x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Quarterly Period Ended May 31, 2017 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Transition Period from _______ to_______ | |
Commission File Number 0-22496 |
OREGON | 93-0341923 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
299 SW Clay Street, Suite 350 Portland, Oregon | 97201 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | x | Non-accelerated filer | o |
Smaller reporting company | o | Emerging growth company | o |
PAGE | |
ITEM 1. | FINANCIAL STATEMENTS (UNAUDITED) |
May 31, 2017 | August 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 15,209 | $ | 26,819 | |||
Accounts receivable, net of allowance for doubtful accounts of $2,267 and $2,315 | 127,457 | 113,952 | |||||
Inventories | 165,832 | 132,972 | |||||
Refundable income taxes | 2,189 | 1,254 | |||||
Prepaid expenses and other current assets | 23,582 | 24,809 | |||||
Total current assets | 334,269 | 299,806 | |||||
Property, plant and equipment, net of accumulated depreciation of $743,202 and $714,965 | 382,825 | 392,820 | |||||
Investments in joint ventures | 13,385 | 13,616 | |||||
Goodwill | 166,273 | 166,847 | |||||
Intangibles, net of accumulated amortization of $3,775 and $3,457 | 4,599 | 4,931 | |||||
Other assets | 19,874 | 13,409 | |||||
Total assets | $ | 921,225 | $ | 891,429 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Short-term borrowings | $ | 641 | $ | 8,374 | |||
Accounts payable | 69,411 | 58,439 | |||||
Accrued payroll and related liabilities | 34,876 | 29,116 | |||||
Environmental liabilities | 1,903 | 1,967 | |||||
Other accrued liabilities | 38,155 | 35,758 | |||||
Total current liabilities | 144,986 | 133,654 | |||||
Deferred income taxes | 18,565 | 16,682 | |||||
Long-term debt, net of current maturities | 183,802 | 184,144 | |||||
Environmental liabilities, net of current portion | 46,284 | 44,383 | |||||
Other long-term liabilities | 10,030 | 11,134 | |||||
Total liabilities | 403,667 | 389,997 | |||||
Commitments and contingencies (Note 6) | |||||||
Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity: | |||||||
Preferred stock – 20,000 shares $1.00 par value authorized, none issued | — | — | |||||
Class A common stock – 75,000 shares $1.00 par value authorized, 26,842 and 26,482 shares issued and outstanding | 26,842 | 26,482 | |||||
Class B common stock – 25,000 shares $1.00 par value authorized, 200 and 306 shares issued and outstanding | 200 | 306 | |||||
Additional paid-in capital | 36,577 | 30,948 | |||||
Retained earnings | 490,760 | 480,100 | |||||
Accumulated other comprehensive loss | (41,322 | ) | (40,115 | ) | |||
Total SSI shareholders’ equity | 513,057 | 497,721 | |||||
Noncontrolling interests | 4,501 | 3,711 | |||||
Total equity | 517,558 | 501,432 | |||||
Total liabilities and equity | $ | 921,225 | $ | 891,429 |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 477,088 | $ | 351,604 | $ | 1,193,333 | $ | 961,880 | |||||||
Operating expense: | |||||||||||||||
Cost of goods sold | 411,109 | 294,738 | 1,033,805 | 839,262 | |||||||||||
Selling, general and administrative | 48,451 | 41,696 | 129,766 | 113,713 | |||||||||||
(Income) loss from joint ventures | (668 | ) | (258 | ) | (3,300 | ) | 61 | ||||||||
Goodwill impairment charge | — | — | — | 8,845 | |||||||||||
Other asset impairment charges (recoveries), net | (1,044 | ) | — | (643 | ) | 18,458 | |||||||||
Restructuring charges and other exit-related activities | 93 | 542 | (200 | ) | 7,758 | ||||||||||
Operating income (loss) | 19,147 | 14,886 | 33,905 | (26,217 | ) | ||||||||||
Interest expense | (2,131 | ) | (2,905 | ) | (5,969 | ) | (6,779 | ) | |||||||
Other income (expense), net | 524 | (81 | ) | 1,318 | 763 | ||||||||||
Income (loss) from continuing operations before income taxes | 17,540 | 11,900 | 29,254 | (32,233 | ) | ||||||||||
Income tax expense | (161 | ) | (95 | ) | (736 | ) | (810 | ) | |||||||
Income (loss) from continuing operations | 17,379 | 11,805 | 28,518 | (33,043 | ) | ||||||||||
Loss from discontinued operations, net of tax | (127 | ) | (116 | ) | (275 | ) | (1,206 | ) | |||||||
Net income (loss) | 17,252 | 11,689 | 28,243 | (34,249 | ) | ||||||||||
Net income attributable to noncontrolling interests | (687 | ) | (689 | ) | (1,967 | ) | (1,294 | ) | |||||||
Net income (loss) attributable to SSI | $ | 16,565 | $ | 11,000 | $ | 26,276 | $ | (35,543 | ) | ||||||
Net income (loss) per share attributable to SSI: | |||||||||||||||
Basic: | |||||||||||||||
Income (loss) per share from continuing operations attributable to SSI | $ | 0.60 | $ | 0.41 | $ | 0.97 | $ | (1.26 | ) | ||||||
Loss per share from discontinued operations attributable to SSI | — | — | (0.01 | ) | (0.04 | ) | |||||||||
Net income (loss) per share attributable to SSI(1) | $ | 0.60 | $ | 0.40 | $ | 0.96 | $ | (1.31 | ) | ||||||
Diluted: | |||||||||||||||
Income (loss) per share from continuing operations attributable to SSI | $ | 0.60 | $ | 0.41 | $ | 0.96 | $ | (1.26 | ) | ||||||
Loss per share from discontinued operations attributable to SSI | — | — | (0.01 | ) | (0.04 | ) | |||||||||
Net income (loss) per share attributable to SSI(1) | $ | 0.60 | $ | 0.40 | $ | 0.95 | $ | (1.31 | ) | ||||||
