View Filing Data

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	May 04, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	MRC GLOBAL INC.
Entity Central Index Key	0001439095
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		101,487,000

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash	$ 58,833	$ 46,127
Accounts receivable, net	871,227	791,280
Inventories	1,022,851	899,064
Other current assets	17,598	11,437
Total current assets	1,970,509	1,747,908
Other assets	44,767	39,212
Property, plant and equipment, net	114,173	107,430
Intangible assets:
Goodwill, net	568,811	561,270
Other intangible assets, net	780,198	771,867
Total intangible assets	1,349,009	1,333,137
Total assets	3,478,458	3,227,687
Current liabilities:
Trade accounts payable	555,556	479,584
Accrued expenses and other current liabilities	142,500	108,973
Income taxes payable	26,133	11,950
Deferred revenue	2,440	4,450
Deferred income taxes	69,155	68,210
Total current liabilities	795,784	673,167
Long-term obligations:
Long-term debt, net	1,611,960	1,526,740
Deferred income taxes	287,585	288,985
Other liabilities	18,108	17,933
Total noncurrent liabilities	1,917,653	1,833,658
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value per share; 500,000 shares authorized, issued and outstanding March 2012 - 84,442, issued and outstanding December 2011 - 84,427	844	844
Preferred stock, $0.01 par value per share; 100,000 shares authorized, no shares issued and outstanding
Additional paid-in capital	1,284,790	1,282,949
Retained (deficit)	(499,257)	(536,791)
Accumulated other comprehensive loss	(21,356)	(26,140)
Total stockholders' equity	765,021	720,862
Total Liabilities and Stockholders' Equity	$ 3,478,458	$ 3,227,687

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	84,442	84,427
Common stock, shares outstanding	84,442	84,427
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued
Preferred stock, shares outstanding

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Condensed Consolidated Statements of Operations [Abstract]
Sales	$ 1,382,632	$ 991,813
Cost of sales	1,146,071	844,847
Gross profit	236,561	146,966
Selling, general and administrative expenses	146,384	117,357
Operating income	90,177	29,609
Other income (expense):
Interest expense	(33,717)	(33,500)
Write off of debt issuance costs	(1,685)
Change in fair value of derivative instruments	2,125	1,868
Other, net	1,747	205
Total other income (expense)	(31,530)	(31,427)
Income (loss) before income taxes	58,647	(1,818)
Income tax expense (benefit)	21,113	(690)
Net income (loss)	$ 37,534	$ (1,128)
Basic earnings (loss) per common share	$ 0.44	$ (0.01)
Diluted earnings (loss) per common share	$ 0.44	$ (0.01)
Weighted-average common shares, basic	84,437	84,413
Weighted-average common shares, diluted	84,756	84,413

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income (loss)	$ 37,534	$ (1,128)
Other comprehensive income	4,784	10,467
Comprehensive income	$ 42,318	$ 9,339

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

+ References

+ Details

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating activities
Net income (loss)	$ 37,534	$ (1,128)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization	4,131	4,003
Amortization of intangibles	12,317	12,443
Equity-based compensation expense	1,841	1,483
Deferred income tax benefit	(2,110)	(1,127)
Amortization of debt issuance costs	2,326	2,990
Write off of debt issuance costs	1,685
Increase in LIFO reserve	6,900	10,065
Change in fair value of derivative instruments	(2,125)	(1,868)
Provision for uncollectible accounts	727	(278)
Non-operating losses and other items not using cash	700	2,264
Changes in operating assets and liabilities:
Accounts receivable	(44,150)	8,257
Inventories	(68,807)	(24,706)
Income taxes payable	14,044	2,983
Other current assets	(5,834)	539
Accounts payable	43,816	(10,685)
Deferred revenue	(2,026)	(4,137)
Accrued expenses and other current liabilities	17,346	4,714
Net cash provided by operations	18,315	5,812
Investing activities
Purchases of property, plant and equipment	(4,458)	(1,964)
Proceeds from the disposition of property, plant and equipment	1,195	140
Acquisition of the assets and operations of OneSteel Piping Systems	(72,816)
Proceeds from the sale of assets held for sale		10,933
Other investment and notes receivable transactions	(3,813)	2,830
Net cash (used in) provided by investing activities	(79,892)	11,939
Financing activities
Net proceeds (payments) on/from revolving credit facilities	114,146	(30,830)
Payments on long term obligations	(31,456)
Debt issuance costs paid	(7,099)
Net cash provided by (used in) financing activities	75,591	(30,830)
Increase (decrease) in cash	14,014	(13,079)
Effect of foreign exchange rate on cash	(1,308)	(1,043)
Cash - beginning of period	46,127	56,202
Cash - end of period	58,833	42,080
Supplemental disclosures of cash flow information:
Cash paid for interest	7,444	5,470
Cash paid (received) for income taxes	$ 9,982	$ (2,753)

Background and Basis of Presentation

3 Months Ended

Mar. 31, 2012

Background and Basis of Presentation [Abstract]

