Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

Segment Information

Note 9.  Segment Information

The company has three reportable segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations.  These operations are described in Note 1 to the financial statements.  Revenues included in the category “Other” are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of further processing, slitting, and sale of certain steel products and the resale of certain secondary and excess steel products.  In addition, “Other” also includes certain unallocated corporate accounts, such as the company’s senior secured credit facilities, senior notes and convertible senior notes, certain other investments, and certain profit sharing expenses.

The company’s operations are primarily organized and managed by operating segment.  Operating segment performance and resource allocations are primarily based on operating results before income taxes.  The accounting policies of the reportable segments are consistent with those described in Note 1 to the financial statements. Intra-segment and intra-company sales and any related profits are eliminated in consolidation. Refer to the company’s Annual Report on Form 10-K for the year ended December 31, 2012, for more information related to the company’s segment reporting.  The company’s segment results for the three and nine-month periods ended September 30, 2013 and 2012 are as follows (in thousands):

For the three months ended			Metals Recycling /			Steel Fabrication
September 30, 2013	Steel Operations		Ferrous Resources			Operations		Other			Eliminations			Consolidated
Net Sales
External	$	1,102,048	$	557,765		$	119,134	$	24,593		$	—		$	1,803,540
External Non-U.S.	60,381		47,616			—		201			—			108,198
Other segments	54,537		313,113			134		7,918			(375,702		)	—
	1,216,966		918,494			119,268		32,712			(375,702		)	1,911,738
Operating income (loss)	146,564		(17,135		)	3,265		(17,274		)(1)	(2,147		)(2)	113,273
Income (loss) before income taxes	133,041		(24,567		)	1,751		(23,922		)	(2,148		)	84,155
Depreciation and amortization	26,815		27,713			2,219		1,506			(51		)	58,202
Capital expenditures	33,985		17,385			297		495			—			52,162
As of September 30, 2013
Assets	2,581,798		2,530,979			272,786		699,244		(3)	(210,502		)(4)	5,874,305
Liabilities	533,966		593,674			22,908		2,366,273		(5)	(200,304		)(6)	3,316,517

Footnotes related to the three months ended September 30, 2013 segment results (in millions):

(1) Corporate SG&A	$	(9.2	)
Company-wide equity-based compensation	(2.1		)
Profit sharing	(7.4		)
Other, net	1.4
Total	$	(17.3	)

(2) Gross profit reduction from intra-company sales $ (2.1 )

(3) Cash and equivalents	$	325.8
Deferred income taxes	25.2
Property, plant and equipment, net	72.9
Debt issuance costs, net	27.7
Intra-company debt	153.6
Other	94.0
Total	$	699.2

(4) Elimination of intra-company receivables	$	(46.9	)
Elimination of intra-company debt	(153.6		)
Other	(10.0		)
Total	$	(210.5	)

(5) Accounts payable	$	43.1
Income taxes payable	7.7
Accrued interest	22.9
Debt	2,041.8
Deferred income taxes	204.6
Other	46.2
Total	$	2,366.3

(6) Elimination of intra-company payables	$	(47.3	)
Elimination of intra-company debt	(153.6		)
Other	0.6
Total	$	(200.3	)

For the three months ended			Metals Recycling /			Steel Fabrication
September 30, 2012	Steel Operations		Ferrous Resources			Operations		Other			Eliminations			Consolidated
Net Sales
External	$	985,524	$	475,547		$	102,401	$	17,156		$	—		$	1,580,628
External Non-U.S.	65,825		46,684			—		253			—			112,762
Other segments	48,157		268,137			41		4,864			(321,199		)	—
	1,099,506		790,368			102,442		22,273			(321,199		)	1,693,390
Operating income (loss)	106,927		(15,697		)	3,141		(17,759		)(1)	(3,891		)(2)	72,721
Income (loss) before income taxes	88,394		(24,829		)	1,225		(53,678		)	(3,891		)	7,221
Depreciation and amortization	25,937		26,449			2,100		4,518			(51		)	58,953
Capital expenditures	14,625		42,370			1,005		342			—			58,342
As of September 30, 2012
Assets	2,523,616		2,586,568			249,988		597,297		(3)	(181,953		)(4)	5,775,516
Liabilities	482,348		507,367			18,143		2,505,036		(5)	(170,206		)(6)	3,342,688

