Slide 1: Schedule 14A Soliciting Materials
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy Statement ¨ Conf
Slide 2: Filed by Ryerson Inc. Pursuant to Rule 14a-12
Filed by: Ryerson Inc. Pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Ryerson Inc. Commission File No. 001-09117 On August 8, 2007, representatives of Ryerson Inc. will deliver a presentation to Institutional Shareholder Services (“ISS”). A copy of material that w
Slide 3: Investor Presentation Regarding Upcoming Events
Investor Presentation Regarding Upcoming Events • Election of Directors: August 23, 2007 • Stockholder Vote on Sale to Platinum Equity: Anticipated in Fourth Quarter of 2007 August 7, 2007
Slide 4: Safe Harbor Provision
2 Safe Harbor Provision During this presentation, we will make forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not li
Slide 5: Proxy Solicitation
3 Proxy Solicitation Important Information In connection with its proposed merger with an affiliate of Platinum Equity, LLC, Ryerson plans to file with the Securities and Exchange Commission (the “SEC”) a preliminary proxy statement and a definitive proxy statement. The definitive proxy statement wi
Slide 6: Use of non-GAAP Financial Information
4 Use of non-GAAP Financial Information The Company uses the LIFO method of inventory accounting in the U.S., which results in a better matching of costs and revenues than the FIFO method. To supplement its consolidated condensed financial statements presented on a GAAP basis, the company has provid
Slide 7: Background
5 Background • Ryerson is party to a sale agreement with Platinum Equity, anticipated to go to a stockholder vote in 4Q2007 • The current Board, after an exhaustive and public auction process, strongly supports this sale over any other option available, including remaining independent • There is an
Slide 8: Agenda
6 Agenda • Overview of Metal Service Center Industry and Ryerson – Ryerson: Performance has been strong vs. competition – Harbinger: Operating criticisms are unfounded • Annual Election of Directors – Ryerson: Well governed by its independent directors and achieves high ISS governance ratings – Harb
Slide 9: Role of the Metals Service Center Industry
7 Role of the Metals Service Center Industry Integrated metal mills ~70% Domestic Metals Service Center Industry End users steel, ~80% Market Size: $120 Billion (Purch. Mag.) OEM’S Products: Carbon, Stainless, Aluminum • Appliances Mini mills • Transportation Forms: Flat products, Plates, Bars, Tubi
Slide 10: Post 1999 – Strategic Actions Taken to Improve Ryerson's Performance
Post 1999 –Strategic Actions Taken to 8 Improve Ryerson’s Performance Focus on operational efficiencies and building a platform for growth Cost Reductions • Reduced headcount and capacity by 1/3—closed or downsized 26 facilities • Centralized and streamlined back room • Radically flattened and strea
Slide 11: 1999–2004 Results of Restructuring Improve Ryerson Performance
1999 – 2004: (Pre-Integris Acquisition) 9 Results of Restructuring Improve Ryerson Performance 1999 2004 Square footage 11.5mm 8.1mm Employees (year end) 5,054 3,574 Tons shipped per employee 663 824 Number of suppliers 150+ 52 Annualized fixed-cost savings — $85mm
Slide 12: 2005: Acquisition and Integration of Integris
2005: Acquisition and Integration of Integris 10 Further Improves Financial Performance and Competitive Position • Closed January 4, 2005 for $644MM – Paid 6.3x LTM EBITDA for highly strategic acquisition – Immediately accretive • 2004 sales of $2.0 Billion • By far the largest of a series of acquis
Slide 13: Ryerson's Strategic Programs have Demonstrated Strong Sales Growth
Ryerson’s Strategic Programs have 11 Demonstrated Strong Sales Growth… $7,000 Sales $5,909 $6,000 $5,000 $4,000 $3,281 $3,000 $2,783 $2,000 $1,000 $- 1997-1999 2006 2007- 6 mons • Poor competitive positions • Restructured • High overhead Structure • Strong product positions • Outdated IT infrastruct
Slide 14: Ryerson Became One of the Leading Public Metal Service Center Companies
Through Implementation of its Strategic 12 Programs, RyersonBecame One of the Leading Public Metal Service Center Companies… $7.0 $5.9 2006 Revenue $6.0 $5.7 $5.0 $4.0 $3.0 $3.0 $2.7 $2.0 $1.8 $1.8 $1.3 $1.2 $1.0 $0.9 $1.0 $0.9 $0.8 $0.6 $0.0
Slide 15: Steadily Improved Financial Returns Relative to Competitors
…And Has Steadily Improved Financial 13 Returns Relative to Competitors 1 After Tax Return on Invested Capital (LIFO companies adjusted to FIFO) 18.0 Pre- 15.8 26.0 Post- 15.1 Restructuring Restructuring 15.0 23.0 13.1 20.0 11.9 12.2 12.0 11.9 17.0 12.0 14.0 9.7 10.0 11.0 9.0 8.0 5.0 6.3 2.0 6.0 (1.