Weighted average number of common shares: | |||||||||||||||
Basic | 27,601 | 27,261 | 27,499 | 27,195 | |||||||||||
Diluted | 27,703 | 27,327 | 27,692 | 27,195 | |||||||||||
Dividends declared per common share | $ | 0.1875 | $ | 0.1875 | $ | 0.5625 | $ | 0.5625 |
(1) | May not foot due to rounding. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income (loss) | $ | 17,252 | $ | 11,689 | $ | 28,243 | $ | (34,249 | ) | ||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments | (694 | ) | 1,485 | (1,488 | ) | (416 | ) | ||||||||
Cash flow hedges, net | — | — | — | 240 | |||||||||||
Pension obligations, net | 266 | 65 | 281 | 170 | |||||||||||
Total other comprehensive income (loss), net of tax | (428 | ) | 1,550 | (1,207 | ) | (6 | ) | ||||||||
Comprehensive income (loss) | 16,824 | 13,239 | 27,036 | (34,255 | ) | ||||||||||
Less comprehensive income attributable to noncontrolling interests | (687 | ) | (689 | ) | (1,967 | ) | (1,294 | ) | |||||||
Comprehensive income (loss) attributable to SSI | $ | 16,137 | $ | 12,550 | $ | 25,069 | $ | (35,549 | ) |
Nine Months Ended May 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 28,243 | $ | (34,249 | ) | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
Depreciation and amortization | 37,459 | 41,943 | |||||
Exit-related (gains), asset impairments and accelerated depreciation, net | (407 | ) | 3,127 | ||||
Goodwill impairment charge | — | 8,845 | |||||
Other asset impairment charges (recoveries), net | (643 | ) | 18,458 | ||||
Write-off of debt issuance costs | — | 768 | |||||
Share-based compensation expense | 9,182 | 6,636 | |||||
Deferred income taxes | 1,452 | 580 | |||||
Inventory write-down | — | 710 | |||||
Undistributed equity in earnings of joint ventures | (3,300 | ) | 61 | ||||
(Gain) loss on disposal of assets | 194 | (529 | ) | ||||
Unrealized foreign exchange (gain) loss, net | 89 | (75 | ) | ||||
Bad debt expense, net | 35 | 154 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (21,950 | ) | 5,303 | ||||
Inventories | (25,033 | ) | 3,812 | ||||
Income taxes | (935 | ) | 436 | ||||
Prepaid expenses and other current assets | (2,826 | ) | 882 | ||||
Other long-term assets | 421 | (465 | ) | ||||
Accounts payable | 13,365 | 3,527 | |||||
Accrued payroll and related liabilities | 5,795 | (2,880 | ) | ||||
Other accrued liabilities | 5,866 | (5,632 | ) | ||||
Environmental liabilities | 1,936 | (534 | ) | ||||
Other long-term liabilities | (1,050 | ) | (88 | ) | |||
Distributed equity in earnings of joint ventures | 3,389 | 400 | |||||
Net cash provided by operating activities | 51,282 | 51,190 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (31,508 | ) | (21,442 | ) | |||
Purchase of cost method investment | (6,017 | ) | — | ||||
Joint venture receipts, net | 266 | 7 | |||||
Proceeds from sale of assets | 2,753 | 2,649 | |||||
Net cash used in investing activities | (34,506 | ) | (18,786 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings from long-term debt | 360,626 | 112,427 | |||||
Repayment of long-term debt | (368,843 | ) | (137,869 | ) | |||
Proceeds from line of credit | — | 135,500 | |||||
Repayment of line of credit | — | (135,500 | ) | ||||
Payment of debt issuance costs | (112 | ) | (879 | ) | |||
Taxes paid related to net share settlement of share-based payment arrangements | (3,300 | ) | (1,938 | ) | |||
Repurchase of Class A common stock | — | (3,479 | ) | ||||
Distributions to noncontrolling interest | (1,177 | ) | (1,179 | ) | |||
Dividends paid | (15,322 | ) | (15,275 | ) | |||
Net cash used in financing activities | (28,128 | ) | (48,192 | ) | |||
Effect of exchange rate changes on cash | (258 | ) | 51 | ||||
Net decrease in cash and cash equivalents | (11,610 | ) | (15,737 | ) | |||
Cash and cash equivalents as of beginning of period | 26,819 | 22,755 | |||||
Cash and cash equivalents as of end of period | $ | 15,209 | $ | 7,018 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reported within other asset impairment charges (recoveries), net(1)(2): | |||||||||||||||
Long-lived assets | $ | — | $ | — | $ | — | $ | 7,336 | |||||||
Accelerated depreciation(1) | — | — | 401 | 6,208 | |||||||||||
Investment in joint venture | — | — | — | 1,968 | |||||||||||
Assets held for sale | — | — | — | 1,659 | |||||||||||
Other assets(1) | — | — | — | 1,287 | |||||||||||
— | — | 401 | 18,458 | ||||||||||||
Reported within restructuring charges and other exit-related activities: | |||||||||||||||
Long-lived assets | — | 119 | — | 448 | |||||||||||
Accelerated depreciation | — | — | 96 | 630 | |||||||||||
Other assets | — | — | 62 | 1,102 | |||||||||||
— | 119 | 158 | 2,180 | ||||||||||||
Reported within discontinued operations: | |||||||||||||||
Long-lived assets | — | — | — | 673 | |||||||||||
Accelerated depreciation | — | — | — | 274 | |||||||||||
— | — | — | 947 | ||||||||||||
Total | $ | — | $ | 119 | $ | 559 | $ | 21,585 |
(1) | Other asset impairment charges were incurred in AMR, except for $401 thousand of accelerated depreciation related to the Steel Manufacturing Business ("SMB") reportable segment for the nine months ended May 31, 2017, and $79 thousand of impairment charges on Other assets related to Corporate for the nine months ended May 31, 2016. |