BACKGROUND AND BASIS OF PRESENTATION

NOTE 1 – BACKGROUND AND BASIS OF PRESENTATION

Business Operations: MRC Global Inc. is a holding company headquartered in Houston, Texas. We are a majority owned subsidiary of PVF Holdings LLC. Our wholly owned subsidiaries, McJunkin Red Man Corporation and its subsidiaries, are global distributors of pipe, valves, fittings (“PVF”) and related products and services across each of the upstream (exploration, production and extraction of underground oil and gas), midstream (gathering and transmission of oil and gas, gas utilities, and the storage and distribution of oil and gas) and downstream (crude oil refining, petrochemical processing and general industrials) markets. We have branches in principal industrial, hydrocarbon producing and refining areas throughout the United States, Canada, Europe, Asia and Australasia. Our products are obtained from a broad range of suppliers.

Basis of Presentation: The consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the “Company” or by such terms as “we,” “our” or “us”). All material intercompany balances and transactions have been eliminated in consolidation. Investments in our unconsolidated joint ventures, over which we exercise significant influence, but do not control, are accounted for by the equity method. Our unconsolidated joint ventures, along with our percentage of ownership of each, are: (a) TFCX Finland Oy (50%) and (b) Transmark DRW GmbH (50%). As of March 31, 2012 and December 31, 2011, our total investment in these entities was insignificant. In April 2012, we sold our interest in Transmark DRW GmbH.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

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+ Details

Transactions

3 Months Ended

Mar. 31, 2012

Transactions [Abstract]

TRANSACTIONS

NOTE 2 – TRANSACTIONS

Acquisitions

In March 2012, we acquired the operations and assets of OneSteel Piping Systems, now known as MRC Piping Systems Australia (“MRC PSA”). MRC PSA is a leading PVF distributor supplying the oil and gas, mining and mineral processing industries in Australia. The preliminary purchase price for this acquisition was $72.8 million subject to a working capital adjustment. Although not finalized, the working capital adjustment is currently estimated to be approximately $16.1 million. Because we recently consummated the acquisition, we have not yet completed the determination of the fair values of certain tangible and intangible assets acquired or liabilities assumed. The impact of this acquisition is not material to our financial statements.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

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Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
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Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1486-128463

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1383-128463

+ Details

Inventories

3 Months Ended

Mar. 31, 2012

Inventories [Abstract]

INVENTORIES

NOTE 3 – INVENTORIES

The composition of our inventory is as follows (in thousands):


	March 31, 2012			December 31, 2011
Finished goods inventory at average cost:
Energy carbon steel tubular products	$	507,286		$	488,938
Valves, fittings, flanges and all other products		714,614			601,706

		1,221,900			1,090,644
Less: Excess of average cost over LIFO cost (LIFO reserve)		(182,022	)		(175,122	)
Less: Other inventory reserves		(17,027	)		(16,458	)

	$	1,022,851		$	899,064

Long-Term Debt

3 Months Ended

Mar. 31, 2012

Long-Term Debt [Abstract]

LONG-TERM DEBT

NOTE 4 – LONG-TERM DEBT

The significant components of our long-term debt are as follows (in thousands):


	March 31, 2012		December 31, 2011
9.50% senior secured notes due 2016, net of discount of $17,432 and $18,358	$	1,032,568	$	1,031,642
Global ABL Facility		570,473		—
ABL Credit Facility		—		456,411
MRC Transmark term loan facility		—		30,824
MRC Transmark factoring facility		8,544		7,189
Other		375		674

		1,611,960		1,526,740
Less current portion		—		—

	$	1,611,960	$	1,526,740

In March 2012, we entered into a new multi-currency global asset-based revolving credit facility (the “Global ABL Facility”) which replaced our then existing asset-based lending credit facility (“ABL Credit Facility”), our MRC Transmark term loan and revolving credit facility and our MRC Transmark overdraft facility. The five-year Global ABL Facility is comprised of $1.25 billion of total revolving credit facilities, including $1.025 billion in the United States, $145 million in Canada, $12 million in the United Kingdom, $52 million in Australia, $9 million in the Netherlands and $7 million in Belgium. The facility contains an accordion feature that allows us to increase the principal amount of the facility by up to $300 million.

Each of our wholly owned material U.S. subsidiaries guarantees the obligations of our borrower subsidiaries under the Global ABL Facility. Obligations under the U.S. tranche are primarily secured, subject to certain exceptions, by a first-priority security interest in the accounts receivable, inventory and related assets of our wholly owned, material U.S. subsidiaries. The obligations of any of our foreign borrower subsidiaries are primarily secured, subject to certain exceptions, by:

•

a first-priority security interest in the accounts receivable, inventory and related assets of the foreign subsidiary and the wholly owned material U.S. subsidiaries and

•

a first-priority pledge by the foreign borrower subsidiary of the equity interests of its direct wholly owned restricted subsidiaries incorporated in the relevant borrower jurisdictions and intercompany debt instruments held by the foreign borrower subsidiary.