Slide 16: 1H07 Financial Performance Beats 75% of Public Competitors
14 …And Financial Performance 1H07 Beats 75% of Public Competitors After Tax ROIC 2006 1H 2007 22 22 20.9 20.2 20 20 18.4 18 18 17.6 16.4 16 16 14.0 14 14 12.8 12.1 12.2 12.0 11.9 12 12 11.2 11.1 10.3 10.5 9.6 10 10 8.8 8.2 8.4 8 8 5.8 5.5 6 6 4.4 4 4 2 2 0 0 SHLO ROCKMUSA SMT WOR RYI TONS ZEUS RUS
Slide 17: Improving Performance Reflected in Ryerson's Stock Price
15 Improving Performance Has Also Been Reflected in Ryerson’s Stock Price 350 Transaction w/Platinum Price = $34.50 300 250 Price = $25.09 200 150 100 50 0 Dec-03 Jul-04 Feb-05 Aug-05 Mar-06 Sep-06 Dec-06 Ryerson Peers S&P 500 $34.50 Peers include: A.M. Castle, Gibraltar, Novamerican Olympic, Relian
Slide 18: Harbinger's Critique of Operating Performance is Flawed
Harbinger’s Critique of Ryerson’s 16 Operating Performance is Flawed Return on Invested Capital with comparable inventory accounting is the best measure of financial performance. On this measure, Ryerson outperforms most of the peers selected by Harbinger Harbinger claims • Ryerson underperforms its
Slide 19: Harbinger's Criticism of Inventory Management Not Supported by MSCI Data
17 Additionally, Harbinger’s Criticism of Inventory Management is Not Supported by the MSCI’s Inventory Turn Data… 5.0 4.8 4.6 4.4 4.2 Average 4.0 3.8 3.8 3.7 3.6 3.4 3.2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD (6 months) Ryerson Metal Service Center Institute Note: 1 Calculated as cos
Slide 20: Ryerson Improving Inventory Management Faster Than MSCI Comparables
…And Ryerson has been Improving 18 its Inventory Management Faster Than MSCI Comparables Since Mid 2006 130 Days Sales in Inventory 121 122 120 110 110 105 100 100 96 90 88 88 85 86 80 70 60 50 6/30/2006 9/30/2006 12/31/2006 3/31/2007 6/30/2007 Note: Calculated using Inventory level (in tons) Ryerso
Slide 21: Agenda: Annual Election of Directors
19 Agenda: Annual Election of Directors • Overview of Metal Service Center Industry and Ryerson – Ryerson: Performance has been strong vs. competition – Harbinger: Operating criticisms are unfounded • Annual Election of Directors – Ryerson: Well governed by its independent directors and achieves hig
Slide 22: Ryerson is Well-Governed by its Independent Directors
Ryerson is Well-Governed by its 20 Independent Directors • Five of the ten independent board members were newly elected in the last four years: Longer tenure directors understand historical perspective, shorter tenure brings new insights, questions and debate • Directors are accomplished executives
Slide 23: Ryerson is Well-Governed by its Independent Directors (cont'd)
Ryerson is Well-Governed by its 21 Independent Directors (cont’d) • Lead Director works closely with management to set Board agendas • Independent directors meet in executive session at every meeting without management • Board is actively involved in guiding the direction of the company: Integris ac
Slide 24: Director Biographies: Baxter, Flaum, Cline, Henderson
22 JAMESON A. BAXTER Director since 1999 RUSSELL M. FLAUM Director since 2004 • President of Baxter Associates, Inc., since 1986. • Executive Vice President of Illinois Tool Works, Inc., • Vice President and Principal of Regency Group, Inc., overseeing the $3 billion Global Industrial Packaging 1989
Slide 25: Director Biographies: Josefowicz, Keller