(2) | Excluded from the tabular presentation of asset impairment charges above, but included within other asset impairment charges (recoveries), net reported in the Unaudited Condensed Consolidated Statements of Operations, are recoveries on previously-impaired Assets held for sale at AMR of $1,044 thousand for the three and nine months ended May 31, 2017. |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
• | Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities. |
• | Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly. |
• | Level 3 – Unobservable inputs that are significant to the determination of the fair value of the asset or liability. |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
May 31, 2017 | August 31, 2016 | ||||||
Processed and unprocessed scrap metal | $ | 78,846 | $ | 49,061 | |||
Semi-finished goods (billets) | 7,875 | 8,320 | |||||
Finished goods | 44,887 | 40,646 | |||||
Supplies | 34,224 | 34,945 | |||||
Inventories | $ | 165,832 | $ | 132,972 |
AMR | |||
August 31, 2016 | $ | 166,847 | |
Foreign currency translation adjustment | (574 | ) | |
May 31, 2017 | $ | 166,273 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Reportable Segment | Balance as of August 31, 2016 | Liabilities Established (Released), Net | Payments and Other | Balance as of May 31, 2017 | Short-Term | Long-Term | ||||||||||||||||||
Auto and Metals Recycling | $ | 46,122 | $ | 2,349 | $ | (404 | ) | $ | 48,067 | $ | 1,903 | $ | 46,164 | |||||||||||
Corporate | 228 | 58 | (166 | ) | 120 | — | 120 | |||||||||||||||||
Total | $ | 46,350 | $ | 2,407 | $ | (570 | ) | $ | 48,187 | $ | 1,903 | $ | 46,284 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, 2017 | Three Months Ended May 31, 2016 | ||||||||||||||||||||||
All Other Plans | Q2’15 Plan | Total Charges | All Other Plans | Q2’15 Plan | Total Charges | ||||||||||||||||||
Restructuring charges: | |||||||||||||||||||||||
Severance costs | $ | — | $ | 36 | $ | 36 | $ | — | $ | 340 | $ | 340 | |||||||||||
Contract termination costs | 43 | 24 | 67 | 76 | 26 | 102 | |||||||||||||||||
Other restructuring costs | — | — | — | — | — | — | |||||||||||||||||
Total restructuring charges | 43 | 60 | 103 | 76 | 366 | 442 | |||||||||||||||||
Other exit-related activities: | |||||||||||||||||||||||
Asset impairments and accelerated depreciation | — | — | — | — | 119 | 119 | |||||||||||||||||
Gain on exit-related disposal | — | (3 | ) | (3 | ) | — | — | — | |||||||||||||||
Total other exit-related activities | — | (3 | ) | (3 | ) | — | 119 | 119 | |||||||||||||||
Total restructuring charges and other exit-related activities | $ | 43 | $ | 57 | $ | 100 | $ | 76 | $ | 485 | $ | 561 | |||||||||||
Restructuring charges and other exit-related activities included in continuing operations | $ | 93 | $ | 542 | |||||||||||||||||||
Restructuring charges and other exit-related activities included in discontinued operations | $ | 7 | $ | 19 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Nine Months Ended May 31, 2017 | Nine Months Ended May 31, 2016 | ||||||||||||||||||||||
All Other Plans | Q2’15 Plan | Total Charges | All Other Plans | Q2’15 Plan | Total Charges | ||||||||||||||||||
Restructuring charges: | |||||||||||||||||||||||
Severance costs | $ | — | $ | (23 | ) | $ | (23 | ) | $ | — | $ | 4,686 | $ | 4,686 | |||||||||
Contract termination costs | 180 | 83 | 263 | 201 | 683 | 884 | |||||||||||||||||
Other restructuring costs | — | — | — | — | — | — | |||||||||||||||||
Total restructuring charges | 180 | 60 | 240 | 201 | 5,369 | 5,570 | |||||||||||||||||
Other exit-related activities: | |||||||||||||||||||||||
Asset impairments and accelerated depreciation | — | 158 | 158 | — | 3,127 | 3,127 | |||||||||||||||||
Gain on exit-related disposal | — | (565 | ) | (565 | ) | — | — | — | |||||||||||||||
Total other exit-related activities | — | (407 | ) | (407 | ) | — | 3,127 | 3,127 | |||||||||||||||
Total restructuring charges and other exit-related activities | $ | 180 | $ | (347 | ) | $ | (167 | ) | $ | 201 | $ | 8,496 | $ | 8,697 | |||||||||
Restructuring charges and other exit-related activities included in continuing operations | $ | (200 | ) | $ | 7,758 | ||||||||||||||||||
Restructuring charges and other exit-related activities included in discontinued operations | $ | 33 | $ | 939 |
Q2'15 Plan | |||
Total restructuring charges to date | $ | 14,394 | |
Total expected restructuring charges | $ | 14,460 |
Q2’15 Plan | Total Charges to Date(1) | Total Expected Charges(1) | |||||||||||||||||||||
Balance 8/31/2016 | Charges | Payments and Other | Balance 5/31/2017 | ||||||||||||||||||||
Severance costs | $ | 918 | $ | (23 | ) | $ | (776 | ) | $ | 119 | $ | 10,252 | $ | 10,252 | |||||||||
Contract termination costs | 1,159 | 83 | (337 | ) | 905 | 2,093 | 2,159 | ||||||||||||||||
Other restructuring costs | — | — | — | — | 2,049 | 2,049 | |||||||||||||||||
Total | $ | 2,077 | $ | 60 | $ | (1,113 | ) | $ | 1,024 | $ | 14,394 | $ | 14,460 |
(1) | Total charges to date and total expected charges by major type of cost reflect amounts related to the Q2'15 Plan only. Remaining charges related to prior plans are not expected to be material. |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | Total Charges to Date(1) | Total Expected Charges(1) | ||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
