Segment Information (Notes)

6 Months Ended

Feb. 28, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define operating segments as components of an enterprise that engages in business activities from which it may earn revenues and incur expenses and for which discrete 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 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 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 of each reporting segment does not reflect the operating income the reporting segment would report as a stand-alone business.

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

	Three Months Ended						Six Months Ended
	2/28/2013			2/29/2012			2/28/2013			2/29/2012
Revenues:
Metals Recycling Business:
Revenues	$	576,191		$	781,933		$	1,070,652		$	1,510,371
Less: Intersegment revenues	(42,461		)	(39,986		)	(89,717		)	(98,700		)
MRB external customer revenues	533,730			741,947			980,935			1,411,671
Auto Parts Business:
Revenues	78,082			78,232			147,637			162,285
Less: Intersegment revenues	(20,849		)	(18,090		)	(36,818		)	(39,593		)
APB external customer revenues	57,233			60,142			110,819			122,692
Steel Manufacturing Business:
Revenues	71,247			84,523			163,276			164,424
Total revenues	$	662,210		$	886,612		$	1,255,030		$	1,698,787

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

	Three Months Ended						Six Months Ended
	2/28/2013			2/29/2012			2/28/2013			2/29/2012
Metals Recycling Business	$	14,158		$	19,952		$	19,812		$	33,051
Auto Parts Business	6,711			8,708			13,075			19,150
Steel Manufacturing Business	1,041			(868		)	4,445			349
Segment operating income	21,910			27,792			37,332			52,550
Restructuring charges	(1,540		)	—			(3,133		)	—
Corporate and eliminations	(8,980		)	(9,805		)	(21,595		)	(19,595		)
Operating income	11,390			17,987			12,604			32,955
Interest expense	(2,354		)	(3,472		)	(4,371		)	(6,743		)
Other income (expense), net	(49		)	617			271			223
Income before income taxes	$	8,987		$	15,132		$	8,504		$	26,435

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

	February 28, 2013			August 31, 2012
Metals Recycling Business(1)	$	1,699,320		$	1,696,296
Auto Parts Business	350,299			329,327
Steel Manufacturing Business	327,972			322,398
Total segment assets	2,377,591			2,348,021
Corporate and eliminations	(570,161		)	(584,448		)
Total assets	$	1,807,430		$	1,763,573

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(1) MRB total assets include $16 million and $17 million as of February 28, 2013 and August 31, 2012, respectively, for investments in joint venture partnerships.