No property of our foreign subsidiaries secures the U.S. tranche. The security interest in accounts receivable, inventory and related assets of the U.S. borrower subsidiaries ranks prior to the security interest in this collateral which secures our 9.5% senior secured notes.

Each of our foreign borrower subsidiaries has a separate stand alone borrowing base that limits the foreign subsidiary’s ability to borrow under its respective tranche, provided that the foreign subsidiaries may utilize excess availability under the U.S. tranche to borrow amounts in excess of their respective borrowing bases (but not to exceed the applicable commitment amount for the foreign subsidiary’s jurisdiction), which utilization will reduce availability under the U.S. tranche dollar for dollar.

Our ability to borrow in each jurisdiction, other than Belgium, under the facility is limited by a borrowing base in that jurisdiction equal to 85% of eligible receivables, plus the lesser of 70% of eligible inventory and 85% of appraised net orderly liquidation value of the inventory. In Belgium, our borrowing is limited by a borrowing base in Belgium equal to:

•

for Belgian inventory subject to a pledge under Belgian law, 50% of the lesser of 70% of the net book value and 85% of the appraised net orderly liquidation value of eligible inventory; and

•

for Belgian inventory subject to a possessory pledge under Belgian law, 70% of the net book value and 85% of the appraised net orderly liquidation value of eligible inventory.

The facility initially bears interest at LIBOR plus a margin of 1.75%; from and after Sepember 1, 2012 the margin will vary between 1.50% and 2.00% based on our fixed charge coverge ratio.

Interest Rate Swaps and Forward Foreign Exchange Contracts: We use derivative financial instruments to help manage our exposure to interest rate risk and fluctuations in foreign currencies.

Effective March 31, 2012, our previously outstanding $500 million interest rate swap contract to pay interest at a fixed rate of approximately 1.77% and receive 1-month LIBOR variable interest rate payments monthly, expired. We have several additional interest rate swap derivatives, with notional amounts approximating $19 million in the aggregate. All of our derivative instruments are freestanding and, accordingly, changes in their fair market value are recorded in earnings.

The table below provides data about the fair value of the derivative instruments that are recorded in our consolidated balance sheets (in thousands):


	March 31, 2012				December 31, 2011
	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts⁽¹⁾	$	63	$	—	$	—	$	144
Interest rate contracts⁽¹⁾		—		92		—		2,010

(1)

Included in “Accrued expenses and other current liabilities” in our consolidated balance sheets. The total notional amount of our interest rate swaps was approximately $19 million and $519 million at March 31, 2012 and December 31, 2011. The total notional amount of our forward foreign exchange contracts was approximately $74 million and $39 million at March 31, 2012 and December 31, 2011.

The table below provides data about the amount of net gains recognized in our consolidated statements of operations related to our derivative instruments (in thousands):


	Three Months Ended
	March 31, 2012		March 31, 2011
Derivatives not designated as hedging instruments:
Interest rate contracts	$	1,922	$	1,590
Foreign exchange forward contracts		203		278

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Stockholders' Equity

3 Months Ended

Mar. 31, 2012

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

Preferred Stock

Our Board of Directors has the authority to issue shares and set the terms of the shares of preferred stock. As of March 31, 2012 and December 31, 2011, we had authorized 150,000,000 shares of preferred stock, however, there were no shares of preferred stock issued or outstanding.

In April 2012, our Articles of Incorporation were amended to reduce the number of shares of authorized preferred stock from 150,000,000 to 100,000,000.

Common Stock

In February 2012, our Board of Directors and our shareholder approved a two-for-one reverse stock split which reduced the number of shares of common stock outstanding by one half. All share and per share amounts have been adjusted retroactively to reflect this change.

In April 2012, our Articles of Incorporation were amended to increase the number of shares of common stock authorized from 400,000,000 to 500,000,000.

Stock Options and Restricted Stock

Our 2007 Stock Option Plan permitted the grant of stock options to its employees, directors and consultants for up to 3.8 million shares of new common stock. The options were not to be granted with an exercise price less than the fair market value of the Company’s common stock on the date of the grant, nor for a term exceeding ten years. Vesting generally occured over a five year period on the anniversaries of the date specified in the employees’ respective option agreements, subject to accelerated vesting under certain circumstances set forth in the option agreements. We expense the fair value of the stock option grants on a straight-line basis over the vesting period. A Black-Scholes option-pricing model is used to estimate the fair value of the stock options.

Under the terms of our 2007 Restricted Stock Plan, up to 500,000 shares of restricted stock could have been granted at the direction of the Board of Directors and vesting generally occured in one-fourth increments on the second, third, fourth and fifth anniversaries of the date specified in the employees’ respective restricted stock agreements, subject to accelerated vesting under certain circumstances set forth in the restricted stock agreements. Fair value is based on the fair value of our stock on the date of issuance. We expense the fair value of the restricted stock grants on a straight-line basis over the vesting period.

No stock options were granted or exercised during the first quarter of 2012. In January 2012, 14,451 shares of restricted stock vested. In February 2012, 15,561 shares of restricted stock were granted to two members of the board of directors.