23 GREGORY P. JOSEFOWICZ Director since 1999 DENNIS J. KELLER Director since 2005 • Chairman, President and Chief Executive Officer of • Non-executive Chairman of the Board of DeVry Inc., since Borders Group, Inc., 2002 to 2006; President and Chief 2006; Executive Chairman of the Board, 1987 to 2006
Slide 26: Director Biographies: Novich, Williams, Pearlman
24 NEIL S. NOVICH Director since 1996 ANRÉ D. WILLIAMS Director since 2004 • Chairman, President and Chief Executive Officer of the • President—Global Commercial Card, American Express Company since 1999. Company; Executive Vice President—U.S.Commercial • Former Head, Distribution and Logistics Prac
Slide 27: Management Incentive Compensation Aligned with Stockholders
The Board has Ensured that Management 25 Incentive Compensation is Aligned with Stockholders Short- and long-term incentive plans: – Annual incentive tied to OROOA (operating return on operating assets); no payout if minimum thresholds are not met – Corporate staff: Tied to corporate performance – T
Slide 28: Giving Harbinger Control Will Not Provide Adequate Governance
Giving Harbinger ControlWill Not 26 Provide Adequate Governance for Stockholders • Harbinger’s criticism of Ryerson’s “under performance” is rebutted when results are measured with appropriate metric (ROIC%) and accounting. Additionally, the accusation of below industry inventory management is incon
Slide 29: Harbinger Has Stated No Strategic Plan for Day-to-Day Management
Harbinger Has Stated No Strategic Plan for 27 Day-to-Day Management, Even While Asking to be Given Control of the Company… …In fact, Harbinger’s Proxy States: The HCP Nominees stand committed to pursuing and implementing strategies for enhancing stockholder value and restoring public confidence and
Slide 30: Background on Harbinger's Nominees
28 Background on Harbinger’s Nominees Nominees Background Keith Butler Interlocking director with Davis at Atlas Air* Eugene Davis Extensive previous experience on Harbinger Boards Serves on seven public company boards and numerous private company boards Interlocking director with Butler at Atlas Ai
Slide 31: Harbinger Nominees' Record: Metals USA Sale to Apollo
Harbinger Suggests That Their Nominees Will 29 Improve the Sale Transaction Process. Let’s Look at Their Record — Metals USA Directorship of Davis, Dienst and Morris: Sale to Apollo in November 2005* Nov. 04 • CEO holds meetings with several private equity funds including Apollo (pg. 14) Jan. 05 • A
Slide 32: Giving Harbinger Control Will Not Provide Adequate Governance (cont'd)
Giving Harbinger ControlWill Not 30 Provide Adequate Governance for Stockholders (cont’d) • Harbinger claims its nominees have more relevant industry experience. Three (Dienst, Davis, Morris) were directors of Metals USA (MUSA), from October 2002 through November 2005, a Ryerson competitor and one o
Slide 33: Ryerson/MUSA Relative Performance
31 Ryerson/MUSA Relative Performance 1 2 ROIC Inventory Turns 30 5.0 25 4.5 20 15 Average = 10.3 4.0 Average = 3.7 10 Average = 9.1 3.5 Average = 3.4 5 0 3.0 (5) 2002 2003 2004 2005 2006 1H2007 2.5 2002 2003 2004 2005 2006 1H2007 Ryerson Metals USA Ryerson Metals USA Source: Company reports Notes: R
Slide 34: Reject Harbinger Slate
32 Reject Harbinger Slate • Harbinger has stated no plan as to what they would to do – Operating plan – Strategic plan – Financing plan Shareholders have a right to know what Harbinger would do differently if they gain control of the Board • They have not stated their position on the Platinum merger
