Segment Information

12 Months Ended

Aug. 31, 2014

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 and other exit-related costs 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):

	2014			2013
Total assets:
Metals Recycling Business(1)	$	1,343,771		$	1,316,202
Auto Parts Business	361,411			359,977
Steel Manufacturing Business	350,344			330,282
Total segment assets	2,055,526			2,006,461
Corporate and eliminations	(700,316		)	(600,949		)
Total assets	$	1,355,210		$	1,405,512
Property, plant and equipment, net (2)	$	523,433		$	564,426

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(1) MRB total assets include $15 million as of August 31, 2014 and 2013, for investments in joint venture partnerships.

(2) Property, plant and equipment, net includes $75 million and $85 million as of August 31, 2014 and 2013, respectively, at our Canadian locations.

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

	2014			2013			2012
Metals Recycling Business:
Revenues	$	2,102,935		$	2,210,484		$	2,948,707
Less: Intersegment revenues	(188,103		)	(178,341		)	(183,906		)
MRB external customer revenues	1,914,832			2,032,143			2,764,801
Auto Parts Business:
Revenues	327,569			313,306			316,884
Less: Intersegment revenues	(87,458		)	(75,992		)	(73,974		)
APB external customer revenues	240,111			237,314			242,910
Steel Manufacturing Business:
Revenues	388,640			352,454			333,227
Total revenues	$	2,543,583		$	2,621,911		$	3,340,938
Depreciation and amortization:
Metals Recycling Business	$	56,368		$	58,964		$	57,855
Auto Parts Business	11,861			11,793			10,920
Steel Manufacturing Business	8,256			9,072			9,436
Segment depreciation and amortization	76,485			79,829			78,211
Corporate	2,724			3,241			4,045
Total depreciation and amortization	$	79,209		$	83,070		$	82,256
Capital expenditures:
Metals Recycling Business	$	16,881		$	61,930		$	60,212
Auto Parts Business	12,400			12,769			7,525
Steel Manufacturing Business	5,379			7,582			5,556
Segment capital expenditures	34,660			82,281			73,293
Corporate	4,487			8,100			5,267
Total capital expenditures	$	39,147		$	90,381		$	78,560
Reconciliation of the Company’s segment operating income (loss) to income (loss) from continuing operations before income taxes:
Metals Recycling Business(1)	$	30,083		$	(311,549	)	$	63,872
Auto Parts Business	21,434			24,539			33,304
Steel Manufacturing Business	18,538			6,541			(2,081		)
Segment operating income (loss)	70,055			(280,469		)	95,095
Restructuring charges and other exit-related costs	(6,967		)	(7,906		)	(5,012		)
Corporate and eliminations	(42,772		)	(39,414		)	(36,415		)
Operating income (loss)	20,316			(327,789		)	53,668
Interest expense	(10,804		)	(9,743		)	(11,880		)
Other income, net	1,223			83			1,168
Income (loss) from continuing operations before income taxes	$	10,735		$	(337,449	)	$	42,956

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(1) MRB operating income (loss) includes $1 million, $1 million and $2 million in income from joint ventures accounted for by the equity method in fiscal 2014, 2013 and 2012, 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):

	2014		2013		2012
Revenues based on sales destination:
Foreign	$	1,473,069	$	1,657,736	$	2,284,152
Domestic	1,070,514		964,175		1,056,786
Total revenues from external customers	$	2,543,583	$	2,621,911	$	3,340,938
Major product information:
Ferrous scrap metal	$	1,394,046	$	1,500,115	$	2,117,055
Nonferrous scrap metal and other	520,786		532,028		647,746
Auto parts	240,111		237,314		242,910
Finished steel products	377,678		346,982		332,719
Semi-finished steel products	10,962		5,472		508
Total revenues from external customers	$	2,543,583	$	2,621,911	$	3,340,938

In fiscal 2014, 2013 and 2012, 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):

	2014		% of Revenue		2013		% of Revenue		2012		% of Revenue
China	$	390,634	15.4	%	$	562,558	21.5	%	$	719,979	22.0	%
Turkey	261,558		10.3	%	341,418		13.0	%	435,558		13.0	%
South Korea	265,912		10.5	%	N/A		N/A		397,525		12.0	%

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