ~~and~~cases ~~refining~~with ~~industries~~little further modification.

In ~~June 2007~~our Plates and Shapes and Flat Rolled and Non-Ferrous Groups, we ~~acquired~~engage ~~Lynch~~in ~~Metals~~pre-production processing of carbon steel, ~~Inc~~stainless steel, red metals and aluminum. ~~(“Lynch~~We ~~Metals”)~~purchase ~~with~~metals ~~locations~~from inprimary ~~Union~~producers, ~~New~~maintain ~~Jersey~~an inventory of various metals to allow rapid fulfillment of customer orders and ~~Anaheim,~~perform ~~California~~customized processing services to the specifications provided by end-users. ~~Lynch~~By providing ~~Metals~~these ~~provides~~services, ~~value~~as well as offering inventory management and just-~~added~~in-time delivery services, ~~specialized~~we ~~aluminum~~enable ~~products~~our customers to ~~customers~~reduce ~~who~~overall ~~are~~production ~~predominantly~~costs ~~manufacturers~~and ~~of air/heat~~decrease ~~transfer~~capital ~~products~~required ~~specifically~~for ~~focused~~raw onmaterials ~~aerospace~~inventory and metals processing equipment,. ~~industrial~~The Plates and ~~automotive~~Shapes ~~applications~~and Flat Rolled and Non-Ferrous Groups contributed approximately 95% of our 2011 net sales.

InMetal ~~February~~service centers and processors purchase approximately 35% of all the metals used in the U.S. and Canada and play an important ~~2009,~~intermediary werole ~~acquired~~between VRthe ~~Laser~~production ~~Services~~mills ~~USA,~~and ~~Inc~~the end-users., ~~which~~Over wethe ~~subsequently~~last ~~renamed~~several ~~Philadelphia~~years ~~Plate~~primary ~~(“Philadelphia~~metal ~~Plate”),~~producers ~~which~~have ~~further~~consolidated and focused on optimizing the throughput and operating efficiencies of their production facilities. We believe this consolidation among primary steel and aluminum producers over the last several years has expanded ~~our~~the ~~existing~~demand ~~processing~~for ~~capabilities~~metal distribution and service centers, and in ~~the~~particular ~~northeast~~those ~~region~~service centers capable of ~~the~~providing ~~United~~additional ~~States~~value-added ~~focused~~metal ~~primarily~~processing and inventory management services. Over 300,000 end-users nationwide rely on ~~the~~metal ~~marine~~service centers for their primary supply of metal products and ~~defense~~services. ~~industries~~End-users generally buy metal products and services from metal service centers on a margin over the cost of the metal. When customers require additional processing or inventory management services, value-added metal service centers such as ours earn an additional premium margin over the cost of metal.

InBy ~~June~~outsourcing ~~2010,~~their wecustomized ~~acquired~~metal J.processing ~~Rubin &~~and ~~Co.~~inventory ~~(“J.~~management ~~Rubin”)~~needs, aend-users have the potential to realize significant ~~metal~~economic ~~service~~benefits ~~center~~by ~~business~~shifting ~~that~~the ~~operates~~responsibility infor ~~Illinois,~~pre-production ~~Wisconsin~~processing ~~and~~to ~~Minnesota~~metal ~~with~~service acenters ~~broad~~and ~~mix~~leveraging ofservice ~~products~~centers’ just-in-time delivery and ~~processing~~other inventory management services. ~~that~~These supply-chain services, which are not normally provided by primary metals producers, enable end-users to areduce ~~diverse~~input, ~~range~~labor ofand ~~customer~~other ~~end~~production ~~markets~~costs, shorten lead times, and decrease required investments in working capital, manufacturing and warehouse facilities.

InWe ~~December~~believe ~~2010,~~that welong-term ~~completed~~growth ~~the~~opportunities ~~acquisition~~for ofmetal ~~Ohio~~service ~~River~~centers ~~Metal~~will ~~Services~~continue ~~(“ORMS”),~~to ~~located~~expand inas ~~Jeffersonville,~~both ~~Indiana.~~primary ~~ORMS~~metal producers and ~~operates~~end-users aincreasingly ~~flat~~seek ~~rolled~~to have their metal ~~service~~processing ~~center~~and ~~that~~inventory ~~provides~~management ~~metal~~requirements ~~products~~met ~~and~~by ~~processing~~value-added ~~services~~metal toservice ~~customers~~centers. ~~throughout~~Although the ~~Ohio~~service ~~Valley.~~center industry

On6 March 11, 2011, we completed the acquisition of The Richardson Trident Company (“Trident”). Trident is a general line metal service center with fabricating capabilities designed to service the oil and gas industry, and is also a wholesale distributor of metals, plastics and electronic parts with sales revenues for the twelve months ending December 31, 2010, of approximately $148.0 million. The Company operates under The Trident Company and The Altair Company trade names. Trident’s principal facility is in Richardson, Texas with branch locations in Houston, Austin, El Paso, Harlingen and Odessa, Texas; Tulsa, Oklahoma; Olathe, Kansas; Los Angeles, California; Boston, Massachusetts and Thomasville, Georgia.

~~Trident~~ remains ~~provides~~fragmented ~~a broad range of metals and processing services~~ with aapproximately ~~product mix that emphasizes aluminum~~1,200 ~~stainless~~companies ~~steel~~competing ~~and~~in ~~nickel.~~North ~~The~~America, ~~majority~~we ofbelieve ~~Trident’s~~larger ~~customer~~service ~~base~~center ~~operates~~businesses inwith ~~the~~greater ~~oil~~scale and ~~gas~~financial ~~services sector. Processing services include precision sawing~~flexibility, ~~boring,~~like ~~honing~~ours, ~~slitting, sheeting, shearing and tuning.~~enjoy ~~Trident~~significant ~~also~~advantages ~~offers~~over ~~supply~~smaller ~~chain~~companies ~~solutions~~ such as ~~just-in-time~~the ~~delivery~~ability ~~and~~to ~~value-added~~obtain ~~components~~higher ~~required~~discounts byassociated ~~original~~with ~~equipment~~volume ~~manufacturers~~purchases, ~~(“OEMs”).~~the Asbreadth ~~a result~~ of ~~the~~products ~~acquisition,~~and wevalue-added ~~expect~~services to ~~expand~~meet ~~our~~the ~~position~~diverse asneeds aof ~~leading integrated~~key ~~metals~~end-use ~~processor and distributor in additional~~ markets, asand ~~well~~the asmore sophisticated ~~enhance~~logistics ~~our~~capabilities ~~non-ferrous~~necessary ~~and~~to ~~value-added~~serve ~~processing~~national ~~product and service offerings~~accounts.

6Plates and Shapes Group. The Plates and Shapes Group processes and sells steel plates and structural beams, bars, angles and tubes. We believe we are one of the largest distributors of steel plates and structural beams in the United States. In 2011, we sold approximately 596 thousand tons of products through 19 metal service centers located primarily in the southern and eastern regions of the United States. Our metal service centers are generally equipped to provide additional value-added processing, and a substantial portion of our volume is processed prior to being delivered to the end-user. These processing services include burning, blasting and painting (the process of cleaning steel plate by shot-blasting, then immediately applying a paint or primer), tee-splitting (the cutting of metal beams along the length to form separate pieces), cambering (the bending of structural shapes to improve load-bearing capabilities), leveling (the flattening of metals to uniform tolerances for proper machining), cutting, sawing, punching, drilling, beveling, surface grinding, braking (bending), shearing and cutting-to-length (the cutting of metals into pieces and along the width of a coil to create sheets or plates). We sell our products to a diversified customer base, including a large number of small customers who purchase products in small order sizes. We believe our disciplined management and hands-on service, backed by our national network of metal service centers, enables us to effectively meet our customers’ varied product and inventory management needs.

~~Table~~We generally earn additional margin from our customers by providing services such as product marking, item sequencing, just-in-time delivery and kitting. The customers who require these products and services are primarily in the fabrication, public and private non-residential construction, machinery and equipment, land and marine transportation, and energy industries. Because our metal service centers are generally located in close proximity to our metal suppliers and our customers, we are able to meet our customers’ product and service needs reliably and consistently. Over the last six years, we added two businesses to our Plates and Shapes portfolio through acquisitions. In May 2006, we completed the acquisition of ~~Contents~~Port City, which bolstered our presence in the construction and oil-field services sectors. In February 2009, we acquired Philadelphia Plate, which has expanded our presence in the northeast region of the United States and augmented our presence in the marine and defense sectors.

~~Index~~Flat Rolled and Non-Ferrous Group. The Flat Rolled and Non-Ferrous Group processes and sells flat rolled carbon and stainless steel, aluminum, brass and copper in a number of alloy grades and sizes through 27 metal service centers located primarily in the mid-western and southern regions of the United States. We sold approximately 812 thousand tons of these products in 2011, with our revenues split approximately 60% and 40% between ferrous products and non-ferrous products, respectively. Substantially all of the products from this group that are sold undergo value-added processing prior to shipment ~~Financial~~to ~~Statements~~our customers. These processing services include precision blanking (the process in which metal is cut into precise two-dimensional shapes), slitting (the cutting of coiled metals to specified widths along the length of the coil), shearing and cutting-to-length, punching and leveling.

~~Products~~We sell our products and ~~Services~~services to customers in the electrical and appliance manufacturing, ~~Markets~~fabrication, furniture, machinery and ~~Industry~~equipment, ~~Information~~transportation and aerospace industries. Many of our large customers purchase through pricing arrangements or contractual agreements that specify the margin over the cost of metal and we generally earn additional margin from these customers by providing services such as product marking and labeling, just-in-time delivery and kitting. We are able to provide these services reliably because our metal service centers are generally located in close proximity to our metal suppliers and our customers. Over the last six years, we added four businesses to our Flat Rolled and Non-Ferrous portfolio through acquisitions. In July 2007, we acquired Lynch Metals, a metal service center business that provides specialized aluminum products primarily to the aerospace, industrial and automotive industries. In June 2010, we acquired J. Rubin, expanding

~~The~~7 Company’s businesses are managed on a decentralized basis operating in business segments based on product groups. We believe this product-oriented organizational structure facilitates the efficient advancement of our goals and objectives to achieve operational synergies and focused capital investment. Operational activities and policies are managed by corporate officers and key product group executives who, on average, have over 28 years of experience and are supported by finance, purchasing and sales and marketing staff. For additional industry segment information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment,” and Note 13 to our consolidated financial statements for the year ended December 31, 2010 included elsewhere in this report.

~~Metal~~ the ~~Processing/Metal~~scope ~~Service~~of ~~Center~~our ~~Businesses:~~product ~~Plates~~lines, services and ~~Shapes~~geographic footprint in the upper Midwest, in addition to allowing us to enhance our cross-selling opportunities in existing markets. In December 2010, we acquired ORMS, a metal service center with distinctive processing and ~~Flat~~service ~~Rolled~~capabilities and ~~Non-Ferrous~~a ~~Groups~~strategic location in an existing Midwest market. In March 2011, we acquired Trident, a wholesale distributor of metals, plastics and electronic parts with fabricating capabilities designed to service the oil and gas industry.

~~Industry~~Product ~~Overview~~Mix. ~~Companies~~We provide ~~operating~~a wide variety of metal products in different shapes and sizes to our customers. We actively manage our inventory levels and product mix in order to optimize the ~~metals~~cost ~~industry~~tradeoff ~~can~~between ~~generally~~holding beinventory ~~characterized~~and asincurring ~~primary~~a ~~metal~~shortage ~~producers,~~situation. We ~~metal~~strive ~~processors/metal~~to ~~service~~closely ~~centers~~monitor orour ~~end-users.~~customer ~~Our~~demand ~~Plates~~forecasts and ~~Shapes~~coordinate ~~and~~our ~~Flat~~inventory ~~Rolled~~levels and ~~Non-Ferrous~~product ~~Groups~~mix ~~are~~with ~~metals~~our ~~processors/metal~~customers’ ~~service~~production ~~centers.~~planning Asand ~~such,~~scheduling. weWe ~~purchase~~also ~~carbon~~analyze ~~steel,~~macroeconomic ~~stainless steel~~data, ~~aluminum,~~end-use ~~brass,~~market ~~copper~~data and ~~other~~historical usage to ~~metals~~forecast ~~from~~the ~~producing~~cyclical ~~mills~~effect of inventory building and ~~then~~reduction ~~sell~~in ~~our~~the ~~metal~~industries ~~processing~~we ~~services~~serve, adjusting our inventory levels and ~~the~~product ~~metal~~mix toaccordingly. ~~our~~Our ~~customers,~~product ~~who~~mix ~~are~~also ~~generally~~changes ~~end-users~~as a result of acquisitions. We believe ~~that~~the ~~both~~proactive ~~primary~~management ~~metals~~of our ~~producers~~inventory levels and ~~end-users~~product ~~increasingly~~mix, ~~seek~~along towith ~~have~~our ~~their~~expanding ~~metals~~geographic ~~processing~~footprint and ~~inventory~~ ~~management~~diverse ~~requirements~~customer ~~met~~segments byposition ~~value~~us to maintain long-~~added~~term ~~oriented~~profitability ~~metals~~throughout ~~processors/metal~~the ~~service~~various ~~centers~~stages ~~like~~of economic cycles. We believe that our focus on product mix enhancement helps us to mitigate the effects of uneven demand associated with specific regions and end-user industries.

~~Metal~~Net ~~service centers~~sales ~~function~~by asproduct ~~key~~line ~~intermediaries~~as ~~between~~a ~~the~~percent ~~primary~~of ~~metals~~total ~~producers~~sales ~~that~~for ~~produce~~our ~~and~~metal ~~sell~~service ~~larger~~center ~~volumes~~businesses offor ~~metals~~each ~~in a limited number~~ of ~~sizes~~the ~~and~~three ~~configurations~~years ~~and~~ended December 31, ~~end-users~~2011, ~~such as fabricators~~2010, ~~contractors~~ and ~~OEMs~~2009 ~~that~~were ~~require~~as ~~smaller quantities~~follows: ~~of more customized products delivered on a just-in-time basis. End-users incorporate processed metals into finished products, in some cases with little further modification.~~

In our Plates and Shapes and Flat Rolled and Non-Ferrous Groups, we engage in pre-production processing of carbon steel, stainless steel, red metals and aluminum. We purchase metals from primary producers, maintain an inventory of various metals to allow rapid fulfillment of customer orders and perform customized processing services to the specifications provided by end-users. By providing these services, as well as offering inventory management and just-in-time delivery services, we enable our customers to reduce overall production costs and decrease capital required for raw materials inventory and metals processing equipment. The Plates and Shapes and Flat Rolled and Non-Ferrous Groups contributed approximately 94% of our 2010 net sales.


	Twelve Months Ended December 31,
	2011			2010			2009
Carbon Flat Rolled Products		34.7	%		35.1	%		31.5	%
Mini Mill Products		10.5	%		11.2	%		10.9	%
Non-Ferrous Products		24.4	%		21.9	%		20.0	%
Plate Products		17.6	%		18.1	%		19.6	%
Structural Products		12.8	%		13.7	%		18.0	%

		100.0	%		100.0	%		100.0	%

~~Metal~~Value-Added ~~service~~Processing ~~centers~~Services. ~~and~~Primary ~~processors~~producers ~~purchase~~typically ~~approximately~~find ~~35%~~it ofmore ~~all~~cost ~~the~~effective ~~metals used in the U.S. and Canada and play an important~~to ~~intermediary~~focus ~~role~~on ~~between~~large ~~the~~volume production ~~mills~~ and ~~the~~sale ~~end-users.~~of ~~Over~~metals ~~the~~in ~~last~~standard ~~several~~sizes ~~years primary metal producers have consolidated~~ and ~~focused~~configurations onto ~~optimizing~~large ~~the~~volume ~~throughput and operating efficiencies of their production facilities~~purchasers. We ~~believe this~~process ~~consolidation among primary steel and aluminum producers over~~ the ~~last~~metals ~~several~~to ~~years has expanded~~ the ~~demand~~precise ~~for metal distribution and service centers~~length, ~~and in particular those service centers capable of providing additional value-added metal processing and inventory management services. Over 300~~width,~~000~~ ~~end-users~~shape ~~nationwide rely on metal service centers for their primary supply of metal products~~ and ~~services.~~surface ~~End-users~~quality ~~generally~~specified ~~buy~~by ~~metal~~our ~~products and services from metal service centers on a margin over the cost of the metal~~customers. ~~When~~Our ~~customers require additional processing or inventory management services,~~ value-added ~~metal~~processes include: ~~service centers such as ours earn an additional premium margin over the cost of metal.~~

By• ~~outsourcing~~Precision ~~their customized metal processing and inventory management needs, end-users have~~ blanking—the ~~potential~~process ~~to realize significant economic benefits by shifting the responsibility for pre-production processing to metal service centers and leveraging service centers’ just-~~in~~-time~~ ~~delivery and other inventory management services. These supply-chain services,~~ which ~~are~~metal ~~not normally~~is ~~provided~~cut byinto ~~primary~~precise ~~metals producers, enable end~~two-~~users~~dimensional ~~to reduce input, labor and other production costs, shorten lead times, and decrease required investments in working capital, manufacturing and warehouse facilities~~shapes.

7• Flame cutting—the cutting of metals to produce various shapes according to customer-supplied drawings.

~~Table~~• Laser and plasma cutting—the cutting of ~~Contents~~metals to produce shapes under strict tolerance requirements.

~~Index~~• Slitting—the cutting of coiled metals to ~~Financial~~specified ~~Statements~~widths along the length of the coil.

We• ~~believe~~Blasting ~~that long-term growth opportunities for metal service centers will continue to expand as both primary metal producers~~ and ~~end-users increasingly seek to have their metal processing and inventory management requirements met by value-added metal service centers. Although~~ painting—the ~~service~~process center industry remains fragmented with approximately 1,200 companies competing in North America, we believe larger service center businesses with greater scale and financial flexibility, like ours, enjoy significant advantages over smaller companies such as the ability to obtain higher discounts associated with volume purchases, the breadth of ~~products~~cleaning ~~and~~steel ~~value-added~~plate ~~services~~by ~~to meet the diverse needs of key end~~shot-~~use markets~~blasting, ~~and~~then ~~the~~immediately ~~more~~applying ~~sophisticated~~a ~~logistics~~paint ~~capabilities~~or ~~necessary to serve national accounts~~primer.

~~Plates~~• ~~and~~Plate ~~Shapes~~forming ~~Group. The Plates~~ and ~~Shapes Group processes and sells steel plates and structural beams, bars, angles and tubes. We believe we are one of~~ rolling—the ~~largest~~forming ~~distributors of steel plates~~ and structural beams in the United States. In 2010, we sold approximately 509 thousand tons of products through 20 metal service centers located primarily in the southern and eastern regions of the United States. Our metal service centers are generally equipped to provide additional value-added processing, and a substantial portion of our volume is processed prior to being delivered to the end-user. These processing services include burning, blasting and painting (the process of cleaning steel plate by shot-blasting, then immediately applying a paint or primer), tee-splitting (the cutting of metal beams along the length to form separate pieces), cambering (the bending of ~~structural~~plates ~~shapes~~ to ~~improve~~cylindrical load-bearing capabilities), leveling (the flattening of metals to uniform tolerances for proper machining), cutting, sawing, punching, drilling, beveling, surface grinding, braking (bending), shearing and cutting-to-length (the cutting of metals into pieces and along the width of a coil to create sheets or ~~plates).~~required ~~We sell our products to a diversified customer base, including a large number of small customers who purchase products in small order sizes~~specifications. We believe our disciplined management and hands-on service, backed by our national network of metal service centers, enables us to effectively meet our customers’ varied product and inventory management needs.

We• ~~generally~~Shearing ~~earn additional margin from our customers by providing services such as product marking, item sequencing, just-in-time delivery~~ and ~~kitting.~~cutting The customers who require these products and services are primarily in the fabrication, public and private non-residential construction, machinery and equipment, land and marine transportation, and energy industries. Because our metal service centers are generally located in close proximity to ~~our metal suppliers and our customers, we are able to meet our customers’ product and service needs reliably and consistently. Over~~ length—the ~~last~~cutting ~~five years, we added two businesses to our Plates and Shapes portfolio through acquisitions. In May 2006, we completed the acquisition~~ of ~~Port~~metals ~~City,~~into ~~which~~pieces ~~bolstered our presence in the construction~~ and ~~oil-field~~along ~~services sectors. In February 2009, we acquired Philadelphia Plate, which has expanded our presence in~~ the ~~northeast~~width ~~region~~ of ~~the~~a ~~United~~coil ~~States~~to ~~and~~create ~~augmented~~sheets ~~our~~or ~~presence in the marine and defense sectors~~plates.

~~Flat~~• ~~Rolled and Non~~Tee-Ferrous Group. The Flat Rolled and Non-Ferrous Group processes and sells flat rolled carbon and stainless steel, aluminum, brass and copper in a number of alloy grades and sizes through 19 metal service centers located primarily in splitting—the ~~mid-western~~cutting ~~and southern regions~~ of the United States. We sold approximately 558 thousand tons of these products in 2010, with our revenues split approximately 62% and 38% between ferrous products and non-ferrous products, respectively. Substantially all of the products from this group that are sold undergo value-added processing prior to shipment to our customers. These processing services include precision blanking (the process in which metal isbeams ~~cut into precise two-dimensional shapes), slitting (the cutting of coiled metals to specified widths~~ along the length ~~of the coil), shearing and cutting-~~to~~-length,~~ ~~punching~~form ~~and~~separate ~~leveling~~pieces.

We• ~~sell our products and services to customers in~~ Cambering—the ~~electrical~~bending ~~and appliance manufacturing, fabrication, furniture, machinery and equipment, transportation and aerospace industries. Many~~ of ~~our~~structural ~~large~~shapes ~~customers~~to ~~purchase~~improve through pricing arrangements or contractual agreements that specify the margin over the cost of metal and we generally earn additional margin from these customers by providing services such as product marking and labeling, justload-~~in-time~~bearing ~~delivery and kitting~~capabilities. ~~We are able to provide these services reliably because our metal service centers are generally located in close proximity to our metal suppliers and our customers. Over the last~~

~~Table~~• Sawing—the cutting to length of ~~Contents~~bars, tubular goods and beams.

~~Index~~• Leveling—the flattening of metals to ~~Financial~~uniform ~~Statements~~tolerances for proper machining.

~~five~~• ~~years,~~Edge ~~we added three businesses to our Flat Rolled and Non-Ferrous portfolio through acquisitions. In July 2007, we acquired Lynch Metals,~~ trimming—a ~~metal~~process ~~service center business~~ that ~~provides specialized~~removes ~~aluminum~~a ~~products~~specified ~~primarily~~portion toof the ~~aerospace,~~outside ~~industrial~~edges ~~and automotive industries. In June 2010, we acquired J. Rubin, expanding the scope~~ of ~~our~~coiled ~~product~~metal ~~lines, services and geographic footprint in the upper Midwest, in addition~~ to ~~allowing~~ usproduce touniform ~~enhance~~width ~~our cross-selling opportunities in existing markets. In December 2010, we acquired ORMS, a metal service center with distinctive processing~~ and ~~service~~round ~~capabilities~~or ~~and~~smooth ~~a strategic location in an existing Midwest market~~edges.

~~Product~~• ~~Mix. We provide a wide variety of metal products in different shapes and sizes to our customers. We actively manage our inventory levels and product mix in order to optimize~~ Metallurgy—the ~~cost~~analysis ~~tradeoff between holding inventory~~ and ~~incurring~~testing a shortage situation. We strive to closely monitor our customer demand forecasts and coordinate our inventory levels and product mix with our customers’ production planning and scheduling. We also analyze macroeconomic data, end-use market data and historical usage to forecast the cyclical effect of ~~inventory building and reduction in~~ the ~~industries~~physical ~~we serve, adjusting our inventory levels~~ and ~~product~~chemical ~~mix~~composition ~~accordingly. Our product mix also changes as a result~~ of ~~acquisitions~~metals. We believe the proactive management of our inventory levels and product mix, along with our expanding geographic footprint and diverse customer segments position us to maintain long-term profitability throughout the various stages of economic cycles. We believe that our focus on product mix enhancement helps us to mitigate the effects of uneven demand associated with specific regions and end-user industries.

~~Net~~Our ~~sales~~additional bycapabilities ~~product~~include ~~line~~applications asengineering aand ~~percent~~other ofvalue-added ~~total~~processes ~~sales~~such ~~for~~as ~~our~~custom ~~metal~~machining. ~~service~~Using ~~center~~these ~~businesses~~capabilities, ~~for~~we ~~the~~use ~~three~~processed ~~years~~metals ~~ended~~to ~~December 31,~~manufacture ~~2010~~higher-value ~~were~~components. ~~as follows:~~

	Twelve Months EndedDecember 31,
	2010			2009			2008
Carbon Flat Rolled Products		35.1	%		31.5	%		28.5	%
Mini Mill Products		11.2	%		10.9	%		10.7	%
Non-Ferrous Products		21.9	%		20.0	%		18.4	%
Plate Products		18.1	%		19.6	%		21.9	%
Structural Products		13.7	%		18.0	%		20.5	%
		100.0	%		100.0	%		100.0	%

Once we receive an order, we select the appropriate inventory and schedule it for processing in accordance with the customer’s requirements and specified delivery date. Orders are monitored by our computer systems, including, in certain locations, the use of bar coding to aid in and reduce the cost of tracking material. We record the source of all metal shipped to customers. This enables us to identify the source of any metal which may later be shown to not meet industry standards or that fails during or after manufacture. This capability is important to our customers as it allows them to assign responsibility for non-conforming or defective metal to the mill that produced the metal. Many of the products and services we provide can be ordered and tracked through a web-based electronic network that directly connects our computer system to those of our customers.

~~Value-Added~~We ~~Processing~~cooperate ~~Services.~~with ~~Primary~~our customers ~~producers~~and ~~typically~~tailor ~~find~~our itdeliveries ~~more~~to ~~cost~~support ~~effective~~their ~~to focus~~needs, onwhich ~~large~~in ~~volume~~many ~~production~~instances ~~and~~consist ~~sale~~ of ~~metals~~short inlead ~~standard~~times, ~~sizes~~multiple ~~and~~daily ~~configurations~~deliveries, tostaged ~~large~~deliveries, ~~volume~~or ~~purchasers.~~deliveries Wetimed ~~process~~for ~~the~~immediate ~~metals~~production. toThese ~~the~~“just-in-time” ~~precise~~deliveries are ~~length,~~defined ~~width,~~by ~~shape~~our customers and ~~surface~~are ~~quality~~generally ~~specified~~intended byto ~~our~~minimize ~~customers.~~their ~~Our~~inventory ~~value-added~~investment ~~processes include:~~and handling requirements.

•While ~~Precision~~we ~~blanking—~~ship products throughout the ~~process~~United inStates, ~~which~~most ~~metal~~of isour ~~cut~~customers ~~into~~are ~~precise~~located ~~two~~within a 250-~~dimensional~~mile ~~shapes~~radius of our facilities, thus enabling an efficient delivery system capable of handling a large number of short lead-time orders. We transport most of our products directly to our customers either with our own trucks for short-distance and/or multi-stop deliveries or through common or contract trucking companies.

•We ~~Flame~~have ~~cutting—the~~quality ~~cutting~~control ofsystems ~~metals~~ to ~~produce~~ensure ~~various~~product ~~shapes~~quality ~~according~~and totraceability throughout processing. Quality controls include periodic supplier audits, customer-~~supplied~~approved ~~drawings~~quality standards, inspection criteria and metals source traceability. Twenty of our 46 metal service center facilities have International Standards for Organization, or “ISO,” certification.

•Building ~~Laser~~Products ~~and~~Group ~~plasma cutting—the cutting of metals to produce shapes under strict tolerance requirements.~~

•The ~~Slitting—~~Building Products Group manufactures and sells roofing and patio products. We generally sell these products through a network of independent distributors and home improvement contractors. Our roofing products business manufactures and sells a high performance roofing product consisting of a pressed and stone-coated steel panel that mimics the ~~cutting~~appearance of ~~coiled~~traditional ~~metals~~shake and tile roofing. Our roofing product is well suited for all areas subject to ~~specified~~threats ~~widths~~of ~~along~~high winds, fires and hail storms. In May 2006, we acquired Duraloc Roofing Systems, Ltd., a Canadian-based company which we have re-branded as Allmet Roofing Products. This acquisition provided us with manufacturing capabilities on both the ~~length~~east and west coasts of North America. Our patio products business manufactures and sells building components used primarily for the ~~coil~~erection of residential shade structures such as patio covers and enclosures. With facilities located throughout the southern and western regions of the United States, we believe we are one of only a few suppliers of patio products with national scale.

•The ~~Blasting~~downturn in the United States housing sector has pushed home improvement remodeling spending below its long-term trend. Falling home prices have discouraged discretionary home improvement spending and ~~painting—~~diminished the ~~process~~amount of ~~cleaning~~equity ~~steel~~that ~~plate~~owners byhave ~~shot-blasting~~in their homes. Prior to the downturn in the United States housing sector, ~~then~~the ~~immediately~~ability ~~applying~~to aborrow ~~paint~~against orequity ~~primer.~~created by rising home prices fueled remodeling activity, as

•9 ~~Plate forming and rolling—the forming and bending of plates to cylindrical or required specifications.~~

• well ~~Shearing~~as ~~and~~broader ~~cutting~~consumer tospending. ~~length—the~~Now ~~cutting~~that ofhome ~~metals~~prices ~~into~~have ~~pieces~~softened, ~~and~~owners ~~along~~cannot ~~the~~finance ~~width~~home ofimprovement aprojects ~~coil~~as toeasily. ~~create~~These ~~sheets~~difficult orend ~~plates~~market conditions have affected sales growth associated with our Building Products Group.

•We ~~Tee-splitting—the~~believe ~~cutting~~a recovering economy should stabilize house prices and consumer confidence levels, encouraging homeowners to reinvest in their homes and undertake deferred repairs, replacements and improvements. Low financing costs and a wave of ~~metal~~previously ~~beams~~foreclosed ~~along~~homes coming back on the ~~length~~market and in need of renovation could also contribute to ~~form~~growth. ~~separate~~We ~~pieces~~believe these factors, coupled with an aging American housing stock, are generating significant pent-up demand for remodeling that should manifest itself when the housing sector rebounds (however, there can be no guarantee that demand for remodeling will increase or the timing of any such rebound).

9Strategy

~~Table~~Our mission is to increase our position as one of ~~Contents~~the nation’s leading integrated metals processors and distributors, recognized for best in class customer service and optimal inventory management to meet customer demands, and to ensure strategic use of our capital resources, continuing to strengthen the relationships we have with our suppliers, while constantly renewing our focus on safety, growth and profitability. Execution of the following strategies is critical to our success:

~~Index~~• Expand Value-Added Services. We intend to ~~Financial~~continue ~~Statements~~to invest in capital projects that provide attractive returns and to continue to expand the value-added services we offer at each of our service center locations, a strategy we believe will both enhance our relationships with existing customers and help forge new customer relationships, both of which we believe will result in increased market share for us.

• ~~Cambering—the~~Increase ~~bending~~Sales of ~~structural~~Higher ~~shapes~~Margin Products and Services. The sale of higher margin products and services, which tend to ~~improve~~have ~~load~~higher growth prospects and more stable demand, will continue to be one of our core strategies. We intend to continue executing on this strategy by increasing our core carbon offerings, non-~~bearing~~ferrous ~~capabilities~~volumes, and our sales of processed products.

• ~~Sawing—the~~Execute ~~cutting~~Strategic Acquisitions to ~~length~~Improve ofOur ~~bars,~~Business. ~~tubular~~We ~~goods~~intend to continue to pursue acquisitions and ~~beams~~we will generally target one to two “bolt-on” acquisitions per year that will enhance our metal service center strategy. We believe that we are well positioned to take advantage of acquisition opportunities in the fragmented service center industry because of our flexible capital structure.

• ~~Leveling—the~~Maintain ~~flattening~~and Strengthen Our Strong Relationships with Suppliers and Customers. As one of ~~metals~~the largest metal service center businesses in the United States, we intend to ~~uniform~~use ~~tolerances~~our ~~for~~relationships ~~proper~~to ~~machining~~leverage the opportunities presented by the consolidation of steel producers and the changing needs of our customers.

• ~~Edge~~Continue ~~trimming—a~~Our ~~process~~Strong ~~that~~Focus ~~removes~~on aInventory ~~specified~~Management. ~~portion~~We will continue managing our inventory to maximize our returns, profitability and cash flow while maintaining sufficient inventory to respond to our customers’ demands. Constant evaluation of ~~the~~our ~~outside~~inventory ~~edges~~management framework will allow us to continue supplying our customers reliably, even during periods of ~~coiled~~tight metal tosupply. ~~produce~~We ~~uniform~~expect ~~width~~our inventory management framework will continue generating strong earnings during periods of rising metal prices and ~~round~~strong orcash ~~smooth~~flow ~~edges~~during periods of declining metal prices.

• ~~Metallurgy—the~~Maintain ~~analysis~~High Free Cash Flow Generation and ~~testing~~Conversion. We believe that we are a reliable supplier, especially of ~~the~~higher ~~physical~~margin products and ~~chemical~~services, ~~composition~~to our customers even in periods of tight supply. We believe that our reliability allows us to generate higher margins and more stable operating income through the business cycle. Moreover, we believe our inventory management framework, bolstered by our relationships with our metals suppliers, will stabilize earnings during periods of weakness. Our core business also requires minimal maintenance capital investment. We believe these strengths taken together underscore our ability to generate high levels of free cash flow, which will enable us to reinvest in our business, consummate future acquisitions, reduce debt, and achieve other corporate and financial objectives.

~~Our~~10 additional capabilities include applications engineering and other value-added processes such as custom machining. Using these capabilities, we use processed metals to manufacture higher-value components.

~~Once~~• weMaintain ~~receive~~Our anFocus ~~order,~~on weSafety ~~select~~Throughout ~~the appropriate~~Our ~~inventory~~Operating ~~and schedule it for processing in accordance with the customer’s requirements and specified delivery date~~Facilities. ~~Orders are monitored by our computer systems, including, in certain locations, the use of bar coding to aid in and reduce the cost of tracking material.~~ We ~~record~~remain ~~the~~committed ~~source of all metal shipped~~ to ~~customers. This enables us to identify~~ the ~~source~~belief ~~of any metal which may later be shown to not meet industry standards or~~ that ~~fails~~nothing ~~during or after manufacture. This capability~~ is more important tothan ~~our customers as it allows them to assign responsibility for non-conforming or defective metal to~~ the ~~mill~~safety ~~that produced the metal. Many~~ of ~~the~~our ~~products~~people and ~~services~~will wecontinue ~~provide~~our ~~can~~disciplined befocus ~~ordered~~on ~~and~~constantly ~~tracked~~improving ~~through~~the ~~a web-based~~safety ~~electronic~~performance ~~network that directly connects our computer system to those~~ of our ~~customers~~operations.

WeRaw ~~cooperate~~Materials ~~with our customers~~ and ~~tailor~~Supply our deliveries to support their needs, which in many instances consist of short lead times, multiple daily deliveries, staged deliveries, or deliveries timed for immediate production. These “just-in-time” deliveries are defined by our customers and are generally intended to minimize their inventory investment and handling requirements.

~~While~~In werecent ~~ship~~years, ~~products~~steel, ~~throughout~~aluminum, copper and other metals production in the United States, ~~most~~has offluctuated ~~our~~from ~~customers~~period ~~are~~to ~~located~~period ~~within~~as amills ~~250-mile~~attempt ~~radius~~to match production to projected demand. Periodically, this has resulted in shortages of, ~~our~~or ~~facilities~~increased ordering lead-times for, ~~thus~~some products, as well ~~enabling~~as anfluctuations ~~efficient~~in ~~delivery~~price. ~~system~~Typically, ~~capable~~metals ofproducers ~~handling~~announce aprice ~~large~~changes ~~number~~with ofsufficient ~~short~~advance ~~lead-time~~notice ~~orders.~~to Weallow ~~transport~~us ~~most~~to oforder ~~our~~additional products ~~directly~~prior to ~~our~~the ~~customers~~effective ~~either~~date ~~with~~of a price increase, or to defer purchases until a price decrease becomes effective. Our purchasing decisions are based on our ~~own~~forecast ~~trucks~~of ~~for~~the ~~short~~availability of metal products, ordering lead-~~distance~~times and~~/or~~ ~~multi-stop~~pricing, ~~deliveries~~as orwell ~~through common~~as orour ~~contract~~prediction ~~trucking~~of ~~companies~~customer demand for specific products.

We ~~have~~obtain ~~quality~~the ~~control~~overwhelming ~~systems~~majority toof ~~ensure~~our ~~product~~metals ~~quality~~from ~~and~~domestic ~~traceability~~suppliers, ~~throughout processing.~~which ~~Quality controls~~ include ~~periodic~~Nucor ~~supplier~~Corp., ~~audits~~AK Steel, ~~customer~~Arcelor-~~approved~~Mittal, ~~quality~~North American ~~standards~~Stainless, ~~inspection~~Thyssen ~~criteria~~Krupp ~~and~~Steel ~~metals~~USA, ~~source~~and ~~traceability~~Steel Dynamics. ~~Twenty~~Although we have historically purchased approximately 10% to 15% of our 39raw ~~metal~~material ~~service~~supplies ~~center~~from ~~facilities~~foreign ~~have~~producers, ~~International~~domestic ~~Standards~~suppliers ~~for~~have ~~Organization~~always been, and we believe will continue orto ~~“ISO”~~be, ~~certification~~our principal source of raw material.