Slide 35: Agenda: Sale of Ryerson to Platinum Equity
Agenda: Sale of Ryerson to Platinum 33 Equity • Overview of Metal Service Center Industry and Ryerson – Ryerson: Performance has been strong vs. competition – Harbinger: Operating criticisms are unfounded • Annual Election of Directors – Ryerson: Well governed by its independent directors and achiev
Slide 36: Events Leading up to Decision to Review Strategic Alternatives
Events Leading up to Decision to 34 Review Strategic Alternatives • Ryerson’s financial performance has improved continuously over time relative to competitors; in 1H07 outperforms 8 out of 10 public competitors • Harbinger, as a major stockholder, sought a change in control of the company at the Bo
Slide 37: Key Events vs. Ryerson Stock Price
35 Key Events vs. Ryerson Stock Price 7/24/07 Ryerson announces sale 5/2/07 to Platinum Ryerson reports Equity 50.00 Q1 results 45.00 4/07 Rumors circulate regarding potential sale and possible price 40.00 2/14/07 Ryerson announces Q4 ‘06 and FY2006 results, and exploration of 35.00 Platinum Offer =
Slide 38: Board Followed a Deliberate and Exhaustive Process
The Board Followed a Deliberate and 36 Exhaustive Process to Determine the Best Outcome for Stockholders I. Review the company’s current strategic plan • Historical performance • Impact of cyclicality and future performance under various scenarios • Execution risks II. Determine whether this is a go
Slide 39: Historical Financial and Business Performance
37 Historical Financial and Business Performance 1,2 Historical Fiscal Year Ended December 31, LTM (US$mm, unless otherwise noted) 1998A 1999A 2000A 2001A 2002A 2003A 2004A 2005A 2006A 6/30/07 Tons Shipped (000s) 3,108 3,333 3,339 2,817 2,610 2,553 2,821 3,499 3,292 3,190 Revenue 2,783 2,764 2,862 2
Slide 40: Ryerson's Long-Term Strategic Plan
38 Ryerson’s Long-Term Strategic Plan Growth through acquisitions and joint ventures • Expand acquisition pipeline in specific geographies and product lines • Fully integrate acquisitions to achieve backroom savings and other operating efficiencies • Expand international JVs in Mexico, India and Chi
Slide 41: Overview of Projected Cases
39 Overview of Projected Cases Management prepared three financial Cases as follows: Case I Projections per Ryerson’s long term strategic plan, but without a recession Gain market share organically Additional Growth via acquisitions and new international investments and joint ventures Continue impro
Slide 42: Projections: Weighted Average Scenario
40 Projections: Weighted Average Scenario Weighted Average Scenario Based on probability of 33% each for Case I, Case II and Case III Fiscal Year Ending December 31, '07-11 ($mm except as noted) 2007F 2008F 2009F 2010F 2011F CAGR Tons (000s) 3,336 3,327 3,474 3,618 3,898 4.0% Revenue 6,903 6,371 6,5
Slide 43: Board Followed a Deliberate and Exhaustive Process
The Board Followed a Deliberate and 41 Exhaustive Process to Determine the Best Outcome for Stockholders I. Review the company’s current strategic plan • Historical performance • Impact of cyclicality and future performance under various scenarios • Execution risks II. Determine whether this is a go
Slide 44: Risks to Strategic Plan - External