Restructuring charges: | |||||||||||||||||||||||
Auto and Metals Recycling | $ | 60 | $ | 423 | $ | 173 | $ | 4,766 | $ | 9,486 | $ | 9,535 | |||||||||||
Unallocated (Corporate) | 36 | — | 34 | 812 | 3,212 | 3,212 | |||||||||||||||||
Discontinued operations | 7 | 19 | 33 | (8 | ) | 1,696 | 1,713 | ||||||||||||||||
Total restructuring charges | 103 | 442 | 240 | 5,570 | 14,394 | 14,460 | |||||||||||||||||
Other exit-related activities: | |||||||||||||||||||||||
Auto and Metals Recycling | (3 | ) | 119 | (407 | ) | 2,180 | 4,272 | ||||||||||||||||
Discontinued operations | — | — | — | 947 | 3,613 | ||||||||||||||||||
Total other exit-related activities | (3 | ) | 119 | (407 | ) | 3,127 | 7,885 | ||||||||||||||||
Total restructuring charges and other exit-related activities | $ | 100 | $ | 561 | $ | (167 | ) | $ | 8,697 | $ | 22,279 |
(1) | Total charges to date and total expected charges by reportable segment and discontinued operations reflect amounts related to the Q2'15 Plan only. Remaining charges related to prior plans are not expected to be material. |
Nine Months Ended May 31, 2017 | Nine Months Ended May 31, 2016 | ||||||||||||||||||||||
SSI Shareholders’ Equity | Noncontrolling Interests | Total Equity | SSI Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||
Balance - September 1 (Beginning of period) | $ | 497,721 | $ | 3,711 | $ | 501,432 | $ | 534,535 | $ | 4,016 | $ | 538,551 | |||||||||||
Net income (loss) | 26,276 | 1,967 | 28,243 | (35,543 | ) | 1,294 | (34,249 | ) | |||||||||||||||
Other comprehensive loss, net of tax | (1,207 | ) | — | (1,207 | ) | (6 | ) | — | (6 | ) | |||||||||||||
Distributions to noncontrolling interests | — | (1,177 | ) | (1,177 | ) | — | (1,179 | ) | (1,179 | ) | |||||||||||||
Share repurchases | — | — | — | (3,479 | ) | — | (3,479 | ) | |||||||||||||||
Restricted stock withheld for taxes | (3,300 | ) | — | (3,300 | ) | (1,938 | ) | — | (1,938 | ) | |||||||||||||
Share-based compensation | 9,182 | — | 9,182 | 6,636 | — | 6,636 | |||||||||||||||||
Dividends | (15,615 | ) | — | (15,615 | ) | (15,406 | ) | — | (15,406 | ) | |||||||||||||
Balance - May 31 (End of period) | $ | 513,057 | $ | 4,501 | $ | 517,558 | $ | 484,799 | $ | 4,131 | $ | 488,930 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, 2017 | Three Months Ended May 31, 2016 | ||||||||||||||||||||||||||
Foreign Currency Translation Adjustments | Pension Obligations, net | Total | Foreign Currency Translation Adjustments | Pension Obligations, net | Net Unrealized Gain (Loss) on Cash Flow Hedges | Total | |||||||||||||||||||||
Balances - March 1 (Beginning of period) | $ | (35,333 | ) | $ | (5,561 | ) | $ | (40,894 | ) | $ | (35,910 | ) | $ | (4,168 | ) | $ | — | $ | (40,078 | ) | |||||||
Other comprehensive income (loss) before reclassifications | (694 | ) | — | (694 | ) | 1,485 | — | — | 1,485 | ||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | ||||||||||||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | (694 | ) | — | (694 | ) | 1,485 | — | — | 1,485 | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 420 | 420 | — | 102 | — | 102 | ||||||||||||||||||||
Income tax benefit | — | (154 | ) | (154 | ) | — | (37 | ) | — | (37 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | — | 266 | 266 | — | 65 | — | 65 | ||||||||||||||||||||
Net periodic other comprehensive income (loss) | (694 | ) | 266 | (428 | ) | 1,485 | 65 | — | 1,550 | ||||||||||||||||||
Balances - May 31 (End of period) | $ | (36,027 | ) | $ | (5,295 | ) | $ | (41,322 | ) | $ | (34,425 | ) | $ | (4,103 | ) | $ | — | $ | (38,528 | ) |
Nine Months Ended May 31, 2017 | Nine Months Ended May 31, 2016 | ||||||||||||||||||||||||||
Foreign Currency Translation Adjustments | Pension Obligations, net | Total | Foreign Currency Translation Adjustments | Pension Obligations, net | Net Unrealized Gain (Loss) on Cash Flow Hedges | Total | |||||||||||||||||||||
Balances - September 1 (Beginning of period) | $ | (34,539 | ) | $ | (5,576 | ) | $ | (40,115 | ) | $ | (34,009 | ) | $ | (4,273 | ) | $ | (240 | ) | $ | (38,522 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (1,488 | ) | 49 | (1,439 | ) | (416 | ) | — | — | (416 | ) | ||||||||||||||||
Income tax expense | — | (194 | ) | (194 | ) | — | — | — | — | ||||||||||||||||||
Other comprehensive loss before reclassifications, net of tax | (1,488 | ) | (145 | ) | (1,633 | ) | (416 | ) | — | — | (416 | ) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 670 | 670 | — | 268 | 312 | 580 | ||||||||||||||||||||
Income tax benefit | — | (244 | ) | (244 | ) | — | (98 | ) | (72 | ) | (170 | ) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | — | 426 | 426 | — | 170 | 240 | 410 | ||||||||||||||||||||
Net periodic other comprehensive income (loss) | (1,488 | ) | 281 | (1,207 | ) | (416 | ) | 170 | 240 | (6 | ) | ||||||||||||||||
Balances - May 31 (End of period) | $ | (36,027 | ) | $ | (5,295 | ) | $ | (41,322 | ) | $ | (34,425 | ) | $ | (4,103 | ) | $ | — | $ | (38,528 | ) |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | |||||||
Loss from discontinued operations before income taxes | $ | (120 | ) | $ | (130 | ) | $ | (278 | ) | $ | (1,225 | ) | |||