~~Building~~Although ~~Products~~most ~~Group~~forms of steel and aluminum produced by mills can be obtained from a number of integrated mills or mini-mills, both domestically and internationally, there are a few products that are available from only a limited number of producers. Since most metals are shipped free-on-board and the transportation of metals is a significant cost factor, we generally seek to purchase metals, to the extent possible, from the nearest mill.

~~The~~During ~~Building~~the ~~Products~~last decade, ~~Group manufactures and sells roofing and patio products~~U.S. WeSteel, ~~generally~~Nucor ~~sell these products through a network of independent distributors and home improvement contractors~~Corp. ~~Our roofing products business manufactures~~ and ~~sells~~Arcelor aMittal ~~high~~acquired ~~performance~~several ~~roofing product consisting~~ of atheir ~~pressed~~domestic competitors, and ~~stone-coated~~international ~~steel~~integrated ~~panel~~producers ~~that~~merged ~~mimics the appearance of traditional shake~~ and ~~tile~~consolidated ~~roofing~~operations. ~~Our~~The ~~roofing~~result ~~product is well suited for all areas subject to threats~~ of ~~high~~this ~~winds,~~trend ~~fires~~has ~~and~~been ~~hail~~fewer ~~storms.~~integrated Inproducers ~~May~~from ~~2006, we acquired Duraloc Roofing Systems, Ltd., a Canadian-based company~~ which we can ~~have~~purchase ~~re-branded~~our asraw ~~Allmet Roofing Products~~materials. ~~This~~We ~~acquisition~~believe ~~provided~~that usglobal ~~with~~consolidation ~~manufacturing~~of ~~capabilities on both~~ the ~~east~~metals ~~and~~industry ~~west~~is ~~coasts~~beneficial ofto ~~North America. Our patio products business manufactures and sells building components used primarily for~~ the ~~erection~~metals ofindustry ~~residential shade structures such~~ as ~~patio~~a ~~covers~~whole ~~and~~by ~~enclosures~~enhancing efficiency. ~~With~~However, ~~facilities~~such ~~located~~consolidation ~~throughout~~could ~~the~~result ~~southern~~in ~~and~~price ~~western~~increases ~~regions~~for of the ~~United~~metal ~~States,~~that we ~~believe we are one of only a few suppliers of patio products with national scale~~ purchase.

~~The~~Sales ~~downturn in the United States housing sector has pushed home improvement remodeling spending below its long-term trend. We believe a recovering economy should stabilize house prices~~ and ~~consumer~~Marketing; ~~confidence~~Customers ~~levels, encouraging homeowners to reinvest in their homes and undertake deferred repairs,~~

10We employ a sales force consisting of internal and external salespeople. Internal salespeople are primarily responsible for maintaining customer relationships, receiving and soliciting individual orders and responding to service and other inquiries by customers. Our external sales force is primarily responsible for identifying potential customers and calling on them to explain our services. We believe that our sales force is trained and knowledgeable about the characteristics and applications of various metals, as well as the manufacturing methods employed by our customers.

~~Table~~Our sales and marketing focus is on the identification of ~~Contents~~end-users that could achieve significant cost savings through the use of our inventory management, value-added processing, just-in-time delivery and other services. We use a variety of methods to identify potential customers, including the use of databases, direct mail and participation in manufacturers’ trade shows. Customer referrals and the knowledge of our sales force about regional end-users also result in the identification of potential customers. Once a potential customer is identified, our outside salespeople assume responsibility for visiting the appropriate contact, typically the purchasing manager or manager of operations.

~~Index~~Nearly all sales are on a negotiated price basis. In some cases, sales are the result of a competitive bid process where a customer provides a list of products, along with requirements, to ~~Financial~~us ~~Statements~~and several competitors and we submit a bid on each product. We have a diverse customer base, with no single customer accounting for more than 4% of our net sales in each of the last three years. Our ten largest customers represented less than 14% of our net sales in 2011. For the year ended December 31, 2011, the average transaction size for our metal service

~~replacements~~11 and improvements. Low financing costs and a wave of previously foreclosed homes coming back on the market and in need of renovation could also contribute to growth. We believe these factors, coupled with an aging American housing stock, are generating significant pent-up demand for remodeling that should manifest itself when the housing sector rebounds (however, there can be no guarantee that demand for remodeling will increase or the timing of any such rebound).

~~Strategy~~ centers was approximately $3,269. We have sought to enhance our position in stable growth industries that demand additional value-added services and reduce our exposure to more cyclical sectors. Through our organic growth and acquisitions, we have capitalized on opportunities to augment our existing product and service portfolio with high value-added products such as aluminum brazing sheet, armor plate, marine grade aluminum plate, and pressure vessel plate to service the aerospace, marine, defense, and oil and gas industries. Our broad portfolio of high-quality metal products and customized value-added services allows us to offer one-stop shopping to our customers. We believe the breadth of our portfolio provides a significant competitive advantage over smaller metal service centers, which generally stock fewer products and offer fewer services than we do.

LOGO

~~Our~~Competition mission is to increase our position as one of the nation’s leading integrated metals processors and distributors, recognized for best in class customer service, optimal inventory management to meet customer demands and to ensure strategic use of our capital resources, continuing to strengthen the relationships we have with our suppliers, while constantly renewing our focus on safety, growth and profitability. Execution of the following strategies is critical to our success:

•The ~~Expand~~metals ~~Value-Added~~distribution ~~Services.~~industry Weis ~~intend~~highly tofragmented ~~continue to invest in capital projects that provide attractive returns~~ and tocompetitive. ~~continue~~Service tocenters ~~expand~~compete ~~the~~with ~~value-added services we offer at~~ each ofother ~~our~~on ~~service~~price, ~~center locations~~service, aquality ~~strategy~~and weavailability ~~believe~~of ~~will~~products. ~~both~~According ~~enhance~~to ~~our~~Metal ~~relationships~~Center ~~with existing customers and help forge new customer relationships~~News, Metals ~~both~~USA ofis ~~which~~ranked wenumber ~~believe~~twelve ~~will~~among ~~result~~service centers in ~~increased~~North ~~market~~America ~~share~~based ~~for~~on us2010 revenues.

•Markets ~~Increase~~are ~~Sales~~generally oriented ofon ~~Higher~~a ~~Margin~~regional ~~Products~~ and ~~Services~~local basis. ~~The~~We ~~sale~~have numerous competitors in each of ~~higher~~our ~~margin~~product ~~products~~lines and ~~services,~~geographic ~~which~~locations. ~~tend~~In toevery ~~have~~market ~~higher~~we ~~growth~~service ~~prospects~~we ~~and~~compete ~~more~~with ~~stable~~various ~~demand~~combinations of other large, ~~will~~value-added ~~continue~~oriented tometals beprocessor/metal service ~~one~~centers some of ~~our~~which ~~core~~may ~~strategies.~~have Wegreater ~~intend~~financial toresources ~~continue~~than ~~executing~~we onhave, ~~this~~smaller ~~strategy~~metals byprocessors/metal ~~increasing~~service ~~our~~centers ~~core~~and, ~~carbon~~to ~~offerings~~a much lesser extent, ~~non-ferrous~~with ~~volumes~~primary metals producers, ~~and~~who ~~our~~typically ~~sales~~sell to very large customers requiring regular shipments of ~~processed~~large ~~products~~volumes of metals.

•Our ~~Execute~~sales ~~Strategic~~and ~~Acquisitions~~services todecisions ~~Improve~~are ~~Our~~decentralized, ~~Business.~~providing Welocal ~~intend~~management the flexibility to ~~continue~~quickly toaddress ~~pursue~~local ~~acquisitions~~market ~~and~~conditions. Historically, we ~~will~~believe ~~generally~~we ~~target~~have ~~one~~been able to ~~two~~compete ~~“bolt-on”~~effectively ~~acquisitions~~because ~~per~~of ~~year~~our ~~that~~high ~~will~~levels ~~enhance~~of ~~our~~service, ~~metal~~broad-based ~~service~~inventory, ~~center~~knowledgeable ~~strategy.~~and Wetrained ~~believe~~sales ~~that~~force, weintegrated ~~are~~computer systems, ~~well~~modern ~~positioned~~equipment, tonumerous ~~take~~locations, ~~advantage~~geographic dispersion, operational economies of ~~acquisition~~scale ~~opportunities~~and incombined ~~the~~purchasing ~~fragmented~~volume. ~~service~~Furthermore, ~~center~~we ~~industry~~believe ~~because~~our ofliquidity and overall financial position affords us a good platform with which to compete with our ~~flexible~~peers ~~capital~~in ~~structure~~the industry.

•12 Maintain and Strengthen Our Strong Relationships with Suppliers and Customers. As one of the largest metal service center businesses in the United States, we intend to use our relationships to leverage the opportunities presented by the consolidation of steel producers and the changing needs of our customers.

•Government ~~Continue~~Regulation ~~Strong Focus on Inventory Management. We will continue managing our inventory to maximize our returns, profitability~~ and ~~cash~~Environmental ~~flow~~Matters while maintaining sufficient inventory to respond to our customers’ demands. Constant evaluation of our inventory management framework will allow us to continue supplying our customers reliably, even during periods of tight metal supply. We expect our inventory management framework will continue generating strong earnings during periods of rising metal prices and strong cash flow during periods of declining metal prices.

•Our ~~Maintain~~operations ~~High~~are ~~Free~~subject ~~Cash~~to ~~Flow~~a ~~Generation~~number of federal, state and ~~Conversion~~local regulations relating to the protection of the environment and to workplace health and safety. WeIn ~~believe~~particular, ~~that~~our weoperations are asubject ~~reliable~~to ~~supplier~~extensive federal, ~~especially~~state ofand ~~higher~~local ~~margin~~laws ~~products~~ and ~~services~~regulations governing waste disposal, toair ~~our~~and ~~customers~~water ~~even~~emissions, inthe ~~periods~~handling of ~~tight~~hazardous ~~supply~~substances, environmental protection, remediation, workplace exposure and other matters. WeHazardous ~~believe~~materials ~~that~~we ~~our~~use ~~reliability~~in ~~allows~~our usoperations toinclude ~~generate~~general ~~higher~~commercial ~~margins~~lubricants and cleaning solvents. Among the more ~~stable~~significant ~~operating~~regulated ~~income~~activities ~~through~~that occur at some of our facilities are: the ~~business~~accumulation ~~cycle.~~of ~~Moreover~~scrap metal, wewhich ~~believe~~is ~~our~~sold ~~inventory~~for ~~management~~recycling; ~~framework,~~the ~~bolstered~~generation byof ~~our~~plant ~~relationships~~trash ~~with~~and ~~our~~other ~~metals~~solid ~~suppliers~~wastes and wastewaters, ~~will~~such ~~stabilize~~as ~~earnings~~water ~~during~~from ~~periods~~burning tables operated at some of ~~weakness.~~our ~~Our~~facilities, ~~core~~which ~~business~~wastes ~~also~~are ~~requires~~disposed ~~minimal~~of ~~maintenance~~in ~~capital~~accordance ~~investment.~~with the WeFederal ~~believe~~Water ~~these~~Pollution ~~strengths~~Control ~~taken~~Act ~~together~~and ~~underscore~~the ~~our~~Resource ~~ability~~Conservation toand ~~generate~~Recovery ~~high~~Act ~~levels~~using third-party commercial waste handlers; and the storage, handling, and use of ~~free~~lubricating ~~cash~~and ~~flow~~cutting oils and small quantities of maintenance-related products and chemicals, ~~which~~the ~~will~~health ~~enable~~hazards usof which are communicated to ~~reinvest~~employees inpursuant ~~our~~to ~~business,~~Occupational ~~consummate~~Safety ~~future~~and ~~acquisitions,~~Health ~~reduce~~Act-prescribed ~~debt,~~hazard communication efforts and ~~achieve~~the ~~other~~disposal ~~corporate~~or recycling of which are performed pursuant to the Resource Conservation and ~~financial~~Recovery ~~objectives~~Act.

•Generally ~~Maintain~~speaking, ~~Our~~our ~~Focus~~facilities’ onoperations ~~Safety~~do ~~Throughout~~not ~~Our~~involve ~~Operating~~the ~~Facilities.~~types Weof ~~remain~~emissions ~~committed~~of air pollutants, discharges of pollutants to ~~the~~land ~~belief~~or ~~that~~surface ~~nothing~~water, isor ~~more~~treatment, ~~important~~storage, ~~than~~or ~~the~~disposal ~~safety~~of hazardous waste which would ordinarily require federal or state environmental permits. Some of our ~~people~~facilities possess authorizations for air emissions from paints and ~~will~~coatings, ~~continue~~hazardous ~~our~~materials ~~disciplined~~permits ~~focus~~under onlocal ~~constantly~~fire ~~improving~~codes or ordinances for the ~~safety~~storage ~~performance~~and use of ~~our~~small quantities of combustible materials such as oils or paints, and state or local permits for on-site septic systems. Our cost of obtaining and complying with such permits has not been and is not anticipated to be material. Our operations are such that environmental regulations typically have not required us to make significant capital expenditures for environmental compliance activities.

~~Raw~~We ~~Materials~~believe that we are in substantial compliance with all applicable environmental and workplace ~~Supply~~health and safety laws and do not currently anticipate that we will be required to expend any substantial amounts in the foreseeable future in order to meet such requirements. However, some of the properties we own or lease are located in areas with a history of heavy industrial use, and are near sites listed on the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) National Priority List. CERCLA establishes joint and several responsibility for clean-up without regard to fault for persons who have arranged for disposal of hazardous substances at sites that have become contaminated and for persons who own or operate contaminated facilities. We have a number of properties located in or near industrial or light industrial use areas; accordingly, these properties may have been contaminated by pollutants which would have migrated from neighboring facilities or have been deposited by prior occupants. Some of our properties are affected by contamination from leaks and drips of cutting oils and similar materials. The costs of clean-ups to date have not been material. We are not currently subject to any claims or notices with respect to clean-up or remediation under CERCLA or similar laws for contamination at our leased or owned properties or at any off-site location. However, we cannot rule out the possibility that we could be notified of such claims in the future. It is also possible that we could be identified by the Environmental Protection Agency, a state agency or one or more third parties as a potentially responsible party under CERCLA or under analogous state laws.

InManagement ~~recent~~Information ~~years,~~Systems steel, aluminum, copper and other metals production in the United States has fluctuated from period to period as mills attempt to match production to projected demand. Periodically, this has resulted in

11Both the Plates and Shapes Group and Flat Rolled and Non-Ferrous Group metal service centers use a system marketed and distributed specifically for the metal service center industry. During 2003, we completed a similar common-platform initiative in the Building Products Group. Some of our subsidiaries currently use electronic data interchange, through which they offer customers a paperless process with respect to order entry, shipment tracking, billing, remittance processing and other routine activities. Additionally, several of our subsidiaries also use computer-aided drafting systems to directly interface with computer-controlled metals processing, resulting in more efficient use of material and time.

~~Table~~13 ~~of Contents~~

~~Index~~We believe investment in uniform management information systems and computer-aided manufacturing technology permits us to ~~Financial~~respond ~~Statements~~quickly and proactively to our customers’ needs and service expectations. These systems are able to share data regarding inventory status, order backlog, and other critical operational information on a real-time basis.

~~shortages~~Employees of, or increased ordering lead-times for, some products, as well as fluctuations in price. Typically, metals producers announce price changes with sufficient advance notice to allow us to order additional products prior to the effective date of a price increase, or to defer purchases until a price decrease becomes effective. Our purchasing decisions are based on our forecast of the availability of metal products, ordering lead-times and pricing, as well as our prediction of customer demand for specific products.

WeAs ~~obtain~~of ~~the~~December 31, ~~overwhelming majority~~2011, ofwe ~~our~~employed ~~metals~~approximately ~~from~~2,200 ~~domestic~~persons. ~~suppliers~~As of December 31, ~~which~~2011, ~~include~~approximately ~~Nucor~~176, ~~Corp.~~or approximately 8% of our employees, AKat ~~Steel~~various sites were members of unions: the United Steelworkers of America; the Sheet Metals Workers Union; the International Association of Bridge, ~~Arcelor-Mittal~~Structural, ~~North~~and ~~American~~Ornamental ~~Stainless,~~Ironworkers ~~Steel~~of ~~Dynamics,~~America; and ~~Gerdau~~the ~~Ameristeel~~International Brotherhood of Teamsters. ~~Although~~Our relationship with these unions generally has been satisfactory. Within the last five years, we have ~~historically~~not ~~purchased~~experienced ~~approximately~~any ~~10%~~work tostoppages ~~15%~~at any of our ~~raw material~~facilities. ~~supplies~~We ~~from~~are ~~foreign~~currently ~~producers~~a party to seven collective-bargaining agreements. Six expire in 2013 and one expires in 2014. Presently, ~~domestic~~we ~~suppliers~~do not ~~have~~anticipate ~~always~~any ~~been~~problems or issues with respect to renewing these agreements upon acceptable terms. Historically, we have succeeded in negotiating new collective bargaining agreements without a strike and we ~~believe~~expect ~~will~~to ~~continue~~succeed in negotiating new collective bargaining agreements with respect to ~~be,~~the ~~our~~agreements ~~principal~~that ~~source~~expire ofin ~~raw~~2013 ~~material~~and 2014.

~~Although~~From ~~most~~time ~~forms~~to ~~of steel and aluminum produced by mills can be obtained from a number of integrated mills or mini-mills~~time, ~~both domestically and internationally,~~ there are ~~a few products that are~~ ~~available~~shortages ~~from~~of ~~only~~qualified aoperators ~~limited number~~ of ~~producers. Since most~~ metals ~~are~~processing ~~shipped~~equipment. ~~free-on-board~~In ~~and~~addition, ~~the~~during ~~transportation~~periods of ~~metals~~low isunemployment, aturnover ~~significant~~among ~~cost~~less-skilled ~~factor,~~workers wecan ~~generally~~be ~~seek~~relatively tohigh. ~~purchase~~We ~~metals,~~believe tothat ~~the~~our ~~extent~~relations ~~possible,~~with ~~from~~our ~~the~~employees ~~nearest~~are ~~mill~~satisfactory.

~~Steel~~See ~~producers~~“Risk ~~have~~Factors—Our ~~been~~ability ~~undergoing~~to ~~rapid~~retain ~~consolidation~~our ~~over~~key ~~the~~employees ~~past~~is ~~several~~critical ~~years.~~to ~~U.S.~~the ~~Steel,~~success ~~Nucor~~of ~~Corp.~~our business, and ~~Arcelor~~failure ~~Mittal~~to ~~have~~do ~~acquired~~so ~~several~~may ofadversely ~~their~~affect ~~domestic~~our ~~competitors,~~revenues and ~~international~~as ~~integrated~~a ~~producers~~result ~~have~~could ~~merged~~materially ~~and~~adversely ~~consolidated~~affect ~~operations.~~our ~~The~~business, ~~result~~financial ofcondition, ~~this~~results ~~trend~~of ~~will~~operations beand ~~fewer~~cash ~~integrated~~flows” ~~producers~~and ~~from~~“Risk ~~which~~Factors—Adverse wedevelopments ~~can~~in ~~purchase~~ our ~~raw~~relationship ~~materials.~~with Weour ~~believe~~unionized ~~that~~employees ~~global~~could ~~consolidation~~adversely ofaffect ~~the~~our ~~metals industry is beneficial to the metals industry as a whole by enhancing efficiency~~business.”

~~Sales and~~Vehicles ~~Marketing; Customers~~

We ~~employ~~operate a ~~sales~~fleet ~~force consisting~~ of ~~internal~~owned ~~and~~or ~~external~~leased ~~salespeople.~~trucks ~~Internal~~and ~~salespeople are primarily responsible for maintaining customer relationships~~trailers, ~~receiving~~as ~~and~~well ~~soliciting~~as ~~individual~~forklifts ~~orders~~ and ~~responding~~support ~~to service and other inquiries by customers~~vehicles. ~~Our external sales force is primarily responsible for identifying potential customers and calling on them to explain our services.~~ We believe ~~that~~these ~~our~~vehicles ~~sales~~are generally ~~force~~well ismaintained ~~trained~~ and ~~knowledgeable~~adequate ~~about~~for ~~the characteristics and applications of various metals, as well as the manufacturing methods employed by~~ our ~~customers~~current operations.

~~Our~~Risk ~~sales~~Management and ~~marketing~~Insurance focus is on the identification of end-users that could achieve significant cost savings through the use of our inventory management, value-added processing, just-in-time delivery and other services. We use a variety of methods to identify potential customers, including the use of databases, direct mail and participation in manufacturers’ trade shows. Customer referrals and the knowledge of our sales force about regional end-users also result in the identification of potential customers. Once a potential customer is identified, our outside salespeople assume responsibility for visiting the appropriate contact, typically the purchasing manager or manager of operations.

~~Nearly~~The ~~all~~primary ~~sales~~risks ~~are~~in onour ~~a negotiated~~operations ~~price basis. In some cases, sales~~ are ~~the~~bodily ~~result of a competitive bid process where a customer provides a list of products~~injury, ~~along~~property ~~with~~damage ~~requirements, to us~~ and ~~several~~vehicle ~~competitors and we submit a bid on each product~~liability. We ~~have~~maintain ageneral ~~diverse customer~~and ~~base,~~vehicle with no single customer accounting for more than 4% of our net sales in each of the last three years. Our ten largest customers represented less than 15% of our net sales in 2010. For the year ended December 31liability insurance, ~~2010,~~liability ~~the~~insurance ~~average transaction size~~ for ~~our~~bodily ~~metal~~injury ~~service centers was approximately $3,130. We have sought to enhance our position in stable growth industries that demand additional value-added services~~ and ~~reduce~~property ~~our~~damage ~~exposure to more cyclical sectors. Through our organic growth~~ and ~~acquisitions,~~workers’ wecompensation ~~have capitalized on opportunities to augment our existing product and service portfolio with high value-added products such as aluminum brazing sheet~~coverage, ~~armor~~which ~~plate,~~we ~~marine~~consider ~~grade~~sufficient ~~aluminum plate, and pressure vessel plate~~ to ~~service~~protect ~~the aerospace, marine, defense, and oil and gas industries. Our broad portfolio of high-quality metal products and customized value-added services allows~~ us toagainst ~~offer one-stop shopping to our customers. We believe the breadth of our portfolio provides~~ a ~~significant~~catastrophic ~~competitive~~loss ~~advantage~~due ~~over~~to ~~smaller~~claims ~~metal~~associated ~~service~~with ~~centers,~~these ~~which generally stock fewer products and offer fewer services than we do~~risks.

12Safety

~~Table~~Our goal is to provide an accident-free workplace. We are committed to continuing and improving upon each facility’s focus and emphasis on safety in the workplace. Our safety program includes regular weekly or monthly field safety meetings and training sessions to teach proper safety procedures. A comprehensive “best practices” safety program which has been implemented throughout our operations ensures that all employees comply with our safety standards, as well as those established by our insurance carriers, and federal, state and local laws and regulations. This program is led by the corporate office, with the assistance of ~~Contents~~each of our product group presidents, executive officers and industry consultants with expertise in workplace safety. Furthermore, the Compensation Committee of our Board of Directors considers workplace safety as an important factor in determining the annual bonus amounts awarded to our executive officers.

~~Index~~14 ~~to Financial Statements~~

~~Competition~~Financial Information About Segments

~~The~~For ~~metals~~information ~~distribution~~regarding ~~industry~~revenues isfrom ~~highly~~external ~~fragmented~~customers, ~~and~~measures ~~competitive.~~of ~~The~~profit ~~North~~or ~~American~~loss ~~metal~~and ~~service~~total ~~center~~assets ~~industry~~for ~~generated~~the ~~approximately~~last ~~$107.5~~three ~~billion~~years infor ~~2009 revenues from approximately 1,200~~each ~~different companies that operate approximately 3~~segment,~~300~~ ~~intermediate~~see ~~steel~~“Management’s ~~processors~~Discussion and ~~metals~~Analysis ~~service~~of ~~center~~Financial ~~facilities.~~Condition ~~Service~~and ~~centers~~Results ~~compete~~of ~~with~~Operations—Results ~~each~~of ~~other~~Operations onby ~~price,~~Segment” ~~service, quality~~ and ~~availability~~Note of13 ~~products.~~to ~~Based~~our onconsolidated ~~2009~~financial ~~revenues,~~statements ~~Metals USA~~for isthe ~~ranked~~year ~~number~~ended ~~twelve~~December 31, ~~among service centers in North America~~2011.

Markets are generally oriented on a regional and local basis. We have numerous competitors in each of our product lines and geographic locations. In every market we service we compete with various combinations of other largePatents, ~~value-added~~Trademarks ~~oriented metals processor/metal service centers some of which may have greater financial resources than we have, smaller metals processors/metal service centers~~ and, toOther aIntellectual ~~much~~Property ~~lesser~~Rights ~~extent, with primary metals producers, who typically sell to very large customers requiring regular shipments of large volumes of metals.~~

We ~~compete~~own ~~with~~several ~~other~~U.S. ~~companies~~patents, ~~on price~~trademarks, service, ~~quality~~marks and ~~availability~~copyrights. Certain of ~~products.~~the ~~Our~~trademarks ~~sales~~ and ~~services decisions~~patents are ~~decentralized,~~registered ~~providing~~with ~~local~~the ~~management~~U.S. ~~the~~Patent ~~flexibility~~and toTrademark ~~quickly~~Office ~~address~~and, ~~local~~in ~~market~~some ~~conditions~~cases, with trademark offices of foreign countries. ~~Historically,~~We weconsider ~~believe~~other weinformation ~~have~~owned ~~been~~by ~~able~~us to ~~compete~~be ~~effectively~~trade ~~because~~secrets. ofWe protect our ~~high~~trade ~~levels~~secrets ~~of service~~by, ~~broad-based~~among ~~inventory~~other things, ~~knowledgeable~~ entering into confidentiality agreements with our employees and ~~trained~~implementing ~~sales~~security ~~force,~~measures ~~integrated~~to restrict ~~computer~~access ~~systems,~~to ~~modern~~such ~~equipment,~~information. ~~numerous~~We ~~locations,~~believe ~~geographic~~that ~~dispersion,~~our ~~operational~~safeguards ~~economies~~provide ofadequate ~~scale~~protection ~~and~~to ~~combined~~our ~~purchasing~~proprietary ~~volume~~rights. ~~Furthermore,~~While we ~~believe~~consider all of our ~~liquidity~~intellectual ~~and~~property ~~overall financial~~to ~~position~~be ~~affords~~important, uswe ado ~~good~~not ~~platform~~consider ~~with~~any ~~which~~single intellectual property right to ~~compete~~be ~~with~~essential to our ~~peers~~operations inas ~~the~~a ~~industry~~whole.

~~Government~~Seasonal ~~Regulation~~Aspects, Renegotiation and ~~Environmental~~ ~~Matters~~Backlog

~~Our~~There ~~operations~~is ~~are subject to~~ a ~~number~~slight ofdecrease ~~federal,~~in ~~state~~our ~~and~~business ~~local~~during ~~regulations~~the ~~relating~~winter tomonths ~~the protection~~because of ~~the~~inclement ~~environment~~weather conditions and tothe ~~workplace~~seasonality ~~health~~of customer ~~and~~end ~~safety~~markets. InNo ~~particular,~~material portion of our ~~operations~~business ~~are~~is subject to ~~extensive~~renegotiation ~~federal,~~of ~~state~~profits ~~and~~or ~~local~~termination ~~laws~~of ~~and~~contracts ~~regulations~~at ~~governing waste disposal, air and water emissions,~~ the ~~handling~~election of ~~hazardous substances,~~the ~~environmental protection, remediation, workplace exposure and other matters~~government. ~~Hazardous~~Because ~~materials~~of wethe ~~use~~ just-in-time ~~our~~delivery ~~operations~~policy ~~include general commercial lubricants~~ and ~~cleaning solvents. Among~~ the ~~more~~short ~~significant~~lead-time ~~regulated~~nature ~~activities that occur at some~~ of our ~~facilities are: the accumulation of scrap metal~~ business, ~~which~~we isdo ~~sold~~not ~~for~~believe ~~recycling;~~ the ~~generation~~information ofon ~~plant~~backlog ~~trash~~of ~~and~~orders ~~other~~is ~~solid~~material ~~wastes~~to ~~and~~an ~~wastewaters,~~understanding ~~such as water from burning tables operated at some~~ of our ~~facilities,~~business. ~~which wastes are disposed of in accordance with the Federal~~

13Foreign Operations

~~Table~~We do not have any material long-term assets or customer relationships outside of ~~Contents~~the United States. We have no material foreign operations or subsidiaries.

~~Index~~Research toand ~~Financial~~Development ~~Statements~~

~~Water~~We ~~Pollution~~do ~~Control~~not ~~Act~~incur ~~and~~material ~~the~~expenses ~~Resource~~in ~~Conservation~~research and ~~Recovery~~development ~~Act~~activities ~~using~~but ~~third-party~~do ~~commercial~~participate ~~waste~~in ~~handlers;~~various ~~and~~research ~~the storage, handling,~~ and ~~use~~development ofprograms. ~~lubricating~~We ~~and~~address ~~cutting~~research ~~oils~~ and ~~small~~ ~~quantities~~development ofrequirements ~~maintenance-related products~~ and ~~chemicals,~~product enhancement ~~the~~by ~~health~~maintaining ~~hazards~~a ofstaff ~~which are communicated to employees pursuant to Occupational Safety and Health Act-prescribed hazard communication efforts and the disposal or recycling~~ of ~~which are~~technical ~~performed~~support, ~~pursuant~~quality toassurance ~~the Resource Conservation~~ and ~~Recovery~~engineering ~~Act~~personnel.

~~Generally~~Communication ~~speaking,~~with ~~our facilities’ operations do not involve~~ the types of emissions of air pollutants, discharges of pollutants to land or surface water, or treatment, storage, or disposal of hazardous waste which would ordinarily require federal or state environmental permits. Some of ourCompany facilities possess authorizations for air emissions from paints and coatings, hazardous materials permits under local fire codes or ordinances for the storage and use of small quantities of combustible materials such as oils or paints, and state or local permits for on-site septic systems. Our cost of obtaining and complying with such permits has not been and is not anticipated to be material. Our operations are such that environmental regulations typically have not required us to make significant capital expenditures for environmental compliance activities.

WeThe ~~believe~~Company’s ~~that~~required weSecurities ~~are in substantial compliance with all applicable environmental~~ and ~~workplace~~Exchange ~~health~~Act ~~and~~filings ~~safety~~such ~~laws~~as ~~and~~annual doreports ~~not~~on ~~currently~~Form ~~anticipate that we will be required to expend any substantial amounts in the foreseeable future in order to meet such requirements. However~~10-K, ~~some~~quarterly ofreports ~~the~~on ~~properties~~Form ~~we own or lease are located in areas with a history of heavy industrial use~~10-Q, ~~and~~current ~~are~~reports ~~near sites listed~~ on ~~the~~Form ~~Comprehensive Environmental Response~~8-K, ~~Compensation,~~ and ~~Liability~~amendments ~~Act (“CERCLA”) National Priority List. CERCLA establishes joint and several responsibility for clean-up without regard~~ to ~~fault~~those ~~for~~reports ~~persons~~are ~~who~~available ~~have~~free ~~arranged for disposal~~ of ~~hazardous~~charge ~~substances~~through atthe ~~sites~~Company’s ~~that~~website, ~~have become contaminated and for persons who own or operate contaminated facilities~~http://www. Wemetalsusa.com, ~~have~~as asoon ~~number~~as ofreasonably ~~properties~~practicable ~~located~~after inthey ~~or near industrial or light industrial use areas; accordingly, these properties may~~ have been ~~contaminated~~filed bywith ~~pollutants which would have migrated from neighboring facilities~~ or ~~have~~furnished ~~been~~to ~~deposited by prior~~the ~~occupants.~~Securities ~~Some of our properties are affected by contamination from leaks~~ and ~~drips~~Exchange ofCommission ~~cutting~~(the ~~oils and similar materials~~“SEC”). ~~The~~All ~~costs~~ of ~~clean-ups~~these tomaterials ~~date have not been material. We~~ are ~~not~~located ~~currently subject to any claims or notices with respect to clean-up or remediation under CERCLA or similar laws for contamination~~ at ~~our leased or owned properties or at any off-site location. However, we cannot rule out~~ the ~~possibility~~“Investor ~~that~~Relations” ~~we could be notified of such claims in the future~~link. ItThey iscan also ~~possible~~ ~~that we could~~ be ~~identified~~obtained byfree ~~the~~of ~~Environmental~~charge ~~Protection~~upon ~~Agency,~~request ato ~~state~~the ~~agency~~Company’s orprincipal ~~one~~address: orMetals ~~more~~USA Holdings ~~third~~Corp., ~~parties~~2400 asE. aCommercial ~~potentially~~Blvd., ~~responsible~~Suite ~~party~~905, ~~under~~Fort ~~CERCLA~~Lauderdale, orFlorida ~~under analogous state laws~~33308.

~~Management~~15 ~~Information Systems~~

~~Both~~Item ~~the Plates and Shapes Group and Flat Rolled and Non-Ferrous Group metal service centers use a system marketed and distributed specifically for the metal service center industry~~1A. ~~During~~Risk 2003, we completed a similar common-platform initiative in the Building Products Group. Some of our subsidiaries currently use electronic data interchange, through which they offer customers a paperless process with respect to order entry, shipment tracking, billing, remittance processing and other routine activities. Additionally, several of our subsidiaries also use computer-aided drafting systems to directly interface with computer-controlled metals processing, resulting in more efficient use of material and time. Factors

WeIn ~~believe~~addition ~~investment~~to the factors discussed elsewhere in ~~uniform~~this ~~management~~report ~~information~~and ~~systems~~in Item 7. “Management’s Discussion and ~~computer-aided~~Analysis ~~manufacturing~~of Financial Condition and Results of Operations,” the following are ~~technology~~some ~~permits~~of usthe topotential ~~respond~~risk ~~quickly~~factors ~~and~~that ~~proactively~~could tocause our ~~customers’~~actual ~~needs~~results ~~and~~to ~~service~~differ ~~expectations~~materially from those projected in any forward-looking statements. ~~These~~You ~~systems~~should ~~are~~carefully ~~able~~consider tothe ~~share~~risk ~~data~~factors ~~regarding~~set ~~inventory~~forth ~~status~~below, ~~order~~as ~~backlog~~well as other information contained in this document, when evaluating your investments in our securities. Any of the following risks could materially and ~~other~~adversely ~~critical~~affect ~~operational~~our ~~information~~business, onfinancial acondition ~~real-time basis~~or results of operations.

~~Employees~~Our business, financial condition, results of operations and cash flows are heavily affected by changing metal prices. We believe metal prices are currently increasing from a low point in the cycle toward a new high point in the cycle (which may not continue).

AsMetal costs typically represent approximately 75% of ~~December 31~~our net sales. Metal costs can be volatile due to numerous factors beyond our control, ~~2010~~including domestic and international economic conditions, welabor ~~employed~~costs, ~~approximately~~production 1levels,~~800~~ ~~persons~~competition, import duties and tariffs and currency exchange rates. AsThis volatility can significantly affect the availability and cost of ~~December 31~~raw materials for us and may, ~~2010~~therefore, ~~approximately~~adversely ~~168~~affect our net sales, oroperating ~~approximately~~margin 9%and net income. Our metal service centers maintain substantial inventories of metal to accommodate the short lead-times and just-in-time delivery requirements of our ~~employees~~customers. Accordingly, using information derived from customers, market conditions, historic usage and industry research, we purchase metal in an effort to maintain our inventory at ~~various~~levels ~~sites~~that ~~were~~we ~~members~~believe ofto ~~unions:~~be appropriate to satisfy the ~~United~~anticipated ~~Steelworkers~~needs of ~~America;~~our customers. Our commitments for metal purchases are generally at prevailing market prices in effect at the ~~Sheet~~time ~~Metals~~we ~~Workers~~place ~~Union;~~our orders. We have no substantial long-term, fixed-price purchase contracts. When raw material prices rise, we may not be able to pass the ~~International~~price ~~Association~~increase on to our customers. When raw material prices decline, customer demands for lower prices could result in lower sale prices and, to the extent we reduce existing inventory quantities, lower margins. There have been historical periods of ~~Bridge~~rapid and significant movements in the prices of metal both upward and downward. These changes can make it difficult for us to accurately forecast our results, ~~Structural~~which could cause us to have higher or lower levels of inventory than required or make expenditures that may not generate expected returns. Any limitation on our ability to pass through any price increases to our customers could have a material adverse effect on our business, financial condition, results of operations or cash flows.

14Changes in metal prices (which we believe are currently increasing, which may not continue) also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. We sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, in part to benefit from early-payment discounts. As a result, when metal prices are rising, we tend to draw more on our $500 million amended and restated senior secured asset-based credit facility due 2015 (the “ABL facility”) to cover the cash flow cycle from our raw material purchases to cash collection. This cash requirement for working capital is higher in periods when we are increasing inventory quantities. Our liquidity is thus adversely affected by rising metal prices. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Operating and Investing Activities.”

~~Table~~Our operating results and liquidity could be negatively affected during economic downturns because the demand for our products is cyclical. We believe demand for our product is currently in the lower end of ~~Contents~~the cycle, although conditions have steadily improved throughout the latter half of 2009 through year-end 2011 (which may not continue).

~~Index~~Many of our products are used in businesses that are, to varying ~~Financial~~degrees, ~~Statements~~cyclical and have historically experienced periodic downturns due to economic conditions, energy prices, consumer demand and other factors beyond our control. These economic and industry downturns have been characterized by diminished product demand, excess capacity and, in some cases, lower average selling prices for our products. The recent economic

~~and~~16 Ornamental Ironworkers of America; and the International Brotherhood of Teamsters. Our relationship with these unions generally has been satisfactory. Within the last five years, we have not experienced any work stoppages at any of our facilities. We are currently a party to six collective-bargaining agreements. One expires in 2011 and five expire in 2013. Presently, we do not anticipate any problems or issues with respect to renewing these agreements upon acceptable terms. Historically, we have succeeded in negotiating new collective bargaining agreements without a strike and we expect to succeed in negotiating new collective bargaining agreements with respect to the agreement that expires in 2011.