In April 2012, we replaced the 2007 Stock Option Plan and the 2007 Restricted Stock Plan with the 2011 Omnibus Incentive Plan. All of the shares under the prior plans that had not been previously awarded or subject to prior grants were released. The 2011 Omnibus Incentive Plan has 3,250,000 shares reserved for issuance pursuant to the plan. The plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash-based awards. No awards under this plan were granted in the first quarter of 2012.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss in the accompanying consolidated balance sheets consists of the following (in thousands):


	March 31, 2012			December 31, 2011
Currency translation adjustments	$	(20,838	)	$	(25,622	)
Pension related adjustments		(518	)		(518	)

Accumulated other comprehensive loss	$	(21,356	)	$	(26,140	)

Earnings per Share

Earnings per share are calculated in the table below (in thousands, except per share amounts).


	Three Months Ended
	March 31, 2012		March 31, 2011
Net income (loss)	$	37,534	$	(1,128	)

Average basic shares outstanding		84,437		84,413
Effect of dilutive securities		319		—

Average diluted shares outstanding		84,756		84,413

Net income (loss) per share:
Basic	$	0.44	$	(0.01	)
Diluted	$	0.44	$	(0.01	)

Stock options and shares of restricted stock are disregarded in this calculation if they are determined to be anti-dilutive. For the three months ended March 31, 2012 and 2011, our anti-dilutive stock options approximated 2.3 million and 2.0 million. Our anti-dilutive restricted stock for the three months ended March 31, 2011 approximated 0.1 million.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph d

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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Reference 16: http://www.xbrl.org/2003/role/presentationRef
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Reference 20: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
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Reference 23: http://www.xbrl.org/2003/role/presentationRef
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-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

+ Details

Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 6 – SEGMENT INFORMATION

We operate as two business segments, North America and International. Our North American segment consists of our operations in the United States and Canada. Our International segment consists of our operations outside of North America, principally Europe, Asia and Australasia. These segments represent our business of selling pipe, valves and fittings to the energy and industrial sectors, across each of the upstream (exploration, production and extraction of underground oil and gas), midstream (gathering and transmission of oil and gas, gas utilities, and the storage and distribution of oil and gas) and downstream (crude oil refining, petrochemical processing and general industrials) markets.

The following table presents financial information for each segment (in millions):


	Three Months Ended
	March 31, 2012			March 31, 2011
Sales
North America	$	1,260.9		$	932.4
International		121.7			59.4

Consolidated revenues	$	1,382.6		$	991.8

Depreciation and amortization
North America	$	3.1		$	3.5
International		1.0			0.5

Total depreciation and amortization expense	$	4.1		$	4.0

Amortization of intangibles
North America	$	10.6		$	11.0
International		1.7			1.4

Total amortization of intangibles expense	$	12.3		$	12.4

Operating income
North America	$	84.8		$	27.9
International		5.4			1.7

Total operating income		90.2			29.6
Interest expense		(33.7	)		(33.5	)
Other income		2.1			2.1

Income (loss) before income taxes	$	58.6		$	(1.8	)


	March 31, 2012			December 31, 2011
Goodwill
North America	$	512.0		$	512.1
International		56.8			49.2

Total goodwill	$	568.8		$	561.3

Total assets
North America	$	3,066.5		$	2,923.3
International		412.0			304.4

Total assets	$	3,478.5		$	3,227.7

Our net sales by product line are as follows (in thousands):


	Three months ended
Type	March 31, 2012		March 31, 2011
Energy carbon steel tubular products:
Line pipe	$	290,353	$	174,493
Oil country tubular goods		221,221		157,833

	$	511,574	$	332,326

Valves, fittings, flanges and other products:
Valves and specialty products	$	331,832	$	262,114
Carbon steel fittings and flanges and stainless steel and alloy pipe and fittings		276,526		189,343
Other		262,700		208,030

	$	871,058	$	659,487

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Name Accounting Standards Codification
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+ Details

Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 7 – FAIR VALUE MEASUREMENTS

We used the following methods and significant assumptions to estimate fair value for assets and liabilities recorded at fair value.

Interest Rate Contracts: Interest rate contracts are reported at fair value utilizing Level 2 inputs. We obtain dealer quotations to value our interest rate swap agreements. These quotations rely on observable market inputs such as yield curves and other market-based factors.

Foreign Exchange Forward Contracts: Foreign exchange forward contracts are reported at fair value utilizing Level 2 inputs, as the fair value is based on broker quotes for the same or similar derivative instruments.

The following table presents assets and liabilities measured at fair value on a recurring basis, and the basis for that measurement (in thousands):


			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2012
Assets:
Foreign exchange forward contracts	$	63	$	—	$	63	$	—
Liabilities:
Interest rate swap agreements		92		—		92		—
December 31, 2011
Assets:	$	—	$	—	$	—	$	—
Liabilities:
Foreign exchange forward contracts		144		—		144		—
Interest rate swap agreements		2,010		—		2,010		—

The following table presents the carrying value and estimated fair value of our financial instruments that are carried at adjusted historical cost (in thousands):

March 31, 2012

December 31, 2011

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

Financial assets

Cash

58,833

46,127

Accounts receivable, net

871,227

791,280

Financial liabilities

Trade accounts payable

555,556

479,584

Accrued expenses and other liabilities

142,500

108,973

Long-term debt

1,611,960

1,706,460

1,526,740

1,542,490

The carrying values of our financial instruments, including cash and cash equivalents, accounts receivable, trade accounts payable and accrued liabilities, approximate fair value because of the short maturity of these financial instruments.

