Segment Information

12 Months Ended

Aug. 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 for 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 US. 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. In addition, the Company does not allocate restructuring charges to the segment operating income (loss) because management does not include this information in its measurement of the performance of the operating segments. Because of this unallocated income and expense, the operating income (loss) of each reporting segment does not reflect the operating income (loss) the reporting segment would report 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 following is a summary of the Company’s total assets as of August 31 (in thousands):

	2012			2011
Total assets:
Metals Recycling Business(1)	$	1,696,296		$	1,668,778
Auto Parts Business	329,327			304,060
Steel Manufacturing Business	322,398			324,596
Total segment assets	2,348,021			2,297,434
Corporate and eliminations	(584,448		)	(407,265		)
Total assets	$	1,763,573		$	1,890,169
Property, plant and equipment, net (2)	$	564,185		$	555,284

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

(2) Property, plant and equipment, net includes $67 million and $49 million as of August 31, 2012 and 2011, respectively, at our Canadian locations.

The table below illustrates the Company’s results by reporting segment for the years ended August 31 (in thousands):

	2012			2011			2010
Metals Recycling Business:
Revenues	$	2,948,707		$	3,070,004		$	1,979,770
Less: Intersegment revenues	(183,906		)	(169,331		)	(155,310		)
MRB external customer revenues	2,764,801			2,900,673			1,824,460
Auto Parts Business:
Revenues	316,884			319,833			241,233
Less: Intersegment revenues	(73,974		)	(78,795		)	(49,538		)
APB external customer revenues	242,910			241,038			191,695
Steel Manufacturing Business:
Revenues	333,227			317,483			285,085
Total revenues	$	3,340,938		$	3,459,194		$	2,301,240
Depreciation and amortization:
Metals Recycling Business	$	57,855		$	49,773		$	38,516
Auto Parts Business	10,920			10,131			7,568
Steel Manufacturing Business	9,436			10,782			12,879
Segment depreciation and amortization	78,211			70,686			58,963
Corporate	4,045			4,180			4,265
Total depreciation and amortization	$	82,256		$	74,866		$	63,228
Capital expenditures:
Metals Recycling Business	$	60,212		$	88,917		$	53,753
Auto Parts Business	7,525			7,099			4,682
Steel Manufacturing Business	5,556			3,328			3,255
Segment capital expenditures	73,293			99,344			61,690
Corporate	5,267			5,620			2,634
Total capital expenditures	$	78,560		$	104,964		$	64,324
Reconciliation of the Company’s segment operating income (loss) to income from continuing operations before income taxes:
Metals Recycling Business(1)	$	63,872		$	164,646		$	118,449
Auto Parts Business	33,304			64,027			51,096
Steel Manufacturing Business	(2,081		)	2,562			(5,862		)
Segment operating income	95,095			231,235			163,683
Restructuring charges	(5,012		)	—			—
Corporate and eliminations	(36,415		)	(45,271		)	(37,786		)
Operating income	53,668			185,964			125,897
Interest expense	(11,880		)	(8,436		)	(2,343		)
Other income, net	1,168			3,277			1,779
Income from continuing operations before income taxes	$	42,956		$	180,805		$	125,333

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(1) MRB operating income includes $2 million, $5 million and $3 million in income from joint ventures accounted for by the equity method in fiscal 2012, 2011 and 2010, respectively.

The following revenues from external customers are presented based on the sales destination and by major product for the years ended August 31 (in thousands):

	2012		2011		2010
Revenues based on sales destination:
Foreign	$	2,284,152	$	2,471,737	$	1,570,936
Domestic	1,056,786		987,457		730,304
Total revenues from external customers	$	3,340,938	$	3,459,194	$	2,301,240
Major product information:
Ferrous scrap metal	$	2,117,055	$	2,259,229	$	1,403,354
Nonferrous scrap metal and other	647,746		641,444		421,106
Auto parts	242,910		241,038		191,695
Finished steel products	332,719		317,338		270,712
Semi-finished steel products	508		145		14,373
Total revenues from external customers	$	3,340,938	$	3,459,194	$	2,301,240

In fiscal 2012, 2011 and 2010, there were no external customers that accounted for more than 10% of the Company’s consolidated revenues. Sales to customers in foreign countries are a significant part of the Company’s business. The schedule below identifies those foreign countries in which the Company’s sales exceeded 10% of consolidated revenues in any of the last three years ended August 31 (in thousands):

	2012		% of Revenue		2011		% of Revenue		2010		% of Revenue
China	$	719,979	22.0	%	$	884,744	25.6	%	$	487,098	21.2	%
Turkey	435,558		13.0	%	N/A		N/A		N/A		N/A
South Korea	$	397,525	12.0	%	N/A		N/A		$	260,456	11.3	%

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(1) N/A - sales were less than the 10% threshold and as such not applicable.