~~From~~ downturn ~~time~~and touncertainty ~~time,~~about ~~there~~current ~~are~~global ~~shortages~~economic conditions pose risks as businesses in one or more of ~~qualified~~the ~~operators~~markets that we serve, or consumers in one or more of ~~metals~~the ~~processing~~end-use ~~equipment.~~markets Inthat our ~~addition~~customers serve, ~~during~~may ~~periods~~postpone ofpurchases ~~low~~in ~~unemployment~~response to tighter credit, ~~turnover~~negative ~~among~~financial ~~less-skilled~~news ~~workers~~and/or ~~can~~declines bein ~~relatively~~asset ~~high~~values, which could have a material adverse effect on the demand for our products and services and on our financial condition, results of operations or cash flows. WeAdditionally, ~~believe~~as ~~that~~an increasing amount of our ~~relations~~customers ~~with~~relocate their manufacturing facilities outside of the United States, we may not be able to maintain our ~~employees~~level ~~are~~of ~~satisfactory~~sales to those customers.

~~See~~The ~~“Risk~~decline ~~Factors—Our~~in ~~ability~~steel toprices ~~retain~~resulting ~~our~~from ~~key~~weakened ~~employees~~demand isand ~~critical~~an tooversupply ~~the~~of ~~success~~steel ofthroughout ~~our~~the ~~business,~~supply ~~and~~chain ~~failure~~during tothe dolatter sohalf of ~~may~~2008 ~~adversely~~and ~~affect~~first ~~our~~half ~~revenues~~of ~~and~~2009 ascontributed to a ~~result~~significant ~~could~~decline ~~materially adversely~~in ~~affect~~steel ~~our~~product ~~business,~~shipments ~~financial~~from ~~condition,~~metals ~~results~~service ofcenters ~~operations~~in ~~and~~the ~~cash~~United ~~flows”~~States. ~~and~~Reduced ~~“Risk~~demand ~~Factors—Adverse~~in ~~developments~~a innumber of our ~~relationship~~markets combined with ~~our~~the ~~unionized~~foreign ~~employees~~relocation of some of our customers could ~~adversely~~have ~~affect~~an adverse effect on our business, financial condition, results of operations or cash flows.”

~~Vehicles~~Our customers sell their products abroad, and some of our suppliers buy feedstock abroad. As a result, our business is affected by general economic conditions and other factors outside the United States, primarily in Europe and Asia. Our suppliers’ access to metal, and therefore our access to metal, is additionally affected by such conditions and factors. Similarly, the demand for our customers’ products, and therefore our products, is affected by such conditions and factors. These conditions and factors include enhanced imbalances in the world’s iron ore, coal and steel industries, a downturn in world economies, increases in interest rates, unfavorable currency fluctuations or a slowdown in the key industries served by our customers. In addition, demand for the products of our Building Products Group has been adversely affected by the downturn in the U.S. housing market, since the results of that group depend on a strong residential remodeling industry, which in turn has been historically driven by an expansion in the broader housing market and relatively high consumer confidence.

We ~~operate~~rely aon metal suppliers ~~fleet~~in our business and purchase a significant amount of ~~owned~~metal orfrom ~~leased~~a ~~trucks~~limited number of suppliers and ~~trailers,~~termination asof ~~well~~one asor ~~forklifts~~more ~~and~~of ~~support~~our ~~vehicles.~~relationships Wewith ~~believe~~any ~~these~~of ~~vehicles~~them ~~are~~could ~~generally~~have ~~well~~a ~~maintained~~material ~~and~~adverse ~~adequate~~effect ~~for~~on our ~~current~~business, financial condition, results of operations or cash flows.

~~Risk~~We ~~Management~~use ~~and~~a ~~Insurance~~variety of metals in our business. Our operations depend upon obtaining adequate supplies of metal on a timely basis. We purchase most of our metal from a limited number of metal suppliers. As of December 31, 2011, our top three metals suppliers represent a significant portion of our total metal purchasing cost. Termination of our relationship with any of these suppliers could have a material adverse effect on our business, financial condition, results of operations or cash flows if we were unable to obtain metal from other sources in a timely manner.

~~The~~In ~~primary~~addition, ~~risks~~the domestic metals production industry has experienced consolidation in ~~our~~recent ~~operations~~years. ~~are~~Further consolidation could result in ~~bodily~~a ~~injury,~~decrease ~~property~~in ~~damage~~the ~~and~~number ~~vehicle~~of ~~liability.~~our Wemajor ~~maintain~~suppliers ~~general~~or ~~and~~a ~~vehicle~~decrease ~~liability~~in ~~insurance~~the number of alternative supply sources available to us, ~~liability~~which ~~insurance~~could ~~for~~make ~~bodily~~it ~~injury~~more ~~and~~likely ~~property~~that ~~damage~~termination ~~and~~of ~~workers’~~one ~~compensation~~or ~~coverage~~more of our relationships with major suppliers would result in a material adverse effect on our business, ~~which~~financial condition, results of operations or cash flows. Consolidation could also result in price increases for the metal that we ~~consider~~purchase. ~~sufficient~~Such toprice ~~protect~~increases ~~us against~~could have a ~~catastrophic~~material ~~loss~~adverse ~~due~~effect toon ~~claims~~our business, ~~associated~~financial ~~with~~condition, results of operations or cash flows if we were not able to pass these ~~risks~~price increases on to our customers.

~~Safety~~Intense competition in our fragmented industry could adversely affect our profitability.

~~Our goal is to provide an accident-free workplace.~~ We are ~~committed~~engaged toin ~~continuing~~a ~~and~~highly ~~improving~~fragmented ~~upon each facility’s focus~~ and ~~emphasis~~ oncompetitive ~~safety in the workplace~~industry. ~~Our~~We ~~safety~~compete ~~program~~with ~~includes~~a ~~regular~~large ~~weekly~~number orof ~~monthly~~other ~~field~~value-added ~~safety~~oriented ~~meetings~~metals processor/metal ~~and~~service ~~training~~centers ~~sessions~~on toa ~~teach~~regional ~~proper~~and ~~safety~~local ~~procedures.~~basis, Asome ~~comprehensive~~of ~~“best practices” safety program~~ which ~~has~~may ~~been implemented~~have ~~throughout~~greater ~~our~~financial ~~operations~~resources ~~ensures~~than ~~that~~we ~~all~~have. ~~employees~~Service ~~comply~~centers compete with ~~our~~each ~~safety~~other ~~standards,~~on ~~as well as those established by our insurance carriers~~price, ~~and federal~~service, ~~state~~quality and ~~local~~availability ~~laws~~of ~~and regulations~~products. ~~This~~According ~~program~~to ~~is led by the corporate~~Metal ~~office~~Center News, ~~with~~Metals ~~the~~USA ~~assistance~~is ofranked ~~each~~number oftwelve ~~our~~among ~~product~~service ~~group~~centers ~~presidents,~~in ~~executive~~North ~~officers~~America ~~and~~based ~~industry~~on ~~consultants~~2010 ~~with expertise in workplace safety~~revenues. We ~~have~~also ~~experienced~~compete, ~~improvements~~to ina ~~our~~much ~~safety~~lesser ~~record~~extent, inwith ~~four~~primary ofmetals ~~the~~producers, ~~last~~who ~~five~~typically ~~years.~~sell ~~Furthermore, the~~to ~~Compensation~~very ~~Committee~~large ofcustomers ~~our~~requiring ~~Board~~regular shipments of ~~Directors~~large ~~considers workplace safety as an important factor in determining the annual bonus amounts awarded to our executive officers.~~

~~Financial~~17 ~~Information About Segments~~

~~For~~ volumes ~~information~~of ~~regarding~~metals. ~~revenues from~~Because ~~external customers~~price, ~~measures~~particularly ofin ~~profit~~the orferrous ~~loss~~flat ~~and~~rolled ~~total~~business, ~~assets~~is ~~for~~a ~~the~~competitive ~~last~~factor, ~~three~~we ~~years~~may ~~for~~be ~~each~~required ~~segment,~~in ~~see~~the ~~“Management’s~~future ~~Discussion~~to ~~and~~reduce ~~Analysis~~sales ofvolumes ~~Financial~~to ~~Condition~~maintain ~~and~~our ~~Results~~level of profitability. ~~Operations—Results~~Increased competition in any of ~~Operations~~our ~~by Segment”~~businesses ~~and~~could ~~Note~~have 13a tomaterial adverse effect on our ~~consolidated~~business, financial ~~statements~~condition, ~~for~~results ~~the~~of ~~year~~operations ~~ended~~or ~~December 31,~~cash ~~2010~~flows.

~~Patents~~Our ability to retain our key employees is critical to the success of our business, ~~Trademarks~~and failure to do so may adversely affect our revenues and as a result could materially adversely affect our ~~Other~~business, ~~Intellectual~~financial ~~Property~~condition, ~~Rights~~results of operations and cash flows.

We ~~own~~are ~~several~~dependent ~~U.S.~~on ~~patents,~~the ~~trademarks,~~services ~~service~~of ~~marks~~our Chief Executive Officer and ~~copyrights~~other members of our senior management team to remain competitive in our industry. ~~Certain~~We may not be able to retain or replace one or more of ~~the~~these key employees, we may suffer an extended interruption in one or more of their ~~trademarks~~services ~~and~~or ~~patents~~we may lose the services of one or more of these key employees entirely. Our current key employees are ~~registered~~subject ~~with~~to employment conditions or arrangements that permit the Uemployees to terminate their employment without notice.S Other than a life insurance policy maintained by us on our Chief Executive Officer, for which we are the beneficiary, we do not maintain any life insurance policies for our key employees. ~~Patent~~If ~~and~~any ~~Trademark~~of ~~Office~~our ~~and~~key employees were not able to dedicate adequate time to our business, due to personal or other factors, if we lose or suffer an extended interruption in ~~some~~the ~~cases~~services of any of our key employees or if any of our key employees were to terminate their employment it could have a material adverse effect on our business, ~~with~~financial ~~trademark~~condition, ~~offices~~results of ~~foreign~~operations ~~countries~~or cash flows. WeIn ~~consider~~addition, ~~other~~the ~~information~~market ~~owned~~for byqualified usindividuals tomay be ~~trade~~highly ~~secrets.~~competitive Weand ~~protect~~we ~~our~~may ~~trade~~not ~~secrets~~be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees, should the need arise.

15From time to time, there are shortages of qualified operators of metals processing equipment. In addition, during periods of low unemployment, turnover among less-skilled workers can be relatively high. Any failure to retain a sufficient number of such employees in the future could have a material adverse effect on our business, financial condition, results of operations or cash flows.

~~Table~~We ofare ~~Contents~~subject to litigation that could strain our resources and distract management.

~~Index~~From time to ~~Financial~~time, ~~Statements~~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.

~~by,~~Environmental ~~among~~costs ~~other~~could ~~things,~~decrease ~~entering~~our ~~into~~net ~~confidentiality~~cash ~~agreements~~flow ~~with our employees~~ and ~~implementing~~adversely ~~security~~affect ~~measures to restrict access to such information. We believe that~~ our ~~safeguards provide adequate protection to our proprietary rights~~profitability. ~~While we consider all of our intellectual property to be important, we do not consider any single intellectual property right to be essential to our operations as a whole.~~

~~Seasonal~~Our ~~Aspects~~operations are subject to extensive regulations governing waste disposal, ~~Renegotiation~~air and ~~Backlog~~water emissions, the handling of hazardous substances, remediation, workplace exposure and other environmental matters. Some of the properties we own or lease are located in areas with a history of heavy industrial use, and are near sites listed for clean up under CERCLA. See “Business—Government Regulation and Environmental Matters.” CERCLA established joint and several responsibility for clean-up without regard to fault for persons who have arranged for disposal of hazardous substances at sites that have become contaminated and for persons who own or operate contaminated facilities. We have a number of properties located in or near industrial or light industrial use areas; accordingly, these properties may have been contaminated by pollutants which would have migrated from neighboring facilities or have been deposited by prior occupants. Some of our properties are affected by contamination from leaks and drips of cutting oils and similar materials. The costs of clean-ups to date have not been material. It is possible that we could be notified of such claims in the future. See “Business—Government Regulation and Environmental Matters.” It is also possible that we could be identified by the Environmental Protection Agency, a state agency or one or more third parties as a potentially responsible party under CERCLA or under analogous state laws. If so, we could incur substantial costs related to such claims, which could decrease our net cash flows and adversely affect our profitability.

~~There~~18 is a slight decrease in our business during the winter months because of inclement weather conditions and the impact on the construction industry. No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government. Because of the just-in-time delivery policy and the short lead-time nature of our business, we do not believe the information on backlog of orders is material to an understanding of our business.

~~Foreign~~Adverse ~~Operations~~developments in our relationship with our unionized employees could adversely affect our business.

As of December 31, 2011, approximately 176 of our employees (approximately 8%) at various sites were members of unions. We are currently a party to seven collective-bargaining agreements. Six expire in 2013 and one expires in 2014. Presently we do not ~~have~~anticipate any ~~material~~problems ~~long-term~~or ~~assets~~issues orwith ~~customer~~respect ~~relationships~~to ~~outside~~renewing ofthese agreements upon acceptable terms. However, no assurances can be given that we will succeed in negotiating new collective-bargaining agreements to replace the ~~United~~expiring ~~States~~ones without a strike. WeAny strikes in the future could have noa material ~~foreign~~adverse effect on our business, financial condition, results of operations or ~~subsidiaries~~cash flows. See “Business—Employees” for a discussion of our previous negotiations of collective-bargaining agreements.

~~Research~~We may not successfully implement our acquisition strategy, and ~~Development~~acquisitions that we pursue may present unforeseen integration obstacles and costs, increase our leverage and negatively impact our performance.

We dointend ~~not~~to ~~incur~~continue ~~material~~to ~~expenses~~pursue inour ~~research~~acquisition strategy, and ~~development~~we ~~activities~~generally ~~but~~target one to two “bolt-on” acquisitions per year that will enhance our metal service center strategy. We may not be able to identify suitable acquisition candidates, and if we do ~~participate~~identify suitable candidates, they may be larger than our historical targets. The expense incurred in ~~various~~consummating ~~research~~acquisitions ~~and~~of ~~development~~related ~~programs~~businesses, or our failure to integrate such businesses successfully into our existing businesses, could affect our growth or result in our incurring unanticipated expenses and losses. Furthermore, we may not be able to realize any anticipated benefits from acquisitions. We ~~address~~regularly ~~research~~evaluate potential acquisitions and ~~development~~may ~~requirements~~complete one or more significant acquisitions in the future. To finance an acquisition, we may incur debt or issue equity, both of which could be materially greater amounts than in connection with prior acquisitions. The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and ~~product~~may ~~enhancement~~require significant byfinancial ~~maintaining~~resources athat ~~staff~~would otherwise be available for the ongoing development or expansion of ~~technical~~existing ~~support~~operations. Some of the risks associated with our acquisition strategy which could have an adverse effect on our business, financial ~~quality~~condition, ~~assurance~~results of operations and ~~engineering~~cash ~~personnel.~~flows, include:

~~Communication~~• ~~with~~potential ~~the~~disruption ~~Company~~of our ongoing business and distraction of management;

~~The~~• ~~Company’s~~unexpected ~~required~~loss ~~Securities and Exchange Act filings such as annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free~~ of ~~charge~~key ~~through~~employees ~~the Company’s website, http://www.metalsusa.com., as soon as reasonably practicable after they have been filed with~~ or ~~furnished~~customers ~~to the Securities and Exchange Commission (the “SEC”). All~~ of ~~these materials are located at~~ the ~~“Investor~~acquired Relations” link. They can also be obtained free of charge upon request to the Company’s principal address: Metals USA Holdings Corp., 2400 E. Commercial Blvd., Suite 905, Fort Lauderdale, Florida 33308. company;

16• conforming the acquired company’s standards, processes, procedures and controls with our operations;

~~Table~~• ofcoordinating ~~Contents~~new product and process development;

~~Index~~• tohiring ~~Financial~~additional ~~Statements~~management and other critical personnel;

~~Item~~• ~~1A.~~encountering ~~Risk~~unknown ~~Factors~~contingent liabilities that could be material; and

In• ~~addition~~increasing to the ~~factors~~scope, ~~discussed~~geographic ~~elsewhere~~diversity ~~in this report~~ and incomplexity ~~Item 7. “Management’s Discussion and Analysis~~ of ~~Financial Condition and Results of Operations,” the following are some of the potential risk factors that could cause~~ our actual results to differ materially from those projected in any forward-looking statements. You should carefully consider the risk factors set forth below, as well as other information contained in this document, when evaluating your investments in our securities. Any of the following risks could materially and adversely affect our business, financial condition or results of operations.

~~Our~~As ~~business,~~a ~~financial~~result ~~condition,~~of ~~results~~the offoregoing, ~~operations~~our ~~and~~acquisition ~~cash~~strategy ~~flows~~may ~~are~~not ~~heavily~~be ~~affected~~successfully received by ~~changing~~customers, ~~metal~~and ~~prices.~~we Wemay ~~believe~~not ~~metal~~realize ~~prices are~~any ~~currently~~anticipated ~~increasing~~benefits from ~~a low point in the cycle toward a new high point in the cycle (which may not continue)~~acquisitions.

Metals costs typically represent approximately 75% of our net sales. Metals costs can be volatile due to numerous factors beyond our control, including domestic and international economic conditions, labor costs, production levels, competition, import duties and tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials for us and may, therefore, adversely affect our net sales, operating margin and net income. Our metal service centers maintain substantial inventories of metal to accommodate the short lead-times and just-in-time delivery requirements of our customers. Accordingly, using information derived from customers, market conditions, historic usage and industry research, we purchase metal in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers. Our commitments for metal purchases are generally at prevailing market prices in effect at the time we place our orders. We ~~have no substantial long-term, fixed-price purchase contracts. When raw material prices rise, we~~ may not be able to ~~pass~~retain ~~the~~or ~~price~~expand ~~increase on to~~ our ~~customers. When raw material prices decline,~~ customer ~~demands~~base ~~for~~if ~~lower prices could result in lower sale prices and, to~~ the ~~extent~~North weAmerican ~~reduce existing inventory quantities, lower margins.~~manufacturing ~~There~~industry ~~have~~continues ~~been historical periods of rapid and significant movements in the prices of metal both upward and downward. These changes can make it difficult for us~~ to ~~accurately~~erode ~~forecast~~through ~~our~~moving ~~results,~~offshore ~~which could cause us to have higher~~ or ~~lower~~through ~~levels of~~acquisition ~~inventory~~and ~~than~~merger ~~required~~ or ~~make~~consolidation ~~expenditures~~activity ~~that~~in ~~may not generate expected returns. Any limitation on~~ our ~~ability to pass through any price increases to our~~ customers’ ~~could have a material adverse effect on our business, financial condition, results of operations or cash flows~~industries.

~~Metal~~Our ~~prices~~customer ~~generally~~base, ~~change~~including inour ~~response~~Flat toRolled ~~changes~~and inNon-Ferrous ~~supply,~~Group’s ~~demand~~customer orbase, ~~raw~~primarily ~~material input~~includes ~~costs.~~manufacturing ~~During~~and ~~the~~industrial ~~first~~firms. ~~half~~Some of ~~2009,~~these ~~demand~~customers ~~declined~~operate in ~~reaction~~industries tothat aare undergoing ~~slowing~~consolidation ~~economy~~through acquisition and ~~metal~~merger ~~prices~~activity; ~~dropped~~some inare ~~response~~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. ~~Beginning~~Our infacilities ~~the~~are ~~late~~predominately ~~second~~located ~~quarter~~in ofthe ~~2009~~mid-western and ~~continuing~~southern ~~through~~United States. To the ~~end~~extent ofthat ~~2010~~these customers cease U.S. operations, ~~raw~~relocate ~~material~~or ~~input~~move ~~costs~~operations ~~have~~overseas to regions in ~~generally~~which ~~been~~we ~~increasing~~do ~~and,~~not ashave a ~~result~~presence, ~~metal~~we ~~prices~~could ~~have~~lose ~~been~~their ~~increasing~~business. ~~There~~In ~~are~~addition, noacquirers ~~indications~~of ~~regarding~~manufacturing ~~how~~and ~~long~~industrial ~~this~~firms ~~aspect~~may have suppliers of ~~the~~choice ~~cycle~~that ~~will~~do ~~continue~~not include us, which could affect our customer base and sales.

~~Changes~~19 in metal prices (which we believe are currently increasing but which may not continue) also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. We sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, in part to benefit from early-payment discounts. As a result, when metal prices are rising, we tend to draw more on our $500 million amended and restated senior secured asset-based credit facility due 2015 (the “ABL facility”) to cover the cash flow cycle from our raw material purchases to cash collection. This cash requirement for working capital is higher in periods when we are increasing inventory quantities. Our liquidity is thus adversely affected by rising metal prices. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Operating and Investing Activities.”

17We may face product liability claims that are costly and create adverse publicity.

~~Table~~If any of ~~Contents~~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 to defend against these claims and our reputation could suffer, any of which could harm our business.

~~Index~~We may not be able to ~~Financial~~generate ~~Statements~~sufficient cash to service all of our indebtedness.

Our ~~operating~~ability ~~results~~to ~~and~~make ~~liquidity~~payments ~~could~~on beour ~~negatively~~indebtedness ~~affected~~depends ~~during~~on ~~economic~~our ~~downturns~~ability ~~because~~to generate cash in the future. Our 11 1/8 Senior Secured Notes due 2015 (the “Metals USA Notes”), the ABL facility and our other outstanding ~~demand~~indebtedness are expected to account for significant cash interest expenses in fiscal 2012 and subsequent years. Accordingly, we will have to generate significant cash flows from operations to meet our ~~products~~debt isservice ~~cyclical~~requirements. WeIf ~~believe~~we ~~demand~~do ~~for~~not generate sufficient cash flow to meet our ~~product~~debt isservice ~~currently~~and inworking ~~the~~capital ~~lower~~requirements, ~~end~~we ofmay ~~the~~need ~~cycle~~to seek additional financing; however, ~~although~~this ~~conditions~~insufficient ~~have~~cash ~~steadily~~flow ~~improved~~may ~~throughout~~make ~~the~~it ~~latter~~more ~~half~~difficult offor ~~2009~~us ~~through~~to ~~year-end~~obtain ~~2010~~financing ~~but~~on ~~which~~terms that are acceptable to us, or at all. Furthermore, Apollo has no obligation to provide us with debt or equity financing and we therefore may ~~not~~be ~~continue~~unable to generate sufficient cash to service all of our indebtedness.

~~Many~~Our use of ~~our~~leverage ~~products~~exposes ~~are~~us ~~used in businesses that are,~~ to ~~varying~~interest ~~degrees,~~rate ~~cyclical~~risk and ~~have~~could ~~historically~~adversely ~~experienced periodic~~affect ~~downturns~~our ~~due~~ability to ~~economic~~raise ~~conditions,~~additional ~~energy~~capital ~~prices,~~to ~~consumer~~fund ~~demand and other factors beyond~~ our ~~control. These economic and industry downturns have been characterized by diminished product demand~~operations, ~~excess capacity and, in some cases, lower~~ ~~average~~limit ~~selling prices for~~ our ~~products.~~ability ~~The~~to ~~recent~~react ~~economic~~to ~~downturn~~changes ~~and uncertainty about current global economic conditions pose risks as businesses~~ in ~~one or more of~~ the ~~markets~~economy ~~that we serve,~~ or ~~consumers in one or more of the end-use markets that~~ our ~~customers~~industry ~~serve, may postpone purchases in response to tighter credit, negative financial news~~ and~~/or~~ ~~declines~~prevent inus ~~asset~~from ~~values,~~meeting ~~which could have a material adverse effect on the demand for~~ our ~~products~~obligations ~~and~~under ~~services and on~~ our ~~financial condition, results of operations or cash flows~~indebtedness. ~~Additionally, as an increasing amount of our customers relocate their manufacturing facilities outside of the United States, we may not be able to maintain our level of sales to those customers.~~

~~More~~As ~~recently~~of December 31, ~~the~~2011, ~~decline~~our intotal ~~steel~~indebtedness ~~prices~~was ~~resulting~~$515.6 ~~from~~million. ~~weakened~~We ~~demand~~also ~~and~~had an ~~oversupply~~additional ~~of steel throughout the supply chain during the latter half of 2008 and first half of 2009 contributed to a significant decline in steel product shipments from metals service centers in the U~~$163.S8 inmillion ~~year-over-year~~available ~~comparisons.~~for ~~Reduced~~borrowing ~~demand~~under ~~in a number of our markets combined with~~ the ~~foreign~~ABL ~~relocation~~facility ofas ~~some~~ of ~~our~~that ~~customers could have an adverse effect on our business, financial condition, results of operations or cash flows~~date.

Our ~~customers~~indebtedness ~~sell~~could ~~their~~have ~~products~~important ~~abroad,~~consequences and some of our suppliers buy feedstock abroad. As a result, our business is affected by general economic conditions and other factors outside the United States, primarily in Europe and Asia. Our suppliers’ access to metal, and therefore our access to metal, is additionally affected by such conditions and factors. Similarly, the demand for ~~our customers’ products~~you, ~~and~~including: therefore our products, is affected by such conditions and factors. These conditions and factors include enhanced imbalances in the world’s iron ore, coal and steel industries, a downturn in world economies, increases in interest rates, unfavorable currency fluctuations or a slowdown in the key industries served by our customers. In addition, demand for the products of our Building Products Group has been adversely affected by the downturn in the U.S. housing market, since the results of that group depend on a strong residential remodeling industry, which in turn has been historically driven by an expansion in the broader housing market and relatively high consumer confidence.

We• ~~rely~~it onmay ~~metal~~limit, ~~suppliers~~along inwith ~~our~~the ~~business~~financial and ~~purchase~~other arestrictive ~~significant~~covenants ~~amount~~in ofour ~~metal~~indebtedness, ~~from~~among aother ~~limited~~things, ~~number~~our ofability ~~suppliers~~to ~~and~~borrow ~~termination~~money, dispose of ~~one~~assets or ~~more~~sell ofequity for our ~~relationships~~working ~~with~~capital, ~~any~~capital ofexpenditures, ~~them~~dividend ~~could have~~payments, adebt ~~material~~service ~~adverse effect on our business~~requirements, ~~financial~~strategic ~~condition,~~initiatives ~~results of operations~~ or ~~cash~~other ~~flows.~~ purposes;

We• ~~use~~it ~~a variety~~may oflimit ~~metals in~~ our ~~business.~~flexibility ~~Our~~in ~~operations~~planning ~~depend~~for, ~~upon~~or ~~obtaining~~reacting ~~adequate supplies of metal on a timely basis. We purchase most of our metal from a limited number of metal suppliers. As of December 31~~to, ~~2010,~~changes ~~our~~in ~~top three metals suppliers represent a significant portion of~~ our ~~total metal purchasing cost. Termination of our relationship with any of these suppliers could have a material adverse effect on our business, financial condition, results of~~ operations or ~~cash flows if we were unable to obtain metal from other sources in a timely manner.~~ business;

In• ~~addition,~~we ~~the~~may ~~domestic~~be ~~metals~~more ~~production~~highly ~~industry has~~leveraged ~~experienced~~than ~~consolidation~~some ~~in recent years. Further consolidation could result in a decrease in the number~~ of our ~~major suppliers or a decrease in the number of alternative supply sources available to us~~competitors, which ~~could~~may ~~make~~place itus ~~more~~at ~~likely that termination of one or more of our relationships with major suppliers would result in~~ a ~~material~~competitive adverse effect on our business, financial condition, results of operations or cash flows. Consolidation could also result in price increases for the metal that we purchase. Such price increases could have a material adverse effect on our business, financial condition, results of operations or cash flows if we were not able to pass these price increases on to our customers. disadvantage;

18• it may make us more vulnerable to downturns in our business or the economy; and

~~Table~~• there would be a material adverse effect on our business, financial condition, results of ~~Contents~~operations or cash flows if we were unable to service our indebtedness or obtain additional financing, as needed.

~~Index~~Our todebt ~~Financial~~agreements ~~Statements~~impose significant operating and financial restrictions, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

~~Intense~~The ~~competition~~ABL infacility ~~our~~and ~~fragmented~~the ~~industry~~indenture ~~could~~governing ~~adversely~~the ~~affect~~Metals USA Notes (the “Metals USA Notes Indenture” or the “Indenture”) contain various covenants that limit or prohibit our ~~profitability.~~ability, among other things, to:

We• ~~are~~incur ~~engaged~~or inguarantee aadditional ~~highly~~indebtedness fragmented and competitive industry. We compete with a large number of other value-added oriented metals processor/metal service centers on a regional and local basis, some of which may have greater financial resources than we have. The North American metal service center industry generated approximately $107.5 billion in 2009 revenues from approximately 1,200 different companies that operate approximately 3,300 intermediate steel processors and metals service center facilities. Service centers compete with each other on price, service, quality and availability of products. Based on 2009 revenues, Metals USA is ranked number twelve among service centers in North America. We also compete, to a much lesser extent, with primary metals producers, who typically sell to very large customers requiring regular shipments of large volumes of metals. Because price, particularly in the ferrous flat rolled business, is a competitive factor, we may be required in the future to reduce sales volumes to maintain our level of profitability. Increased competition in any of our businesses could have a material adverse effect on our business, financial condition, results of operations or ~~cash~~issue ~~flows.~~certain preferred shares;

~~Our~~• ~~ability to~~pay ~~retain~~dividends on our ~~key~~capital ~~employees~~stock isor ~~critical~~redeem, ~~to the success of our business~~repurchase, ~~and~~retire ~~failure~~or tomake dodistributions soin ~~may~~respect ~~adversely~~of ~~affect~~ our ~~revenues~~capital ~~and~~stock asor asubordinated ~~result~~indebtedness ~~could~~or ~~materially~~make ~~adversely~~other ~~affect~~restricted ~~our business, financial condition, results of operations and cash flows.~~ payments;

We• ~~are~~enter ~~dependent~~into ~~on the services of our Chief Executive Officer and other members of our senior management team to remain competitive in our industry. We may not be able to retain~~ or replace one or more of these key employees, we may suffer an extended interruption in one or more of their services or we may lose the services of one or more of these key employees entirely. Our current key employees are subject to employment conditions or arrangements that permit ~~the~~certain ~~employees~~agreements to terminate their employment without notice. Other than a life insurance policy maintained by us on our Chief Executive Officer, for which we are the beneficiary, we do not maintain any life insurance policies for our key employees. If any of our key employees were not able to dedicate adequate time to our business, due to personal or ~~other~~make ~~factors,~~certain ifinvestments ~~we lose~~ or suffer an extended interruption in the services of any of our key employees or if any of our key employees were to terminate their employment it could have a material adverse effect on our business, financial condition, results of operations or cash flows. In addition, the market for qualified individuals may be highly competitive and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees, should the need arise. loans;

~~From~~• ~~time~~sell tocertain time, there are shortages of qualified operators of metals processing equipment. In addition, during periods of low unemployment, turnover among less-skilled workers can be relatively high. Any failure to retain a sufficient number of such employees in the future could have a material adverse effect on our business, financial condition, results of operations or cash flows. assets;

We20 ~~are subject to litigation that could strain our resources and distract management.~~

~~From~~• ~~time~~create 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~~incur ~~flows~~liens; ~~or reputation.~~ and

~~Environmental~~• ~~costs~~enter ~~could~~into ~~decrease~~certain ~~our~~transactions ~~net~~with ~~cash flow and adversely affect~~ our ~~profitability~~affiliates.

~~Our~~The ~~operations~~Metals ~~are~~USA ~~subject~~Notes toIndenture ~~extensive~~contains ~~regulations~~covenants ~~governing~~that ~~waste~~restrict ~~disposal,~~our ~~air~~ability ~~and~~to ~~water~~take ~~emissions~~certain actions, ~~the~~such ~~handling~~as ofincurring ~~hazardous~~additional ~~substances~~debt, ~~remediation,~~if ~~workplace~~we ~~exposure~~are ~~and~~unable ~~other~~to ~~environmental~~meet defined adjusted EBITDA to fixed charges ~~matters~~and consolidated total debt ratios (each, as defined by the Indenture). ~~Some~~The ofcovenants in the ~~properties~~Indenture werequire ~~own~~us orto ~~lease~~have ~~are~~an ~~located~~adjusted inEBITDA ~~areas~~to ~~with~~fixed charge ratio (measured on a ~~history~~trailing four-quarter basis) of ~~heavy~~2.0 ~~industrial~~to ~~use,~~1.0 to incur “ratio” indebtedness and ~~are~~a ~~near~~consolidated ~~sites~~total ~~listed~~debt ~~for~~ratio ~~clean~~of upno ~~under~~greater ~~CERCLA~~than 4.75 ~~See~~to 1.0 to incur “~~Business—Government~~ratio” ~~Regulation~~indebtedness ~~and~~in ~~Environmental~~connection ~~Matters~~with acquisitions.” ~~CERCLA established~~Based ~~joint~~on ~~and~~the ~~several~~calculations ~~responsibility~~ for ~~clean-up~~the ~~without~~trailing ~~regard~~four quarters, we are able to ~~fault~~satisfy ~~for~~these ~~persons~~covenants and ~~who~~incur ~~have~~additional ~~arranged~~indebtedness under these ratios, including for acquisition purposes, under the Indenture.

19As of December 31, 2011, our fixed charge coverage ratio (“FCCR”), as defined by the loan and security agreement governing the ABL facility, was 2.82. As of December 31, 2011 we had $163.8 million of additional borrowing capacity under the ABL facility. Failure to comply with the FCCR covenant of the ABL facility can result in limiting our long-term growth prospects by hindering our ability to incur future indebtedness or grow through acquisitions. We do not have to maintain a minimum FCCR as long as our borrowing availability under the ABL facility is greater than or equal to the greater of (i) $45.0 million and (ii) 10% of the lesser of the borrowing base and the aggregate commitment (the “Minimum Availability”). We must maintain an FCCR of at least 1.0 to 1.0 if borrowing availability falls below the Minimum Availability.

~~Table~~Our inability to satisfy the terms of ~~Contents~~the negative covenants in our debt agreements do not, by themselves, constitute covenant violations or events of default. Rather, they are event-related restrictions that limit or prohibit the Company from taking certain corporate actions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Covenant Compliance.”

~~Index~~The torestrictions ~~Financial~~contained ~~Statements~~in the agreements that govern the terms of our debt could:

~~disposal~~• oflimit ~~hazardous~~our ~~substances~~ability atto ~~sites~~plan ~~that have become contaminated and~~ for ~~persons who own~~ or ~~operate~~react ~~contaminated~~to ~~facilities.~~market Weconditions ~~have a number of properties located in~~ or ~~near~~meet ~~industrial~~capital ~~or light~~needs ~~industrial use areas; accordingly, these properties may have been contaminated by pollutants which would have migrated from neighboring facilities~~ or ~~have~~otherwise ~~been~~restrict ~~deposited by prior occupants. Some of~~ our ~~properties~~activities are affected by contamination from leaks and drips of cutting oils and similar materials. The costs of clean-ups to date have not been material. It is possible that we could be notified of such claims in the future. See “Business—Government Regulation and Environmental Matters.” It is also possible that we could be identified by the Environmental Protection Agency, a state agency or ~~one~~business or more third parties as a potentially responsible party under CERCLA or under analogous state laws. If so, we could incur substantial costs related to such claims, which could decrease our net cash flows and adversely affect our profitability. plans;

~~Adverse developments~~• inadversely affect our ~~relationship~~ability ~~with~~to finance our ~~unionized~~operations, ~~employees~~to ~~could~~enter ~~adversely~~into ~~affect~~strategic ~~our~~acquisitions, investments or other capital needs or to engage in other business. activities that would be in our interest; and

As• ~~of December 31,~~limit ~~2010, approximately 168 of~~ our ~~employees~~access ~~(approximately 9%) at various sites were members of unions. We are currently a party~~ to six collective-bargaining agreements. One expires in 2011 and five expire in 2013. Presently we do not anticipate any problems or issues with respect to renewing these agreements upon acceptable terms. However, no assurances can be given that we will succeed in negotiating new collective-bargaining agreements to replace the ~~expiring ones without a strike. Any strikes in the future could have a material adverse effect on our business, financial condition, results of operations or~~ cash ~~flows.~~generated ~~See~~by ~~“Business—Employees” for a discussion of~~ our ~~previous negotiations of collective-bargaining agreements~~subsidiaries.

WeUpon ~~may~~the ~~not~~occurrence ~~successfully~~of ~~implement~~an ~~our~~event ~~acquisition~~of ~~strategy~~default under the ABL facility, the lenders could elect to declare all amounts outstanding under the ABL facility to be immediately due and ~~acquisitions~~payable ~~that~~and terminate all commitments to extend further credit. If we ~~pursue~~were ~~may~~unable to repay those amounts, the lenders under the ABL facility could proceed against the collateral granted to them to secure the ABL facility on a first-priority lien basis. If the lenders under ~~present~~the ~~unforeseen~~ABL ~~integration~~facility ~~obstacles~~accelerate ~~and~~the ~~costs~~repayment of borrowings, ~~increase~~such ~~our~~acceleration ~~leverage~~could ~~and~~have ~~negatively~~a ~~impact~~material adverse effect on our ~~performance~~business, financial condition, results of operations or cash flows. In addition, we may not have sufficient assets to repay the Metals USA Notes upon acceleration.