Income tax benefit (expense) | (7 | ) | 14 | 3 | 19 | ||||||||||
Loss from discontinued operations, net of tax | $ | (127 | ) | $ | (116 | ) | $ | (275 | ) | $ | (1,206 | ) |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | |||
State taxes, net of credits | 2.0 | 1.7 | 2.0 | 1.4 | |||||||
Foreign income taxed at different rates | (2.3 | ) | (2.4 | ) | (2.1 | ) | (6.1 | ) | |||
Non-deductible officers’ compensation | 2.2 | 0.7 | 1.9 | (1.3 | ) | ||||||
Noncontrolling interests | (1.6 | ) | (1.6 | ) | (2.5 | ) | 3.0 | ||||
Research and development credits | (0.9 | ) | (2.1 | ) | (0.8 | ) | 1.6 | ||||
Tax return to provision adjustment | (4.7 | ) | (1.1 | ) | (2.8 | ) | 0.4 | ||||
Valuation allowance on deferred tax assets | (31.2 | ) | (31.2 | ) | (30.3 | ) | (33.5 | ) | |||
Non-deductible goodwill | — | 0.3 | — | (0.6 | ) | ||||||
Unrecognized tax benefits | 0.7 | 1.4 | 0.9 | (1.4 | ) | ||||||
Other non-deductible expenses | 1.6 | 0.7 | 1.3 | (1.8 | ) | ||||||
Other | 0.1 | (0.6 | ) | (0.1 | ) | 0.8 | |||||
Effective tax rate(1) | 0.9 | % | 0.8 | % | 2.5 | % | (2.5 | )% |
(1) | For periods with reported pre-tax losses, the effect of reconciling items with positive signs is a tax benefit in excess of applying the federal statutory rate to the pre-tax loss. |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income (loss) from continuing operations | $ | 17,379 | $ | 11,805 | $ | 28,518 | $ | (33,043 | ) | ||||||
Net income attributable to noncontrolling interests | (687 | ) | (689 | ) | (1,967 | ) | (1,294 | ) | |||||||
Income (loss) from continuing operations attributable to SSI | 16,692 | 11,116 | 26,551 | (34,337 | ) | ||||||||||
Loss from discontinued operations, net of tax | (127 | ) | (116 | ) | (275 | ) | (1,206 | ) | |||||||
Net income (loss) attributable to SSI | $ | 16,565 | $ | 11,000 | $ | 26,276 | $ | (35,543 | ) | ||||||
Computation of shares: | |||||||||||||||
Weighted average common shares outstanding, basic | 27,601 | 27,261 | 27,499 | 27,195 | |||||||||||
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs, and RSUs | 102 | 66 | 193 | — | |||||||||||
Weighted average common shares outstanding, diluted | 27,703 | 27,327 | 27,692 | 27,195 |
SCHNITZER STEEL INDUSTRIES, INC. | ||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Auto and Metals Recycling: | |||||||||||||||
Revenues | $ | 430,047 | $ | 306,851 | $ | 1,084,354 | $ | 829,628 | |||||||
Less: Intersegment revenues | (34,923 | ) | (26,171 | ) | (83,872 | ) | (68,965 | ) | |||||||
AMR external customer revenues | 395,124 | 280,680 | 1,000,482 | 760,663 | |||||||||||
Steel Manufacturing Business: | |||||||||||||||
Revenues | 81,964 | 70,924 | 192,851 | 201,217 | |||||||||||
Total revenues | $ | 477,088 | $ | 351,604 | $ | 1,193,333 | $ | 961,880 |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Auto and Metals Recycling | $ | 29,801 | $ | 26,870 | $ | 68,579 | $ | 2,555 | |||||||
Steel Manufacturing Business | 411 | 1,246 | (4,416 | ) | 2,799 | ||||||||||
Segment operating income | 30,212 | 28,116 | 64,163 | 5,354 | |||||||||||
Restructuring charges and other exit-related activities | (93 | ) | (542 | ) | 200 | (7,758 | ) | ||||||||
Corporate and eliminations | (10,972 | ) | (12,688 | ) | (30,458 | ) | (23,813 | ) | |||||||
Operating income (loss) | 19,147 | 14,886 | 33,905 | (26,217 | ) | ||||||||||
Interest expense | (2,131 | ) | (2,905 | ) | (5,969 | ) | (6,779 | ) | |||||||
Other income (expense), net | 524 | (81 | ) | 1,318 | 763 | ||||||||||
Income (loss) from continuing operations before income taxes | $ | 17,540 | $ | 11,900 | $ | 29,254 | $ | (32,233 | ) |
May 31, 2017 | August 31, 2016 | ||||||
Auto and Metals Recycling(1) | $ | 1,597,410 | $ | 1,510,688 | |||
Steel Manufacturing Business | 360,195 | 373,130 | |||||
Total segment assets | 1,957,605 | 1,883,818 | |||||
Corporate and eliminations(2) | (1,036,380 | ) | (992,389 | ) | |||
Total assets | $ | 921,225 | $ | 891,429 |
(1) | AMR total assets include $13 million and $14 million as of May 31, 2017 and August 31, 2016, respectively, for investments in joint ventures. |
(2) | The substantial majority of Corporate and eliminations total assets is comprised of Corporate intercompany payables to the Company's operating segments and intercompany eliminations. |
SCHNITZER STEEL INDUSTRIES, INC. |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
• | For the first nine months of fiscal 2017 and 2016, net cash provided by operating activities of $51 million; |
• | Debt of $184 million as of May 31, 2017, compared to $193 million as of August 31, 2016; and |
• | Debt, net of cash, of $169 million as of May 31, 2017, compared to $166 million as of August 31, 2016 (see the reconciliation of debt, net of cash, in Non-GAAP Financial Measures at the end of this Item 2). |
SCHNITZER STEEL INDUSTRIES, INC. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||
($ in thousands) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | |||||||||||||||
Revenues: | |||||||||||||||||||||
Auto and Metals Recycling | $ | 430,047 | $ | 306,851 | 40 | % | $ | 1,084,354 | $ | 829,628 | 31 | % | |||||||||
Steel Manufacturing Business | 81,964 | 70,924 | 16 | % | 192,851 | 201,217 | (4 | )% | |||||||||||||
