Segment Information

9 Months Ended

May 31, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company is organized by line of business. While the Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. Under the aforementioned criteria, the Company operates in three operating and reporting segments: metal purchasing, processing, recycling and selling (MRB), used auto parts (APB) and mini-mill steel manufacturing (SMB). Additionally, the Company is a noncontrolling partner in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal.

MRB buys and processes ferrous and nonferrous metal for sale to foreign and other domestic steel producers or their representatives and to SMB. MRB also purchases ferrous metal from other processors for shipment directly to SMB.

APB purchases used and salvaged vehicles, sells parts from those vehicles through its retail facilities and wholesale operations, and sells the remaining portion of the vehicles to metal recyclers, including MRB.

SMB operates a steel mini-mill that produces a wide range of finished steel products using recycled metal and other raw materials.

Intersegment sales from MRB to SMB are made at rates that approximate export market prices for shipments from the West Coast of the U.S. In addition, the Company has intersegment sales of autobodies from APB to MRB at rates that approximate market prices. These intercompany sales tend to produce intercompany profits which are not recognized until the finished products are ultimately sold to third parties.

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses operating income (loss) to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative services that benefit all three segments. Because of this unallocated expense, the operating income (loss) of each reporting segment does not reflect the operating income (loss) the reporting segment would have as a stand-alone business. All amounts presented exclude the results of operations of the Company’s discontinued full-service used auto parts operation.

The table below illustrates the Company’s operating results from continuing operations by reporting segment (in thousands):

	Three Months Ended May 31,						Nine Months Ended May 31,
	2012			2011			2012			2011
Revenues:
Metals Recycling Business:
Revenues	$	786,527		$	879,304		$	2,296,898		$	2,108,040
Less: Intersegment revenues	(51,215		)	(55,934		)	(149,916		)	(126,694		)
MRB external customer revenues	735,312			823,370			2,146,982			1,981,346
Auto Parts Business:
Revenues	82,936			86,850			245,222			226,063
Less: Intersegment revenues	(17,006		)	(20,052		)	(56,599		)	(53,997		)
APB external customer revenues	65,930			66,798			188,623			172,066
Steel Manufacturing Business:
Revenues	78,623			90,894			243,048			224,596
Total revenues	$	879,865		$	981,062		$	2,578,653		$	2,378,008

The table below illustrates the reconciliation of the Company’s segment operating income to income from continuing operations before income taxes (in thousands):

	Three Months Ended May 31,						Nine Months Ended May 31,
	2012			2011			2012			2011
Metals Recycling Business	$	17,817		$	45,693		$	50,868		$	112,918
Auto Parts Business	12,543			17,328			31,693			47,324
Steel Manufacturing Business	253			3,485			602			739
Segment operating income	30,613			66,506			83,163			160,981
Corporate and eliminations	(8,535		)	(11,174		)	(28,129		)	(31,273		)
Operating income	22,078			55,332			55,034			129,708
Interest expense	(2,729		)	(3,127		)	(9,473		)	(4,883		)
Other income (expense), net	(154		)	(31		)	70			3,274
Income from continuing operations before income taxes	$	19,195		$	52,174		$	45,631		$	128,099

The following is a summary of the Company’s total assets by reporting segment (in thousands):

	May 31, 2012			August 31, 2011
Metals Recycling Business(1)	$	1,668,574		$	1,668,778
Auto Parts Business	329,458			304,060
Steel Manufacturing Business	325,599			324,596
Total segment assets	2,323,631			2,297,434
Corporate and eliminations	(512,468		)	(407,265		)
Total assets	$	1,811,163		$	1,890,169

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(1) MRB total assets include $17 million as of May 31, 2012 and August 31, 2011, respectively, for investments in joint venture partnerships.