~~We intend~~For toa ~~continue~~more todetailed ~~pursue~~description ~~our~~on ~~acquisition~~the ~~strategy,~~limitations ~~and we generally target one to two “bolt-~~on” ~~acquisitions per year that will enhance~~ our ~~metal~~ability ~~service center strategy. We may not be able~~ to ~~identify~~incur ~~suitable acquisition candidates,~~additional ~~and if we do identify suitable candidates~~indebtedness, ~~they~~please ~~may~~see be“Management’s ~~larger~~Discussion than our historical targets. The expense incurred in consummating acquisitions of related businesses, or our failure to integrate such businesses successfully into our existing businesses, could affect our growth or result in our incurring unanticipated expenses and ~~losses.~~Analysis Furthermore, we may not be able to realize any anticipated benefits from acquisitions. We regularly evaluate potential acquisitions and may complete one or more significant acquisitions in the future. To finance an acquisition, we may incur debt or issue equity, both of ~~which~~Financial ~~could~~Condition ~~be materially greater amounts than in connection with prior acquisitions. The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties~~ and ~~may~~Results ~~require significant financial resources that would otherwise be available for the ongoing development or expansion~~ of ~~existing~~Operations—Financing ~~operations~~Activities.” ~~Some of the risks associated with our acquisition strategy which could have an adverse effect on our business, financial condition, results of operations and cash flows, include:~~

•Despite ~~potential~~our ~~disruption~~current ofindebtedness, ~~our~~we ~~ongoing~~may still be able to incur significantly more indebtedness which could have a material adverse effect on our business, ~~and~~financial ~~distraction~~condition or results of operations. ~~management;~~

•The ~~unexpected~~terms ~~loss~~ of ~~key~~the ~~employees~~Metals orUSA ~~customers~~Notes ofIndenture and the ~~acquired~~ABL ~~company;~~facility contain restrictions on our ability to incur additional indebtedness. These restrictions are subject to a number of important qualifications and

•21 ~~conforming the acquired company’s standards, processes, procedures and controls with our operations;~~

• exceptions, ~~coordinating~~and ~~new~~the ~~product~~indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we or our subsidiaries could incur significant additional indebtedness in the future. As of December 31, 2011, we had approximately $163.8 million available for additional borrowing under the ABL facility, including the subfacility for letters of credit, and ~~process~~the ~~development;~~covenants under our debt agreements would allow us to borrow a significant amount of additional indebtedness. In addition, the Metals USA Notes Indenture does not limit the amount of indebtedness that may be incurred by Flag Intermediate or Metals USA Holdings. Additional leverage could have a material adverse effect on our business, financial condition or results of operations and could increase the risks described in “—Our use of leverage exposes us to interest rate risk and could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our indebtedness,” “—Our debt agreements impose significant operating and financial restrictions, which could have a material adverse effect on our business, financial condition, results of operations or cash flows” and “—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.”

•Because ~~hiring~~a ~~additional~~portion ~~management~~of ~~and~~our ~~other~~indebtedness bears ~~critical~~interest ~~personnel;~~at rates that fluctuate with changes in certain prevailing short-term interest rates, we are vulnerable to interest rate increases.

•A ~~encountering~~portion ~~unknown~~of ~~contingent~~our ~~liabilities~~indebtedness bears interest at rates that fluctuate with changes in certain short-term prevailing interest rates. As of December 31, 2011, we had approximately $240.3 million of floating rate debt under the ABL facility and our Industrial Revenue Bonds (“IRBs”). We also had an additional $163.8 million available for borrowing under the ABL facility as of December 31, 2011. 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 fiscal 2011 interest expense under the ABL facility and the IRBs by approximately $2.4 million. We use derivative financial instruments to manage a portion of the potential impact of our interest rate risk. As of December 31, 2011, we had $4.1 million of IRBs that were hedged under interest rate swap agreements. To some extent, derivative financial instruments can protect against increases in interest rates, but they do not provide complete protection over the longer term. If interest rates increase dramatically, we could be unable to service our debt which could have a material; ~~and~~adverse effect on our business, financial condition, results of operations or cash flows.

•We ~~increasing~~are ~~the~~controlled ~~scope,~~by ~~geographic~~Apollo ~~diversity~~and its affiliates, and ~~complexity~~their ofinterests ~~our~~as ~~operations~~equity holders may conflict with yours.

AsWe aare ~~result~~an affiliate of, ~~the~~and ~~foregoing~~are controlled by, ~~our~~Apollo ~~acquisition~~and ~~strategy~~its affiliates. The interests of Apollo and its affiliates may not always be ~~successfully~~aligned ~~received~~with byyours. ~~customers~~For example, ~~and~~Apollo may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though these transactions might involve risks to the non-affiliated holders of our common stock or holders of our debt if the transactions resulted in our being more highly leveraged or significantly changed the nature of our business operations or strategy. In addition, if we ~~may~~encounter financial difficulties, or if we are unable to pay our debts as they mature, the interests of Apollo might conflict with those of the non-affiliated holders of our common stock or the holders of our debt. In that situation, for example, the non-affiliated holders of our common stock or the holders of our debt might want us to raise additional equity to reduce our leverage and pay our debts, while Apollo might not ~~realize~~want ~~any~~to increase their investment in us or have their ownership diluted and instead choose to take other actions, such as selling our assets. Furthermore, Apollo and its affiliates have no continuing obligation to ~~anticipated~~provide ~~benefits~~us ~~from~~with ~~acquisitions~~debt or equity financing. Additionally, Apollo and certain of its affiliates are in the business of making investments in businesses engaged in the metals service industry that complement or directly or indirectly compete with certain portions of our business.

20Further, if they pursue such acquisitions in the metals service industry, those acquisition opportunities may not be available to us. So long as Apollo and its affiliates continue to indirectly own a significant amount of the equity of Metals USA Holdings Corp., our parent company, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control our business decisions.

~~Table~~22 ~~of Contents~~

~~Index~~Item to1B. ~~Financial~~Unresolved ~~Statements~~Staff Comments

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’ industriesNone.

~~Our~~23 customer base, including our Flat Rolled and Non-Ferrous Group’s customer base, primarily includes manufacturing and industrial firms. Some of these 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 mid-western and southern United States. To the extent that these 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. In addition, acquirers of manufacturing and industrial firms may have suppliers of choice that do not include us, which could affect our customer base and sales.

WeItem ~~may face product liability claims that are costly and create adverse publicity~~2. Properties

IfAs ~~any~~ of ~~the~~December 31, ~~products that we sell cause harm to any of our customers~~2011, we ~~could~~operated be19 ~~exposed~~metal toservice ~~product~~centers ~~liability~~in ~~lawsuits.~~the IfPlates weand ~~were found~~Shapes ~~liable~~Group ~~under~~and ~~product~~27 ~~liability~~facilities ~~claims,~~in wethe ~~could~~Flat beRolled ~~required~~and toNon-Ferrous ~~pay substantial monetary damages~~Group. ~~Further,~~These ~~even~~facilities ifuse wevarious ~~successfully~~metals ~~defended~~processing and ~~ourselves~~materials ~~against~~handling ~~this~~machinery ~~type~~and ofequipment. ~~claim,~~As ~~we could be forced to spend a substantial amount~~ of ~~money~~the ~~in litigation~~same ~~expenses~~date, our ~~management~~Building ~~could~~Products beGroup ~~required~~operated tofour ~~spend~~manufacturing ~~valuable~~plants ~~time~~where towe ~~defend~~process ~~against~~metals ~~these~~into ~~claims~~various ~~and~~building ~~our~~products ~~reputation~~and ~~could~~14 ~~suffer,~~sales ~~any of which could harm our business~~centers.

WeMany ~~may~~of ~~not~~our befacilities ~~able~~are tocapable ~~generate~~of ~~sufficient~~being ~~cash~~used toat ~~service~~higher ~~all~~capacities, if necessary. We believe that our facilities will be adequate for the expected needs of our ~~indebtedness~~existing businesses over the next several years. Our metal service center facilities, Building Products sales centers and manufacturing plants, and administrative offices are located and described as follows:

~~Our~~OPERATING ~~ability~~FACILITIES toAS ~~make~~OF ~~payments~~DECEMBER ~~on our indebtedness depends on our ability to generate cash in the future. Our 11 1/8 Senior Secured Notes due 2015 (the “Metals USA Notes”)~~31, ~~the ABL facility and our other outstanding indebtedness are expected to account for significant cash interest expenses in fiscal~~ 2011 and subsequent years. 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 need to seek additional financing; however, this insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or at all. Furthermore, Apollo has no obligation to provide us with debt or equity financing and we therefore may be unable to generate sufficient cash to service all of our indebtedness.

Our use of leverage exposes us to interest rate risk and could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our indebtedness.


	Location	Square Footage		Owned/ Leased
*Plates and Shapes Group:*
	Mobile, Alabama		246,000		Owned
	Jacksonville, Florida		60,000		Owned
	Oakwood, Georgia		206,000		Owned
	Waggaman, Louisiana		371,000		Owned
	Baltimore, Maryland		65,000		Leased
	Seekonk, Massachusetts		115,000		Owned
	Columbus, Mississippi		45,000		Owned
	Newark, New Jersey		81,000		Owned
	Greensboro, North Carolina		180,000		Owned
	Canton, Ohio		110,000		Owned
	Enid, Oklahoma		112,000		Owned
	Muskogee, Oklahoma (1)		229,000		Owned
	Tulsa, Oklahoma		533,000		Leased
	Ambridge, Pennsylvania		200,000		Leased
	Langhorne, Pennsylvania		235,000		Leased
	Philadelphia, Pennsylvania		85,000		Owned
	Philadelphia, Pennsylvania		109,000		Leased
	York, Pennsylvania		109,000		Owned
	Cedar Hill, Texas		150,000		Owned

As24 ~~of December 31, 2010, our total indebtedness was $393.5 million. We also had an additional $161.5 million available for borrowing under the ABL facility as of that date.~~

Our indebtedness could have important consequences for you, including:


	Location	Square Footage		Owned/ Leased
*Flat Rolled and Non-Ferrous Group:*
	Thomasville, Alabama		75,000		Owned
	Anaheim, California		45,000		Leased
	Orange, California		28,000		Leased
	Thomasville, Georgia		52,000		Leased
	Madison, Illinois		100,000		Owned
	Northbrook, Illinois		187,000		Owned
	Rockford, Illinois		119,000		Owned
	Rockford, Illinois		41,000		Owned
	Jeffersonville, Indiana		90,000		Owned
	Jeffersonville, Indiana (1) (2)		270,000		Owned
	Jeffersonville, Indiana (2)		40,000		Leased
	Wichita, Kansas		43,000		Leased
	Mansfield, Massachusetts		42,000		Owned
	Walker, Michigan		50,000		Owned
	Plymouth, Minnesota		18,000		Owned
	Liberty, Missouri		117,000		Leased
	Union, New Jersey		39,000		Leased
	Randleman, North Carolina		154,000		Owned
	Springfield, Ohio		105,000		Owned
	Wooster, Ohio		140,000		Owned
	Tulsa, Oklahoma		130,000		Owned
	Houston, Texas		57,000		Owned
	Katy, Texas		212,000		Owned
	Odessa, Texas		29,000		Owned
	Richardson, Texas		192,000		Owned
	Germantown, Wisconsin		102,000		Owned
	Horicon, Wisconsin		120,000		Leased
	Horicon, Wisconsin		32,000		Leased

*Building Products Group:*
Sales Centers	Birmingham, Alabama		19,000		Leased
	Phoenix, Arizona		111,000		Leased
	Hayward, California		24,000		Leased
	Leesburg, Florida		61,000		Leased
	Pensacola, Florida		48,000		Leased
	Las Vegas, Nevada		42,000		Leased
	Oklahoma City, Oklahoma		40,000		Leased
	Irmo, South Carolina		38,000		Leased
	Nashville, Tennessee		44,000		Leased
	Houston, Texas		155,000		Leased
	Longview, Texas		15,000		Leased
	Mesquite, Texas		55,000		Leased
	Weslaco, Texas		21,000		Leased
	Kent, Washington		57,000		Leased
Manufacturing Plants	Brea, California		43,000		Owned
	Buena Park, California		168,000		Leased
	Groveland, Florida		247,000		Leased
	Courtland, Ontario		32,000		Owned

•25 it may limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow money, dispose of assets or sell equity for our working capital, capital expenditures, dividend payments, debt service requirements, strategic initiatives or other purposes;

• it may limit our flexibility in planning for, or reacting to, changes in our operations or business;


	Location	Square Footage		Owned/ Leased
*Administrative Locations:*
Corporate Headquarters	Fort Lauderdale, Florida		6,700		Leased
i-Solutions	Ft. Washington, Pennsylvania		4,000		Leased

•(1) weThese ~~may~~facilities beare ~~more~~subject ~~highly~~to ~~leveraged~~liens ~~than~~with ~~some~~respect ofto ~~our~~specific ~~competitors~~debt obligations, ~~which~~including ~~may place us at a competitive disadvantage;~~IRBs.

•(2) itThese ~~may~~facilities ~~make~~comprise usone ~~more~~operating ~~vulnerable to downturns in our business or the economy; and~~location.

21Item 3. Legal Proceedings

~~Table~~From time to time, we are involved in a variety of ~~Contents~~claims, lawsuits and other disputes arising in the ordinary course of business. We believe the resolution of these matters and the incurrence of their related costs and expenses should not have a material adverse effect on our consolidated financial position, results of operations, liquidity or cash flows. While it is not feasible to predict the outcome of all pending suits and claims, 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, cash flows or reputation.

~~Index~~Item to4. ~~Financial~~Mine ~~Statements~~Safety Disclosures

•Not there would be a material adverse effect on our business, financial condition, results of operations or cash flows if we were unable to service our indebtedness or obtain additional financing, as neededapplicable.

~~Our~~26 ~~debt agreements impose significant operating and financial restrictions, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.~~

~~The~~PART ~~ABL~~II ~~facility and the indentures governing the Metals USA Notes contain various covenants that limit or prohibit our ability, among other things, to:~~

•Item ~~incur~~5. orMarket ~~guarantee~~for ~~additional~~Registrant’s ~~indebtedness~~Common orEquity ~~issue~~and ~~certain~~Related ~~preferred~~Stockholder ~~shares;~~Matters and Issuer Purchases of Equity Securities

•As ~~pay~~a ~~dividends~~result onof ~~our~~the Merger, all of Metals USA Inc.’s issued and outstanding common stock is held indirectly by Metals USA Holdings through Flag Intermediate, its wholly owned subsidiary. Investment funds associated with Apollo own approximately 64% of the capital stock orof ~~redeem~~Metals USA Holdings. As a result of Metals USA Holdings’ initial public offering, ~~repurchase~~the aggregate percentage of Metals USA Holdings’ outstanding capital stock held by non-affiliates as of December 31, ~~retire~~2011 oris ~~make~~approximately ~~distributions~~31%. inThe ~~respect~~remainder of ~~our~~the capital stock orof ~~subordinated~~Metals ~~indebtedness~~USA orHoldings ~~make~~is ~~other~~held ~~restricted~~by ~~payments;~~members of management. Accordingly, the Company’s common stock is not traded on any stock exchange and has no established public trading market.

•Dividends ~~enter into or permit certain agreements or make certain investments or loans;~~

•As ~~sell~~a ~~certain~~result of ~~assets;~~the Merger, Metals USA assumed the obligations of Flag Acquisition, including the Metals USA Notes. All domestic operating subsidiaries of Metals USA have agreed, jointly and severally with Flag Intermediate (“Guarantors”), to unconditionally and irrevocably guarantee Metals USA’s obligations under the Metals USA Notes and Indenture Agreement dated November 30, 2005. Additionally, Flag Intermediate has unconditionally guaranteed as a primary obligor the due and punctual payment and performance of the obligations under the Indenture.

•Metals ~~create~~USA orHoldings ~~incur~~is ~~liens;~~not a guarantor of the Metals USA Notes. There is a limitation on the amount of funds which can be transferred by the Guarantors to Metals USA Holdings in the form of dividends (see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 9 to the Consolidated Financial Statements).

•No ~~enter~~dividends were ~~into~~paid ~~certain~~from ~~transactions~~Flag ~~with~~Intermediate ~~our~~to ~~affiliates~~Metals USA Holdings during 2009, 2010 or 2011. In 2008, Flag Intermediate paid dividends to Metals USA Holdings aggregating $87.5 million. In 2007, Flag Intermediate paid dividends to Metals USA Holdings aggregating $18.1 million. In 2006, Flag Intermediate paid dividends to Metals USA Holdings aggregating $25.0 million.

~~The~~27 indenture governing the Metals USA Notes contains covenants that restrict our ability to take certain actions, such as incurring additional debt, if we are unable to meet defined adjusted EBITDA to fixed charges and consolidated total debt ratios (each, as defined by the applicable indenture). The covenants in the indenture require us to have an adjusted EBITDA to fixed charge ratio (measured on a trailing four-quarter basis) of 2.0 to 1.0 to incur “ratio” indebtedness and a consolidated total debt ratio of no greater than 4.75 to 1.0 to incur “ratio” indebtedness in connection with acquisitions. Based on the calculations for the trailing four quarters, we are able to satisfy these covenants and incur additional indebtedness under these ratios, including for acquisition purposes, under our indenture.

AsItem ~~of December 31, 2010, our fixed charge coverage ratio (“FCCR”), as defined by the loan and security agreement governing the ABL facility, was 2~~6.~~44.~~ AsSelected ofFinancial December 31, 2010 we had $161.5 million of additional borrowing capacity under the ABL facility. Failure to comply with the FCCR covenant of the ABL facility can result in limiting our long-term growth prospects by hindering our ability to incur future indebtedness or grow through acquisitions. We do not have to maintain a minimum FCCR as long as our borrowing availability under the ABL facility is greater than or equal to the greater of (i) $45.0 million and (ii) 10% of the lesser of the borrowing base and the aggregate commitment (the “Minimum Availability”). We must maintain an FCCR of at least 1.0 to 1.0 if borrowing availability falls below the Minimum Availability. Data

~~Our~~The ~~inability~~following totable ~~satisfy~~sets forth our selected historical consolidated financial data as of the ~~terms~~dates and for the periods indicated. The selected historical consolidated financial data for the year ended December 31, 2009, and as of December 31, 2010 and for the ~~negative~~year ~~covenants~~ended inDecember 31, 2010, and as of December 31, 2011, and for the year ended December 31, 2011, have been derived from our ~~debt~~audited ~~agreements~~consolidated dofinancial statements ~~not~~and related notes included in this Form 10-K. The selected historical consolidated financial data for the year ended December 31, by2007, ~~themselves~~and as of December 31, ~~constitute~~2007, ~~covenant~~and ~~violations~~for the year ended December 31, 2008, and as of orDecember 31, ~~events~~2008, and as of ~~default.~~December 31, ~~Rather~~2009, ~~they~~presented ~~are~~in ~~event-related~~this ~~restrictions~~table ~~that~~have ~~limit~~been orderived ~~prohibit~~from the Company’s ~~from~~audited ~~taking~~consolidated ~~certain~~financial ~~corporate~~statements ~~actions~~not included in this Form 10-K. ~~See~~The historical results set forth below do not necessarily indicate results expected for any future period, and should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations~~—Liquidity~~” and ~~Capital~~the consolidated ~~Resources—Covenant~~financial ~~Compliance~~statements and related notes thereto included elsewhere in this Form 10-K.”

The restrictions contained in the agreements that govern the terms of our debt could:


	Years Ended December 31,
	2007		2008			2009			2010		2011
	(in millions)
Statements of Operations Data:
Net Sales	$	1,845.3	$	2,156.2		$	1,098.7		$	1,292.1	$	1,885.9
Cost of sales (exclusive of operating and delivery, and depreciation and amortization included in operating expenses below)		1,418.8		1,612.9			890.1			996.7		1,445.7
Operating expenses		313.0		336.3			230.7			235.1		304.9

Operating income (loss)		113.5		207.0			(22.1	)		60.3		135.3
Interest expense		57.6		54.5			44.9			37.2		42.2
Gain on extinguishment of debt		—		—			(13.6	)		—		—
Other (income) expense, net		—		(0.2	)		0.3			—		0.1

Income (loss) before income taxes		55.9		152.7			(53.7	)		23.1		93.0
Provision (benefit) for income taxes		19.3		59.3			(18.0	)		8.2		31.8

Net income (loss)	$	36.6	$	93.4		$	(35.7	)	$	14.9	$	61.2


	As of December 31,
	2007		2008			2009			2010		2011
	(in millions)
Balance Sheet Data:
Working capital	$	511.9	$	635.3		$	276.3		$	368.2	$	488.0
Total assets		951.1		1,010.9			619.2			744.1		978.6
Long-term debt, less current portion		563.1		648.9			307.1			392.4		514.6
Stockholder’s equity		167.6		175.4			141.1			158.1		220.7

•28 ~~limit our ability to plan for or react to market conditions or meet capital needs or otherwise restrict our activities or business plans;~~

•Item ~~adversely~~7. ~~affect~~Management’s ~~our~~Discussion ~~ability~~and toAnalysis ~~finance~~of ~~our~~Financial ~~operations,~~Condition toand ~~enter~~Results ~~into~~of ~~strategic acquisitions, investments or other capital needs or to engage in other business activities that would be in our interest; and~~Operations

•This ~~limit~~section ~~our~~contains ~~access~~statements tothat constitute “forward-looking statements” within the meaning ~~cash~~of ~~generated~~the byPrivate ~~our~~Securities ~~subsidiaries~~Litigation Reform Act of 1995. See disclosure presented on page 2 of this report for cautionary information with respect to such forward-looking statements. Readers should refer to Item 1A. “Risk Factors” for risk factors that may affect future performance. The following discussion should be read in conjunction with Item 6. “Selected Financial Data” and Item 8. “Financial Statements and Supplementary Data.”

~~Upon~~Overview the occurrence of an event of default under the ABL facility, the lenders could elect to declare all amounts outstanding under the ABL facility to be immediately due and payable and terminate all commitments

22All references to the “Company” include Flag Intermediate, its wholly owned subsidiary Metals USA, and the wholly owned subsidiaries of Metals USA.

~~Table~~We believe that we are a leading provider of ~~Contents~~value-added processed carbon steel, stainless steel, aluminum and specialty metals, as well as manufactured metal components. For the year ended December 31, 2011, approximately 95% of our revenue was derived from our metals service center and processing activities, which are segmented into two groups: Flat Rolled and Non-Ferrous Group and Plates and Shapes Group. The remaining portion of our revenue was derived from our Building Products Group, which principally manufactures and sells aluminum products related to the residential remodeling industry. We purchase metal from primary producers that generally focus on large volume sales of unprocessed metals in standard configurations and sizes. In most cases, we perform the customized, value-added processing services required to meet the specifications provided by end-use customers. Our Plates and Shapes Group and Flat Rolled and Non-Ferrous Group customers are in the aerospace, automotive industry manufacturing, defense, heavy equipment, marine transportation, commercial construction, office furniture manufacturing, and energy and oilfield services industries. Our Building Products Group customers are primarily distributors and contractors engaged in the residential remodeling industry.

~~Index~~Industry toTrends ~~Financial Statements~~

to extend further credit. If we were unable to repay those amounts, the lenders under the ABL facility could proceed against the collateral granted to them to secure the ABL facility on a first-priority lien basis. If the lenders under the ABL facility accelerate the repayment of borrowings, such acceleration could have a material adverse effect on our business, financial condition, results of operations or cash flows. In addition, we may not have sufficient assets to repay the Metals ~~USA~~Service ~~Notes~~Centers ~~upon acceleration.~~

~~For~~U.S. asteel ~~more~~consumption ~~detailed~~declined ~~description~~dramatically onduring the ~~limitations~~ on2009 ~~our~~recession. ~~ability~~2009 toU.S. ~~incur~~steel ~~additional~~consumption ~~indebtedness,~~was ~~please~~less ~~see~~than ~~“Management’s~~70% ~~Discussion~~of 2008 U.S. steel consumption and ~~Analysis~~significantly ofoutpaced ~~Financial~~GDP ~~Condition~~declines. ~~and~~Consequently, annual ~~Results~~growth ofin ~~Operations—Financing~~steel ~~Activities~~demand in 2010 exceeded prior year figures by more than 14% as U.”S. industrial production recovered slowly.

~~Despite~~World ~~our~~steel ~~current~~production ~~indebtedness~~continued to grow in 2011. Domestic steel mills produced at an average capacity utilization rate of 75% during 2011, up 8% from last year. Apparent demand began to improve in the economies of Europe and the United States at the end of 2011 and we ~~may~~believe ~~still~~it is likely that there will be ~~able~~further togrowth ~~incur~~during ~~significantly~~2012. ~~more~~Economic ~~indebtedness~~indicators ~~which~~in ~~could~~the U.S. have arecently ~~material~~been ~~adverse~~rising, ~~effect~~which onwe ~~our business,~~believe ~~financial~~should ~~condition~~mean orpositive ~~results~~growth ofin ~~operations~~steel consumption in 2012.

~~The~~China ~~terms~~has ofcontinued ~~the Metals USA Notes indenture and the ABL facility contain restrictions on our ability~~ to ~~incur~~dominate ~~additional~~global ~~indebtedness.~~steel ~~These~~production ~~restrictions are subject to a number of important qualifications~~ and ~~exceptions~~consumption, ~~and~~accounting ~~the~~for ~~indebtedness~~roughly ~~incurred~~half ~~in compliance with these restrictions could be~~of ~~substantial. Accordingly, we or our subsidiaries could incur significant additional indebtedness in~~ the ~~future.~~total Asglobal ofsteel ~~December 31, 2010, we had approximately $161~~market.5 ~~million~~Chinese ~~available~~steel ~~for~~production ~~additional~~levels ~~borrowing under the ABL facility, including the subfacility for letters of credit,~~ and ~~the~~growth ~~covenants~~characteristics ~~under~~have ~~our~~created ~~debt agreements would allow us to borrow a~~ significant ~~amount~~demand ofon ~~additional~~iron ~~indebtedness.~~ore Inand ~~addition,~~metallurgical ~~the~~coal ~~Metals~~which ~~USA~~has ~~Notes~~generally ~~indenture~~outpaced ~~does~~global ~~not limit the amount of indebtedness that may be incurred by Flag Intermediate or Metals USA Holdings~~supply. Spot ~~Additional~~iron ~~leverage~~ore ~~could~~prices ~~have~~eased aslightly ~~material adverse effect on our business, financial condition or results of operations and could increase the risks described in “—Our use of~~during ~~leverage~~December ~~exposes us to interest rate risk and could adversely affect our ability to raise additional capital to fund our operations~~2011, ~~limit~~but ~~our~~remained ~~ability to react to changes~~ in ~~the~~a ~~economy~~narrow orrange. ~~our~~Prices ~~industry and prevent us from meeting our obligations under our indebtedness,” “—Our debt agreements impose significant operating and financial restrictions, which could~~ have asince ~~material adverse effect on our business~~rebounded, ~~financial condition, results of operations or cash flows”~~ and ~~“—Because~~ ~~a portion of our indebtedness bears interest at rates that fluctuate with changes in certain prevailing short-term interest rates,~~ we ~~are~~believe ~~vulnerable~~this toupward ~~interest~~price ~~rate~~trend ~~increases~~will continue.”

~~Because~~Steel aprices ~~portion~~were relatively stable during 2011 when compared to the significantly volatile periods of ~~our~~2008, ~~indebtedness~~2009, ~~bears~~and ~~interest~~to ata ~~rates~~lesser ~~that~~degree ~~fluctuate~~2010. Given ~~with~~current ~~changes~~market conditions, steel prices are predominately influenced by raw material input costs, namely iron ore and metallurgical coal. We believe that in ~~certain~~the ~~prevailing~~absence ~~short~~of any unanticipated macro-economic disruptions, no near term ~~interest~~catalyst ~~rates,~~that wewould ~~are vulnerable~~materially toalter ~~interest~~current ~~rate~~price ~~increases~~trends is anticipated.

A portion of our indebtedness bears interest at rates that fluctuate with changes in certain short-term prevailing interest rates. As of December 31, 2010, we had approximately $119.4 million of floating rate debt under the ABL facility and our Industrial Revenue Bonds (“IRBs”). We also had an additional $161.5 million available for borrowing under the ABL facility as of December 31, 2010. 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 fiscal 2010 interest expense under the ABL facility and the IRBs by approximately $1.2 million. We use derivative financial instruments to manage a portion of the potential impact of our interest rate risk. As of December 31, 2010, we had $106.0 million of outstanding advances on the ABL facility and $7.7 million of IRBs, which represented approximately 29% of our total indebtedness, that were hedged under interest rate swap agreements. To some extent, derivative financial instruments can protect against increases in interest rates, but they do not provide complete protection over the longer term. 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.

WeBuilding ~~are~~Products ~~controlled by Apollo and its affiliates, and their interests as equity holders may conflict with yours.~~

WeThe ~~are~~downturn anin ~~affiliate~~the ~~of,~~housing and ~~are~~mortgage markets has caused significant contraction in the home improvement remodeling industry. Research ~~controlled~~indicates ~~by,~~that ~~Apollo~~remodeling activity is pro-cyclical with both new residential construction and ~~its~~the ~~affiliates~~broader economy, but remodeling lags homebuilding by several quarters. The ~~interests~~high cyclicality of ~~Apollo~~remodeling ~~and~~activity ~~its~~appears ~~affiliates~~to ~~may~~be ~~not~~driven ~~always~~by discretionary beimprovements, ~~aligned~~similar ~~with~~to ~~yours.~~the ~~For~~products ~~example~~sold by our building products business, ~~Apollo~~which ~~may~~are ~~have~~quite anvolatile. ~~interest~~Improvement inspending ~~pursuing~~is ~~acquisitions,~~expected ~~divestitures,~~to ~~financings~~be ormuch ~~other~~more ~~transactions~~cyclical ~~that,~~and more sensitive to upturns and downturns in ~~their~~ ~~judgment~~the general economy, whereas ~~could~~maintenance ~~enhance~~and ~~their~~repair ~~equity~~spending is expected to be fairly stable over time.

23While the pace of the decline in homeowner remodeling projects appears to be moderating, increased remodeling activity does not seem likely to materialize until further signs of recovery emerge in the broader housing market. Although lower financing costs are reducing the cost of financing home improvement projects, weak home prices, the lack of homeowner equity, and decreased cost recovery for most types of remodeling projects continue to discourage upper-end remodeling improvements.

~~Table~~Product demand for the Company’s Building Products Group may be influenced by numerous factors such as interest rates, general economic conditions, consumer confidence and other factors beyond our control. Declines in existing home sales and improvement remodeling expenditures due to such factors could continue to limit the pace of ~~Contents~~the segment’s recovery.

~~Index~~Consolidated toResults ~~Financial~~of ~~Statements~~Operations

~~investment,~~The ~~even~~following ~~though~~financial ~~these~~information ~~transactions~~reflects ~~might involve risks to the non-affiliated holders of~~ our ~~common~~historical ~~stock or holders of our debt if the transactions resulted in our being more highly leveraged or significantly changed the nature of our business operations or strategy. In addition, if we encounter~~ financial ~~difficulties, or if we are unable to pay our debts as they mature, the interests of Apollo might conflict with those of the non-affiliated holders of our common stock or the holders of our debt~~statements. In that situation, for example, the non-affiliated holders of our common stock or the holders of our debt might want us to raise additional equity to reduce our leverage and pay our debts, while Apollo might not want to increase their investment in us or have their ownership diluted and instead choose to take other actions, such as selling our assets. Furthermore, Apollo and its affiliates have no continuing obligation to provide us with debt or equity financing. Additionally, Apollo and certain of its affiliates are in the business of making investments in businesses engaged in the metals service industry that complement or directly or indirectly compete with certain portions of our business.

Further, if they pursue such acquisitions in the metals service industry, those acquisition opportunities may not be available to us. So long as Apollo and its affiliates continue to indirectly own a significant amount of the equity of Metals USA Holdings Corp., our parent company, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control our business decisions.


	Fiscal Years Ended December 31,
	2011		%			2010		%			2009			%
	(in millions, except percentages)
Net sales	$	1,885.9		100.0	%	$	1,292.1		100.0	%	$	1,098.7			100.0	%
Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		1,445.7		76.7	%		996.7		77.1	%		890.1			81.0	%
Operating and delivery		175.7		9.3	%		131.9		10.2	%		126.7			11.5	%
Selling, general and administrative		108.0		5.7	%		81.8		6.3	%		85.1			7.7	%
Depreciation and amortization		21.2		1.1	%		17.8		1.4	%		18.9			1.7	%
Loss on sale of property and equipment		—		—			0.3		0.0	%		—			—
Advisory agreement termination charge		—		—			3.3		0.3	%		—			—

Operating income (loss)		135.3		7.2	%		60.3		4.7	%		(22.1	)		-2.0	%
Interest expense		42.2		2.2	%		37.2		2.9	%		44.9			4.1	%
Gain on debt extinguishment		—		—			—		—			(13.6	)		-1.2	%
Other expense, net		0.1		0.0	%		—		—			0.3			0.0	%

Income (loss) before income taxes	$	93.0		4.9	%	$	23.1		1.8	%	$	(53.7	)		-4.9	%

~~Item~~Results ~~1B.~~of ~~Unresolved~~Operations—Year ~~Staff~~Ended ~~Comments~~December 31, 2011 Compared to 2010

~~None~~Net sales. Net sales increased $593.8 million, or 46.0%, from $1,292.1 million for the year ended December 31, 2010 to $1,885.9 million for the year ended December 31, 2011. The increase was primarily attributable to a 31.8% increase in shipments, in addition to a 12.9% increase in average realized prices for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups. Net sales for our Building Products Group increased $2.8 million, or 3.4%, for the year ended December 31, 2011 compared to the same period of 2010. Results for the year ended December 31, 2011 include operating results from the Trident acquisition, which closed on March 11, 2011, and the ORMS acquisition, which closed on December 31, 2010. In addition, results for the year ended December 31, 2011 include a full twelve months of operating results from the J. Rubin

2430

~~Table~~ acquisition, which closed on June 28, 2010. Trident, ORMS and J. Rubin contributed a combined $194.7 million of ~~Contents~~incremental sales for the year ended December 31, 2011. Excluding the Trident, ORMS and J. Rubin acquisitions, net sales for our metal service center businesses increased $396.3 million, or 33.3%, for the year ended December 31, 2011 versus the same period of 2010, which primarily resulted from a 16.7% increase in shipments and a 14.2% increase in average realized prices. The increase in prices and volumes is attributable to the cyclical nature of the metal consuming industries supported by our products and services. The economic recovery that continued through 2011 has translated into increased metal consumption as industrial production continues to gradually expand. We continue to experience weaker demand in industries tied to non-residential construction and offshore oil and gas drilling.

~~Index~~According to ~~Financial~~data ~~Statements~~from the Metals Service Center Institute, actual shipments for the service center industry for the year ended December 31, 2011 are up 14.2% over the same period of 2010. Inventory levels have remained relatively stable throughout 2011. Despite a cautious economic outlook, business conditions were generally favorable for the year ended December 31, 2011 compared to the same period of 2010.

~~Item~~Cost of sales. Cost of sales increased $449.0 million, or 45.0%, from $996.7 million for the year ended December 31, 2010 to $1,445.7 million for the year ended December 31, 2011. The increase was primarily attributable to a 31.8% increase in shipments for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, in addition to an 11.8% increase in average cost per ton. Cost of sales for our Building Products Group increased $4.2 million, or 7.2%. ~~Properties~~The Trident, ORMS and J. Rubin acquisitions added a combined $144.2 million of incremental cost of sales for the year ended December 31, 2011. Excluding the Trident, ORMS and J. Rubin acquisitions, shipments increased 16.7% and average cost per ton increased 13.5% over the same period of 2010. The increase in volumes that contributed to higher cost of sales during 2011 was primarily attributable to the factors that affected the increase in net sales discussed above. Cost of sales as a percentage of net sales decreased from 77.1% for the year ended December 31, 2010 to 76.7% for the same period of 2011.

~~Properties~~Operating and delivery. Operating and delivery expenses increased $43.8 million, or 33.2%, from $131.9 million for the year ended December 31, 2010 to $175.7 million for the year ended December 31, 2011. The increase was a result of higher variable costs associated with increased shipments, most notably higher labor costs of approximately $5.7 million and higher freight costs of approximately $8.5 million. In addition, Trident, ORMS and J. Rubin added a combined $21.2 million of incremental operating and delivery expenses for the year ended December 31, 2011. As a percentage of net sales, operating and delivery expenses decreased from 10.2% for the year ended December 31, 2010 to 9.3% for the year ended December 31, 2011.

AsSelling, ofgeneral and administrative. Selling, general and administrative expenses increased $26.2 million, or 32.0%, from $81.8 million for the year ended December 31, 2010 to $108.0 million for the year ended December 31, we2011. ~~operated~~An 20approximate ~~metal service~~$7.2 ~~centers~~million increase in incentive compensation, which is aligned with the ~~Plates~~improved performance of our business, contributed to the period-over-period increase. Trident, ORMS and ~~Shapes~~J. ~~Group~~Rubin added a combined $12.0 million of incremental selling, general and 19administrative ~~facilities~~expenses infor the ~~Flat~~year ~~Rolled~~ended ~~and~~December 31, ~~Non-Ferrous~~2011. ~~Group~~We also incurred costs of approximately $1.6 ~~These~~million ~~facilities~~during ~~use~~2011 ~~various~~which ~~metals~~were ~~processing~~primarily ~~and~~attributable ~~materials~~to ~~handling~~the ~~machinery~~Trident ~~and~~acquisition, ~~equipment~~which closed in March 2011. As a percentage of ~~the~~net ~~same~~sales, ~~date~~selling, ~~our~~general ~~Building~~and ~~Products Group~~administrative ~~operated~~expenses ~~four~~decreased ~~manufacturing~~from ~~plants~~6.3% ~~where~~for wethe ~~process~~year ~~metals~~ended ~~into~~December 31, 2010 ~~various~~to ~~building~~5.7% ~~products~~for ~~and~~the 17year ~~sales~~ended ~~centers~~December 31, 2011.