We estimated the fair value of the senior secured notes using quoted market prices as of March 31, 2012 and December 31, 2011.

The carrying value of our Global ABL Facility and remaining portions of our long-term debt approximate their fair values.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
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-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Litigation

Asbestos Claims. We are involved in various legal proceedings and claims, both as a plaintiff and a defendant, which arise in the ordinary course of business. These legal proceedings include claims that individuals brought against a large number of defendant entities, including us, seeking damages for injuries that certain products containing asbestos allegedly caused. As of March 31, 2012, we are a defendant in lawsuits involving approximately 1,011 of these claims. Each claim involves allegations of exposure to asbestos-containing materials by an individual or his or her family members. The complaints typically name many defendants. In a majority of these lawsuits, little or no information is known regarding the nature of the plaintiff’s alleged injuries or their connection with products that we distributed. Through March 31, 2012, lawsuits involving 11,874 claims have been brought against us. No asbestos lawsuit has resulted in a judgment against us to date, with the majority being settled, dismissed or otherwise resolved.

There has been an increase in the number of claims filed since the fiscal year ending December 31, 2007. We believe that this increase is primarily due to an increase in the marketing efforts by personal injury law firms in West Virginia and Pennsylvania. Although we do not know whether this is a trend that will continue in the near term, in the long term, we anticipate that asbestos-related litigation against us will decrease as the incidence of asbestos-related disease in the general U.S. population decreases.

We annually conduct analyses of our asbestos-related litigation to estimate the adequacy of the reserve for pending and probable asbestos-related claims. These analyses consist of separately estimating our reserve with respect to pending claims (both those scheduled for trial and those for which a trial date had not been scheduled), mass filings (including lawsuits brought in West Virginia each involving many, in some cases over a hundred, plaintiffs, which include little information regarding the nature of each plaintiff’s claim and historically have rarely resulted in any payments to plaintiff) and probable future claims. A key element of the analysis is categorizing our claims by the type of disease the plaintiffs allege and developing “benchmark” estimated settlement values for each claim category based on our historical settlement experience. These estimated settlement values are applied to each of our pending individual claims. With respect to pending claims where the disease type is unknown, the outcome is projected based on historic experience. The reserve with respect to mass filings is estimated by determining the number of individual plaintiffs included in the mass filings likely to have claims resulting in settlements based on our historical experience with mass filings. Finally, we estimate the value of probable claims that plaintiffs may assert against us over the next 15 years based on public health estimates of future incidences of certain asbestos-related diseases in the general U.S. population. Estimated settlement values are applied to those projected claims. Our annual assessment, dated September 30, 2011, projected that our payments to asbestos claimants over the next 15 years are estimated to range from $5 million to $11 million. Given these estimates and existing insurance coverage that historically has been available to cover substantial portions of our past payments to claimants and defense costs, we believe that our current accruals and associated estimates relating to pending and probable asbestos-related litigation likely to be asserted over the next 15 years are currently adequate. Our belief that our accruals and associated estimates are currently adequate, however, relies on a number of significant assumptions, including:

•

That our future settlement payments, disease mix and dismissal rates will be materially consistent with historic experience;

•

That future incidences of asbestos-related diseases in the U.S. will be materially consistent with current public health estimates;

•

That the rates at which future asbestos-related mesothelioma incidences result in compensable claims filings against us will be materially consistent with its historic experience;

•

That insurance recoveries for settlement payments and defense costs will be materially consistent with historic experience;

•

That legal standards (and the interpretation of these standards) applicable to asbestos litigation will not change in material respects;

•

That there are no materially negative developments in the claims pending against us; and

•

That key co-defendants in current and future claims remain solvent.

If any of these assumptions prove to be materially different in light of future developments, liabilities related to asbestos-related litigation may be materially different than amounts accrued or estimated. Further, while we anticipate that additional claims will be filed in the future, we are unable to predict with any certainty the number, timing and magnitude of such future claims.

Other Legal Claims and Proceedings. From time to time, we have been subject to various claims and involved in legal proceedings incidental to the nature of our businesses. We maintain insurance coverage to reduce financial risk associated with certain of these claims and proceedings. It is not possible to predict the outcome of these claims and proceedings. However, in our opinion, there are no material pending legal proceedings that are likely to have a material effect on our business, financial condition or results of operations.