42 Risks to Strategic Plan -External Industry Metals Pricing Stainless & Aluminum Shipments 6,400 5,800 1.4 5,200 1.2 4,600 4,000 1.0 3,400 0.8 2,800 MSCI Shipments 2,200 1,600 0.6 1,000 0.4 60000 Stainless Aluminum Hot Rolled, Cold Rolled & Carbon Plate 50000 850 750 650 550 Cagr = 2.0% 450 350 250
Slide 45: Timing is Appropriate to Consider a Sale
43 Timing is Appropriate to Consider a Sale • Industry volume has shown recent declines • Metal pricing at or near peak and softening • Many of the benefits of strategic initiatives have already been realized • Ryerson already performing better than most public competitors Right time to sell at a fa
Slide 46: Board Followed a Deliberate and Exhaustive Process
The Board Followed a Deliberate and 44 Exhaustive Process to Determine the Best Outcome for Stockholders I. Review the company’s current strategic plan • Historical performance • Impact of cyclicality and future performance under various scenarios • Execution risks II. Determine whether this is a go
Slide 47: Strategic Process Highlights
45 Strategic Process Highlights • Board met 30 times between January 10 and July 24 – Executive sessions excluding management – Separate discussions with legal (Skadden Arps) and financial advisors (UBS) • Board conducted broad and public auction process – 55 parties contacted (23 mills, 6 service c
Slide 48: Strategic Process Highlights (cont'd)
46 Strategic ProcessHighlights(cont’d) • Extensive negotiation process conducted by UBS at the Board’s direction – Negotiated with Platinum as well as other bidders – Independent Directors controlled discussions regarding management continuity – Extensive effort by UBS to receive the highest offer p
Slide 49: Strategic Process Highlights (cont'd)
Strategic Process Highlights (cont’d) 47 • Board determined that it was in best interests of stockholders to accept Platinum offer of $34.50 vs. remaining an independent company or any other alternative – UBS presented its financial analysis to the Board and delivered a fairness opinion with respect
Slide 50: This Was The Best Price Available
48 This Was The Best Price Available • Active and public auction process prior to definitive agreement • Platinum agreement is not contingent on: – Due Diligence – Ryerson management – there are no contracts with management – Financing • Go shop and no shop provisions encourage superior bids – At th
Slide 51: Board Followed a Deliberate and Exhaustive Process
The Board Followed a Deliberate and 49 Exhaustive Process to Determine the Best Outcome for Stockholders I. Review the company’s current strategic plan • Historical performance • Impact of cyclicality and future performance under various scenarios • Execution risks II. Determine whether is was a goo
Slide 52: Historical Trading Multiples Analysis - EV/LTM EBITDA
Historical Trading Multiples Analysis— 50 EV/LTM EBITDA 1 Selected Companies 9.0 Offer value = 9.0x EBITDA³ 8.0 Offer Value = 7.7x EBITDA² 7.0 6.0 Average = 5.4x 5.0 4.0 3.0 2.0 1.0 0.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Source: FactSet (not pro forma for any acquisitions) Notes: 1 Selected c
Slide 53: Implied Multiples of Selected Precedent Transactions
Implied Multiples of Selected Precedent 51 Transactions 10.0 9.0 9.0 8.0 7.7 7.4 7.0 6.2 6.2 6.3 6.0 6.0 Median 5.9 5.7 5.2 4.9 5.0 Mean 5.5 4.0 4.0 3.5 3.0 2.0 1.0 0.0 Source: Based on reported financials adjusted for one-time items 1. Annualized 1H2005 results 2. Adjusted for impact of company-own