~~Many~~Depreciation ~~of our~~and ~~facilities~~amortization. Depreciation ~~are~~and amortization ~~capable~~expense ofincreased ~~being~~$3.4 ~~used~~million, ator ~~higher capacities~~19.1%, iffrom ~~necessary~~$17.8 Wemillion ~~believe~~for ~~that~~the ~~our~~year ~~facilities~~ended ~~will~~December 31, be2010 ~~adequate~~to $21.2 million for the ~~expected~~year ~~needs~~ended ofDecember 31, 2011. The increase is primarily attributable to increases in fixed assets resulting from our ~~existing~~growth ~~businesses~~through acquisitions over the ~~next~~past ~~several~~year ~~years~~and from increased capital spending, as our investments in new equipment have grown in line with higher business activity levels. ~~Our~~Net ~~metal~~property ~~service~~and ~~center~~equipment ~~facilities,~~as ~~Building~~of December 31, ~~Products~~2011 ~~sales~~was ~~centers~~$247.8 ~~and~~million ~~manufacturing~~compared ~~plants~~to $198.8 million as of December 31, ~~and~~2010. ~~administrative~~As ~~offices~~a ~~are~~percentage ~~located~~of net sales, depreciation and ~~described~~amortization asexpenses ~~follows:~~decreased from 1.4% for the year ended December 31, 2010 to 1.1% for the year ended December 31, 2011.

~~OPERATING FACILITIES AS OF DECEMBER~~ 31, ~~2010~~

	Location	SquareFootage		Owned/Leased
Plates and Shapes Group:
Northeast Plates and Shapes	Baltimore, Maryland		65,000		Leased
	Seekonk, Massachusetts		115,000		Owned
	Newark, New Jersey		81,000		Owned
	Langhorne, Pennsylvania		235,000		Leased
	Philadelphia, Pennsylvania		85,000		Owned
	Philadelphia, Pennsylvania		109,000		Leased
	York, Pennsylvania		109,000		Owned
South Central Plates and Shapes	Enid, Oklahoma		112,000		Owned
	Tulsa, Oklahoma		533,000		Leased
	Muskogee, Oklahoma(1)		229,000		Owned
	Cedar Hill, Texas		150,000		Owned
Mid-Atlantic Plates and Shapes	Oakwood, Georgia		206,000		Owned
	Greensboro, North Carolina		180,000		Owned
Ohio Valley Plates and Shapes	Canton, Ohio		110,000		Owned
	Ambridge, Pennsylvania		200,000		Leased
Southeast Plates and Shapes	Mobile, Alabama		246,000		Owned
	Jacksonville, Florida		60,000		Owned
	Waggaman, Louisiana		371,000		Owned
	Columbus, Mississippi		45,000		Owned
Southwest Plates and Shapes	Hayward, California		64,000		Leased

Operating income. Operating income increased $75.0 million, or 124.4%, from $60.3 million for the year ended December 31, 2010 to $135.3 million for the year ended December 31, 2011. The increase was primarily a result of the increase in net sales discussed above, in addition to the impact associated with the acquisitions of Trident, ORMS and J. Rubin, which contributed a combined $13.1 million of incremental operating income for the year ended December 31, 2011. The increase in operating income during 2011 was also partially attributable to the absence of a $3.3 million charge to operating expense for the termination of our advisory agreement with Apollo in connection with our IPO during the second quarter of 2010. As a percentage of net sales, operating income increased from 4.7% for the year ended December 31, 2010 to 7.2% for the year ended December 31, 2011.

25Interest expense. Interest expense increased $5.0 million, or 13.4%, from $37.2 million for the year ended December 31, 2010 to $42.2 million for the year ended December 31, 2011. The increase was due to higher borrowings and a higher average facility rate on the ABL facility. The weighted average outstanding balance on our ABL facility increased from $77.6 million for the year ended December 31, 2010 to $214.8 million for the year ended December 31, 2011. Borrowings under the ABL facility were used to fund the Trident and ORMS acquisitions, in addition to higher working capital needs between the two periods.

~~Table~~Results of ~~Contents~~Operations—Year Ended December 31, 2010 Compared to 2009

~~Index~~Net sales. Net sales increased $193.4 million, or 17.6%, from $1,098.7 million for the year ended December 31, 2009 to $1,292.1 ~~Financial~~million ~~Statements~~for the year ended December 31, 2010. The increase was primarily attributable to a 16.0% increase in shipments, in addition to a 3.7% increase in average realized prices for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups. Net sales decreased $10.2 million, or 10.9%, for our Building Products Group. Results for the year ended December 31, 2010, include the results from the J. Rubin acquisition from the date of the acquisition closing, which occurred on June 28, 2010. J. Rubin contributed $17.8 million of incremental sales for the year ended December 31, 2010. The increase in volumes for our metal service center businesses stemmed from better operating performance in an improving economy and stronger demand across most of our end-user markets, with the exception of weak non-residential construction and diminished levels of energy demand in the Gulf of Mexico. We believe that our focus on product mix enhancement during 2010 helped to mitigate the effects of uneven demand associated with specific regions and end-use industries.

	Location	SquareFootage		Owned/Leased
Flat Rolled and Non-Ferrous Group:
	Anaheim, California		45,000		Leased
	Madison, Illinois		100,000		Owned
	Northbrook, Illinois		187,000		Owned
	Jeffersonville, Indiana		90,000		Owned
	Jeffersonville, Indiana (1) (2)		270,000		Owned
	Jeffersonville, Indiana (2)		40,000		Leased
	Wichita, Kansas		43,000		Leased
	Walker, Michigan		50,000		Owned
	Liberty, Missouri		117,000		Leased
	Union, New Jersey		39,000		Leased
	Randleman, North Carolina		154,000		Owned
	Springfield, Ohio		105,000		Owned
	Wooster, Ohio		140,000		Owned
	Mesquite, Texas		55,000		Leased
	Germantown, Wisconsin		102,000		Owned
	Horicon, Wisconsin		120,000		Leased
	Horicon, Wisconsin		40,000		Leased
	Rockford, Illinois		72,000		Owned
	Rockford, Illinois		41,000		Owned
	Plymouth, Minnesota		19,000		Owned
Building Products Group:
Sales Centers	Birmingham, Alabama		12,000		Leased
	Phoenix, Arizona		111,000		Leased
	Hayward, California		24,000		Leased
	Ontario, California		12,000		Leased
	Leesburg, Florida		61,000		Leased
	Pensacola, Florida		48,000		Leased
	Kansas City, Missouri		16,000		Leased
	Las Vegas, Nevada		133,000		Leased
	Oklahoma City, Oklahoma		40,000		Leased
	Irmo, South Carolina		38,000		Leased
	Nashville, Tennessee		44,000		Leased
	Houston, Texas		155,000		Leased
	Longview, Texas		15,000		Leased
	Mesquite, Texas		55,000		Leased
	Weslaco, Texas		21,000		Leased
	Salt Lake City, Utah		23,000		Leased
	Kent, Washington		57,000		Leased
Manufacturing Plants	Brea, California		43,000		Leased
	Buena Park, California		168,000		Leased
	Groveland, Florida		247,000		Leased
	Courtland, Ontario		32,000		Owned
Administrative Locations:
Corporate Headquarters	Fort Lauderdale, Florida		6,700		Leased
Corporate Administration	Houston, Texas		3,000		Leased
i-Solutions	Ft. Washington, Pennsylvania		4,000		Leased

Weak demand caused prices for many grades of steel to fall substantially during the first half of 2009, as steel producers in North America reduced prices and cut production to adjust to lower order levels. As a result, although our metal service center businesses benefitted from a broader market recovery since mid-2009, the increase in net sales for 2010 versus 2009 was largely driven by volumes. Carbon steel prices generally trended upward at a modest rate during the latter half of 2009, although we experienced intermittent volatility in steel prices at various times during 2010, mainly during the third quarter. Prices increased in late 2010 in response to persistent higher raw material costs and typical seasonal demand strength leading into the next year.

(Cost of sales. Cost of sales increased $106.6 million, or 12.0%, from $890.1) ~~These~~million ~~facilities~~for ~~are~~the ~~subject~~year ended December 31, 2009, to ~~liens~~$996.7 ~~with~~million ~~respect~~for the year ended December 31, 2010. The increase was primarily attributable to ~~specific~~a ~~debt~~16.0% ~~obligations~~increase in shipments for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, partially ~~including~~offset ~~IRBs~~by a 1.9% decrease in average cost per ton. The J. Rubin acquisition added $12.1 million of incremental cost of sales for the year ended December 31, 2010. Cost of sales for our Building Products Group decreased $7.0 million, or 10.7%. The increase in volumes that contributed to higher cost of sales during 2010 was attributable to higher steel demand as the economy recovered from the global economic recession. Cost of sales as a percentage of net sales decreased from 81.0% for 2009 to 77.1% for 2010.

(Operating and delivery. Operating and delivery expenses increased $5.2) million, ~~These~~or ~~facilities~~4.1%, ~~comprise~~from ~~one~~$126.7 ~~operating~~million ~~location~~for the year ended December 31, 2009 to $131.9 million for the year ended December 31, 2010. The increase was a result of higher variable costs associated with increased shipments, most notably higher freight

2632

~~Table~~ costs of ~~Contents~~approximately $2.9 million. The increase was partially offset by cost reduction initiatives implemented over the last eighteen months, including reductions in square footage under lease, reduction in headcount and employee benefit modifications. As a percentage of net sales, operating and delivery expenses decreased from 11.5% for the year ended December 31, 2009 to 10.2% for the year ended December 31, 2010.

~~Index~~Selling, general and administrative. Selling, general and administrative expenses decreased $3.3 million, or 3.9%, from $85.1 million for year ended December 31, 2009 to ~~Financial~~$81.8 ~~Statements~~million for the year ended December 31, 2010. Lower costs associated with salaries and employee benefits, which amounted to approximately $6.2 million, achieved through personnel reductions and other cost reduction initiatives were the primary contributors to the period-over-period decrease. The decrease also includes a decrease of $0.5 million of expense related to potentially uncollectible customer accounts. As a percentage of net sales, selling, general and administrative expenses decreased from 7.7% for the year ended December 31, 2009 to 6.3% for the year ended December 31, 2010.

~~Item~~Depreciation 3and amortization. Depreciation ~~Legal~~and ~~Proceedings~~amortization expense decreased $1.1 million, or 5.8%, from $18.9 million for the year ended December 31, 2009 to $17.8 million for the year ended December 31, 2010. During the years ended December 31, 2010 and 2009, the Company has reduced capital expenditures to align our investments in new equipment with lower business activity levels, and also to use available cash for debt reduction. As we reduced capital spending, our depreciation costs decreased over time. The decrease was also due to lower amortization of customer list intangible assets (which is recognized on an accelerated basis and decreases over the life of the assets) recorded in connection with the acquisitions completed in May 2006, the acquisition of Lynch Metals in July 2007, and the Merger.

~~From~~Operating ~~time~~income to(loss). Operating ~~time,~~income we(loss) ~~are~~increased ~~involved~~$82.4 inmillion, aor ~~variety of claims~~372.9%, ~~lawsuits~~from ~~and~~an ~~other~~operating ~~disputes~~loss ~~arising in the ordinary course~~ of ~~business~~$22.1 Wemillion ~~believe~~for the ~~resolution~~year ofended ~~these~~December 31, ~~matters~~2009 ~~and~~to ~~the~~operating ~~incurrence~~income of ~~their~~ ~~related~~$60.3 ~~costs~~million ~~and~~for ~~expenses~~the ~~should~~year ~~not~~ended ~~have~~December 31, a2010. ~~material~~The ~~adverse~~increase ~~effect~~was onprimarily ~~our~~a ~~consolidated~~result ~~financial position, results~~ of ~~operations,~~the ~~liquidity~~increase orin ~~cash~~sales ~~flows.~~discussed ~~While~~above, itas iswell ~~not~~as ~~feasible to predict~~ the ~~outcome~~decreases ofin ~~all~~selling, ~~pending~~general ~~suits~~ and ~~claims~~administrative expenses, ~~the ultimate~~and ~~resolution~~depreciation ofand ~~these~~amortization, ~~matters~~ as discussed ~~well~~above. asIn ~~future~~addition, ~~lawsuits~~the ~~could~~J. ~~have~~Rubin aacquisition ~~material~~also ~~adverse~~contributed ~~effect~~$1.1 onmillion ~~our business, financial condition, results~~ of ~~operations,~~incremental ~~cash~~operating ~~flows~~income orfor ~~reputation~~the period.

~~Item~~The increase in operating income during 2010 was partially offset by a $3.3 million charge to operating expense for the termination of our advisory agreement with Apollo in connection with Metals USA Holdings’ IPO. As a percentage of net sales, operating income (loss) increased from (2.0%) for the year ended December 31, 2009 to 4.7% for ~~[Removed~~the ~~and~~year ~~Reserved]~~ended December 31, 2010.

27Interest expense. Interest expense decreased $7.7 million, or 17.1%, from $44.9 million for the year ended December 31, 2009 to $37.2 million for the year ended December 31, 2010. The decrease was primarily a function of reduced borrowings on our ABL facility. The weighted average outstanding balance on our ABL facility decreased from $180.1 million for the year ended December 31, 2009 to $77.6 million for the year ended December 31, 2010.

~~Table~~Gain on extinguishment of debt. ~~Contents~~During the year ended December 31, 2009, we purchased $48.7 million principal amount of the Metals USA Notes in the open market, resulting in a pretax gain of $13.6 million (net of unamortized deferred financing costs) on debt extinguishment.

~~Index~~33 ~~to Financial Statements~~

~~PART~~Results IIof Operations by Segment

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities


	Fiscal Years Ended December 31,
	Net Sales			%			Operating Costs and Expenses		%			Operating Income (Loss)			%			Capital Spending		Tons Shipped (1)
	Net Sales			%			Operating Costs and Expenses		%			Operating Income (Loss)			%			Capital Spending		Direct			Toll
2011:
Plates and Shapes	$	765.9			40.6	%	$	682.9		39.0	%	$	83.0			61.3	%	$	6.4		567			29
Flat Rolled and Non-Ferrous		1,046.7			55.5	%		968.6		55.3	%		78.1			57.7	%		10.5		685			127
Building Products		85.8			4.5	%		86.5		4.9	%		(0.7	)		-0.5	%		4.6		—			—
Corporate and other		(12.5	)		-0.7	%		12.6		0.7	%		(25.1	)		-18.6	%		0.3		(12	)		—

Total	$	1,885.9			100.0	%	$	1,750.6		100.0	%	$	135.3			100.0	%	$	21.8		1,240			156

2010:
Plates and Shapes	$	538.0			41.6	%	$	499.6		40.6	%	$	38.4			63.7	%	$	2.3		488			21
Flat Rolled and Non-Ferrous		680.5			52.7	%		635.2		51.6	%		45.3			75.1	%		0.7		528			30
Building Products		83.0			6.4	%		83.6		6.8	%		(0.6	)		-1.0	%		—		—			—
Corporate and other		(9.4	)		-0.7	%		13.4		1.1	%		(22.8	)		-37.8	%		1.0		(8	)		—

Total	$	1,292.1			100.0	%	$	1,231.8		100.0	%	$	60.3			100.0	%	$	4.0		1,008			51

2009:
Plates and Shapes	$	523.0			47.6	%	$	537.8		48.0	%	$	(14.8	)		67.0	%	$	3.3		472			13
Flat Rolled and Non-Ferrous		490.7			44.7	%		474.2		42.3	%		16.5			-74.7	%		0.5		409			26
Building Products		93.2			8.5	%		97.1		8.7	%		(3.9	)		17.6	%		—		—			—
Corporate and other		(8.2	)		-0.7	%		11.7		1.0	%		(19.9	)		90.0	%		0.3		(7	)		—

Total	$	1,098.7			100.0	%	$	1,120.8		100.0	%	$	(22.1	)		100.0	%	$	4.1		874			39

As(1) aShipments ~~result~~are ofexpressed ~~the~~in ~~Merger,~~thousands ~~all~~ of ~~Metals~~tons ~~USA Inc.’s issued~~ and ~~outstanding~~are ~~common~~not ~~stock~~an isappropriate ~~held indirectly~~measure byfor ~~Metals USA Holdings through Flag Intermediate, its wholly owned subsidiary. Investment funds associated with Apollo own approximately 64% of~~ the ~~capital~~Building ~~stock~~Products ~~of Metals USA Holdings~~Group. As a result of Metals USA Holdings’ initial public offering, the aggregate percentage of Metals USA Holdings’ outstanding capital stock held by non-affiliates as of December 31, 2010, is approximately 31%. The remainder of the capital stock of Metals USA Holdings is held by members of management. Accordingly, the Company’s common stock is not traded on any stock exchange and has no established public trading market.

~~Dividends~~Segment Results—Year Ended December 31, 2011 Compared to 2010

AsPlates aand ~~result of~~Shapes. Net ~~the~~sales ~~Merger~~increased $227.9 million, ~~Metals~~or ~~USA~~42.4%, ~~assumed~~from ~~the~~$538.0 ~~obligations~~million offor ~~Flag~~the ~~Acquisition~~year ended December 31, ~~including~~2010 to $765.9 million for the ~~Metals~~year ~~USA~~ended ~~Notes~~December 31, 2011. ~~All~~The ~~domestic~~increase ~~operating~~was ~~subsidiaries~~primarily ofattributable ~~Metals~~to ~~USA~~a ~~have~~21.6% ~~agreed~~increase in average realized prices, ~~jointly~~in ~~and~~addition ~~severally~~to ~~with~~a ~~Flag~~17.1% ~~Intermediate~~increase ~~(“Guarantors”)~~in shipments for the year ended December 31, 2011 compared to ~~unconditionally~~the ~~and~~year ~~irrevocably~~ended ~~guarantee~~December 31, ~~Metals~~2010. ~~USA’s~~While ~~obligations~~we ~~under~~experienced ~~the~~increased ~~Metals~~demand ~~USA~~from ~~Notes~~the defense and ~~Indenture~~energy ~~Agreement~~services ~~dated~~end ~~November 30,~~markets ~~2005.~~during ~~Additionally~~2011, ~~Flag~~the ~~Intermediate~~non-residential ~~has~~construction ~~unconditionally~~sector, ~~guaranteed~~which ashas been a ~~primary~~key ~~obligor~~metal ~~the~~consuming ~~due~~end ~~and punctual~~market ~~payment~~for ~~and~~us ~~performance~~in of the ~~obligations~~past, continued ~~under~~to ~~the~~experience ~~Indenture~~weak demand by historical standards.

~~Metals~~Operating ~~USA~~costs ~~Holdings~~and isexpenses ~~not~~increased a$183.3 ~~guarantor~~million, ofor ~~the Metals~~36.7%, ~~USA~~from ~~Notes~~$499.6 ~~There~~million isfor athe ~~limitation~~year onended December 31, 2010 to $682.9 million for the ~~amount~~year ofended ~~funds~~December 31, ~~which~~2011. The ~~can~~increase bewas ~~transferred~~primarily byattributable ~~the~~to ~~Guarantors~~a 20.7% increase in average cost per ton, in addition to ~~Metals~~a ~~USA~~17.1% ~~Holdings~~increase in shipments for the ~~form~~year ofended ~~dividends~~December 31, ~~(see~~2011 ~~Item~~compared to the year ended December 731, 2010. ~~“Management’s~~We ~~Discussion~~incurred approximately $0.6 million of facility closure and ~~Analysis~~severance expenses related to the closure of ~~Financial~~a ~~Condition~~Plates and ~~Results~~Shapes location in Hayward, California during the first quarter of ~~Operations—Liquidity~~2011, which contributed to the increase in operating costs and ~~Capital~~expenses ~~Resources”~~versus the prior year. Operating costs and ~~Note~~expenses as a percentage of net sales decreased from 92.9% for the year ended December 31, 2010 to 89.2% for the ~~Consolidated~~year ~~Financial~~ended ~~Statements)~~December 31, 2011.

NoOperating ~~dividends were~~income ~~paid~~increased ~~from~~$44.6 ~~Flag~~million, ~~Intermediate to Metals USA Holdings during 2009~~ or ~~2010~~ 116. ~~In 2008~~1%, ~~Flag~~from ~~Intermediate paid dividends to Metals USA Holdings aggregating~~ $8738.54 million. Infor ~~2007,~~the ~~Flag~~year ~~Intermediate~~ended ~~paid~~December 31, ~~dividends~~2010 to ~~Metals USA Holdings aggregating~~ $1883.10 million. Infor ~~2006,~~the ~~Flag~~year ~~Intermediate~~ended ~~paid~~December 31, ~~dividends~~2011. toThe ~~Metals~~increase ~~USA~~primarily ~~Holdings~~resulted ~~aggregating~~from ~~$25.0~~the ~~million.~~increase in

2834

~~Table~~ net sales discussed above, in addition to lower operating costs and expenses as a percentage of ~~Contents~~net sales, as we continue to focus on cost control. Operating income as a percentage of net sales increased from 7.1% for the year ended December 31, 2010 to 10.8% for the year ended December 31, 2011.

~~Index~~Flat Rolled and Non-Ferrous. Net sales increased $366.2 million, or 53.8%, from $680.5 million for the year ended December 31, 2010 to ~~Financial~~$1,046.7 ~~Statements~~million for the year ended December 31, 2011. Trident, ORMS and J. Rubin contributed a combined $194.7 million of incremental sales for the year ended December 31, 2011. The remaining increase was primarily attributable to a 16.9% increase in shipments, in addition to a 7.7% increase in average realized prices for the year ended December 31, 2011 compared to the year ended December 31, 2010. Our recent acquisitions caused shipments during 2011 to include a larger proportion of toll processed tonnage than our historical norm. Toll processing describes performing processing services on customer-owned material. Net sales for toll processing equates to the processing service fee charged to the customer. Sales of non-ferrous metals accounted for approximately 40% of the segment’s sales product mix for 2011, compared to approximately 38% for 2010. Our Flat Rolled and Non-Ferrous Group experienced increased demand in the automotive, heating and air conditioning equipment, lawn and garden equipment and aerospace equipment markets during 2011.

~~Item~~Operating costs and expenses increased $333.4 million, or 52.5%, from $635.2 million for the year ended December 31, 2010 to $968.6 million for the year ended December 31, 2011. ~~Selected~~Trident, ~~Financial~~ORMS ~~Data~~and J. Rubin contributed a combined $181.4 million of incremental operating costs and expenses to the segment for 2011. The remaining increase was primarily attributable to a 16.9% increase in shipments, in addition to a 7.8% increase in average cost per ton. Operating costs and expenses as a percentage of net sales decreased from 93.3% for the year ended December 31, 2010 to 92.5% for the year ended December 31, 2011.

~~The~~Operating ~~following~~income ~~table~~increased ~~sets~~$32.8 ~~forth~~million, ~~our~~or ~~selected~~72.4%, ~~historical~~from ~~consolidated financial data as of the dates and for the periods indicated~~$45.3 ~~The~~million ~~selected historical consolidated financial data~~ for the year ended ~~December 31,~~ ~~2008, and as of~~ December 31, ~~2009~~2010 ~~and~~to $78.1 million for the year ended December 31, ~~2009,~~2011. The ~~and~~increase aswas ofprimarily ~~December 31,~~attributable ~~2010,~~to ~~and for~~ the ~~year~~increase ~~then~~in ~~ended December 31~~volumes, ~~2010,~~combined ~~have~~with ~~been~~the ~~derived~~increase ~~from~~in ~~our~~average ~~audited~~realized ~~consolidated~~prices ~~financial statements~~discussed ~~and~~above. ~~related~~Trident, ~~notes~~ORMS ~~included~~and inJ. ~~this~~Rubin ~~Form~~contributed ~~10-K~~a combined $13.1 ~~The~~million ~~selected~~of ~~historical~~incremental ~~consolidated~~operating ~~financial~~income ~~data~~ for ~~the~~ year ended December 31, ~~2006,~~2011. ~~and~~Operating income as a percentage of ~~December 31,~~net ~~2006,~~sales ~~and~~increased from 6.7% for the year ended December 31, ~~2007,~~2010 ~~and~~to ~~as of December~~7.5% ~~31,~~for ~~2007, and as of December 31, 2008, presented in this table have been derived from~~ the ~~Company’s~~same ~~audited consolidated financial statements not included in this Form 10-K. The historical results set forth below do not necessarily indicate results expected for any future~~ period, ~~and should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis~~ of ~~Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this Form 10-K~~2011.

	Years Ended December 31,
	2006			2007		2008			2009			2010
	(in millions)
Statements of Operations Data:
Net Sales	$	1,802.9		$	1,845.3	$	2,156.2		$	1,098.7		$	1,292.1
Cost of sales (exclusive of operating and delivery, and depreciation and amortization included in operating expenses below)		1,371.8			1,418.8		1,612.9			890.1			996.7
Operating expenses		312.1			313.0		336.3			230.7			235.1
Operating income (loss)		119.0			113.5		207.0			(22.1	)		60.3
Interest expense		54.1			57.6		54.5			44.9			37.2
Gain on extinguishment of debt		—			—		—			(13.6	)		—
Other (income) expense, net		(0.5	)		—		(0.2	)		0.3			—
Income (loss) before income taxes		65.4			55.9		152.7			(53.7	)		23.1
Provision (benefit) for income taxes		25.9			19.3		59.3			(18.0	)		8.2
Net income (loss)	$	39.5		$	36.6	$	93.4		$	(35.7	)	$	14.9
	Years Ended December 31,
	2006			2007		2008			2009			2010
	(in millions)
Balance Sheet Data:
Working Capital	$	572.9		$	511.9	$	635.3		$	276.3		$	368.2
Total assets		981.9			951.1		1,010.9			619.2			744.1
Long-term debt, less current portion		610.1			563.1		648.9			307.1			392.4
Stockholder’s equity		147.6			167.6		175.4			141.1			158.1

Building Products. Net sales increased $2.8 million, or 3.4%, from $83.0 million for the year ended December 31, 2010 to $85.8 million for the year ended December 31, 2011. Although the Building Products segment experienced top-line growth during 2011 compared to the same period of 2010, this segment of our business continues to be affected by lower consumer spending on residential remodeling due to the effects of the economic recession. Weak job growth, high unemployment, declining home prices and subdued consumer confidence, in addition to decreased access to affordable credit for homeowners and residential remodeling contractors, have contributed to volatility in home improvement spending.

29Operating costs and expenses increased $2.9 million, or 3.5%, from $83.6 million for the year ended December 31, 2010 to $86.5 million for the year ended December 31, 2011. Operating costs and expenses as a percentage of net sales for 2011 were approximately in line with 2010.

~~Table~~Operating loss increased from $0.6 million for the year ended December 31, 2010 to $0.7 million for the year ended December 31, 2011. Results from operations for 2011 include a non-recurring gain of ~~Contents~~approximately $0.7 million from a settlement with the previous owners of the Dura-Loc Roofing Systems, Ltd. (now Allmet Roofing Products) roofing business we acquired in 2006 to cover pre-acquisition warranty claims.

~~Index~~Corporate and other. This category reflects certain administrative costs and expenses management has not allocated to ~~Financial~~its industry ~~Statements~~segments. These costs include compensation for executive officers, insurance, professional fees for audit, tax and legal services and data processing expenses. The negative net sales amount represents the elimination of intercompany sales. The operating loss increased $2.3 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010 due primarily to higher professional fees and higher expenses associated with incentive compensation as a result of the underlying growth and improved performance of the business.

~~Item~~35 ~~7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~This~~Segment ~~section~~Results—Year ~~contains~~Ended ~~statements~~December 31, ~~that~~2010 ~~constitute~~Compared “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. See disclosure presented on the inside of the front cover of this report for cautionary information with respect to ~~such forward-looking statements. Readers should refer to Item 1.A “Risk Factors” for~~2009 risk factors that may affect future performance. The following discussion should be read in conjunction with Item 6. “Selected Financial Data” and Item 8. “Financial Statements and Supplementary Data.”

~~Overview~~Plates and Shapes. Net sales increased $15.0 million, or 2.9%, from $523.0 million for the year ended December 31, 2009 to $538.0 million for the year ended December 31, 2010. The increase was primarily attributable to a 4.9% increase in shipments, partially offset by a 2.0% decrease in average realized prices for the year ended December 31, 2010 compared to the year ended December 31, 2009. Product demand for the Plates and Shapes Group is more transactional in nature and is typically associated with industries and end markets that show strength during later stages of economic cycles. Although we experienced an increase in demand for structural steel during 2010, it was offset to a large extent by the dramatic decline in non-residential construction associated with the global recession that began in late 2008 and to a lesser extent by the U.S. deepwater drilling moratorium issued in May 2010. Intense competition negatively impacted pricing for structural steel throughout most of 2010.

~~All~~Operating ~~references~~costs and expenses decreased $38.2 million, or 7.1%, from $537.8 million for the year ended December 31, 2009 to $499.6 million for the year ended December 31, 2010. The decrease was primarily attributable to a 12.2% decrease in the ~~“Company”~~average ~~include~~cost ~~Flag~~per ~~Intermediate~~ton, ~~its~~partially ~~wholly~~offset ~~owned~~by ~~subsidiary~~a ~~Metals~~4.9% ~~USA~~increase in shipments for the year ended December 31, ~~and~~2010 compared to the ~~wholly~~year ~~owned~~ended ~~subsidiaries~~December 31, 2009. Operating costs and expenses as a percentage of ~~Metals~~net ~~USA~~sales decreased from 102.8% for the year ended December 31, 2009 to 92.9% for the year ended December 31, 2010.

WeOperating ~~believe~~income ~~that~~(loss) weincreased ~~are~~by a$53.2 ~~leading provider of value-added processed carbon steel~~million, ~~stainless~~or ~~steel~~359.5%, ~~aluminum~~from ~~and~~an ~~specialty~~operating ~~metals,~~loss asof ~~well as manufactured metal components~~$14.8 ~~For~~million for the year ended December 31, ~~2010,~~2009 ~~approximately~~to ~~94%~~operating income of ~~our~~$38.4 ~~revenue~~million ~~was~~for ~~derived~~the ~~from~~year ~~our~~ended ~~metals service center and processing activities~~December 31, ~~which are segmented into two groups: Flat Rolled and Non-Ferrous Group and Plates and Shapes Group~~2010. The ~~remaining~~increase ~~portion of~~primarily ~~our~~resulted ~~revenue was derived~~ from ~~our~~lower ~~Building~~operating ~~Products~~costs ~~Group~~and expenses, which ~~principally~~were ~~manufactures~~primarily ~~and~~the ~~sells~~result ~~aluminum~~of ~~products related to~~ the ~~residential~~decreases ~~remodeling~~in ~~industry.~~average Wecost ~~purchase~~per ~~metal from primary producers that generally focus on large volume~~ton ~~sales~~discussed ofabove ~~unprocessed metals~~ in ~~standard~~addition ~~configurations~~to ~~and~~cost ~~sizes.~~reduction Ininitiatives ~~most~~implemented ~~cases,~~during wethe ~~perform~~year ~~the~~ended ~~customized~~December 31, ~~value-added~~2010 ~~processing~~and ~~services~~prior ~~required to meet the specifications provided by end-use customers~~thereto. ~~Our~~Operating ~~Plates~~income ~~and~~(loss) ~~Shapes~~as ~~Group~~a ~~and~~percentage ~~Flat Rolled~~of ~~and~~net ~~Non-Ferrous~~sales ~~Group~~increased ~~customers~~from ~~are~~(2.8%) for in the ~~land~~year ~~and marine transportation~~ended December 31, ~~energy,~~2009 ~~aerospace,~~to ~~defense,~~7.1% for ~~electrical~~the ~~and~~year ~~appliance~~ended ~~manufacturing~~December 31, ~~fabrication, furniture, commercial construction, and machinery and equipment industries~~2010. ~~Our Building Products Group customers are primarily distributors and contractors engaged in the residential remodeling industry.~~

~~Industry~~Flat Rolled and Non-Ferrous. Net ~~Trends~~sales increased $189.8 million, or 38.7%, from $490.7 million for the year ended December 31, 2009 to $680.5 million for the year ended December 31, 2010. The J. Rubin acquisition contributed $17.8 million of incremental sales to this segment for the year ended December 31, 2010. The remaining increase was primarily attributable to a 25.3% increase in shipments, in addition to a 7.8% increase in average realized prices for the year ended December 31, 2010 compared to the year ended December 31, 2009. Sales of non-ferrous metals accounted for approximately 38% of the segment’s sales product mix for 2010, compared to approximately 40% for 2009. Our Flat Rolled and Non-Ferrous Group experienced strong demand in the automotive, aerospace and lawn and garden equipment markets during 2010.

~~Metals~~Operating ~~Service~~costs ~~Centers~~and expenses increased $161.0 million, or 34.0%, from $474.2 million for the year ended December 31, 2009 to $635.2 million for the year ended December 31, 2010. The J. Rubin acquisition contributed $16.7 million of incremental operating costs and expenses to the segment for 2010. The remaining increase was primarily attributable to a 25.3% increase in shipments, in addition to a 6.9% increase in average cost per ton. Operating costs and expenses as a percentage of net sales decreased from 96.6% for the year ended December 31, 2009 to 93.3% for the year ended December 31, 2010.

~~According~~Operating toincome ~~data~~increased ~~from~~by ~~the~~$28.8 million, ~~Metal~~or ~~Service Center Institute~~174.5%, 34from $16.5 million ~~tons~~for ~~of steel sold by~~ the ~~metals~~year ~~service~~ended ~~center~~December 31, ~~industry in North America during~~ 2009 ~~was~~to ~~down~~$45.3 ~~approximately~~million ~~35%~~for ~~from~~ the ~~53.5 million~~ ~~tons~~year ~~sold~~ended ~~in 2008~~December 31, ~~as the global financial crisis caused significant contraction in industrial production world-wide~~2010. The ~~reduction~~increase inwas ~~demand~~primarily ~~for~~attributable ~~metals~~to ~~was~~the ~~compounded~~increase byin ~~widespread~~volumes, ~~inventory~~combined ~~destocking~~with ~~throughout~~ the ~~supply~~increase ~~chain~~in asaverage ~~industry~~realized ~~participants~~prices ~~looked~~discussed ~~to preserve liquidity by managing down their investment in working capital~~above. ~~Beginning~~Operating inincome ~~the~~as ~~fourth~~a ~~quarter~~percentage of ~~2008~~net ~~and~~sales ~~continuing~~increased ~~through~~from 3.4% for the ~~first~~year ~~half~~ended ofDecember 31, 2009, ~~both~~to ~~prices and demand~~ 6.7% for ~~metal products decreased significantly, reaching a low point late in~~ the ~~second~~year ~~quarter~~ended ~~of 2009~~December 31, ~~after which both prices and demand began to stabilize~~2010.

~~Through~~Building ~~the~~Products. Net ~~first~~sales ~~half~~decreased of$10.2 ~~2010~~million, ~~spot~~or ~~prices~~10.9%, ~~for~~from ~~the~~$93.2 ~~key~~million ~~steel-making~~for ~~raw~~the ~~materials~~year ~~moved~~ended ~~steadily~~December 31, ~~higher~~2009 to as$83.0 amillion ~~result~~for of the ~~continuation of~~year ~~strong~~ended ~~Chinese~~December 31, ~~steel production and upticks in demand in the U~~2010.S. ~~domestic~~The ~~market.~~sales Atdecrease ~~the~~was ~~same~~driven ~~time,~~by ~~the~~lower ~~global~~consumer ~~supply/demand~~spending ~~balance~~on ~~remained~~residential ~~sufficiently~~remodeling ~~tight,~~due ~~driven~~to ~~primarily by~~ the ~~discipline~~effects of athe ~~consolidated~~economic ~~set~~recession ~~of producers~~ and ~~lower inventory risk assumed by~~ the ~~service center sector as a whole.~~ resulting

~~Amid~~36 continued signs of economic recovery, metals prices increased modestly during the first half of 2010. In the fourth quarter of 2010, the combination of lean inventory levels throughout the entire supply chain for both steel and scrap, along with the world’s largest iron ore producers running at record production rates and raising prices, provided upward momentum for steel prices. Service centers and end users purchased inventory to stay ahead of announced price increases and the expectation of a normal seasonal recovery, which extended mill lead times, prompting mills to push prices up more aggressively. Under the current scenario of favorable supply/demand trends in global markets, along with continued consolidation and discipline from producers, and tight

30 depreciation of homes, as well as decreased access to affordable credit for homeowners and residential remodeling contractors. These factors have led to significant contraction in the home improvement remodeling industry.

~~Table~~Operating costs and expenses decreased $13.5 million, or 13.9%, from $97.1 million for the year ended December 31, 2009 to $83.6 million for the year ended December 31, 2010. The decrease was primarily due to lower sales volume and a decrease in variable costs related to lower market demand, and to a lesser extent due to cost reduction measures which were implemented to align the cost structure of ~~Contents~~the segment to current levels of lower market demand. Operating costs and expenses as a percentage of net sales decreased from 104.2% for the year ended December 31, 2009 to 100.7% for the year ended December 31, 2010.