Footnotes related to the three months ended September 30, 2012 segment results (in millions):

(1) Corporate SG&A	$	(7.6	)
Profit sharing	(2.9		)
Impairment charges	(7.9		)
Other, net	0.6
Total	$	(17.8	)

(2) Gross profit reduction from intra-company sales $ (3.9 )

(3) Cash and equivalents	$	246.8
Income taxes receivable	0.9
Deferred income taxes	28.2
Property, plant and equipment, net	75.7
Debt issuance costs, net	29.4
Intra-company debt	129.1
Other	87.2
Total	$	597.3

(4) Elimination of intra-company receivables	$	(35.8	)
Elimination of intra-company debt	(129.1		)
Other	(17.1		)
Total	$	(182.0	)

(5) Accounts payable	$	32.3
Income taxes payable	12.7
Accrued interest	28.9
Accrued profit sharing	15.5
Debt	2,156.2
Deferred income taxes	240.9
Other	18.5
Total	$	2,505.0

(6) Elimination of intra-company payables	$	(39.0	)
Elimination of intra-company debt	(129.1		)
Other	(2.1		)
Total	$	(170.2	)

For the nine months ended			Metals Recycling /			Steel Fabrication
September 30, 2013	Steel Operations		Ferrous Resources			Operations		Other			Eliminations			Consolidated
Net Sales
External	$	3,152,111	$	1,653,975		$	316,526	$	64,792		$	—		$	5,187,404
External Non-U.S.	162,646		158,026			—		698			—			321,370
Other segments	168,482		865,143			1,276		20,198			(1,055,099		)	—
	3,483,239		2,677,144			317,802		85,688			(1,055,099		)	5,508,774
Operating income (loss)	351,410		(34,210		)	7,125		(48,147		)(1)	2,525		(2)	278,703
Income (loss) before income taxes	309,780		(56,860		)	2,475		(72,136		)	2,524			185,783
Depreciation and amortization	79,698		81,553			6,455		4,536			(153		)	172,089
Capital expenditures	93,244		49,999			2,000		1,501			—			146,744

Footnotes related to the nine months ended September 30, 2013 segment results (in millions):

(1) Corporate SG&A	$	(26.3	)
Company-wide equity-based compensation	(7.3		)
Profit sharing	(16.5		)
Other, net	2.0
Total	$	(48.1	)

(2) Gross profit increase from intra-company sales $ 2.5

For the nine months ended			Metals Recycling /			Steel Fabrication
September 30, 2012	Steel Operations		Ferrous Resources			Operations			Other			Eliminations			Consolidated
Net Sales
External	$	3,279,344	$	1,643,522		$	273,060		$	54,071		$	—		$	5,249,997
External Non-U.S.	166,025		168,818			—			393			—			335,236
Other segments	148,839		1,009,604			45			12,290			(1,170,778		)	—
	3,594,208		2,821,944			273,105			66,754			(1,170,778		)	5,585,233
Operating income (loss)	380,832		(30,905		)	666			(49,294		)(1)	(5,063		)(2)	296,236
Income (loss) before income taxes	325,521		(57,932		)	(4,408		)	(117,956		)	(5,063		)	140,162
Depreciation and amortization	78,405		78,114			6,007			7,654			(153		)	170,027
Capital expenditures	26,848		127,133			3,502			1,203			—			158,686

Footnotes related to the nine months ended September 30, 2012 segment results (in millions):

(1) Corporate SG&A	$	(22.4	)
Company-wide stock option expense	(5.7		)
Profit sharing	(15.3		)
Impairment charges	(7.9		)
Other, net	2.0
Total	$	(49.3	)

(2) Gross profit reduction from intra-company sales $ (5.1 )