Product Claims. From time to time, in the ordinary course of our business, our customers may claim that the products that we distribute are either defective or require repair or replacement under warranties that either we or the manufacturer may provide to the customer. These proceedings are, in the opinion of management, ordinary and routine matters incidental to our normal business. Our purchase orders with our suppliers generally require the manufacturer to indemnify us against any product liability claims, leaving the manufacturer ultimately responsible for these claims. In many cases, state, provincial or foreign law provides protection to distributors for these sorts of claims, shifting the responsibility to the manufacturer. In some cases, we could be required to repair or replace the products for the benefit of our customer and seek our recovery from the manufacturer for our expense. In the opinion of management, the ultimate disposition of these claims and proceedings is not expected to have a material adverse effect on our business, financial condition or results of operations.

NiSource Claim. In the summer of 2010, our customer NiSource, Inc. notified us that certain polyethylene pipe that PolyPipe, Inc. manufactured may be defective. NiSource requested that the Company and PolyPipe repair and replace the allegedly defective pipe and reimburse NiSource for the costs of locating and removing the pipe. When installing the pipe, NiSource did not track where the pipe was installed, so to locate the allegedly defective pipe, NiSource has embarked on a program of “potholing” or digging holes by possible sites where the pipe was used to locate the serial numbers of the pipe that may be defective. This has caused NiSource to test locations far in excess of the locations where the allegedly defective pipe may have been used.

On April 28, 2011, PolyPipe filed a petition in the District Court in Cooke County, Texas against the Company and NiSource seeking, among other things, a declaratory judgment that PolyPipe was not responsible for the costs relating to the NiSource’s alleged failure to track and record the installation locations of the pipe and NiSource’s expenditures to implement a potential remediation plan including finding the pipe and removing the pipe. On June 1, 2011, the Court entered an order of non-suit, dismissing PolyPipe’s claims without prejudice to their re-filing the same claims.

NiSource is in the process of locating where the allegedly defective pipe was used while the parties discuss a possible resolution of their respective claims. NiSource has asserted that the Company and PolyPipe are liable for the costs of finding the allegedly defective pipe. Under its contract with NiSource, the Company is not liable for consequential damages. The Company believes that this applies to damages such as finding the allegedly defective pipe. To the extent that pipe is actually defective, the Company may be liable under its warranty to replace the defective pipe. The Company believes that PolyPipe, as the manufacturer of the pipe, is ultimately liable for any manufacturing defects. The Company believes that the ultimate outcome of NiSource’s claim will not be material.

Former Shareholder Litigation. On July 30, 2010, an action was brought against the Company in Delaware Chancery Court by a former shareholder of our predecessor, McJunkin Corporation, on his own behalf and as trustee for a trust, alleging the Company has not fully complied with a contractual obligation to divest of certain non-core assets contained in the December 2006 merger agreement, and seeking damages and equitable relief. The parties subsequently reached a settlement agreement whereby the Company agreed to distribute $1.9 million to the former shareholders (excluding the plaintiffs in the litigation) and both parties have released each other from their respective claims. The Company signed the final settlement documents in February 2012, and the court dismissed the case in March 2012.

Customer Contracts

We have contracts and agreements with many of our customers that dictate certain terms of our sales arrangements (pricing, deliverables, etc.). While we make every effort to abide by the terms of these contracts, certain provisions are complex and often subject to varying interpretations. Under the terms of these contracts, our customers have the right to audit our adherence to the contract terms. Historically, any settlements that have resulted from these customer audits have been immaterial to our consolidated financial statements.

Purchase Commitments

We have purchase obligations consisting primarily of inventory purchases made in the normal course of business to meet operating needs. While our vendors often allow us to cancel these purchase orders without penalty, in certain cases, cancellations may subject us to cancellation fees or penalties depending on the terms of the contract.

Warranty Claims

We are involved from time to time in various warranty claims, which arise in the ordinary course of business. Historically, any settlements that have resulted from these warranty claims have been immaterial to our consolidated financial statements.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

Guarantor and Non-Guarantor Financial Statements

3 Months Ended

Mar. 31, 2012

Guarantor and Non-Guarantor Financial Statements [Abstract]

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

NOTE 9 – GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

In December 2009 and February 2010, McJunkin Red Man Corporation (presented as Issuer in the following tables), a 100%-owned subsidiary of MRC Global Inc. (presented as Parent in the following tables), issued senior secured notes due December 15, 2016. The senior secured notes are fully and unconditionally, and jointly and severally, guaranteed on a senior basis by MRC Global Inc. and substantially all existing and future 100%-owned domestic restricted subsidiaries of McJunkin Red Man Corporation (collectively, the “Guarantors”). All other subsidiaries of McJunkin Red Man Corporation, whether direct or indirect, do not guarantee the senior secured notes (the “Non-Guarantors”).

The following condensed consolidating financial statements present the results of operations, comprehensive income, financial position and cash flows of (1) the Parent, (2) the Issuer, (3) the Guarantors, (4) the Non-Guarantors, and (5) eliminations to arrive at the information for MRC Global Inc. on a consolidated basis. Separate financial statements and other disclosures concerning the Guarantors are not presented because management does not believe such information is material to investors. Therefore, each of the Guarantors is combined in the presentation below.