~~Index~~Operating loss decreased from an operating loss of $3.9 million for the year ended December 31, 2009 to ~~Financial~~an ~~Statements~~operating loss of $0.6 million for the year ended December 31, 2010. The decrease was primarily attributable to lower operating costs, which decreased at a rate that was greater than the rate of decline in sales. Operating loss as a percentage of net sales was 0.7% for the year ended December 31, 2010 versus 4.2% for the year ended December 31, 2009.

Corporate and other. This category reflects certain administrative costs and expenses management has not allocated to its industry segments. These costs include compensation for executive ~~raw~~officers, ~~material~~insurance, ~~supply~~professional fees for audit, ~~current~~tax ~~steel~~and legal services and ~~metal~~data ~~prices~~processing ~~could~~expenses. The benegative ~~sustainable~~net ~~for~~sales amount represents the ~~near~~elimination ~~future~~of intercompany sales. The ~~However~~operating loss increased $2.9 million for the year ended December 31, ~~there~~2010 ~~can~~as becompared noto ~~guarantees~~the ~~regarding~~year ended December 31, 2009. During the ~~timing~~second orquarter ~~extent~~of 2010, unamortized prepaid advisory fees of ~~any~~$3.3 ~~future~~million ~~upward~~were ~~price~~charged ~~trends~~to expense as a result of the termination of our advisory agreement orwith ~~demand~~Apollo ~~increases~~in connection with Metals USA Holdings’ IPO. ~~Any~~This ~~number~~charge ofwas ~~political~~partially oroffset ~~general~~by ~~economic~~a ~~factors~~decrease ~~could~~in ~~cause~~salaries ~~prices~~and employee benefits of approximately $1.0 million, in addition to ~~decline~~lower professional and consulting fees of approximately $0.4 million for the year ended December 31, 2010 versus 2009.

~~Building~~Liquidity ~~Products~~ and Capital Resources

~~The~~Our ~~downturn~~primary insources ~~the~~of ~~housing~~short-term ~~and~~liquidity ~~mortgage~~are ~~markets~~borrowings ~~has~~under ~~caused~~the ~~significant~~ABL ~~contraction~~facility inand ~~the~~our ~~home~~cash ~~improvement~~flow ~~remodeling industry~~from operations. ~~Research~~We ~~indicates~~believe ~~that~~these resources ~~remodeling~~will ~~activity~~be issufficient ~~pro-cyclical~~to ~~with~~meet ~~both~~our ~~new~~working ~~residential~~capital ~~construction~~ and ~~the~~capital ~~broader~~expenditure ~~economy,~~requirements ~~but~~for ~~remodeling~~the ~~lags~~next ~~homebuilding by several quarters~~year. ~~The~~As ~~high cyclicality~~ of ~~remodeling~~December 31, ~~activity~~2011, ~~appears~~we tohad ~~be driven~~$227.7 bymillion ~~discretionary~~drawn ~~improvements,~~on ~~similar to~~ the ~~products~~ABL ~~sold~~facility, by our ~~building~~borrowing ~~products~~availability ~~business,~~was ~~which are quite volatile~~$163.8 ~~Improvement~~million, ~~spending is expected to be much more cyclical~~ and ~~more~~we ~~sensitive to upturns and downturns in the general~~had ~~economy,~~cash ~~whereas~~of ~~maintenance~~$5.9 ~~and repair spending is expected to be fairly stable over time~~million.

~~While~~Our ~~the~~borrowing ~~pace~~availability offluctuates ~~the~~daily ~~decline~~with changes in ~~homeowner~~ ~~remodeling~~eligible ~~projects~~accounts ~~appears~~receivables ~~to be moderating~~and inventory, ~~increased~~less ~~remodeling~~outstanding ~~activity~~borrowings ~~does~~and ~~not~~letters ~~seem~~of ~~likely~~credit. toSee ~~materialize~~“—Financing ~~until~~Activities” ~~further~~below. ~~signs~~At ofMarch 7, ~~recovery~~2012, ~~emerge~~we inhad ~~the broader housing market~~$253.8 ~~Although~~million ~~lower~~drawn ~~financing~~on ~~costs are reducing~~ the ~~cost~~ABL ~~of financing~~facility, ~~home~~our ~~improvement~~borrowing ~~projects,~~availability ~~weak~~was ~~home~~$162.8 ~~prices~~million and ~~decreased~~we ~~cost~~had ~~recovery~~cash ~~for most types~~ of approximately ~~remodeling~~$6.2 ~~projects continue to discourage owners from pursuing upper-end improvements~~million.

~~Product~~We ~~demand~~generally ~~for~~meet long-term liquidity requirements, the ~~Company’s~~repayment ~~Building~~of ~~Products~~debt ~~Group~~and ~~may~~investment befunding needs ~~influenced~~through byadditional ~~numerous~~borrowings ~~factors~~under ~~such~~the asABL ~~interest~~facility ~~rates~~and the issuance of debt securities. At December 31, ~~general~~2011, our long-term debt consisted of $227.7 million of outstanding borrowings on the ABL facility, $226.3 million principal amount ~~economic~~of ~~conditions~~the Metals USA Notes, ~~consumer~~a ~~confidence~~note ~~and~~payable ~~other~~to ~~factors~~Metals ~~beyond~~USA ~~our~~Holdings ~~control~~in the amount of $47.0 ~~Declines~~million, IRBs with $12.6 million principal amount outstanding, $1.5 million in ~~existing~~the ~~home~~form ~~sales~~of a note payable in connection with the acquisition of Trident, and ~~improvement~~$0.5 million ~~remodeling~~of ~~expenditures~~capital ~~due~~lease toobligations. ~~such~~We ~~factors~~believe ~~could~~that ~~continue~~cash flow from operations, supplemented by cash available under the ABL facility, will be sufficient to ~~significantly~~enable ~~reduce~~us to meet our debt service and operational obligations as they come due for at least the ~~segment’s~~next ~~performance~~twelve months.

~~Consolidated~~With ~~Results~~respect ofto ~~Operations~~long-term liquidity, we believe that we will be able to meet our working capital, capital expenditure and debt service obligations. Our ability to meet long-term liquidity requirements is subject to obtaining additional debt and/or equity financing. Decisions by lenders and investors to enter into such

~~The~~37 ~~following financial information reflects our historical financial statements.~~

	Fiscal Years Ended December 31,
	2010		%			2009			%			2008			%
	(in millions, except percentages)
Net sales	$	1,292.1		100.0	%	$	1,098.7			100.0	%	$	2,156.2			100.0	%
Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		996.7		77.1	%		890.1			81.0	%		1,612.9			74.8	%
Operating and delivery		131.9		10.2	%		126.7			11.5	%		186.1			8.6	%
Selling, general and administrative		81.8		6.3	%		85.1			7.7	%		126.2			5.9	%
Depreciation and amortization		17.8		1.4	%		18.9			1.7	%		21.3			1.0	%
Loss (gain) on sale of property and equipment		0.3		0.0	%		—			—			(2.4	)		-0.1	%
Advisory agreement termination charge		3.3		0.3	%		—			—			—			—
Impairment of assets		—		—			—			—			5.1			0.2	%
Operating income (loss)		60.3		4.7	%		(22.1	)		-2.0	%		207.0			9.6	%
Interest expense		37.2		2.9	%		44.9			4.1	%		54.5			2.5	%
Gain on debt extinguishment		—		—			(13.6	)		-1.2	%		—			—
Other (income) expense, net		—		—			0.3			0.0	%		(0.2	)		0.0	%
Income (loss) before income taxes	$	23.1		1.8	%	$	(53.7	)		-4.9	%	$	152.7			7.1	%

transactions with us will depend upon a number of factors, such as our historical and projected financial performance, compliance with the terms of our current credit agreements, industry and market trends, the availability of capital, and the relative attractiveness of alternative lending or investment opportunities.

~~Results~~Operating ofand ~~Operations—Year~~Investing ~~Ended~~Activities ~~December 31, 2010 Compared to 2009~~

~~Net~~Although ~~sales. Net~~we ~~sales~~do ~~increased~~not ~~$193.4~~produce ~~million~~any metal, orour ~~17.6%,~~financial ~~from~~performance ~~$1,098~~is affected by changes in metal prices.7 ~~million~~When ~~for~~metal prices rise, the ~~year~~prices ~~ended~~at ~~December 31,~~which ~~2009~~we are able to sell our products generally increase over $1their historical costs; accordingly,~~292~~ our working capital (which consists primarily of accounts receivable and inventory) tends to increase in a rising price environment.1 ~~million~~Conversely, ~~for~~when ~~the~~metal ~~year~~prices ~~ended~~fall, our working capital tends to decrease. Our working capital (current assets less current liabilities) increased from $368.2 million at December 31, 2010 to $488.0 ~~The~~million ~~increase~~at ~~was~~December 31, ~~primarily~~2011.

31Changes in metal prices also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. We sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, primarily to benefit from early-payment discounts that are substantially higher than our cost of incremental debt. As a result, when metal prices are rising, we tend to draw more on the ABL facility to cover the cash flow cycle from material purchase to cash collection. When metal prices fall, we can replace our inventory at lower cost and, thus, generally the ABL facility utilization is reduced. We believe our cash flow from operations, supplemented with the cash available under the ABL facility, will provide sufficient liquidity to meet the challenges and obligations we face during the current metal price environment. Additionally, we intend to look for value-added business opportunities that we can acquire at reasonable prices. We intend to use cash flows from operations and borrowing availability under the ABL facility to fund future investments.

~~Table~~Cash ofFlows ~~Contents~~

~~Index~~The tofollowing discussion of the principal sources and uses of cash should be read in conjunction with our Consolidated Statements of Cash Flows which are set forth under Item 8. “Financial Statements and Supplementary Data.”

~~attributable~~Year ~~to a 16.0% increase in shipments, in addition to a 3.7% increase in average realized prices for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups. Net sales~~Ended ~~decreased $10.2 million, or 10.9%, for our Building Products Group. Results for the year ended~~ December 31, ~~2010,~~2011 include the results from the J. Rubin acquisition from the date of the acquisition closing, which occurred on June 28, 2010. J. Rubin contributed $17.8 million of incremental sales for the year ended December 31, 2010. The increase in volumes for our metal service center businesses stemmed from better operating performance in an improving economy and stronger demand across most of our end-user markets, with the exception of weak non-residential construction and diminished levels of energy demand in the Gulf of Mexico. We believe that our focus on product mix enhancement during 2010 helped to mitigate the effects of uneven demand associated with specific regions and end-use industries.

~~Weak~~During ~~demand caused prices for many grades of steel to fall substantially during~~ the ~~first~~year ~~half~~ended ofDecember 31, ~~2009~~2011, asnet ~~steel~~cash ~~producers~~used in ~~North~~operating ~~America~~activities ~~reduced~~was ~~prices and cut production to adjust to lower order levels~~$17.1 million. AsOur aworking ~~result,~~capital ~~although~~increased ~~our~~during ~~metal~~2011 ~~service~~as ~~center~~we ~~businesses~~experienced ~~have~~increasing ~~benefitted~~prices ~~from~~and ~~a broader~~end market ~~recovery~~demand. ~~since~~Increases ~~mid-2009,~~of ~~the~~$48.6 ~~increase~~million in ~~net~~our ~~sales~~accounts ~~for~~receivable ~~2010~~balance ~~versus~~and ~~2009 was largely driven by volumes~~$93.6 ~~Carbon~~million ~~steel~~in ~~prices~~our ~~have~~inventory ~~generally~~value ~~trended~~were ~~upward~~the atprimary acontributors ~~modest rate since late June 2009, although we experienced intermittent~~to ~~volatility~~operating incash ~~steel~~outflows ~~prices~~for ~~at various times during 2010, mainly during~~ the ~~third quarter~~period. ~~Prices~~Accounts receivable increased indue ~~late 2010 in response~~ to ~~persistent~~stronger ~~higher~~sales ~~raw~~which ~~material~~were ~~costs~~primarily ~~and~~driven ~~typical~~by ~~seasonal~~sharply ~~demand~~higher ~~strength~~shipments ~~leading~~versus ~~into~~ the ~~next~~prior year. ~~We believe current price levels are sustainable if producers maintain production commensurate with demand, however there can be no guarantee that such trends will continue.~~

~~Cost~~Net ofcash ~~sales. Cost~~used ofin ~~sales~~investing ~~increased~~activities was $~~106~~109.6 million, ~~or 12.0%, from $890.1 million~~ for the year ended December 31, ~~2009~~2011, toand ~~$996.7~~consisted ~~million for the year ended December 31, 2010. The increase was~~ primarily ~~attributable~~of ~~to a 16.0% increase in shipments for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, partially offset by a 1.9% decrease in average cost per ton. The J. Rubin acquisition added~~ $1288.1 million of ~~incremental~~acquisition ~~cost~~costs, net of ~~sales~~cash acquired, for the ~~year ended December 31~~Trident acquisition, ~~2010.~~which ~~Cost~~closed ofon ~~sales~~March 11, ~~for~~2011, ~~our~~and ~~Building~~capital ~~Products~~expenditures ~~Group~~of ~~decreased~~ $721.08 million~~, or 10~~.~~7%.~~ The ~~increase~~most insignificant ~~volumes~~internal ~~that~~capital ~~contributed~~project tofor ~~higher~~2011 ~~cost of sales during 2010~~ was ~~attributable to higher steel demand as~~ the ~~economy~~construction ~~recovered from the global economic recession. Cost~~ of ~~sales~~our asThomasville, aAlabama ~~percentage~~Flat ofRolled ~~net~~and ~~sales~~Non-Ferrous ~~decreased~~service ~~from 81~~center.~~0% for 2009 to 77.1% for 2010.~~

~~Operating~~Net ~~and~~cash ~~delivery. Operating~~provided ~~and~~by ~~delivery~~financing ~~expenses~~activities ~~increased~~was $5117.~~2 million, or~~ 4~~.1%,~~ ~~from $126.7~~ million for the year ended December 31, ~~2009 to $131.9 million for the year ended December 31~~2011, ~~2010. The~~which ~~increase~~consisted ~~was a result~~ of net ~~higher~~borrowings ~~variable~~on ~~costs~~the ~~associated~~ABL ~~with~~facility ~~increased shipments, most notably higher freight costs~~ of ~~approximately~~ $2121.97 million~~. The~~ ~~increase was partially~~ offset by ~~cost reduction initiatives implemented over the last eighteen months, including reductions in square footage under lease, reduction in headcount and employee benefit modifications~~$2.9 Asmillion ~~a percentage~~ of ~~net~~cash ~~sales, operating~~paid ~~and delivery expenses decreased from 11.5%~~ for ~~the~~loan ~~year~~financing ~~ended~~costs ~~December 31,~~and ~~2009 to 10~~$1.2%4 ~~for~~million ~~the~~of ~~year~~debt ~~ended December 31, 2010~~repayments.

~~Selling,~~Year ~~general~~Ended ~~and administrative. Selling, general and administrative expenses decreased $3.3 million, or 3.9%, from $85.1 million for year ended~~ December 31, ~~2009 to $81.8 million for the year ended December 31,~~ 2010. Lower costs associated with salaries and employee benefits, which amounted to approximately $6.2 million, achieved through personnel reductions and other cost reduction initiatives were the primary contributors to the period-over-period decrease. The decrease also includes a decrease of $0.5 million of expense related to potentially uncollectible customer accounts. As a percentage of net sales, selling, general and administrative expenses decreased from 7.7% for the year ended December 31, 2009 to 6.3% for the year ended December 31, 2010.

~~Depreciation~~During ~~and amortization. Depreciation and amortization expense decreased $1.1 million, or 5.8%, from $18.9 million for~~ the year ended December 31, ~~2009~~2010, tonet ~~$17.8~~cash ~~million~~used ~~for~~in ~~the~~operating ~~year~~activities ~~ended~~was ~~December 31,~~$30.2 ~~2010~~million. ~~Over~~This ~~the~~amount ~~past~~was ~~two~~primarily ~~years, the~~attributable ~~Company has reduced capital expenditures~~ to ~~align~~increases ~~our investments~~ in ~~new~~accounts ~~equipment~~receivable ~~with lower business activity levels,~~ and ~~also to use available cash for debt reduction~~inventories. AsChanges wein ~~reduced~~working ~~capital spending, our depreciation costs have decreased over time. The decrease was also due to lower~~

3238

~~Table~~ capital during 2010 reflected improving business conditions as commodity prices and demand continued to increase. We increased inventory tonnage on hand commensurate with increased levels of shipments ~~Contents~~to our customers, while prices increased moderately throughout the year, despite some intermittent volatility. Our accounts receivable increased due to higher sales levels in 2010.

~~Index~~Net cash used in investing activities was $31.3 million for the year ended December 31, 2010, and consisted primarily of $28.0 million for the acquisition of J. Rubin and ORMS in June and December, respectively. Capital expenditures amounted to ~~Financial~~$4.0 ~~Statements~~million for the year ended December 31, 2010. There were no material individual capital investment projects specific to any facilities during 2010.

~~amortization~~Net ofcash ~~customer~~provided ~~list~~by ~~intangible~~financing ~~assets~~activities ~~(which~~was is$71.2 ~~recognized~~million onfor anthe ~~accelerated~~year ~~basis~~ended December 31, 2010, and ~~decreases~~consisted ~~over~~primarily ~~the~~of ~~life~~borrowings ofon the ~~assets)~~intercompany ~~recorded~~loan infacility ~~connection~~of ~~with~~$47.0 ~~the~~million ~~acquisitions completed~~ in ~~May~~ ~~2006,~~addition ~~the~~to ~~acquisition~~net ofborrowings ~~Lynch~~under ~~Metals~~the inABL ~~July~~facility ~~2007,~~of ~~and~~$31.0 ~~the Merger~~million.

~~Operating~~Year ~~income~~Ended ~~(loss). Operating income (loss) increased $82.4 million, or 372.9%, from an operating loss of $22.1 million for the year ended~~ December 31, 2009 to operating income of $60.3 million for the year ended December 31, 2010. The increase was primarily a result of the increase in sales discussed above, as well as the decreases in selling, general and administrative expenses, and depreciation and amortization, as discussed above. In addition, the J. Rubin acquisition also contributed $1.1 million of incremental operating income for the period.

~~The~~During ~~increase~~the inyear ~~operating~~ended December 31, ~~income~~2009, ~~during~~net ~~2010~~cash ~~was~~provided ~~partially offset~~ by aoperating ~~one-time,~~activities was $3248.3 9 million. This ~~charge~~amount was primarily attributable to ~~operating~~decreases ~~expense~~in ~~for~~accounts ~~the~~receivable ~~termination~~and ofinventories. ~~our~~Changes ~~advisory~~in ~~agreement~~working ~~with~~capital ~~Apollo~~during in2009 ~~connection~~reflect ~~with~~the ~~Metals~~change ~~USA~~in ~~Holdings’~~the business ~~IPO.~~environment Asthat abegan ~~percentage~~during ofthe ~~net~~fourth ~~sales~~quarter of 2008, ~~operating~~when ~~income~~we ~~(loss)~~began ~~increased~~reducing ~~from~~inventory ~~(2.0%) for~~purchases ~~the~~as ~~year~~a ~~ended December 31,~~result ~~2009~~of toweaker 4demand and declining prices.~~7% for~~ ~~the~~Our ~~year~~accounts ~~ended~~receivable ~~December 31,~~decreased ~~2010~~due to lower sales levels in 2009.

~~Interest~~Net ~~expense.~~cash ~~Interest~~used ~~expense decreased~~in ~~$7.7~~investing ~~million,~~activities orwas ~~17.1%, from~~ $447.98 million for the year ended December 31, 2009, toand ~~$37.2~~consisted ~~million~~of ~~for~~proceeds ~~the~~from ~~year~~sales ~~ended~~of assets ~~December 31,~~of ~~2010~~$0.5 ~~The~~million ~~decrease~~offset ~~was~~by ~~primarily~~$4.1 amillion ~~function~~ of ~~reduced~~capital ~~borrowings~~expenditures onand ~~our ABL facility~~$4.2 ~~The~~million ~~weighted average~~for ~~outstanding~~the ~~balance~~acquisition onof ~~our~~VR ~~ABL facility decreased from $180~~Laser.1 ~~million~~For ~~for~~ the year ended December 31, 2009, tothe ~~$77.6~~most ~~million~~significant ~~for~~internal ~~the~~capital ~~year~~projects ~~ended~~were ~~December 31~~expansion of our plate processing machinery and equipment at our Tulsa, ~~2010~~Oklahoma and York, Pennsylvania Plates and Shapes facilities.

~~Results~~Net ofcash ~~Operations—Year~~used ~~Ended~~in financing activities was $328.6 million for the year ended December 31, 2009, ~~Compared~~and consisted primarily of net repayments on the ABL facility of $293.0 million, in addition to ~~2008~~repayments of other long-term debt of $35.6 million.

~~Net~~Covenant ~~sales. Net~~Compliance sales decreased $1,057.5 million, or 49.0%, from $2,156.2 million for the year ended December 31, 2008 to $1,098.7 million for the year ended December 31, 2009. The decrease was primarily attributable to a 36.1% decrease in volumes for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, in addition to a 22.5% decrease in average realized prices. The decrease in volumes for our metal service center businesses was due to an abrupt slowdown in demand in our end-use markets, as the global recession significantly reduced shipment levels to virtually all of the sectors that we serve. Weak demand caused prices for many grades of steel to fall substantially, as steel producers in North America reduced prices and cut production to adjust to the lower order levels. During the year ended December 31, 2009, steel product shipments from metals service centers in the U.S. declined approximately 36% in year-over-year comparisons, according to data from the Metals Service Center Institute. Net sales decreased $32.8 million for our Building Products Group, driven by continued weakness in residential remodeling and the overall housing markets.

~~Cost~~Adjusted ofEBITDA sales. Cost of sales decreased $722.8 million, or 44.8%, from $1,612.9 million for the year ended December 31, 2008, to $890.1 million for the year ended December 31, 2009. The decrease was primarily attributable to a 36.1% decrease in volumes for our Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, in addition to a 15.1% decrease in the average cost per ton for our metals service center businesses. Cost of sales decreased $28.0 million for our Building Products Group. We recorded $53.4 million of write-downs during the year ended December 31, 2009, as compared to $6.8 million of write-downs during the year ended December 31, 2008, for inventory lower of cost or market adjustments in our metal service center businesses as a result of the price decreases and weak demand for steel products discussed above. Inventory tonnage on hand as of December 31, 2009 was 33.9% less than at December 31, 2008. Cost of sales as a percentage of net sales increased from 74.8% for the year ended December 31, 2008 to 81.0% for the year ended December 31, 2009. Steel prices generally increased modestly during the latter half of 2009.

~~Operating~~Adjusted ~~and~~EBITDA ~~delivery. Operating~~(as ~~and~~defined ~~delivery~~by ~~expenses~~the ~~decreased~~loan ~~$59.4~~and ~~million,~~security oragreement ~~31.9%,~~governing ~~from~~the ~~$186.1~~ABL ~~million~~facility ~~for~~and the ~~year~~Metals USA Notes Indenture) is defined ~~ended~~as ~~December 31,~~EBITDA ~~2008~~further adjusted to ~~$126~~exclude certain non-cash and non-recurring items.7 ~~million~~Adjusted ~~for~~EBITDA ~~the~~is ~~year~~not ~~ended~~a ~~December 31,~~defined ~~2009~~term under GAAP and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. ~~The~~

33Fixed Charge Coverage Ratio

~~Table~~Under the ABL facility, the FCCR is determined on a rolling four-quarter period, often referred to as a last-twelve month period, by dividing (1) the sum of ~~Contents~~Adjusted EBITDA of Metals USA minus income taxes paid in cash minus non-financed capital expenditures by (2) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt paid by Metals USA. Should borrowing availability under the ABL facility fall below Minimum Availability, we must maintain a FCCR of at least 1.0 to 1.0, measured on a trailing four-quarter basis. As of December 31, 2011, our borrowing availability under the ABL facility was $163.8 million. In addition, the FCCR also is an important measure of our liquidity and affects our ability to take certain actions, including paying dividends to stockholders and making acquisitions.

~~Index~~39 ~~to Financial Statements~~

~~decrease~~Although ~~was~~the aMetals ~~result~~USA ofNotes ~~lower~~Indenture ~~variable~~also ~~costs~~contains ~~associated~~covenants ~~with~~that ~~decreased~~restrict ~~shipments. As~~our aability ~~percentage~~to incur ofindebtedness ~~net~~and ~~sales~~pay dividends based on our FCCR, ~~operating~~the definition and ~~delivery~~application ~~expenses~~of ~~increased~~the FCCR contained in the Indenture differs from ~~8.6%~~the ~~for~~definition and application of the ~~year~~FCCR ~~ended~~in the ABL facility in that the numerator of the FCCR as defined in ~~December 31,~~the ~~2008~~Indenture todoes ~~11.5%~~not ~~for~~include cash income taxes or non-financed capital expenditures and the ~~year~~denominator ~~ended~~of ~~December 31~~the FCCR as defined in the Indenture does not include the sum of certain distributions paid in cash and scheduled principal reductions on debt, ~~2009~~and separate FCCRs are required under certain circumstances. See “—Financing Activities” below.

~~Selling,~~Because access ~~general~~to ~~and~~debt ~~administrative. Selling,~~capital ~~general~~is currently and ~~administrative~~in ~~expenses~~the ~~decreased~~future ~~$41.1~~will ~~million,~~continue orto ~~32.6%,~~be ~~from~~important ~~$126.2~~to ~~million~~us, ~~for~~we believe that the ~~year~~inclusion ~~ended~~of ~~December 31,~~supplementary ~~2008~~adjustments to ~~$85.1~~EBITDA ~~million~~applied ~~for~~in ~~the~~presenting ~~year~~Adjusted ~~ended~~EBITDA ~~December 31,~~are ~~2009.~~appropriate ~~Lower~~to ~~variable~~provide ~~costs~~additional ~~of $21.1 million~~information ~~associated~~to ~~with~~investors ~~decreased~~to ~~incentive~~demonstrate ~~compensation,~~compliance inwith ~~addition~~the tocovenants ~~lower~~in ~~salaries~~our ofdebt $8agreements.6 ~~million~~Failure ~~achieved~~to incomply ~~connection~~ with ~~cost~~the ~~reduction~~FCCR ~~initiatives,~~covenant ~~were~~of the ~~primary~~ABL ~~contributors~~facility tocan ~~the~~result ~~period-over-period~~in ~~decrease.~~limiting Asour along-term ~~percentage~~growth ofprospects ~~net~~by ~~sales, selling,~~hindering ~~general~~our ~~and~~ability ~~administrative~~to ~~expenses~~incur ~~increased~~future indebtedness ~~from~~or ~~5.9%~~grow ~~for~~through ~~the~~acquisitions. ~~year~~As ~~ended~~of December 31, ~~2008~~2011, toour ~~7.7%~~FCCR ~~for~~was ~~the~~2.82. ~~year~~As ~~ended~~of December 31, ~~2009~~2011, we had $163.8 million of additional borrowing capacity under the ABL facility.

~~Depreciation~~The ~~and~~Metals ~~amortization. Depreciation~~USA ~~and~~Notes ~~amortization~~Indenture ~~expense~~contains ~~decreased~~covenants ~~$2.4~~that ~~million,~~restrict orour ~~11.3%~~ability to take certain actions, ~~from~~such ~~$21.3~~as ~~million~~incurring ~~for~~additional ~~the~~debt and ~~year~~making ~~ended~~certain ~~December 31~~acquisitions, ~~2008~~if we are unable to ~~$18.9~~meet ~~million~~defined ~~for the~~Adjusted ~~year~~EBITDA ~~ended~~to ~~December 31, 2009~~fixed charge coverage ratios (as defined). The ~~decrease~~covenants ~~was~~in ~~primarily~~the ~~due~~Indenture require us to ~~lower~~have ~~amortization~~an ofAdjusted ~~customer~~EBITDA ~~list~~to ~~intangible~~fixed ~~assets~~charge ~~(which~~coverage isratio ~~recognized~~(measured on ana trailing ~~accelerated~~four-quarter basis and ~~decreases~~calculated ~~over~~differently from the ~~life~~fixed ofcharge coverage ratio as defined by the ~~assets~~ABL facility) ~~recorded~~of in2.0 ~~connection~~to ~~with~~ 1.0 to incur “ratio” indebtedness. Based on the ~~acquisitions~~calculations ~~completed~~for inthe ~~May~~trailing ~~2006~~four quarters, ~~the~~we ~~acquisition~~are ofable to ~~Lynch~~satisfy ~~Metals~~these incovenants ~~July~~and ~~2007~~incur additional indebtedness under these ratios, ~~and~~including for acquisition purposes, under the ~~Merger~~Indenture.

~~Operating~~Our ~~income (loss). Operating~~inability ~~income~~to ~~(loss)~~satisfy ~~decreased~~the ~~$229.1~~terms ~~million,~~of orthe ~~110.7%,~~negative ~~from~~covenants ~~operating~~in ~~income~~our ofdebt ~~$207.0~~agreements ~~million~~do ~~for~~not, ~~the~~by ~~year ended December 31~~themselves, ~~2008~~constitute tocovenant anviolations ~~operating~~or ~~loss~~events of ~~$22~~default.1 ~~million~~Rather, ~~for~~they ~~the~~are ~~year~~event-related ~~ended December 31, 2009. The~~restrictions ~~decrease~~that ~~was~~may ~~primarily~~limit aor ~~result~~prohibit of the ~~decrease~~Company ~~in net sales discussed above. As a percentage of net sales, operating income (loss) decreased~~ from ~~9.6%~~taking ~~for~~certain ~~the~~corporate ~~year ended December 31, 2008 to (2~~actions.~~0%) for~~ ~~the year ended December 31, 2009.~~

~~Interest~~Limitations expense. Interest expense decreased $9.6 million, or 17.6%, from $54.5 million for the year ended December 31, 2008 to $44.9 million for the year ended December 31, 2009. The decrease was primarily a function of ~~reduced~~Adjusted ~~borrowings~~EBITDA on our ABL facility, as well as debt extinguishments on the Metals USA Notes. The weighted average outstanding balance on our ABL facility decreased from $384.1 million for the year ended December 31, 2008 to $180.1 million for the same period of 2009. We repurchased $48.7 million face value of the Metals USA Notes in the open market during the year ended December 31, 2009.

~~Gain~~There onare ~~debt~~material ~~extinguishment.~~limitations ~~During~~associated with making the ~~year~~adjustments ~~ended~~to ~~December 31,~~our ~~2009,~~earnings ~~we purchased~~to ~~$48.7~~calculate ~~principal~~Adjusted ~~amount~~EBITDA ofand ~~the~~using ~~Metals~~such ~~USA~~a non-GAAP ~~Notes~~financial inmeasure ~~the~~as ~~open~~compared ~~market,~~to ~~resulting~~the inmost adirectly ~~pretax~~comparable ~~gain~~GAAP offinancial ~~$13~~measures.6 ~~(net~~For ofinstance, ~~unamortized~~Adjusted ~~deferred~~EBITDA ~~financing~~does ~~costs)~~not oninclude: ~~debt extinguishment.~~

34• interest expense, and, because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and ability to generate revenue;

~~Table~~• income tax expense, and because the payment of ~~Contents~~taxes is part of our operations, income tax expense is a necessary element of our costs and ability to operate; and

~~Index~~• depreciation and amortization expense, and, because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to ~~Financial~~generate ~~Statements~~revenue.

~~Results~~In ofaddition, ~~Operations~~fixed bycharges ~~Segment~~should not be considered an alternative to interest expense.

	Fiscal Years Ended December 31,
	NetSales			%			OperatingCosts andExpenses		%			OperatingIncome(Loss)			%			CapitalSpending		TonsShipped (1)
	(in millions, except percentages)
2010:
Plates and Shapes	$	538.0			41.6	%	$	499.6		40.6	%	$	38.4			63.7	%	$	2.3		509
Flat Rolled and Non-Ferrous		680.5			52.7	%		635.2		51.6	%		45.3			75.1	%		0.7		558
Building Products		83.0			6.4	%		83.6		6.8	%		(0.6	)		-1.0	%		—		—
Corporate and other		(9.4	)		-0.7	%		13.4		1.1	%		(22.8	)		-37.8	%		1.0		(8	)
Total	$	1,292.1			100.0	%	$	1,231.8		100.0	%	$	60.3			100.0	%	$	4.0		1,059
2009:
Plates and Shapes	$	523.0			47.6	%	$	537.8		48.0	%	$	(14.8	)		67.0	%	$	3.3		485
Flat Rolled and Non-Ferrous		490.7			44.7	%		474.2		42.3	%		16.5			-74.7	%		0.5		435
Building Products		93.2			8.5	%		97.1		8.7	%		(3.9	)		17.6	%		—		—
Corporate and other		(8.2	)		-0.7	%		11.7		1.0	%		(19.9	)		90.0	%		0.3		(7	)
Total	$	1,098.7			100.0	%	$	1,120.8		100.0	%	$	(22.1	)		100.0	%	$	4.1		913
2008:
Plates and Shapes	$	1,161.2			53.9	%	$	990.5		50.8	%	$	170.7			82.5	%	$	8.6		837
Flat Rolled and Non-Ferrous		882.9			40.9	%		804.7		41.3	%		78.2			37.8	%		2.2		601
Building Products		126.0			5.8	%		135.1		6.9	%		(9.1	)		-4.4	%		0.7		—
Corporate and other		(13.9	)		-0.6	%		18.9		1.0	%		(32.8	)		-15.8	%		0.7		(10	)
Total	$	2,156.2			100.0	%	$	1,949.2		100.0	%	$	207.0			100.0	%	$	12.2		1,428

~~(1)~~Below ~~Shipments~~is ~~are~~a ~~expressed~~reconciliation inof ~~thousands~~net ofincome ~~tons~~(loss) ~~and~~to ~~are~~EBITDA, ~~not~~Adjusted anEBITDA ~~appropriate~~and ~~measure~~net ~~for~~cash provided ~~the~~by ~~Building~~(used ~~Products~~in) ~~Group.~~operating activities:

Segment Results—Year Ended December 31, 2010 Compared to 2009


	Years Ended December 31,
	2011			2010			2009
	(in millions, except ratios)
Net income (loss)	$	61.2		$	14.9		$	(35.7	)
Depreciation and amortization (1)		23.3			19.8			21.2
Interest expense		42.2			37.2			44.9
Gain on extinguishment of debt		—			—			(13.6	)
Provision (benefit) for income taxes		31.8			8.2			(18.0	)
Other expense		0.1			—			0.3

EBITDA		158.6			80.1			(0.9	)
Covenant defined adjustments:
Stock options and grant expense (2)		2.4			1.2			0.4
Facilities closure (3)		0.6			—			2.1
Advisory agreement fees and other costs (4)		—			3.8			1.2
Acquisition expenses (5)		1.6			—			—

Adjusted EBITDA		163.2			85.1			2.8
Loss on sale of property and equipment		—			0.3			—
Provision for bad debts		2.9			2.4			2.9
Amortization of debt issuance costs		2.9			4.0			3.5
Deferred income taxes		15.4			1.6			4.2
Excess tax benefit from stock-based compensation		—			(0.1	)		—
Advisory agreement termination charge		—			3.3			—
Interest expense		(42.2	)		(37.2	)		(44.9	)
Provision for income taxes		(31.8	)		(8.2	)		18.0
Other expense		(1.0	)		—			(0.3	)
Facilities closure		(0.6	)		—			(2.1	)
Advisory agreement fees and other costs		—			(3.8	)		(1.2	)
Acquisition expenses (5)		(1.6	)		—			—
Changes in assets and liabilities		(124.3	)		(77.6	)		266.0

Net cash (used in) provided by operating activities	$	(17.1	)	$	(30.2	)	$	248.9

Net cash used in investing activities	$	(109.6	)	$	(31.3	)	$	(7.8	)

Net cash provided by (used in) financing activities	$	117.4		$	71.2		$	(328.6	)

Fixed charge coverage ratio numerator (6)	$	119.9		$	88.5		$	15.8
Fixed charge coverage ratio denominator (6)	$	42.5		$	36.3		$	37.6
FCCR (6)		2.82			2.44			0.42

~~Plates~~(1) ~~and~~Includes ~~Shapes. Net~~depreciation ~~sales increased $15.0 million, or 2.9%, from $523.0 million~~ for ~~the~~Building ~~year~~Products ~~ended~~that December 31, 2009 to $538.0 million for the year ended December 31, 2010. The increase was primarily attributable to a 4.9% increase in shipments, partially offset by a 2.0% decrease in average realized prices for the year ended December 31, 2010 compared to the year ended December 31, 2009. Product demand for the Plates and Shapes Group is ~~more~~included ~~transactional~~ in ~~nature~~cost ~~and is typically associated with industries and end markets that show strength during later stages~~ of ~~economic cycles~~sales. Although we experienced an increase in demand for structural steel during 2010, it was offset to a large extent by the dramatic decline in non-residential construction associated with the global recession that began in late 2008 and to a lesser extent by the U.S. deepwater drilling moratorium issued in May 2010. Intense competition negatively impacted pricing for structural steel throughout most of 2010. Non-residential construction typically lags behind the general economy by approximately eighteen months, and we expect to see some recovery in this market during 2011, although there can be no assurance that this will be the case.

~~Operating costs and expenses decreased $38.~~(2) ~~million,~~Primarily orstock-based ~~7.1%,~~compensation ~~from $537~~expense.8 million for the year ended December 31, 2009 to $499.6 million for the year ended December 31, 2010. The decrease was primarily attributable to a 12.2% decrease in the average cost per ton, partially offset by a 4.9% increase in shipments for the year ended December 31, 2010 compared to the year ended December 31, 2009. Operating costs and

35(3) This amount represents charges for the closure of nine facilities in our Building Products Group and one facility in our Plates and Shapes Group during 2009, in addition to one facility in our Plates and Shapes Group during 2011.