Intercompany revenue eliminations(1) | (34,923 | ) | (26,171 | ) | 33 | % | (83,872 | ) | (68,965 | ) | 22 | % | |||||||||
Total revenues | 477,088 | 351,604 | 36 | % | 1,193,333 | 961,880 | 24 | % | |||||||||||||
Cost of goods sold: | |||||||||||||||||||||
Auto and Metals Recycling | 366,741 | 251,008 | 46 | % | 926,155 | 716,128 | 29 | % | |||||||||||||
Steel Manufacturing Business | 79,693 | 67,892 | 17 | % | 191,860 | 193,565 | (1 | )% | |||||||||||||
Intercompany cost of goods sold eliminations(1) | (35,325 | ) | (24,162 | ) | 46 | % | (84,210 | ) | (70,431 | ) | 20 | % | |||||||||
Total cost of goods sold | 411,109 | 294,738 | 39 | % | 1,033,805 | 839,262 | 23 | % | |||||||||||||
Selling, general and administrative expense: | |||||||||||||||||||||
Auto and Metals Recycling | 35,319 | 29,241 | 21 | % | 94,076 | 83,577 | 13 | % | |||||||||||||
Steel Manufacturing Business | 1,860 | 1,786 | 4 | % | 5,006 | 4,853 | 3 | % | |||||||||||||
Corporate(2) | 11,272 | 10,669 | 6 | % | 30,684 | 25,283 | 21 | % | |||||||||||||
Total selling, general and administrative expense | 48,451 | 41,696 | 16 | % | 129,766 | 113,713 | 14 | % | |||||||||||||
(Income) loss from joint ventures: | |||||||||||||||||||||
Auto and Metals Recycling | (770 | ) | (268 | ) | 187 | % | (3,412 | ) | 144 | NM | |||||||||||
Change in intercompany profit elimination(3) | 102 | 10 | 920 | % | 112 | (83 | ) | NM | |||||||||||||
Total (income) loss from joint ventures | (668 | ) | (258 | ) | 159 | % | (3,300 | ) | 61 | NM | |||||||||||
Goodwill impairment charge: | |||||||||||||||||||||
Auto and Metals Recycling | — | — | NM | — | 8,845 | NM | |||||||||||||||
Other asset impairment charges (recoveries), net: | |||||||||||||||||||||
Auto and Metals Recycling | (1,044 | ) | — | NM | (1,044 | ) | 18,379 | NM | |||||||||||||
Steel Manufacturing Business | — | — | NM | 401 | — | NM | |||||||||||||||
Corporate | — | — | NM | — | 79 | NM | |||||||||||||||
Total other asset impairment charges (recoveries), net | (1,044 | ) | — | NM | (643 | ) | 18,458 | NM | |||||||||||||
Operating income (loss): | |||||||||||||||||||||
Auto and Metals Recycling | 29,801 | 26,870 | 11 | % | 68,579 | 2,555 | 2,584 | % | |||||||||||||
Steel Manufacturing Business | 411 | 1,246 | (67 | )% | (4,416 | ) | 2,799 | NM | |||||||||||||
Segment operating income | 30,212 | 28,116 | 7 | % | 64,163 | 5,354 | 1,098 | % | |||||||||||||
Restructuring charges and other exit-related activities(4) | (93 | ) | (542 | ) | (83 | )% | 200 | (7,758 | ) | NM | |||||||||||
Corporate expense(2) | (11,272 | ) | (10,669 | ) | 6 | % | (30,684 | ) | (25,362 | ) | 21 | % | |||||||||
Change in intercompany profit elimination(5) | 300 | (2,019 | ) | NM | 226 | 1,549 | (85 | )% | |||||||||||||
Total operating income (loss) | $ | 19,147 | $ | 14,886 | 29 | % | $ | 33,905 | $ | (26,217 | ) | NM |
(1) | AMR sells recycled ferrous metal to SMB at rates per ton that approximate West Coast U.S. market prices. These intercompany revenues and cost of goods sold are eliminated in consolidation. |
(2) | Corporate expense consists primarily of unallocated expenses for management and certain administrative services that benefit both reportable segments. |
SCHNITZER STEEL INDUSTRIES, INC. |
(3) | The joint ventures sell recycled metal to AMR and to SMB at prices that approximate local market rates, which produces intercompany profit. This intercompany profit is eliminated while the products remain in inventory and is not recognized until the finished products are sold to third parties. |
(4) | Restructuring charges consist of expense for severance, contract termination and other restructuring costs that management does not include in its measurement of the performance of the reportable segments. Other exit-related activities consist of asset impairments and accelerated depreciation, net of gains on exit-related disposals, related to site closures. |
(5) | Intercompany profits are not recognized until the finished products are sold to third parties; therefore, intercompany profit is eliminated while the products remain in inventory. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||
($ in thousands, except for prices) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | |||||||||||||||
Ferrous revenues | $ | 272,099 | $ | 194,961 | 40 | % | $ | 686,030 | $ | 498,500 | 38 | % | |||||||||
Nonferrous revenues(1) | 121,938 | 79,823 | 53 | % | 304,386 | 237,480 | 28 | % | |||||||||||||
Retail and other revenues(1) | 36,010 | 32,067 | 12 | % | 93,938 | 93,648 | — | % | |||||||||||||
Total segment revenues | 430,047 | 306,851 | 40 | % | $ | 1,084,354 | 829,628 | 31 | % | ||||||||||||
Segment operating income | $ | 29,801 | $ | 26,870 | 11 | % | $ | 68,579 | $ | 2,555 | 2,584 | % | |||||||||
Average ferrous recycled metal sales prices ($/LT):(2) | |||||||||||||||||||||
Domestic | $ | 265 | $ | 210 | 26 | % | $ | 234 | $ | 185 | 26 | % | |||||||||
Foreign | $ | 254 | $ | 218 | 17 | % | $ | 236 | $ | 191 | 24 | % | |||||||||
Average | $ | 259 | $ | 215 | 20 | % | $ | 235 | $ | 189 | 24 | % | |||||||||
Ferrous sales volume (LT, in thousands): | |||||||||||||||||||||
Domestic | 400 | 322 | 24 | % | 998 | 895 | 12 | % | |||||||||||||
Foreign | 551 | 510 | 8 | % | 1,639 | 1,480 | 11 | % | |||||||||||||