Condensed Consolidated Balance Sheets

(in millions)

March 31, 2012

Parent

Issuer

Guarantors

Non-
Guarantors

Elim

Total

Cash

0.1

5.0

0.5

53.2

—

58.8

Accounts receivable, net

0.7

601.3

—

269.2

—

871.2

Inventory, net

—

725.7

—

297.2

—

1,022.9

Income taxes receivable

0.1

4.4

—

(4.5

)

—

Other current assets

—

2.3

5.6

9.7

—

17.6

Total current assets

0.9

1,338.7

6.1

629.3

(4.5

)

1,970.5

Investment in subsidiaries

762.3

734.3

—

(1,496.6

)

—

Intercompany receivable

7.3

315.6

591.6

—

(914.5

)

—

Other assets

1.5

36.9

0.1

6.3

—

44.8

Property, plant and equipment, net

—

44.5

19.6

50.1

—

114.2

Goodwill

—

512.0

—

56.8

—

568.8

Other intangible assets, net

—

697.2

—

83.0

—

780.2

772.0

3,679.2

617.4

825.5

(2,415.6

)

3,478.5

Trade accounts payable

0.1

376.2

0.6

178.7

—

555.6

Accrued expenses

1.2

81.5

8.3

51.5

—

142.5

Income taxes payable

—

28.1

2.5

(4.5

)

26.1

Deferred revenue

—

1.7

—

0.7

—

2.4

Deferred income taxes

—

72.0

(0.6

)

(2.2

)

—

69.2

Total current liabilities

1.3

531.4

36.4

231.2

(4.5

)

795.8

Long-term debt, net

—

1,551.1

—

60.9

—

1,612.0

Intercompany payable

—

555.9

—

358.6

(914.5

)

—

Deferred income taxes

5.7

267.7

0.5

13.7

—

287.6

Other liabilities

—

10.8

0.2

7.1

—

18.1

Stockholders’ equity

765.0

762.3

580.3

154.0

(1,496.6

)

765.0

772.0

3,679.2

617.4

825.5

(2,415.6

)

3,478.5


	December 31, 2011
	Parent		Issuer		Guarantors			Non- Guarantors			Elim			Total
Cash	$	0.1	$	4.8	$	0.2		$	41.0		$	—		$	46.1
Accounts receivable, net		0.7		585.9		—			204.7			—			791.3
Inventory, net		—		682.1		—			217.0			—			899.1
Income taxes receivable		0.8		28.5		—			—			(29.3	)		—
Other current assets		—		2.2		2.1			7.1			—			11.4

Total current assets		1.6		1,303.5		2.3			469.8			(29.3	)		1,747.9
Investment in subsidiaries		718.0		607.1		—			—			(1,325.1	)		—
Intercompany receivable		7.3		258.3		561.3			—			(826.9	)		—
Other assets		—		31.8		0.1			7.3			—			39.2
Property, plant and equipment, net		—		45.2		19.6			42.6			—			107.4
Goodwill		—		512.0		—			49.3			—			561.3
Other intangible assets, net		—		707.2		—			64.7			—			771.9

	$	726.9	$	3,465.1	$	583.3		$	633.7		$	(2,181.3	)	$	3,227.7

Trade accounts payable	$	—	$	328.1	$	2.5		$	149.0		$	—		$	479.6
Accrued expenses		0.2		63.1		12.4			33.3			—			109.0
Income taxes payable		—		—		37.1			4.2			(29.3	)		12.0
Deferred revenue		—		3.7		—			0.7			—			4.4
Deferred income taxes		—		71.0		(0.6	)		(2.2	)		—			68.2

Total current liabilities		0.2		465.9		51.4			185.0			(29.3	)		673.2
Long-term debt, net		—		1,469.8		—			56.9			—			1,526.7
Intercompany payable		—		530.2		—			296.7			(826.9	)		—
Deferred taxes		5.7		269.7		1.0			12.6			—			289.0
Other liabilities		0.1		11.5		0.2			6.1			—			17.9
Stockholders’ equity		720.9		718.0		530.7			76.4			(1,325.1	)		720.9

	$	726.9	$	3,465.1	$	583.3		$	633.7		$	(2,181.3	)	$	3,227.7

Condensed Consolidated Statements of Operations

(in millions)

Three Months Ended March 31, 2012

Parent

Issuer

Guarantors

Non-
Guarantors

Elim

Total

Sales

—

1,052.7

—

329.9

—

1,382.6

Cost of sales

—

883.5

1.0

261.5

—

1,146.0

Gross profit

—

169.2

(1.0

)

68.4

—

236.6

Operating expenses

0.3

69.6

25.9

50.6

—

146.4

Operating (loss) income

(0.3

)

99.6

(26.9

)

17.8

—

90.2

Other (expense) income

—

(128.0

)

104.4

(8.0

)

—

(31.6

)

(Loss) income before taxes

(0.3

)

(28.4

)

77.5

9.8

—

58.6

Equity in earnings of subsidiary

37.7

55.9

—

(93.6

)

—

Income tax (benefit)

(0.1

)

(10.2

)

27.9

3.5

—

21.1

Net income (loss)