~~Table~~(4) ofPrimarily ~~Contents~~represents expenses related to the advisory agreement we had with Apollo.

~~Index~~(5) Primarily related to ~~Financial~~the ~~Statements~~acquisition of Trident, which closed in March 2011.

~~expenses~~(6) asThese aamounts ~~percentage~~represent ofthe ~~net~~FCCR ~~sales~~numerator, ~~decreased~~the ~~from~~FCCR ~~102.8%~~denominator, ~~for~~and the ~~year ended December 31~~FCCR, ~~2009~~each toas ~~92.9%~~defined ~~for~~by the ~~year~~ABL ~~ended December 31, 2010~~facility.

~~Operating~~41 income (loss) increased by $53.2 million, or 359.5%, from an operating loss of $14.8 million for the year ended December 31, 2009 to operating income of $38.4 million for the year ended December 31, 2010. The increase primarily resulted from lower operating costs and expenses, which were primarily the result of the decreases in average cost per ton discussed above in addition to cost reduction initiatives implemented over the last eighteen months. Operating income (loss) as a percentage of net sales increased from (2.8%) for the year ended December 31, 2009 to 7.1% for the year ended December 31, 2010.

~~Flat~~Financing ~~Rolled~~Activities and Non-Ferrous. Net sales increased $189.8 million, or 38.7%, from $490.7 million for the year ended December 31, 2009 to $680.5 million for the year ended December 31, 2010. The J. Rubin acquisition contributed $17.8 million of incremental sales to this segment for the year ended December 31, 2010. The remaining increase was primarily attributable to a 25.3% increase in shipments, in addition to a 7.8% increase in average realized prices for the year ended December 31, 2010 compared to the year ended December 31, 2009. Sales of non-ferrous metals accounted for approximately 38% of the segment’s sales product mix for 2010, compared to approximately 40% for 2009. Our Flat Rolled and Non-Ferrous Group experienced good demand in the automotive, aerospace and lawn and garden equipment markets during 2010, and we expect these markets to continue to do well during 2011, although there can be no assurance that this will be the case.

~~Operating costs and expenses increased $161.0 million, or 34.0%, from $474.2 million for the year ended December 31, 2009 to $635.2 million for the year ended December 31, 2010.~~ The J.ABL ~~Rubin acquisition~~Facility contributed $16.7 million of incremental operating costs and expenses to the segment for 2010. The remaining increase was primarily attributable to a 25.3% increase in shipments, in addition to a 6.9% increase in average cost per ton. Operating costs and expenses as a percentage of net sales decreased from 96.6% for the year ended December 31, 2009 to 93.3% for the year ended December 31, 2010.

~~Operating~~On ~~income~~December 17, ~~increased~~2010, byFlag ~~$28.8 million~~Intermediate, Metals ~~or 174.5%~~USA, ~~from~~and ~~$16.5~~certain ~~million~~subsidiaries ~~for~~of ~~the~~Metals ~~year~~USA ~~ended~~entered ~~December 31,~~into ~~2009~~an toamended ~~$45.3~~and ~~million~~restated ~~for~~loan ~~the~~and ~~year~~security ~~ended~~agreement ~~December 31, 2010. The increase was primarily attributable to~~ (the ~~increase~~“ABL inCredit ~~volumes,~~Agreement”) ~~combined~~ with the ~~increase~~lenders inparty ~~average~~thereto ~~realized~~and ~~prices~~Bank ~~discussed above. Operating income as a percentage~~ of ~~net~~America, ~~sales increased from 3~~N.~~4% for~~A., ~~the~~as ~~year~~administrative ~~ended~~agent ~~December 31, 2009 to~~and ~~6.7% for~~collateral ~~the year ended December 31, 2010~~agent.

~~Building~~The ~~Products. Net~~ABL ~~sales~~Credit ~~decreased~~Agreement ~~$10.2~~provides ~~million,~~for ~~or 10.9%,~~borrowings ~~from~~of up to $93500.20 million ~~for~~of ~~the~~Tranche ~~year~~A ~~ended~~commitments ~~December 31,~~and ~~2009 to~~ $8335.0 million ~~for~~of ~~the year ended December 31~~first-in, ~~2010.~~first-out ~~The~~(“FILO”) ~~sales~~Tranche ~~decrease~~A-1 ~~was~~commitments ~~driven~~(which bymay ~~lower~~be ~~consumer~~increased ~~spending~~up onto ~~residential~~$750.0 ~~remodeling~~million ~~due~~at to the ~~effects~~option of ~~the~~Metals ~~economic recession~~USA, ~~and~~including ~~the~~$35.0 ~~resulting~~million ~~depreciation~~under ofthe ~~homes~~FILO tranche), asunder ~~well~~the as5-year, ~~decreased~~senior ~~access~~secured toABL ~~affordable~~facility ~~credit~~that amended ~~for~~and ~~homeowners~~restated ~~and~~Metals ~~residential~~USA’s ~~remodeling~~then-existing ~~contractors~~$625.0 ~~These~~million ~~factors~~senior ~~have~~secured ~~led~~asset-based tocredit ~~significant~~facility ~~contraction~~that inwas ~~the~~scheduled ~~home~~to ~~improvement~~mature ~~remodeling~~on ~~industry~~November 30, 2011.

~~Operating~~On ~~costs~~March 9, ~~and~~2011, ~~expenses~~we ~~decreased~~activated $1325.50 million, orof ~~13.9%,~~the ~~from~~FILO ~~$97~~tranche.1 ~~million~~The ~~for~~ABL ~~the~~facility ~~year~~permits ~~ended~~us ~~December 31, 2009~~ to ~~$83.6~~borrow ~~million~~on ~~for~~a revolving basis through the ~~year~~earlier ~~ended~~of ~~December~~November 3130, ~~2010. The~~2015 ~~decrease~~and ~~was~~60 ~~primarily~~days ~~due~~prior to ~~lower~~the scheduled ~~sales~~maturity ~~volume~~of ~~and~~the aMetals ~~decrease~~USA inNotes, ~~variable~~unless ~~costs~~the ~~related~~Metals toUSA ~~lower~~Notes ~~market~~are ~~demand,~~refinanced ~~and~~ to a ~~lesser~~date ~~extent~~more ~~due~~than to5 ~~cost~~years ~~reduction~~and ~~measures~~60 ~~which~~days ~~were implemented~~after ~~to align~~ the ~~cost~~closing ~~structure~~date of the ~~segment~~ABL tofacility ~~current~~and/or ~~levels~~repaid ofprior ~~lower~~to ~~market~~such ~~demand~~date. ~~Operating~~Substantially ~~costs~~all ~~and expenses as a percentage~~ of ~~net~~our ~~sales~~subsidiaries ~~decreased~~are borrowers ~~from~~under ~~104.2% for~~ the ~~year~~ABL ~~ended December 31, 2009 to 100~~facility.7% ~~for the year ended December 31, 2010.~~

~~Operating~~On ~~loss~~August 10, ~~decreased~~2011, ~~from~~we anamended ~~operating~~the ~~loss~~ABL offacility ~~$3.9~~by ~~million~~reducing ~~for~~ the ~~year~~borrowing ~~ended~~costs ~~December 31,~~on the ~~2009~~Tranche toA ancommitments ~~operating~~by ~~loss~~75 ofbasis ~~$0.6~~points ~~million~~and ~~for~~reducing the ~~year~~borrowing ~~ended~~costs ~~December 31,~~on ~~2010.~~the ~~The~~FILO ~~decrease~~tranche ~~was~~by ~~primarily~~62.5 ~~attributable~~basis topoints. ~~lower~~Under ~~operating~~the ~~costs~~amendment, ~~which~~the ~~decreased~~maturity atdate aof ~~rate~~the ~~that~~ABL facility was ~~greater~~extended ~~than~~to the ~~rate~~earlier of ~~decline~~August 10, in2016 ~~sales.~~or ~~Operating~~60 days ~~loss~~prior to asthe scheduled maturity of the Metals USA Notes, unless the Metals USA Notes are refinanced to a ~~percentage~~ date more than 5 years and 60 days after the closing date of ~~net~~the ~~sales~~ABL ~~was~~facility 0and/or repaid prior to such date.7% ~~for~~The ABL facility remains subject to the ~~year~~same ~~ended~~acceleration ~~December 31,~~provision ~~2010~~with ~~versus~~respect ~~4.2%~~to ~~for~~the maturity of the ~~year~~Metals ~~ended~~USA ~~December 31,~~Notes ~~2009~~described above.

36Borrowing Base. The maximum availability under the ABL facility is based on eligible receivables and eligible inventory, subject to certain reserves. Our borrowing availability fluctuates daily with changes in eligible receivables and inventory, less outstanding borrowings and letters of credit. The borrowing base is equal to:

~~Table~~• 85% of ~~Contents~~the net amount of eligible accounts receivable, plus

~~Index~~• tothe ~~Financial~~lesser ~~Statements~~of (x) 80% of the lesser of the original cost or market value of eligible inventory and (y) 90% of the net orderly liquidation value of eligible inventory, plus

~~Corporate~~• ~~and~~an ~~other. This~~incremental category reflects certain administrative costs and expenses management has not allocated to its industry segments. These costs include compensation for executive officers, insurance, professional fees for audit, tax and legal services and data processing expenses. The negative net sales amount ~~represents~~of the ~~elimination~~lesser of ~~intercompany~~(x) ~~sales. The operating loss increased $2.9 million for~~ the ~~year~~maximum ~~ended~~commitments ~~December 31,~~under ~~2010 as compared to~~ the ~~year~~FILO ~~ended~~tranche ~~December 31,~~and ~~2009.~~(y) ~~During~~ the ~~second~~sum ~~quarter~~ of ~~2010,~~(i) ~~unamortized prepaid~~5% ~~advisory fees~~ of ~~$3.3~~the ~~million~~net ~~were~~amount ~~charged to expense as a result~~ of ~~the~~eligible ~~termination~~accounts ofreceivable ~~our advisory agreement with Apollo in connection with Metals USA Holdings’ IPO. This one-time charge was partially offset by a decrease in salaries~~ and ~~employee~~(ii) ~~benefits~~5% of ~~approximately~~the ~~$1.0~~net ~~million,~~orderly inliquidation ~~addition~~value toof ~~lower~~eligible ~~professional~~inventory ~~and~~during ~~consulting~~the ~~fees~~effectiveness of ~~approximately~~any ~~$0.4~~FILO ~~million for the year ended December 31~~tranche, ~~2010 versus 2009.~~ less

~~Segment~~• ~~Results—Year Ended December 31, 2009 Compared to 2008~~ reserves.

~~Plates~~The ~~and~~ABL ~~Shapes. Net~~facility ~~sales~~provides ~~decreased~~sub-limits ~~$638.2~~for ~~million,~~up orto 55$25.0%, ~~from $1,161.2~~ million ~~for~~of ~~the~~swingline ~~year~~loans ~~ended~~and ~~December 31, 2008~~up to $~~523~~100.0 million for the ~~year~~issuance ~~ended~~of ~~December 31,~~letters ~~2009~~of credit. ~~The~~Both ~~decrease~~the ~~was~~face ~~primarily~~amount ~~attributable~~of toany aoutstanding ~~42.1%~~letters ~~decrease~~of incredit ~~shipments,~~and inany ~~addition~~swingline toloans awill ~~22.3%~~reduce ~~decrease~~borrowing inavailability ~~average~~under ~~realized prices for~~ the ~~year~~ABL ~~ended~~facility ~~December 31,~~on ~~2009~~a ~~compared to~~dollar-for-dollar ~~the year ended December 31, 2008~~basis.

~~Operating~~As ~~costs~~of ~~and~~December 31, ~~expenses~~2011, ~~decreased~~we had $~~452~~415.74 million, orof ~~45.7%~~eligible collateral, ~~from~~ $~~990~~227.5 7 million ~~for~~in ~~the~~outstanding ~~year ended December 31~~advances, ~~2008 to~~ $~~537~~23.89 million ~~for~~in ~~the~~open letters ~~year~~of ~~ended~~credit ~~December 31,~~and ~~2009~~$163. ~~The~~8 ~~decrease~~million ~~was~~of ~~primarily~~additional ~~attributable~~borrowing ~~to a 42~~capacity.1% ~~decrease~~As inof ~~shipments for the year ended~~ December 31, ~~2009 compared to the year ended December 31~~2011, ~~2008.~~we ~~This~~had ~~segment recorded a~~ $435.9 million ~~write-down for inventory lower~~ of ~~cost or market adjustments during the year ended December 31, 2009~~cash.

~~Operating~~At ~~income (loss) decreased by $185.5 million~~March 7, ~~or 108.7%~~2012, ~~from~~we ~~operating~~had ~~income of~~ $~~170~~439.73 million ~~for~~of ~~the~~eligible ~~year ended December 31~~collateral, ~~2008 to operating loss of~~ $14253.8 million ~~for~~in ~~the~~outstanding ~~year ended December 31~~advances, ~~2009~~$22.7 ~~The~~million ~~decrease primarily resulted from lower net sales which were driven by a decrease~~ in ~~shipments,~~open inletters ~~addition~~of tocredit ~~the~~and ~~charges incurred to write-down the segment’s inventories for the year ended December 31, 2009~~$162.8 ~~Operating~~million ~~income (loss) as a percentage~~ of ~~net~~additional ~~sales~~borrowing ~~was (2~~capacity.~~8%) for~~ ~~the~~As of ~~year ended December~~March 317, ~~2009~~2011, ~~compared~~we tohad 14approximately $6.~~7% for~~2 ~~the~~million ~~year~~of ~~ended December 31, 2008~~cash.

~~Flat~~Guarantees ~~Rolled~~ and ~~Non-Ferrous~~Security. ~~Net~~ ~~sales~~Substantially ~~decreased~~all ~~$392.2~~of ~~million, or 44.4%, from $882.9 million for the year~~our ~~ended~~subsidiaries ~~December 31,~~are ~~2008~~defined toas ~~$490.7~~“borrowers” ~~million~~under ~~for~~ the ~~year~~ABL ~~ended~~Credit ~~December 31, 2009~~Agreement. The ~~decrease~~obligations ~~was~~under ~~primarily attributable to a 27.6% decrease in shipments, in addition to a 23.2% decrease in average realized prices, for~~ the ~~year~~ABL ~~ended December 31,~~facility ~~2009~~are ~~compared~~guaranteed toby ~~the~~Flag ~~year~~Intermediate ~~ended~~and ~~December 31,~~certain ~~2008. Sales~~ of ~~non-ferrous~~our ~~metals accounted for 40% of the segment’s sales product mix during 2009, compared to 41% during 2008.~~

~~Operating~~42 costs and expenses decreased $330.5 million, or 41.1%, from $804.7 million for the year ended December 31, 2008 to $474.2 million for the year ended December 31, 2009. The decrease was primarily attributable to a decrease in shipments of 27.6% in addition to a decrease in the average cost per ton of 21.6%. This segment recorded a $9.5 million write-down for inventory lower of cost or market adjustments during 2009. Operating costs and expenses as a percentage of net sales increased from 91.1% for the year ended December 31, 2008 to 96.6% for the year ended December 31, 2009.

~~Operating~~ domestic ~~income~~subsidiaries ~~decreased~~and byare ~~$61.7~~secured ~~million,~~by ora ~~78.9%,~~first-priority ~~from~~lien ~~$78.2~~and ~~million~~security ~~for~~interest ~~the~~in, ~~year~~among ~~ended~~other ~~December 31~~things, ~~2008~~accounts toreceivable, ~~$16.5~~inventory ~~million~~and ~~for the~~deposit ~~year~~accounts ~~ended~~of ~~December 31~~Flag Intermediate, ~~2009. The~~Metals ~~decrease~~USA and ~~was~~the ~~primarily~~subsidiaries ~~attributable~~of Metals USA party to the ~~decrease~~ABL inCredit ~~sales~~Agreement ~~discussed~~and ~~above,~~a ~~which~~second-priority ~~were~~lien ~~primarily~~and asecurity ~~function~~interest ofin, ~~lower~~among ~~shipments.~~other ~~Operating~~things, ~~income~~substantially asall aother ~~percentage~~tangible ofand ~~net~~intangible ~~sales~~personal ~~decreased~~and ~~from~~real ~~8.9%~~property ~~for the~~owned ~~year~~by ~~ended~~such ~~December 31~~companies, ~~2008~~ subject to ~~3.4% for~~certain ~~the year ended December 31, 2009~~exceptions.

~~Building Products. Net~~Interest ~~sales~~Rate ~~decreased~~and ~~$32~~Fees.8 ~~million~~At Metals USA’s option, orinterest 26accrues on the loans made under the ABL facility at either LIBOR plus a specified margin (set at 1.075%, ~~from $126~~(3.025% ~~million~~ for the ~~year~~FILO ~~ended~~tranche) as of December 31, ~~2008~~2011), toor ~~$93~~the base rate (which is based off of the federal funds rate plus 0.250%, ~~million~~Bank of America’s prime rate or LIBOR plus 1.00%), plus a specified margin (set at 0.75% (2.25% for the ~~year~~FILO ~~ended~~tranche) as of December 31, ~~2009~~2011). ~~Softness~~Under inthe ABL facility amendment that was executed on August 10, 2011, the ~~residential~~specified ~~remodeling~~margins ~~market~~over ~~continued~~LIBOR towere reduced by 75 basis ~~produce~~points ~~period-over-period~~for ~~net~~the ~~sales~~Tranche ~~decreases~~A commitments and 62.5 basis points for the FILO tranche. The marginal rates vary based on our ~~Building~~average ~~Products~~monthly ~~Group~~excess availability (as defined in the ABL Credit Agreement). The applicable base rate and the effective LIBOR rate for the loans made under the ABL facility were 3.25% and 0.55%, respectively, as of December 31, 2011.

37A commitment fee is payable on any unused commitment equal to 0.25% per annum to the lenders under the ABL facility if utilization under the facility exceeds 40.0% of the total commitments under the facility and a commitment fee equal to 0.375% per annum if utilization under the facility is less than or equal to 40.0% of the total commitments under the facility. Customary letter of credit fees are also payable, as necessary.

~~Table~~Certain Conditions Precedent and Covenants. As a condition precedent to any borrowing or issuance of ~~Contents~~a letter of credit, a material adverse effect shall not have occurred or exist. The ABL facility contains customary representations, warranties and covenants, including limitations on our ability to incur or guarantee additional debt, subject to certain exceptions, pay dividends, or make redemptions and repurchases, with respect to capital stock, repay debt, create or incur certain liens, make certain loans or investments, make acquisitions or investments, engage in mergers, acquisitions, asset sales, and engage in certain transactions with affiliates. The ABL facility requires a lock-box arrangement for collection of accounts receivable and proceeds from sales of inventory. Metals USA may make withdrawals from the lock-box unless an event of default exists or borrowing availability is less than the greater of (i) $50.0 million and (ii) 12.5% of the lesser of (A) the borrowing base (not to exceed $62.5 million) and (B) the aggregate commitment. We do not have to maintain a minimum FCCR as long as our borrowing availability is greater than or equal to the Minimum Availability, defined as the greater of (i) $45.0 million and (ii) 10% of the lesser of the borrowing base and the aggregate commitment. We must maintain an FCCR of at least 1.0 to 1.0 if borrowing availability falls below the Minimum Availability. For purposes of determining covenant compliance, the FCCR is determined by dividing (i) the sum of Adjusted EBITDA (as defined in the ABL Credit Agreement) minus income taxes paid in cash (excluding certain specified deferred taxes) minus non-financed capital expenditures by (ii) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt, and is calculated based on such amounts for the most recent period of four consecutive fiscal quarters for which financial statements are available. FCCR and Adjusted EBITDA are each calculated on a pro forma basis. As of December 31, 2011, our FCCR was 2.82.

~~Index~~Certain Events of Default and Remedies. The ABL facility contains events of default with respect to: ~~Financial~~default ~~Statements~~in payment of principal when due, default in the payment of interest, fees or other amounts after a specified grace period, material breach of the representations or warranties, default in the performance of covenants, a default that causes or permits acceleration under any indebtedness with a principal amount in excess of a specified amount, certain bankruptcy events, certain ERISA violations, invalidity of certain security agreements or guarantees, material judgments, or a change of control. In the event of default, the ABL Credit Agreement may permit a majority of the lenders to: (i) restrict the amount of or refuse to make revolving loans; (ii) cause customer receipts to be applied against borrowings under the ABL facility which would cause Metals USA to suffer a rapid loss of liquidity and restrict the ability to operate on a day-to-day basis; (iii) restrict or refuse to provide letters of credit; or ultimately: (iv) terminate the commitments and the agreement; or (v) declare any or all obligations to be immediately due and payable if such default is not cured in the specified period required.

~~Operating~~43 costs and expenses decreased $38.0 million, or 28.1%, from $135.1 million for the year ended December 31, 2008 to $97.1 million for the year ended December 31, 2009. The decrease was primarily due to lower sales volume and a decrease in variable costs related to lower market demand, in addition to certain initiatives the segment has taken in response to the downturn in the housing and remodeling markets. Management has continued to focus on cost reduction in order to mitigate the impact of lower operating levels resulting from the market downturn. Operating costs and expenses as a percentage of net sales decreased from 107.2% for the year ended December 31, 2008 to 104.2% for the year ended December 31, 2009.

~~Operating~~ Any ~~loss~~payment ~~decreased~~default ~~by $5.2 million,~~ or ~~57.1%,~~acceleration ~~from~~under ~~$9.1 million for~~ the ~~year~~ABL ~~ended~~facility ~~December 31,~~would ~~2008~~also toresult ~~$3.9~~in ~~million for the year ended December 31, 2009. The decrease was primarily attributable to lower operating costs, which decreased at~~ a ~~rate~~default ~~greater~~under ~~than~~ the ~~decline~~Metals inUSA ~~sales~~Notes ~~discussed~~that ~~above.~~would ~~Operating~~provide ~~loss~~the asholders ~~a percentage~~ of ~~net sales decreased from 7.2% for~~ the ~~year~~Metals ~~ended~~USA ~~December 31,~~Notes ~~2008~~with ~~to 4.2% for~~ the ~~year~~right ~~ended~~to ~~December 31,~~demand ~~2009~~immediate repayment.

~~Corporate~~Interest ~~and~~Rate ~~other~~Swaps. ~~This~~ ~~category~~In ~~reflects~~February ~~certain~~2008, ~~administrative~~$250.0 ~~costs~~million ~~and~~notional ~~expenses~~amount of outstanding ~~management~~borrowings ~~has~~under ~~not~~the ~~allocated~~ABL facility were swapped from a floating LIBOR-based rate to ~~its~~a ~~industry~~fixed ~~segments~~rate. ~~These~~ ~~costs~~The ~~include~~swaps ~~compensation~~entitled ~~for~~us ~~executive~~to ~~officers,~~receive ~~insurance,~~quarterly ~~professional~~payments ~~fees~~of ~~for~~interest ~~audit,~~at ~~tax~~a ~~and~~floating ~~legal~~rate ~~services~~indexed to three-month LIBOR and ~~data~~pay ~~processing~~a ~~expenses. The~~fixed ~~negative~~rate ~~net~~that ~~sales~~ranged ~~amount~~from ~~represents~~2.686% ~~the~~to ~~elimination~~2.997%, ofconverting ~~intercompany~~a ~~sales. The~~portion ~~operating~~of ~~loss~~the ~~decreased~~outstanding ~~$12.9~~borrowings ~~million,~~on orour ~~39.3%,~~ABL facility from ~~$32~~a floating rate obligation to a fixed rate obligation.8 ~~million~~Pretax ~~for~~realized gains and losses from the ~~year~~Company’s ~~ended~~ABL ~~December 31,~~facility ~~2008~~interest torate ~~$19.9~~swaps ~~million~~which ~~for~~were recognized in earnings during the year ended December 31, ~~2009.~~2011 ~~Lower~~amounted ~~variable costs~~to of $40.51 million ~~associated~~of ~~with~~additional ~~decreased~~interest ~~incentive~~expense, ~~compensation~~consisting ~~were the primary component~~ of ~~the decrease~~$1.8 ~~Other~~million ~~cost~~of ~~reductions~~settlements, ~~included~~offset by $1.4 7 million of ~~lower~~changes ~~professional~~in ~~and~~the ~~consulting~~fair ~~fees,~~value ~~and~~of $1derivatives.0 ~~million~~The Company’s ofABL ~~lower~~facility ~~costs~~interest ~~attributable~~rate ~~to employee~~swaps ~~benefit~~expired ~~modifications~~during the second quarter of 2011.

~~Liquidity~~The ~~and~~Metals ~~Capital~~USA ~~Resources~~ Notes

~~Our~~On ~~primary~~the ~~sources~~closing date of ~~short-term~~the ~~liquidity~~Merger, ~~are~~we ~~borrowings~~received ~~under~~approximately ~~the~~$268.0 ~~ABL~~million ~~facility~~of ~~and~~net ~~our~~ cash ~~flow~~ proceeds from ~~operations~~the sale of $275.0 Wemillion ~~believe~~in ~~these resources~~aggregate ~~will~~principal beamount ~~sufficient~~of tothe ~~meet~~Metals ~~our~~USA ~~working~~Notes, ~~capital~~after ~~and~~deducting ~~capital~~expenses ~~expenditure~~of ~~requirements~~the ~~for~~offering. Interest on the ~~next~~Metals ~~year.~~USA AsNotes accrues at the rate of ~~December~~11 ~~31,~~1/8% per ~~2010,~~annum weand ~~had~~is ~~$106.0~~payable ~~million~~semiannually ~~drawn~~in arrears on June 1 ~~the~~and ~~ABL~~December 1 ~~facility~~and commenced on June 1, ~~our~~2006. ~~borrowing~~The ~~availability~~Metals ~~was~~USA ~~$161.5~~Notes ~~million~~will mature on December 1, ~~and~~2015. weWe ~~had cash~~may redeem some or all of ~~$15.2~~the ~~million.~~Metals ~~Our~~USA ~~borrowing~~Notes ~~availability~~at ~~fluctuates~~any ~~daily~~time ~~with~~on ~~changes~~or inafter ~~eligible~~December 1, ~~accounts~~2010, ~~receivables~~at a predetermined redemption price plus accrued and ~~inventory~~unpaid interest and additional interest, ~~less~~if ~~outstanding~~any, ~~borrowings~~to ~~and~~the ~~letters~~applicable ofredemption ~~credit~~date. ~~See~~If ~~“—Financing~~we ~~Activities”~~experience ~~below.~~a Atchange ~~February~~of 28control and we do not redeem the Metals USA Notes, ~~2011,~~ we ~~had~~will ~~$125.5 million~~be ~~drawn~~required onto make an offer to repurchase the ~~ABL~~Metals ~~facility,~~USA ~~our~~Notes ~~borrowing~~at ~~availability~~a ~~was~~price ~~$185.8~~equal ~~million~~to 101% of the principal amount, plus accrued and weunpaid ~~had~~interest ~~cash~~and ofadditional ~~approximately~~interest, ~~$15.5~~if ~~million~~any, to the date of repurchase.

WeUnder ~~generally meet long-term liquidity requirements,~~ the ~~repayment~~Metals ofUSA ~~debt~~Notes ~~and investment funding needs~~Indenture, ~~through~~we ~~additional~~are ~~borrowings~~required ~~under~~to ~~the~~pay ~~ABL~~interest ~~facility~~on ~~and~~overdue ~~the~~principal ~~issuance~~at ~~of debt securities. At December~~1% ~~31,~~per ~~2010,~~annum ~~our~~in ~~long-term~~excess ~~debt consisted~~ of ~~$106.0 million of outstanding borrowings on~~ the ~~ABL~~above ~~facility,~~rate ~~$226.3~~and ~~million~~are ~~principal~~required ~~amount~~to ofpay ~~the~~interest ~~Metals~~on ~~USA~~overdue ~~Notes,~~installments ~~$47.0 million principal amount~~ of ~~intercompany loans payable to Metals USA~~ ~~Holdings,~~interest ~~IRBs~~at ~~with~~such ~~$12.6~~higher ~~million~~rate ~~principal~~to ~~amount~~the ~~outstanding~~extent ~~and $0~~lawful.5 ~~million~~The inMetals ~~vendor~~USA ~~financing~~Notes ~~and~~Indenture ~~purchase~~contains ~~money~~the ~~notes.~~covenants Wedescribed ~~believe that cash flow from operations, supplemented by cash available~~ under ~~the~~“—Covenant ~~ABL~~Compliance” ~~facility, will be sufficient to enable us to meet our debt service and operational obligations as they come due for at least the next twelve months~~above.

~~With respect~~The toMetals ~~long-term~~USA ~~liquidity,~~Notes weIndenture ~~believe~~contains ~~that~~certain wecustomary ~~will~~events beof ~~able~~default, toincluding ~~meet~~(subject, ~~our~~in ~~working~~some ~~capital~~cases, ~~capital~~to ~~expenditures~~customary ~~and~~cure ~~debt~~period ~~service~~thresholds) ~~obligations.~~defaults ~~Our~~based ~~ability~~on to(1) the ~~meet~~failure ~~long-term liquidity requirements is subject~~ to ~~obtaining~~make ~~additional debt and/or~~payments ~~equity~~under ~~financing.~~the ~~Decisions~~Metals byUSA ~~lenders~~Notes ~~and~~Indenture ~~investors~~when todue, ~~enter~~(2) breach ~~into~~of ~~such~~covenants, ~~transactions~~(3) cross-defaults ~~with~~to usother ~~will~~material ~~depend upon a number of factors~~indebtedness, ~~such~~(4) bankruptcy asevents ~~our~~and ~~historical~~(5) material ~~and~~judgments. ~~projected~~We ~~financial~~were ~~performance,~~in compliance with ~~the~~all ~~terms~~covenants ofas ~~our current credit~~of ~~agreements~~December 31, ~~industry and market trends, the availability of capital, and the relative attractiveness of alternative lending or investment opportunities~~2011.

38Industrial Revenue Bonds

~~Table~~Metals USA is a conduit bond obligor on IRBs issued by the municipalities of ~~Contents~~Muskogee, Oklahoma and Jeffersonville, Indiana. As of December 31, 2011, our total indebtedness under the IRBs was $12.6 million. The IRBs are secured by certain real estate, leasehold improvements and equipment acquired with proceeds from the IRBs. The Muskogee IRB is due in one lump sum of $5.7 million on May 1, 2023. The Jeffersonville IRBs had principal amounts outstanding of $4.0 million and $2.9 million as of December 31, 2011, and are being redeemed in varying amounts annually through August 2021 and December 2027, respectively. The interest rates assessed on the IRBs vary from month to month. As of December 31, 2011, the weighted average interest rate on the IRBs was 0.26%. The IRBs place various restrictions on certain of our subsidiaries, including but not limited to maintenance of required insurance coverage, maintenance of certain financial ratios, limits on capital expenditures and maintenance of tangible net worth and are supported by letters of credit. We were in compliance with all covenants as of December 31, 2011.

~~Index~~Interest toRate ~~Financial~~Swaps. ~~Statements~~In November 2004 and December 2007, ORMS, which we acquired on December 31, 2010, entered into two separate interest rate swap agreements in connection with the Jeffersonville IRBs

~~Operating~~44 ~~and Investing Activities~~

~~Although~~ discussed weabove. doThe ~~not~~notional ~~produce~~amounts ~~any~~under ~~metal,~~these ~~our~~swaps ~~financial~~correspond ~~performance~~to isthe ~~affected~~principal byamounts ~~changes~~of the IRBs. The first swap agreement matured in ~~metal~~December ~~prices~~2011. ~~When~~The ~~metal~~second ~~prices~~swap ~~rise,~~agreement ~~the~~matures ~~prices~~in atDecember ~~which~~2017, weand ~~are~~had ~~able~~notional tovalue ~~sell~~of ~~our~~$4.0 ~~products~~million ~~generally~~as ~~increase~~of ~~over~~December 31, ~~their~~2011, ~~historical~~an ~~costs;~~amount ~~accordingly~~that is reduced on an annual basis as the IRB is redeemed. Under the swaps, ~~our~~the ~~working~~notional ~~capital~~amounts ~~(which~~under ~~consists~~the ~~primarily~~Jeffersonville ofIRBs ~~accounts~~were ~~receivable~~swapped from a floating rate based on a rate established by the Securities Industry and ~~inventory)~~Financial ~~tends~~Market toAssociation ~~increase~~(“SIFMA”) into afixed ~~rising~~rates ~~price~~of ~~environment~~4.00% ~~Conversely~~and 3.75%, ~~when~~ ~~metal~~converting ~~prices~~the ~~fall,~~outstanding ~~our~~borrowings ~~working~~on ~~capital~~the ~~tends~~Jeffersonville IRBs from floating rate obligations to fixed ~~decrease~~rate obligations. ~~Our~~Pretax ~~working~~realized ~~capital~~gains ~~(current~~and ~~assets~~losses ~~less~~from ~~current~~these ~~liabilities)~~derivatives ~~increased~~are ~~from~~recognized ~~$276.3~~in ~~million~~earnings atas ~~December 31,~~an ~~2009~~addition or reduction to interest expense, consisting of cash settlements and changes in the fair value of derivatives. The fair value of the ORMS interest rate swap was $~~368~~0.26 million at December 31, ~~2010~~2011, which was classified as other long-term liabilities in the consolidated balance sheet.

~~Changes~~Intercompany inLoan ~~metal~~Agreement prices also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. We sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, primarily to benefit from early-payment discounts that are substantially higher than our cost of incremental debt. As a result, when metal prices are rising, we tend to draw more on the ABL facility to cover the cash flow cycle from material purchase to cash collection. When metal prices fall, we can replace our inventory at lower cost and, thus, generally the ABL facility utilization is reduced. We believe our cash flow from operations, supplemented with the cash available under the ABL facility, will provide sufficient liquidity to meet the challenges and obligations we face during the current metal price environment. Additionally, we intend to look for value-added business opportunities that we can acquire at reasonable prices. We intend to use cash flows from operations and excess cash available under the ABL facility to fund future investments.

~~Cash~~Metals ~~Flows~~USA Holdings has made advances to Metals USA through an intercompany loan agreement, as amended, (the “Loan Agreement”), which totaled $47.0 million as of December 31, 2011 and 2010. The advances have been primarily to accommodate working capital expansion and the J. Rubin acquisition discussed in Note 2 to our Consolidated Financial Statements. In June 2011, the Loan Agreement was amended to extend the maturity date to June 15, 2017, and to modify the rate at which borrowings under the Loan Agreement bear interest to LIBOR plus 6.00% per annum. The aggregate amount of Metals USA Holdings’ commitment under the Loan Agreement is $50.0 million. For the years ended December 31, 2011 and 2010, Metals USA recognized $5.6 million and $1.8 million, respectively, of interest expense related to the Loan Agreement.

~~The following~~Restricted ~~discussion~~Payments of the principal sources and uses of cash should be read in conjunction with our Consolidated Statements of Cash Flows which are set forth under Item 8—“Financial Statements and Supplementary Data.”

~~Year~~Both ~~Ended~~the ABL facility and the Metals USA Notes Indenture contain restrictions as to the payment of dividends. Under the ABL Credit Agreement, general distributions are unlimited if the FCCR is at least 1.1:1.0 and availability (including a 30 day lookback) exceeds the greater of (i) $50.0 million and (ii) 15% of the lesser of the borrowing base (not to exceed $75.0 million) and the aggregate commitments. As of December 31, ~~2010~~2011, our FCCR was 2.82, and our borrowing availability was $163.8 million.

~~During~~As ~~the~~of ~~year ended~~ December 31, ~~2010~~2011, ~~net cash used in operating activities was~~ $3028.29 million. ~~This amount~~ was ~~primarily~~available ~~attributable~~for togeneral ~~increases~~distribution inunder ~~accounts~~the ~~receivable~~restricted ~~and~~payment ~~inventories.~~covenant ~~Changes~~ contained in ~~working~~the ~~capital~~Metals ~~during~~USA ~~2010~~Notes ~~reflect improving business conditions as commodity prices and demand continued to increase~~Indenture. WeAs ~~increased inventory tonnage on hand commensurate with increased levels~~ of ~~shipments~~December 31, ~~to our customers~~2011, ~~while prices~~Flag ~~increased~~Intermediate ~~moderately~~and ~~throughout~~its ~~the~~wholly ~~year~~owned subsidiary, ~~despite~~Metals ~~some~~USA, ~~intermittent~~had ~~volatility~~$220.7 ~~Our~~million ~~accounts~~of ~~receivable~~total ~~increased~~stockholder’s ~~due to higher sales levels in 2010~~equity.

~~Net~~We believe that cash ~~used~~flow infrom ~~investing~~operations, ~~activities~~supplemented ~~was~~by ~~$31.3~~cash ~~million~~available ~~for~~under the ~~year~~ABL ~~ended December 31~~facility, ~~2010,~~will ~~and~~be ~~consisted~~sufficient ~~primarily~~to ofenable ~~$28.0~~us ~~million~~to ~~for~~meet ~~the~~our ~~acquisition~~debt ofservice ~~J. Rubin~~ and ~~ORMS~~operational inobligations ~~June~~as ~~and~~they ~~December, respectively.~~come ~~Capital~~due ~~expenditures~~for ~~amounted~~at toleast ~~$4.0 million for~~ the ~~year~~next ~~ended~~twelve ~~December 31, 2010~~months. ~~There were no material individual capital investment projects specific to any facilities during 2010.~~

~~Net~~Commitments ~~cash provided by financing activities was $71.2 million for the year ended December 31, 2010,~~ and ~~consisted~~Contingencies ~~primarily of borrowings on the intercompany loan facility of $47.0 million in addition to net borrowings under the ABL facility of $31.0 million.~~

~~Year~~From ~~Ended~~time ~~December 31~~to time, ~~2009~~we are involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. We believe the resolution of these matters and the incurrence of their related costs and expenses should not have a material adverse effect on our consolidated financial position, results of operations, liquidity or cash flows.