Total ferrous sales volume (LT, in thousands) | 951 | 832 | 14 | % | 2,637 | 2,375 | 11 | % | |||||||||||||
Average nonferrous sales price ($/pound)(2)(3) | $ | 0.66 | $ | 0.59 | 12 | % | $ | 0.63 | $ | 0.60 | 5 | % | |||||||||
Nonferrous sales volumes (pounds, in thousands)(3) | 161,832 | 122,244 | 32 | % | 420,443 | 356,996 | 18 | % | |||||||||||||
Cars purchased (in thousands)(4) | 108 | 79 | 37 | % | 298 | 226 | 32 | % | |||||||||||||
Number of auto parts stores at period end | 53 | 53 | — | % | 53 | 53 | — | % | |||||||||||||
Outbound freight in cost of goods sold | $ | 30,795 | $ | 19,523 | 58 | % | $ | 77,632 | $ | 60,876 | 28 | % |
(1) | An adjustment of certain intrasegment items was made between nonferrous revenues and retail and other revenues for the three and nine months ended May 31, 2016 to conform to the presentation for the three and nine months ended May 31, 2017. The adjustment had no impact on previously reported total revenues or earnings. |
(2) | Price information is shown after netting the cost of freight incurred to deliver the product to the customer. |
(3) | Average sales price and volume information excludes platinum group metals ("PGMs") in catalytic converters. |
(4) | Cars purchased by auto parts stores only. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||
($ in thousands, except for price) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | |||||||||||||||
Revenues(1) | $ | 81,964 | $ | 70,924 | 16 | % | $ | 192,851 | $ | 201,217 | (4 | )% | |||||||||
Segment operating income (loss) | $ | 411 | $ | 1,246 | (67 | )% | $ | (4,416 | ) | $ | 2,799 | NM | |||||||||
Finished steel average sales price ($/ST)(2) | $ | 545 | $ | 501 | 9 | % | $ | 521 | $ | 520 | — | % | |||||||||
Finished steel products sold (tons, in thousands) | 141 | 133 | 6 | % | 348 | 366 | (5 | )% | |||||||||||||
Rolling mill utilization(3) | 85 | % | 53 | % | 60 | % | 80 | % | 61 | % | 31 | % |
(1) | Revenues include sales of semi-finished goods (billets) and finished steel products. |
(2) | Price information is shown after netting the cost of freight incurred to deliver the product to the customer. |
(3) | Rolling mill utilization for the third quarter and first nine months of fiscal 2017 is based on effective annual production capacity under current conditions of 580 thousand tons of finished steel products, reflecting a decrease in the effective finished steel production capacity resulting from the decommissioning of the older rolling mill during the first quarter of fiscal 2017. |
SCHNITZER STEEL INDUSTRIES, INC. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reported within other asset impairment charges (recoveries), net(1)(2): | |||||||||||||||
Long-lived assets | $ | — | $ | — | $ | — | $ | 7,336 | |||||||
Accelerated depreciation(1) | — | — | 401 | 6,208 | |||||||||||
Investment in joint venture | — | — | — | 1,968 | |||||||||||
Assets held for sale | — | — | — | 1,659 | |||||||||||
Other assets(1) | — | — | — | 1,287 | |||||||||||
— | — | 401 | 18,458 | ||||||||||||
Reported within restructuring charges and other exit-related activities: | |||||||||||||||
Long-lived assets | — | 119 | — | 448 | |||||||||||
Accelerated depreciation | — | — | 96 | 630 | |||||||||||
Other assets | — | — | 62 | 1,102 | |||||||||||
— | 119 | 158 | 2,180 | ||||||||||||
Reported within discontinued operations: | |||||||||||||||
Long-lived assets | — | — | — | 673 | |||||||||||
Accelerated depreciation | — | — | — | 274 | |||||||||||
— | — | — | 947 | ||||||||||||
Total | $ | — | $ | 119 | $ | 559 | $ | 21,585 |
(1) | Other asset impairment charges were incurred in AMR, except for $401 thousand of accelerated depreciation related to SMB for the nine months ended May 31, 2017, and $79 thousand of impairment charges on Other assets related to Corporate for the nine months ended May 31, 2016. |
(2) | Excluded from the tabular presentation of asset impairment charges above, but included within other asset impairment charges (recoveries), net reported in the Unaudited Condensed Consolidated Statements of Operations, are recoveries on previously-impaired Assets held for sale at AMR of $1,044 thousand for the three and nine months ended May 31, 2017. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
Three Months Ended May 31, 2017 | Three Months Ended May 31, 2016 | ||||||||||||||||||||||
All Other Plans | Q2’15 Plan | Total Charges | All Other Plans | Q2’15 Plan | Total Charges | ||||||||||||||||||
Restructuring charges: | |||||||||||||||||||||||
Severance costs | $ | — | $ | 36 | $ | 36 | $ | — | $ | 340 | $ | 340 | |||||||||||
Contract termination costs | 43 | 24 | 67 | 76 | 26 | 102 | |||||||||||||||||
Other restructuring costs | — | — | — | — | — | — | |||||||||||||||||
Total restructuring charges | 43 | 60 | 103 | 76 | 366 | 442 | |||||||||||||||||
Other exit-related activities: | |||||||||||||||||||||||
Asset impairments and accelerated depreciation | — | — | — | — | 119 | 119 | |||||||||||||||||
Gain on exit-related disposal | — | (3 | ) | (3 | ) | — | — | — | |||||||||||||||
Total other exit-related activities | — | (3 | ) | (3 | ) | — | 119 | 119 | |||||||||||||||
Total restructuring charges and other exit-related activities | $ | 43 | $ | 57 | $ | 100 | $ | 76 | $ | 485 | $ | 561 | |||||||||||