Slide 54: Comparison of Offer to Potential Future Value of Stock
Comparison of Offer to Potential 52 Future Value of Stock Equal Weighted Case Comparison of PV of Estimated Future Share Price to $34.50 Offer PV per Share @ 5x EBITDA PV per Share @ 5.5x EBITDA PV per share price calculated by PV per Share @ 6x EBITDA future EBITDA x multiple, less debt, $50.00 dis
Slide 55: Selected Publicly Traded Companies in the North American Service Center Industry
53 Selected Publicly Traded Companies in the North American Service Center Industry 1, 2 EV/EBITDA EV/EBIT LTM CY CY 5-Year LTM CY CY Average 2007E 2008E EV/LTM 2007E 2008E 3 EBITDA Selected Companies 6 Mean…………………….……. 7.5 7.0 6.5 5.7 8.4 8.4 7.5 Median………………….…….. 7.7 6.8 6.2 5.6 8.4 8.2 7.1 Range
Slide 56: Discounted Cash Flow Analysis
54 Discounted Cash Flow Analysis • Based on publicly available balance sheet as of March 31, 2007 • Included cash flows during Q2-Q4 2007 and 2008-2011 based on Weighted Average Scenario • Assumes discount rates in the range of 11.5% - 14.5% for enterprise value • Assumes terminal value multiple in
Slide 57: Ryerson's Long-Term Strategic Plan
55 Ryerson’s Long-Term Strategic Plan Growth through acquisitions and joint ventures • Expand acquisition pipeline in specific geographies and product lines • Fully integrate acquisitions to achieve backroom savings and other operating efficiencies • Expand international JVs in Mexico, India and Chi
Slide 58: Summary
56 Summary • Ryerson Performance – Ryerson: Performance has been strong vs. competition – Harbinger: Operating criticisms are unfounded • Ryerson Governance – Ryerson: Well governed by its independent directors and achieves high ISS governance ratings – Harbinger: Has not put forth their own strateg
Slide 59: Ryerson is Asking for Your Support
57 Ryersonis Askingfor Your Support • VOTE FOR the Board that proposes to sell to Platinum Equity – Right time to sell – Best deal available – Good and fair deal for stockholders • VOTE FOR the Ryerson Board – Board has governed Ryerson well – Harbinger has not demonstrated any valid reason they sho
Slide 60: End
© RYERSON. THE STRENGTH IN METAL End Company Confidential
Slide 61: Addendums
59 Addendums @rverson
Slide 62: Reconciliation of Certain Non-GAAP Items
60 Reconciliation of Certain Non-GAAP Items LTM ($mm) 1997 (1) 1998 (1) 1999 2000 2001 2002 2003 2004 2005 2006 1H 2007 6/30/2007 Operating Profit 133.1 96.0 97.0 (4.1) (76.0) (7.9) 3.4 99.7 232.9 183.9 139.3 202.7 Adjustments + Gain on Sale of Asset (8.9) (5.9) (1.8) - (1.3) (10.9) - (5.6) (6.6) (2
Slide 63: Reconciliation of Return on Invested Capital
61 Reconciliation of Return on Invested Capital ($mm, unless otherwise noted) 1997 (1) 1998 (1) 1999 2000 2001 2002 2003 2004 2005 2006 1H2007 FIFO EBIT (2) 102.6 48.7 90.8 13.5 (84.9) 17.7 31.7 371.2 147.3 356.1 197.5 Tax-Effected FIFO EBIT (3) 66.7 31.7 59.0 8.8 (55.2) 11.5 20.6 241.3 95.7 231.5 1
Slide 64: Reconciliation of Gross Margin and Inventory Turns
62 Reconciliation of Gross Margin and Inventory Turns ($mm, unless otherwise noted) 1997 (1) 1998 (1) 1999 2000 2001 2002 2003 2004 2005 2006 1H2007 Revenue 2,804.0 2,782.7 2,763.5 2,862.4 2,243.5 2,096.5 2,189.4 3,302.0 5,780.5 5,908.9 3,281.0 Cost of Goods Sold (2) 2,178.0 2,156.9 2,131.6 2,292.7