~~During~~Off-Balance ~~the~~Sheet ~~year~~Arrangements ended December 31, 2009, net cash provided by operating activities was $248.9 million. This amount was primarily attributable to decreases in accounts receivable and inventories. Changes in working capital during 2009 reflect the change in the business environment that began during the fourth quarter of 2008, when we began reducing inventory purchases as a result of weaker demand and declining prices. Our accounts receivable decreased due to lower sales levels in 2009.

39We were not engaged in off-balance sheet arrangements through any unconsolidated, limited purpose entities and no material guarantees of debt or other commitments to third parties existed at December 31, 2011.

~~Table~~Letters of ~~Contents~~credit outstanding at December 31, 2011 consist of letters of credit in the amount of $14.0 million in conjunction with the IRBs and other letters of credit aggregating $9.9 million (total letters of credit of $23.9 million at December 31, 2011). Other letters of credit consist primarily of collateral support for our property and casualty insurance program. All letters of credit reduce the amount available to borrow under the ABL facility.

~~Index~~45 ~~to Financial Statements~~

~~Net~~Contractual ~~cash~~Obligations used in investing activities was $7.8 million for the year ended December 31, 2009, and consisted of proceeds from sales of assets of $0.5 million offset by $4.1 million of capital expenditures and $4.2 million for the acquisition of VR Laser. For the year ended December 31, 2009, the most significant internal capital projects were expansion of our plate processing machinery and equipment at our Tulsa, Oklahoma and York, Pennsylvania Plates and Shapes facilities.

~~Net~~We ~~cash~~enter ~~used~~into inoperating ~~financing~~leases ~~activities~~for ~~was~~many ~~$328~~of our facility, vehicle and equipment needs.6 ~~million~~These leases allow us to conserve cash by paying a monthly lease rental fee for the ~~year~~use ~~ended December 31~~of, ~~2009~~rather than purchase of, facilities, vehicles and ~~consisted~~equipment. ~~primarily~~At the end of ~~net~~the ~~repayments~~lease, onwe have no further obligation to the ~~ABL~~lessor. ~~facility~~We have varying amounts of ~~$293.0~~open ~~million,~~purchase inorders ~~addition~~that are subject to renegotiation/cancellation by either party as to quantity or price. ~~repayments~~Generally, the amounts outstanding relate to delivery periods of ~~other~~up ~~long-term~~to ~~debt~~12 weeks from the date of ~~$35.6~~the ~~million~~purchase order.

~~Year~~Our future ~~Ended~~contractual obligations as of December 31, ~~2008~~2011 include the following:

During the year ended December 31, 2008, net cash provided by operating activities was $92.0 million. Through the first three quarters of 2008, we generated significant profits as global steel prices rose to record highs. Our increased profitability was the primary contributor to our cash flow from operations for 2008. During the fourth quarter of 2008, we began to decrease our inventories in response to slackening demand and decreasing prices. Our fourth quarter 2008 reduction in working capital also contributed to cash flow from operations for the year.


			For the Fiscal Years Ended December 31,
	Total		2012		2013		2014		2015		2016		Beyond
							(in millions)
ABL facility (1)	$	227.7	$	—	$	—	$	—	$	227.7	$	—	$	—
Purchase obligations		292.3		292.3		—		—		—		—		—
Metals USA Notes		327.1		25.2		25.2		25.2		251.5		—		—
IRBs (2)		12.6		0.4		0.4		0.4		0.4		0.5		10.5
Due to Parent		47.0		—		—		—		—		—		47.0
Other obligations (3)		8.0		1.2		1.3		1.2		0.7		0.6		3.0
Operating lease obligations		37.1		11.5		8.3		6.2		5.4		2.6		3.1

Total (4)	$	951.8	$	330.6	$	35.2	$	33.0	$	485.7	$	3.7	$	63.6

~~Net~~(1) ~~cash~~The ~~used~~amounts instated ~~investing~~do ~~activities~~not ~~was~~include $7interest costs.7 ~~million~~The ~~for~~ABL ~~the~~facility ~~year~~bears ~~ended~~interest ~~December 31,~~based ~~2008,~~upon ~~and~~a ~~consisted~~margin ofover ~~proceeds~~reference ~~from~~rates ~~sales~~established ~~of assets~~within ofa ~~$9.5~~specific ~~million~~pricing ~~offset by $12~~grid.2 ~~million~~The ofmarginal ~~purchases~~rates ofwill ~~assets~~vary ~~and~~based $5on availability.0 ~~million~~The ofapplicable ~~contingent~~base ~~consideration~~rate ~~paid~~and ~~during 2008 in connection with~~ the ~~May~~effective ~~2006~~LIBOR ~~acquisition~~rate ofwere ~~Port City~~3.25% ~~For~~and ~~the~~0.55%, ~~year~~respectively, ~~ended~~on December 31, ~~2008, the most significant internal capital project was the expansion of our New Orleans Plates and Shapes facility~~2011.

~~Net~~(2) ~~cash~~The ~~used~~amounts ~~in financing~~do ~~activities~~not ~~was~~include $4interest costs.9 ~~million~~The ~~for~~interest ~~the~~rates ~~year~~assessed ~~ended December 31, 2008, and consisted primarily of net borrowings~~ on the ~~ABL~~IRBs ~~facility~~vary offrom ~~$87.5~~month ~~million,~~to ~~offset~~month bybased ~~dividends~~on ~~paid~~an toindex ~~Metals USA Holdings~~ of ~~$87.5~~mutual ~~million, $2~~bonds.4 ~~million~~The ~~of repayments~~weighted ofaverage ~~long-term~~IRB ~~debt~~rate ~~and~~was $20.526% ~~million~~as of ~~deferred~~December ~~financing~~31, ~~costs~~2011.

~~Covenant~~(3) ~~Compliance~~Consists of (i) note payable in connection with the Trident acquisition of approximately $1.5 million, (ii) capital lease of approximately $0.5 million, and (iii) a multiemployer pension fund withdrawal liability of approximately $6.0 million.

~~Adjusted~~(4) ~~EBITDA~~Excludes payments for unrecognized tax benefits. We believe it is reasonably possible that a decrease of up to $1.0 million in the consolidated liability for unrecognized tax benefits related to federal and state tax uncertainties may occur within the next twelve months. In addition, we believe that it is reasonably possible that approximately $1.5 million of other remaining unrecognized tax benefits, each of which is individually insignificant, may be recognized within the next twelve months as a result of a lapse in the statute of limitations. For additional information see Note 10 to the consolidated financial statements in Item 8 of this Form 10-K.

~~Adjusted~~Critical ~~EBITDA~~Accounting ~~(as~~Policies ~~defined by the loan~~ and ~~security~~Estimates agreement governing the ABL facility and the Indenture governing the Metals USA Notes) is defined as EBITDA further adjusted to exclude certain non-cash and non-recurring items. Adjusted EBITDA is not a defined term under GAAP and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity.

~~Fixed~~The ~~Charge~~discussion ~~Coverage~~and ~~Ratio~~analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of this process forms the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. We review our estimates and judgments on a regular, ongoing basis. Actual results may differ from these estimates due to changed circumstances and conditions.

~~Under~~46 the ABL facility, the FCCR is determined on a rolling four-quarter period, often referred to as a last-twelve month period, by dividing (1) the sum of Adjusted EBITDA of Metals USA minus income taxes paid in cash minus non-financed capital expenditures by (2) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt paid by Metals USA. Should borrowing availability under the ABL facility fall below Minimum Availability, we must maintain a FCCR of at least 1.0 to 1.0, measured on a trailing four-quarter basis. As of December 31, 2010, our borrowing availability under the ABL facility was $161.5 million. In addition, the FCCR also is an important measure of our liquidity and affects our ability to take certain actions, including paying dividends to stockholders and making acquisitions.

~~Although~~The ~~the~~following ~~Indenture~~accounting ~~governing~~policies ~~the~~and ~~Metals~~estimates ~~USA~~are ~~Notes~~considered ~~also~~critical ~~contains~~in ~~covenants~~light ~~that~~of ~~restrict~~the potentially ~~our~~material ~~ability~~impact tothat ~~incur~~the ~~indebtedness~~ estimates, judgments and ~~pay~~uncertainties ~~dividends~~affecting ~~based~~the onapplication ~~our~~of ~~FCCR,~~these ~~the~~policies ~~definition~~might ~~and~~have ~~application~~on ofour ~~the~~reported ~~FCCR~~financial ~~contained~~information.

40Accounts Receivable

~~Table~~We generally recognize revenue as product is shipped (risk of ~~Contents~~loss for our products generally passes at time of shipment), net of provisions for estimated returns. Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of trade accounts and notes receivable. Collections on our accounts receivable are made through several lockboxes maintained by our lenders. Credit risk associated with concentration of cash deposits is low as we have the right of offset with our lenders for the substantial portion of our cash balances. Concentrations of credit risk with respect to trade accounts receivable are within several industries. Generally, credit is extended once appropriate credit history and references have been obtained. We perform ongoing credit evaluations of customers and set credit limits based upon reviews of 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. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically based upon our expected ability to collect all such accounts. Generally we do not require collateral for the extension of credit.

~~Index~~Each month we consider all available information when assessing the adequacy of the provision for allowances, claims and doubtful accounts. Adjustments made with respect to ~~Financial~~the ~~Statements~~allowance for doubtful accounts often relate to improved information not previously available. Uncertainties with respect to the allowance for doubtful accounts are inherent in the preparation of financial statements. The rate of future credit losses may not be similar to past experience.

inInventories the Indenture differs from the definition and application of the FCCR in the ABL facility in that the numerator of the FCCR as defined in the Indenture does not include cash income taxes or non-financed capital expenditures and the denominator of the FCCR as defined in the Indenture does not include the sum of certain distributions paid in cash and scheduled principal reductions on debt, and separate FCCRs are required under certain circumstances. See “—Financing Activities” below.

~~Because~~As ~~access~~of toDecember 31, ~~debt~~2011 ~~capital~~we ishad ~~currently~~inventories ~~and~~of in$402.5 ~~the future~~million. ~~will~~Inventories ~~continue~~are tostated beat ~~important to us, we believe that~~ the ~~inclusion~~lower of ~~supplementary~~cost ~~adjustments~~or tomarket ~~EBITDA~~(“LCM”). ~~applied~~Our ininventories ~~presenting Adjusted EBITDA~~ are ~~appropriate~~accounted tofor ~~provide~~using ~~additional~~a ~~information~~variety toof ~~investors~~methods including tospecific ~~demonstrate~~identification, ~~compliance~~average ~~with~~cost and the ~~covenants~~ first-in, ~~our~~first-out ~~debt~~method ~~agreements~~of accounting. ~~Failure~~Under ~~to comply with~~ the ~~FCCR~~LCM ~~covenant~~concept, of the ~~ABL~~Company ~~facility~~is ~~can~~required ~~result in limiting our long-term growth prospects by hindering our ability~~ to ~~incur~~recognize ~~future~~an ~~indebtedness~~additional orexpense ~~grow~~in ~~through~~cost ~~acquisitions. As~~ of ~~December 31,~~ ~~2010,~~sales ~~our~~in ~~FCCR~~the ~~was~~current ~~2.44.~~period Asfor ofany ~~December 31,~~inventory ~~2010,~~whose replacement wecost ~~had~~has ~~$161.5~~declined ~~million~~below ofits ~~additional~~carrying ~~borrowing capacity under the ABL facility~~cost.

~~The~~We ~~Indenture~~conduct ~~governing~~an ~~the~~LCM ~~Metals~~inventory ~~USA~~valuation ~~Notes~~annually ~~contains covenants that restrict our ability to take certain actions, such~~ as ~~incurring~~of ~~additional~~December 31 or ~~debt~~more ~~and~~frequently ~~making certain acquisitions,~~ if wecircumstances ~~are~~indicate ~~unable~~potential ~~to meet defined Adjusted EBITDA to fixed charge coverage ratios (as defined)~~write-downs. The ~~covenants~~LCM invaluation ~~the~~requires ~~Indenture require~~ us to ~~have~~review anproduct ~~Adjusted~~specific ~~EBITDA~~facts ~~to fixed charge coverage ratio (measured on a trailing four-quarter basis~~ and ~~calculated~~circumstances, ~~differently~~including ~~from the~~current ~~fixed~~selling ~~charge~~prices, ~~coverage~~estimated ~~ratio~~costs ~~as defined by the ABL facility) of 2.0~~ to ~~1.0~~complete toand ~~incur~~deliver ~~“ratio” indebtedness. Based on~~ the ~~calculations~~product, expectations for ~~the~~normal ~~trailing~~profit ~~four quarters~~margins, wecosts ~~are~~currently ~~able~~in ~~to satisfy these covenants and incur additional indebtedness under these ratios~~inventory, ~~including~~as ~~for~~well ~~acquisition~~as ~~purposes,~~current ~~under~~replacement ~~our Indenture~~costs.

~~Our~~In ~~inability~~addition to ~~satisfy~~making ~~the~~an assessment ~~terms~~ of ~~the negative~~current ~~covenants~~selling inprices ~~our~~relative ~~debt~~to ~~agreements~~product ~~do not~~cost, bywe ~~themselves,~~also ~~constitute~~review ~~covenant~~customer ~~violations~~purchasing ortrends ~~events~~and oftake ~~default.~~into ~~Rather,~~consideration ~~they are event-related restrictions that may limit or prohibit~~ the ~~Company~~current ~~from~~economic ~~taking~~conditions ~~certain~~as ~~corporate~~they ~~actions.~~relate ~~As of December 31, 2010, we were unable~~ to ~~pay dividends as a result of~~ our ~~inability~~industry toand ~~satisfy~~ the ~~terms~~end-use industries of ~~certain negative covenants in~~ our ~~debt agreements~~customers.

~~Limitations~~During 2008 and 2009, the global financial crisis caused significant contraction in industrial production world-wide. The reduction in demand for metals was driven by widespread inventory destocking throughout the supply chain as industry participants looked to preserve liquidity by reducing their investment in working capital. As a direct consequence of ~~Adjusted~~the ~~EBITDA~~rapid and unprecedented decline in metals prices we experienced as a result of the economic recession discussed above, we recorded $53.4 million of write-downs during the year ended December 31, 2009, as compared to $6.8 million of write-downs during the year ended December 31, 2008, for inventory LCM adjustments in our metal service center businesses.

~~There~~We ~~are~~have ~~material~~not ~~limitations~~recorded ~~associated~~any ~~with~~LCM ~~making~~adjustments ~~the~~since ~~adjustments~~2009, toas ~~our~~metal ~~earnings~~selling prices relative to ~~calculate~~metal ~~Adjusted~~costs ~~EBITDA~~have ~~and~~been ~~using~~more ~~such~~favorable asince ~~non-GAAP~~approximately ~~financial~~the ~~measure~~second asquarter ~~compared~~of to2009. ~~the~~We ~~most~~continue ~~directly~~to ~~comparable~~manage ~~GAAP~~our ~~financial~~inventory ~~measures.~~by ~~For~~working ~~instance,~~to ~~Adjusted~~optimize ~~EBITDA~~the ~~does~~tradeoff ~~not~~between ~~include:~~holding inventory and forgoing incremental sales.

•47 ~~interest expense, and, because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and ability to generate revenue;~~

•We ~~income~~regularly ~~tax~~review ~~expense,~~inventory on hand and ~~because~~may periodically record provisions for damaged and slow-moving inventory based on the ~~payment~~factors discussed above. Adjustments made with respect to inventory valuation often relate to improved information not previously available. Uncertainties with respect to inventory valuation are inherent in the preparation of ~~taxes~~financial isstatements. ~~part~~The rate of ~~our~~future ~~operations,~~losses ~~income~~associated ~~tax~~with ~~expense~~damaged isor aslow ~~necessary~~moving ~~element~~inventory, ofor ~~our~~LCM ~~costs~~write-downs, ~~and~~may ~~ability~~not be similar to ~~operate;~~past ~~and~~experience.

•Goodwill ~~depreciation and amortization expense, and, because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate revenue.~~

The acquisition method of accounting for business combinations requires the Company to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the net tangible and identifiable intangible assets. We perform a goodwill impairment test annually as of October 31. In addition, ~~fixed~~goodwill ~~charges~~would ~~should~~be ~~not~~tested bemore ~~considered~~frequently anif ~~alternative~~changes ~~to interest~~in ~~expense~~circumstances or the occurrence of events indicates that a potential impairment exists.

41We test for impairment of goodwill by first making a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we proceed to the two-step approach as prescribed in Accounting Standards Codification (“ASC”) Topic 350—“Intangibles—Goodwill and Other” (“ASC 350”). The first step of the impairment test compares the fair value of a reporting unit with its carrying value including assigned goodwill. The second step of the impairment test is required only in situations where the carrying value of the reporting unit exceeds its fair value as determined in the first step. In such instances, we compare the implied fair value of goodwill to its carrying value. The implied fair value of goodwill is determined by allocating the fair value of a reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recorded to the extent that the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill.

~~Table~~We use the present value of ~~Contents~~future cash flows to determine fair value in combination with the market approach. While we believe that our keys assumptions and estimates are consistent with those a hypothetical market participant would use given circumstances that are present at the time the estimates are made, future operating results could reasonably differ from our estimates and could require a provision for impairment in a future period.

~~Index~~New toAccounting ~~Financial~~Pronouncements ~~Statements~~

~~Below~~In isDecember a2010, ~~reconciliation~~the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-29 “Business Combinations (Topic 805): Disclosure of ~~net~~Supplementary ~~income~~Pro Forma Information for Business Combinations” (~~loss~~“ASU 2010-29”) which amended ASC Topic 805 “Business Combinations” to ~~EBITDA~~specify that if a public entity presents comparative financial statements, ~~Adjusted~~the ~~EBITDA~~entity should disclose revenue and ~~net~~earnings ~~cash~~of ~~(used~~the combined entity as though the business combination that occurred during the year had occurred as of the beginning of the comparable prior annual reporting period only. The ASU also expands the supplemental pro forma disclosures under ASC Topic 805 to include a description of the nature and the amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in) ~~provided~~the byreported ~~operating~~pro ~~activities:~~forma revenue and earnings. The ASU is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We have disclosed the required information in accordance with ASU 2010-29 as it relates to the Trident acquisition described in Note 2 to our consolidated financial statements.

	Years Ended December 31,
	2010			2009			2008
	(in millions, except ratios)
Net income (loss)	$	14.9		$	(35.7	)	$	93.4
Depreciation and amortization(1)		19.8			21.2			23.6
Interest expense		37.2			44.9			54.5
Gain on extinguishment of debt		—			(13.6	)		—
Provision (benefit) for income taxes		8.2			(18.0	)		59.3
Other (income) expense		—			0.3			(0.2	)
EBITDA		80.1			(0.9	)		230.6
Covenant defined adjustments:
Stock options and grant expense(2)		1.2			0.4			1.1
Facilities closure(3)		—			2.1			4.0
Advisory agreement fees and other costs(4)		3.8			1.2			1.9
Impairment of assets(5)		—			—			5.1
Adjusted EBITDA		85.1			2.8			242.7
Loss (gain) on sale of property and equipment		0.3			—			(2.4	)
Provision for bad debts		2.4			2.9			3.1
Amortization of debt issuance costs		4.0			3.5			3.2
Deferred income taxes		1.6			4.2			(3.1	)
Excess tax benefit from stock-based compensation		(0.1	)		—			—
Advisory agreement termination charge		3.3			—			—
Interest expense		(37.2	)		(44.9	)		(54.5	)
Provision for income taxes		(8.2	)		18.0			(59.3	)
Other income (expense)		—			(0.3	)		0.2
Facilities closure		—			(2.1	)		(4.0	)
Advisory agreement fees and other costs		(3.8	)		(1.2	)		(1.9	)
Changes in assets and liabilities		(77.6	)		266.0			(32.0	)
Net cash (used in) provided by operating activities	$	(30.2	)	$	248.9		$	92.0
Net cash used in investing activities	$	(31.3	)	$	(7.8	)	$	(7.7	)
Net cash provided by (used in) financing activities	$	71.2		$	(328.6	)	$	(4.9	)
Fixed charge coverage ratio numerator(6)	$	88.5		$	15.8		$	197.9
Fixed charge coverage ratio denominator(6)	$	36.3		$	37.6		$	68.1
FCCR(6)		2.44			0.42			2.91

In June 2011, the FASB issued ASU No. 2011-05 Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”) which will amend some of the guidance in ASC Topic 220

~~(1)~~48 ~~Includes depreciation for Building Products that is included in cost of sales.~~

~~(2)~~ “Comprehensive ~~Non~~Income” regarding how companies must present comprehensive income. The main provisions of ASU 2011-~~cash~~05 ~~stock~~provide that an entity that reports items of other comprehensive income has the option to present comprehensive income in either a single statement or two separate statements. A single statement would contain the components of net income and ~~stock~~total ~~grant~~net ~~expense~~income, the components of other comprehensive income and total other comprehensive income, and a total for all comprehensive income. In a two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total for all comprehensive income. The ASU is intended to increase the prominence of other comprehensive income in financial statements and to facilitate convergence of U.S. GAAP and International Financial Reporting Standards. The amendments in ASU 2011-05 are to be applied retrospectively. For public entities, the ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company expects to include the expanded disclosures about comprehensive income within its financial statements beginning in the first quarter of 2012. ASU 2011-05 impacts presentation only and will have no effect on the Company’s financial condition, results of operations, or cash flows.

In September 2011, the FASB issued ASU No. 2011-08 Intangibles—Goodwill and Other (3Topic 350): ~~This~~Testing ~~amount~~Goodwill ~~represents~~for ~~charges~~Impairment (“ASU 2011-08”) which amends the guidance in ASC Topic 350 “Intangibles—Goodwill and Other” on testing goodwill for impairment. ASU 2011-08 permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step ~~closure~~goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of ~~nine~~a ~~facilities~~reporting inunit ~~our~~is ~~Building~~less ~~Products~~than ~~Group~~its ~~and~~carrying ~~one~~amount, ~~facility~~it inwould ~~our~~not ~~Plates~~be required to perform the two-step impairment test for that reporting unit. The ASU’s objective is to simplify how an entity tests goodwill for impairment. ASU 2008-11 is effective for annual and ~~Shapes~~interim ~~Group~~goodwill ~~during~~impairment ~~2009~~tests performed in fiscal years beginning after December 15, ~~and~~2011. ~~six~~Early adoption ~~facilities~~is permitted. The Company elected to adopt ASU 2011-08 in ~~our~~the ~~Building~~fourth ~~Products~~quarter ~~Group~~of ~~during~~2011, ~~2008~~coinciding with its 2011 annual goodwill impairment test. The adoption of ASU 2011-08 did not have a material impact on our financial statements.

~~(4)~~Item ~~Primarily~~7A. ~~represents~~Quantitative ~~expenses~~and ~~related~~Qualitative toDisclosures ~~the~~About ~~advisory~~Market ~~agreement we had with Apollo.~~Risk

~~(5)~~In ~~This~~the ~~amount~~normal ~~represents~~course ~~non-cash~~of ~~impairment~~our ~~charges~~business, ~~related~~we are exposed to ~~goodwill~~market risk, primarily from changes in interest rates and ~~customer~~the ~~list~~cost ~~intangible~~of ~~assets~~metal ~~associated~~we hold ~~with~~in inventory. We continually monitor exposure to market risk and develop appropriate strategies to manage this risk. With respect to our ~~Building~~metal ~~Products~~purchases, ~~Group~~there is no recognized market to purchase derivative financial instruments to reduce the inventory exposure risks. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a discussion of market risk relative to steel prices.

~~(6)~~Our ~~These~~exposure ~~amounts~~to ~~represent~~market risk for changes in interest rates relates primarily to the ~~Fixed~~ABL ~~Charge~~facility, ~~Coverage~~which ~~Ratio~~is ~~(“FCCR”)~~subject ~~numerator~~to variable interest rates. As of December 31, 2011, outstanding borrowings under the ~~FCCR~~ABL ~~denominator,~~facility ~~and~~were $227.7 million. Based on the ~~FCCR,~~weighted ~~each~~average asborrowings ~~defined~~outstanding byon the ABL facility during the year ended December 31, 2011, a one percent increase or decrease in the weighted average facility rate would have resulted in a change to pretax interest expense of approximately $2.2 million for the period.

42In November 2004 and December 2007, ORMS, which we acquired on December 31, 2010, entered into two separate interest rate swap agreements in connection with the Jeffersonville IRBs discussed above. The notional amounts under these swaps correspond to the principal amounts of the IRBs. The first swap agreement matured in December 2011. The second swap agreement matures in December 2017, and had notional value of $4.0 million as of December 31, 2011, an amount that is reduced on an annual basis as the IRB is redeemed. Under the swaps, the notional amounts under the Jeffersonville IRBs were swapped from a floating rate based on a rate established by SIFMA to fixed rates of 4.00% and 3.75%, converting the outstanding borrowings on the Jeffersonville IRBs from floating rate obligations to fixed rate obligations. Pretax realized gains and losses from these derivatives are recognized in earnings as an addition or reduction to interest expense, consisting of cash

~~Table~~49 ~~of Contents~~

~~Index~~ settlements toand ~~Financial~~changes ~~Statements~~in the fair value of derivatives. The fair value of the ORMS interest rate swap was $0.6 million at December 31, 2011, which was classified as other long-term liabilities in the consolidated balance sheet.

~~Financing~~At ~~Activities~~December 31, 2011, $226.3 million aggregate principal amount of Metals USA Notes were outstanding with a fixed interest rate of 11 1/8%. Changes in market interest rates will not impact cash interest payable on the Metals USA Notes. At March 2, 2012, the Metals USA Notes were traded at approximately 103.88% of face value, based on quoted market prices.

~~The~~50 ~~ABL Facility~~

OnItem December 17, 2010, Flag Intermediate, Metals USA, and certain subsidiaries of Metals USA entered into an amended and restated loan and security agreement (the “ABL Credit Agreement”) with the lenders party thereto and Bank of America, N8.~~A.,~~ asFinancial ~~administrative~~Statements ~~agent~~ and ~~collateral~~ ~~agent.~~Supplementary Data

~~The~~REPORT ~~ABL~~OF ~~Credit~~INDEPENDENT ~~Agreement~~REGISTERED ~~provides~~PUBLIC ~~for~~ACCOUNTING aFIRM new $500 million (which may be increased up to $750 million at the option of Metals USA, including up to $35.0 million under a first-in, last-out (“FILO”) tranche)), 5-year, senior secured asset-based credit facility (the “ABL facility”) that amended and restated Metals USA’s then-existing $625 million senior secured asset-based credit facility that was scheduled to mature on November 30, 2011.

~~On March 9,~~To ~~2011, we activated $25.0 million of~~ the ~~FILO~~Board ~~tranche, and thereafter aggregate commitments under the ABL facility. The ABL facility permits us to borrow on a revolving basis through the earlier~~ of ~~November 30,~~Directors ~~2015~~ and 60Stockholder ~~days prior to the scheduled maturity~~ of the Metals USA Notes, unless the Metals USA Notes are refinanced to a date more than 5 years and 60 days after the closing date of the ABL facility and/or repaid prior to such date. Substantially all of our subsidiaries are borrowers under the ABL facility.

~~Borrowing~~Flag ~~Base.~~Intermediate ~~The~~Holdings ~~maximum~~Corporation availability under the ABL facility is based on eligible receivables and eligible inventory, subject to certain reserves. Our borrowing availability fluctuates daily with changes in eligible receivables and inventory, less outstanding borrowings and letters of credit. The borrowing base is equal to:

~~• 85% of the net amount of eligible accounts receivable~~Fort Lauderdale, ~~plus~~Florida

•We have audited the ~~lesser~~accompanying consolidated balance sheets of Flag Intermediate Holdings Corporation and subsidiaries (xthe “Company”) ~~80%~~as of ~~the~~December 31, ~~lesser~~2011 ofand ~~the~~2010, ~~original~~and ~~cost~~the orrelated ~~market~~consolidated ~~value~~statements of ~~eligible~~operations, ~~inventory~~stockholder’s equity and comprehensive income (yloss), ~~90%~~and cash flows for each of the ~~net~~three ~~orderly~~years ~~liquidation~~in ~~value~~the period ended December 31, 2011. These financial statements are the responsibility of ~~eligible~~the ~~inventory,~~Company’s ~~plus~~management. Our responsibility is to express an opinion on these financial statements based on our audits.

•We anconducted ~~incremental~~our ~~amount~~audits ofin accordance with the ~~lesser~~standards of the Public Company Accounting Oversight Board (xUnited States). ~~the~~Those ~~maximum~~standards ~~commitments~~require ~~under~~that we plan and perform the ~~FILO~~audit ~~tranche~~to ~~and~~obtain ~~(y)~~reasonable assurance about whether the ~~sum~~financial ofstatements ~~(i)~~are 5%free of ~~the~~material ~~net~~misstatement. ~~amount~~The Company is not required to have, nor were we engaged to perform, an audit of ~~eligible~~its ~~accounts~~internal ~~receivable~~control ~~and~~over financial ~~(ii)~~reporting. 5%Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the ~~net~~circumstances, ~~orderly~~but ~~liquidation~~not ~~value~~for the purpose of ~~eligible~~expressing ~~inventory~~an ~~during~~opinion ~~the~~on the effectiveness of ~~any~~the ~~FILO~~Company’s ~~tranche~~internal control over financial reporting. Accordingly, ~~less~~we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 ~~reserves~~our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Flag Intermediate Holdings Corporation and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

~~The~~/s/ ~~ABL~~DELOITTE & ~~facility~~TOUCHE ~~provides~~LLP sub-limits for up to $25.0 million of swingline loans and up to $100.0 million for the issuance of letters of credit. Both the face amount of any outstanding letters of credit and any swingline loans will reduce borrowing availability under the ABL facility on a dollar-for-dollar basis.

AsCertified ofPublic ~~December 31,~~Accountants 2010, we had $290.5 million of eligible collateral, $106.0 million in outstanding advances, $23.0 million in open letters of credit and $161.5 million of additional borrowing capacity. As of December 31, 2010, we had $15.2 million of cash.

AtBoca ~~February 28~~Raton, ~~2011,~~Florida we had $337.2 million of eligible collateral, $125.5 million in outstanding advances, $25.9 million in open letters of credit and $185.8 million of additional borrowing capacity. As of February 28, 2011, we had approximately $15.5 million of cash.

~~Guarantees~~March and Security. Substantially all of our subsidiaries are defined as “borrowers” under the ABL Credit Agreement. The obligations under the ABL facility are guaranteed by Flag Intermediate and certain of our domestic subsidiaries and are secured by a first-priority lien and security interest in14, ~~among~~2012 other things, accounts receivable, inventory and deposit accounts of Flag Intermediate, Metals USA and the subsidiaries of Metals USA party to the ABL Credit Agreement and a second-priority lien and security interest in, among other things, substantially all other tangible and intangible personal and real property owned by such companies, subject to certain exceptions.

4351

~~Table~~FLAG ofINTERMEDIATE ~~Contents~~HOLDINGS CORPORATION AND SUBSIDIARIES

~~Index~~CONSOLIDATED toBALANCE ~~Financial~~SHEETS ~~Statements~~

~~Interest Rate and Fees. At Metals USA’s option, interest accrues on the loans made under the ABL facility at either LIBOR plus a specified margin~~ (~~currently~~in ~~set at 2.50% (3.875% for the FILO tranche))~~millions, orexcept ~~the~~share ~~base rate (which is based off of the federal funds rate plus 0.50%, Bank of America’s prime rate or LIBOR plus 1.00%~~amounts), plus a specified margin (currently set at 1.50% (2.875% for the FILO tranche)). The marginal rates vary based on our average monthly excess availability (as defined in the ABL Credit Agreement). The applicable base rate and the effective LIBOR rate for the loans made under the ABL facility were 3.25% and 0.303%, respectively, as of December 31, 2010.

A commitment fee is payable on any unused commitment equal to 0.375% per annum to the lenders under the ABL facility if utilization under the facility exceeds 40.0% of the total commitments under the facility and a commitment fee equal to 0.5% per annum if utilization under the facility is less than or equal to 40.0% of the total commitments under the facility. Customary letter of credit fees are also payable, as necessary.


	December 31,
	2011		2010
Assets
Current assets:
Cash	$	5.9	$	15.2
Accounts receivable, net of allowance of $6.9 and $5.9, respectively		212.2		149.3
Inventories		402.5		290.8
Deferred income tax asset		7.9		12.0
Prepayments and other		9.4		9.8

Total current assets		637.9		477.1
Property and equipment, net		247.8		198.8
Intangible assets, net		26.6		7.4
Goodwill		52.8		47.3
Other assets		13.5		13.5

Total assets	$	978.6	$	744.1

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	110.0	$	66.6
Accrued liabilities		28.7		31.6
Payable to parent		10.2		9.6
Current portion of long-term debt		1.0		1.1

Total current liabilities		149.9		108.9
Long-term debt, less current portion		467.6		345.4
Deferred income tax liability		71.0		62.5
Due to parent		47.0		47.0
Other long-term liabilities		22.4		22.2

Total liabilities		757.9		586.0

Commitments and contingencies
Stockholder’s Equity:
Common stock, $0.01 par value, 100 shares authorized, issued and oustanding at December 31, 2011 and 2010, respectively		—		—
Additional paid-in capital		128.5		127.0
Retained earnings		91.9		30.7
Accumulated other comprehensive income		0.3		0.4

Total stockholder’s equity		220.7		158.1

Total liabilities and stockholder’s equity	$	978.6	$	744.1

~~Certain Conditions Precedent and Covenants. As a condition precedent to any borrowing or issuance of a letter of credit, a material adverse effect shall not have occurred or exist.~~ The ~~ABL~~accompanying ~~facility~~notes ~~contains~~are customary representations, warranties and covenants, including limitations on our ability to incur or guarantee additional debt, subject to certain exceptions, pay dividends, or make redemptions and repurchases, with respect to capital stock, repay debt, create or incur certain liens, make certain loans or investments, make acquisitions or investments, engage in mergers, acquisitions, asset sales, and engage in certain transactions with affiliates. The ABL facility requires a lock-box arrangement for collection of accounts receivable and proceeds from sales of inventory. Metals USA may make withdrawals from the lock-box unless an ~~event~~integral ofpart ~~default exists or borrowing availability is less than the greater~~ of ~~(i) $50.0~~these ~~million~~consolidated and (ii) 12.5% of the lesser of (A) the borrowing base (not to exceed $62.5 million) and (B) the aggregate commitment. We do not have to maintain a minimum FCCR as long as our borrowing availability is greater than or equal to the greater of (i) $45.0 million and (ii) 10% of the lesser of the borrowing base and the aggregate commitment (the “Minimum Availability”). We must maintain an FCCR of at least 1.0 to 1.0 if borrowing availability falls below the Minimum Availability. For purposes of determining covenant compliance, the FCCR is determined by dividing (i) the sum of Adjusted EBITDA (as defined in the ABL Credit Agreement) minus income taxes paid in cash (excluding certain specified deferred taxes) minus non-financed capital expenditures by (ii) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt, and is calculated based on such amounts for the most recent period of four consecutive fiscal quarters for which financial statements ~~are available~~. ~~FCCR and Adjusted EBITDA are each calculated on a pro forma basis. As of December 31, 2010, our FCCR was 2.44.~~

~~Certain~~52 Events of Default and Remedies. The ABL facility contains events of default with respect to: default in payment of principal when due, default in the payment of interest, fees or other amounts after a specified grace period, material breach of the representations or warranties, default in the performance of covenants, a default that causes or permits acceleration under any indebtedness with a principal amount in excess of a specified amount, certain bankruptcy events, certain ERISA violations, invalidity of certain security agreements or guarantees, material judgments, or a change of control. In the event of default, the ABL Credit Agreement may permit a majority of the lenders to: (i) restrict the amount of or refuse to make revolving loans; (ii) cause customer receipts to be applied against borrowings under the ABL facility which would cause Metals USA to suffer a rapid loss of liquidity and restrict the ability to operate on a day-to-day basis; (iii) restrict or refuse to provide letters of credit; or ultimately: (iv) terminate the commitments and the agreement; or (v) declare any or all obligations to be immediately due and payable if such default is not cured in the specified period required. Any payment default or acceleration under the ABL facility would also result in a default under the Metals USA Notes that would provide the holders of the Metals USA Notes with the right to demand immediate repayment.

~~Interest~~FLAG ~~Rate~~INTERMEDIATE ~~Swaps.~~HOLDINGS InCORPORATION ~~February~~AND ~~2008,~~SUBSIDIARIES $250.0 million notional amount of outstanding borrowings under the ABL facility were swapped from a floating LIBOR-based rate to a fixed rate. The swaps entitle us to receive quarterly payments of interest at a floating rate indexed to the three-month LIBOR and pay a fixed rate that ranges from 2.686% to 2.997%, converting a portion of the outstanding borrowings on our ABL facility from a floating rate obligation to a fixed rate obligation. Pretax realized gains and losses from derivatives which were

44CONSOLIDATED STATEMENTS OF OPERATIONS

~~Table~~(in ofmillions) ~~Contents~~

Index to Financial Statements


	Years Ended December 31,
	2011		2010		2009
Net Sales	$	1,885.9	$	1,292.1	$	1,098.7
Operating costs and expenses:
Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		1,445.7		996.7		890.1
Operating and delivery		175.7		131.9		126.7
Selling, general and administrative		108.0		81.8		85.1
Depreciation and amortization

Filing Compare · METALS USA INC