Segment Information

12 Months Ended

Aug. 31, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses 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 segment 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):

	2013			2012
Total assets:
Metals Recycling Business(1)	$	1,316,202		$	1,696,296
Auto Parts Business	359,977			329,327
Steel Manufacturing Business	330,282			322,398
Total segment assets	2,006,461			2,348,021
Corporate and eliminations	(600,949		)	(584,448		)
Total assets	$	1,405,512		$	1,763,573
Property, plant and equipment, net (2)	$	564,426		$	564,185

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(1) MRB total assets include $15 million and $17 million as of August 31, 2013 and 2012, respectively, for investments in joint venture partnerships.

(2) Property, plant and equipment, net includes $85 million and $67 million as of August 31, 2013 and 2012, respectively, at our Canadian locations.

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

	2013			2012			2011
Metals Recycling Business:
Revenues	$	2,210,484		$	2,948,707		$	3,070,004
Less: Intersegment revenues	(178,341		)	(183,906		)	(169,331		)
MRB external customer revenues	2,032,143			2,764,801			2,900,673
Auto Parts Business:
Revenues	313,306			316,884			319,833
Less: Intersegment revenues	(75,992		)	(73,974		)	(78,795		)
APB external customer revenues	237,314			242,910			241,038
Steel Manufacturing Business:
Revenues	352,454			333,227			317,483
Total revenues	$	2,621,911		$	3,340,938		$	3,459,194
Depreciation and amortization:
Metals Recycling Business	$	58,964		$	57,855		$	49,773
Auto Parts Business	11,793			10,920			10,131
Steel Manufacturing Business	9,072			9,436			10,782
Segment depreciation and amortization	79,829			78,211			70,686
Corporate	3,241			4,045			4,180
Total depreciation and amortization	$	83,070		$	82,256		$	74,866
Capital expenditures:
Metals Recycling Business	$	61,930		$	60,212		$	88,917
Auto Parts Business	12,769			7,525			7,099
Steel Manufacturing Business	7,582			5,556			3,328
Segment capital expenditures	82,281			73,293			99,344
Corporate	8,100			5,267			5,620
Total capital expenditures	$	90,381		$	78,560		$	104,964
Reconciliation of the Company’s segment operating income (loss) to income (loss) from continuing operations before income taxes:
Metals Recycling Business(1)	$	(311,549	)	$	63,872		$	164,646
Auto Parts Business	24,539			33,304			64,027
Steel Manufacturing Business	6,541			(2,081		)	2,562
Segment operating income (loss)	(280,469		)	95,095			231,235
Restructuring charges	(7,906		)	(5,012		)	—
Corporate and eliminations	(39,414		)	(36,415		)	(45,271		)
Operating income (loss)	(327,789		)	53,668			185,964
Interest expense	(9,743		)	(11,880		)	(8,436		)
Other income, net	83			1,168			3,277
Income (loss) from continuing operations before income taxes	$	(337,449	)	$	42,956		$	180,805

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(1) MRB operating income (loss) includes $1 million, $2 million and $5 million in income from joint ventures accounted for by the equity method in fiscal 2013, 2012 and 2011, respectively. The MRB operating loss for fiscal 2013 also includes a goodwill impairment charge of $321 million and other asset impairment charges of $13 million.

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):

	2013		2012		2011
Revenues based on sales destination:
Foreign	$	1,657,736	$	2,284,152	$	2,471,737
Domestic	964,175		1,056,786		987,457
Total revenues from external customers	$	2,621,911	$	3,340,938	$	3,459,194
Major product information:
Ferrous scrap metal	$	1,500,115	$	2,117,055	$	2,259,229
Nonferrous scrap metal and other	532,028		647,746		641,444
Auto parts	237,314		242,910		241,038
Finished steel products	346,982		332,719		317,338
Semi-finished steel products	5,472		508		145
Total revenues from external customers	$	2,621,911	$	3,340,938	$	3,459,194

In fiscal 2013, 2012 and 2011, 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):

	2013		% of Revenue		2012		% of Revenue		2011		% of Revenue
China	$	562,558	21.5	%	$	719,979	22.0	%	$	884,744	25.6	%
Turkey	341,418		13.0	%	435,558		13.0	%	N/A		N/A
South Korea	N/A		N/A		$	397,525	12.0	%	N/A		N/A

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