37.5

37.7

49.6

6.3

(93.6

)

37.5

Three Months Ended March 31, 2011

Parent

Issuer

Guarantors

Non-
Guarantors

Elim

Total

Sales

—

771.5

—

220.3

—

991.8

Cost of sales

—

667.1

0.9

176.8

—

844.8

Gross profit

—

104.4

(0.9

)

43.5

—

147.0

Operating expenses

0.2

61.2

20.5

35.5

—

117.4

Operating (loss) income

(0.2

)

43.2

(21.4

)

8.0

—

29.6

Other (expense) income

—

(94.1

)

68.8

(6.1

)

—

(31.4

)

(Loss) income before taxes

(0.2

)

(50.9

)

47.4

1.9

—

(1.8

)

Equity in earnings of subsidiary

(1.0

)

30.0

—

(29.0

)

—

Income tax (benefit)

(0.1

)

(19.9

)

17.6

1.7

—

(0.7

)

Net (loss) income

(1.1

)

(1.0

)

29.8

0.2

(29.0

)

(1.1

)

Condensed Consolidated Statements of Comprehensive Income

(in millions)

Three Months Ended March 31, 2012

Parent

Issuer

Guarantors

Non-
Guarantors

Elim

Total

Net income

37.5

37.7

49.6

6.3

(93.6

)

37.5

Other comprehensive income

4.8

—

(1.2

)

(3.6

)

4.8

Comprehensive income

42.3

42.5

49.6

5.1

(97.2

)

42.3

Three Months Ended March 31, 2011

Parent

Issuer

Guarantors

Non-
Guarantors

Elim

Total

Net income

(1.1

)

(1.0

)

29.8

0.2

(29.0

)

(1.1

)

Other comprehensive income

10.4

—

3.7

(14.1

)

10.4

Comprehensive income

(9.3

)

9.4

29.8

3.9

(43.1

)

9.3

Condensed Consolidated Statements of Cash Flows

(in millions)


	Three Months Ended March 31, 2012
	Parent			Issuer			Guarantors			Non- Guarantors			Elim			Total
Cash flows provided by (used in):
Operating activities	$	1.6		$	(22.1	)	$	1.2		$	37.6		$	—		$	18.3
Investing activities		(1.6	)		(47.6	)		(1.0	)		(75.2	)		45.5			(79.9	)
Financing activities		—			73.6			—			47.5			(45.5	)		75.6

Increase (decrease) in cash		—			3.9			0.2			9.9			—			14.0
Effect of exchange rate on cash		—			(3.7	)		—			2.4			—			(1.3	)
Cash – beginning of period		0.1			4.8			0.2			41.0			—			46.1

Cash – end of period	$	0.1		$	5.0		$	0.4		$	53.3		$	—		$	58.8


	Three Months Ended March 31, 2011
	Parent			Issuer			Guarantors			Non- Guarantors			Elim			Total
Cash flows provided by (used in):
Operating activities	$	(0.1	)	$	33.8		$	3.6		$	(31.5	)	$	—		$	5.8
Investing activities		(0.1	)		12.7			(3.6	)		2.9			—			11.9
Financing activities		—			(43.3	)		—			12.5			—			(30.8	)

Increase (decrease) in cash		(0.2	)		3.2			—			(16.1	)		—			(13.1	)
Effect of exchange rate on cash		—			(1.3	)		—			0.3			—			(1.0	)
Cash – beginning of period		1.1			4.4			—			50.7			—			56.2

Cash – end of period	$	0.9		$	6.3		$	—		$	34.9		$	—		$	42.1

Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 10 – SUBSEQUENT EVENTS

In April 2012, we completed the initial public offering of 22,727,273 shares of common stock at a stock price of $21.00 per share. In connection with the offering, MRC Global Inc. sold 17,045,455 shares resulting in aggregate net proceeds to us of approximately $333.9 million after deducting underwriting discounts and estimated offering expenses. A selling stockholder sold the remaining 5,681,818 shares. The $333.9 million of proceeds were used to repay advances on the Global ABL Facility. The following unaudited pro forma condensed balance sheet reflects the transaction as if it had occurred on March 31, 2012.

Actual as of
March 31, 2012

Pro forma
adjustments

Pro forma as of
March 31, 2012

Assets

Total current assets

1,970,509

—

1,970,509

Other assets

44,767

—

44,767

Property, plant and equipment, net

114,173

—

114,173

Intangible assets

1,349,009

—

1,349,009

Total assets

3,478,458

—

3,478,458

Liabilities and stockholders’ equity

Total current liabilities

795,784

—

795,784

Long-term debt, net

1,611,960

(333,900

)

1,278,060

Other long term liabilities

305,693

—

305,693

Shareholders’ equity:

Common stock

844

170

1,014

Preferred stock

—

Additional paid-in capital

1,284,790

333,730

1,618,520

Retained (deficit)

(499,257

)

—

(499,257

)

Other comprehensive income

(21,356

)

—

(21,356

)

Total equity

765,021

333,900

1,098,921

Total liabilities and equity

3,478,458

—

3,478,458