Restructuring charges and other exit-related activities included in continuing operations | $ | 93 | $ | 542 | |||||||||||||||||||
Restructuring charges and other exit-related activities included in discontinued operations | $ | 7 | $ | 19 |
SCHNITZER STEEL INDUSTRIES, INC. |
Nine Months Ended May 31, 2017 | Nine Months Ended May 31, 2016 | ||||||||||||||||||||||
All Other Plans | Q2’15 Plan | Total Charges | All Other Plans | Q2’15 Plan | Total Charges | ||||||||||||||||||
Restructuring charges: | |||||||||||||||||||||||
Severance costs | $ | — | $ | (23 | ) | $ | (23 | ) | $ | — | $ | 4,686 | $ | 4,686 | |||||||||
Contract termination costs | 180 | 83 | 263 | 201 | 683 | 884 | |||||||||||||||||
Other restructuring costs | — | — | — | — | — | — | |||||||||||||||||
Total restructuring charges | 180 | 60 | 240 | 201 | 5,369 | 5,570 | |||||||||||||||||
Other exit-related activities: | |||||||||||||||||||||||
Asset impairments and accelerated depreciation | — | 158 | 158 | — | 3,127 | 3,127 | |||||||||||||||||
Gain on exit-related disposal | — | (565 | ) | (565 | ) | — | — | — | |||||||||||||||
Total other exit-related activities | — | (407 | ) | (407 | ) | — | 3,127 | 3,127 | |||||||||||||||
Total restructuring charges and other exit-related activities | $ | 180 | $ | (347 | ) | $ | (167 | ) | $ | 201 | $ | 8,496 | $ | 8,697 | |||||||||
Restructuring charges and other exit-related activities included in continuing operations | $ | (200 | ) | $ | 7,758 | ||||||||||||||||||
Restructuring charges and other exit-related activities included in discontinued operations | $ | 33 | $ | 939 |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. |
May 31, 2017 | August 31, 2016 | ||||||
Short-term borrowings | $ | 641 | $ | 8,374 | |||
Long-term debt, net of current maturities | 183,802 | 184,144 | |||||
Total debt | 184,443 | 192,518 | |||||
Less: cash and cash equivalents | 15,209 | 26,819 | |||||
Total debt, net of cash | $ | 169,234 | $ | 165,699 |
Nine Months Ended May 31, | |||||||
2017 | 2016 | ||||||
Borrowings from long-term debt | $ | 360,626 | $ | 112,427 | |||
Repayment of long-term debt | (368,843 | ) | (137,869 | ) | |||
Proceeds from line of credit | — | 135,500 | |||||
Repayment of line of credit | — | (135,500 | ) | ||||
Net borrowings (repayments) of debt | $ | (8,217 | ) | $ | (25,442 | ) |
SCHNITZER STEEL INDUSTRIES, INC. |
Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Consolidated operating income (loss): | |||||||||||||||
As reported | $ | 19,147 | $ | 14,886 | $ | 33,905 | $ | (26,217 | ) | ||||||
Goodwill impairment charge | — | — | — | 8,845 | |||||||||||
Other asset impairment charges (recoveries), net | (1,044 | ) | — | (643 | ) | 18,458 | |||||||||
Restructuring charges and other exit-related activities | 93 | 542 | (200 | ) | 7,758 | ||||||||||
Recoveries related to the resale or modification of previously contracted shipments | (171 | ) | (139 | ) | (727 | ) | (139 | ) | |||||||
Adjusted | $ | 18,025 | $ | 15,289 | $ | 32,335 | $ | 8,705 | |||||||
AMR operating income: | |||||||||||||||
As reported | $ | 29,801 | $ | 26,870 | $ | 68,579 | $ | 2,555 | |||||||
Goodwill impairment charge | — | — | — | 8,845 | |||||||||||
Other asset impairment charges (recoveries), net | (1,044 | ) | — | (1,044 | ) | 18,379 | |||||||||
Recoveries related to the resale or modification of previously contracted shipments | (171 | ) | (139 | ) | (727 | ) | (139 | ) | |||||||
Adjusted | $ | 28,586 | $ | 26,731 | $ | 66,808 | $ | 29,640 | |||||||
SMB operating income (loss): | |||||||||||||||
As reported | $ | 411 | $ | 1,246 | $ | (4,416 | ) | $ | 2,799 | ||||||
Other asset impairment charges | — | — | 401 | — | |||||||||||
Adjusted | $ | 411 | $ | 1,246 | $ | (4,015 | ) | $ | 2,799 | ||||||
Income (loss) from continuing operations attributable to SSI: | |||||||||||||||
As reported | $ | 16,692 | $ | 11,116 | $ | 26,551 | $ | (34,337 | ) | ||||||
Goodwill impairment charge | — | — | — | 8,845 | |||||||||||
Other asset impairment charges (recoveries), net | (1,044 | ) | — | (643 | ) | 18,458 | |||||||||
Restructuring charges and other exit-related activities | 93 | 542 | (200 | ) | 7,758 | ||||||||||
Recoveries related to the resale or modification of previously contracted shipments | (171 | ) | (139 | ) | (727 | ) | (139 | ) | |||||||
Non-cash write-off of debt issuance costs | — | 768 | — | 768 | |||||||||||
Income tax expense (benefit) allocated to adjustments(1) | 3 | 273 | 9 | 829 | |||||||||||
Adjusted | $ | 15,573 | $ | 12,560 | $ | 24,990 | $ | 2,182 | |||||||
Diluted earnings (loss) per share from continuing operations attributable to SSI: | |||||||||||||||
As reported | $ | 0.60 | $ | 0.41 | $ | 0.96 | $ | (1.26 | ) | ||||||
Goodwill impairment charge, per share | — | — | — | 0.33 | |||||||||||
Other asset impairment charges (recoveries), net, per share | (0.04 | ) | — | (0.02 | ) | 0.68 | |||||||||
Restructuring charges and other exit-related activities, per share | — | 0.02 | (0.01 | ) | 0.29 | ||||||||||
Recoveries related to the resale or modification of previously contracted shipments, per share | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.01 | ) | |||||||
Non-cash write-off of debt issuance costs, per share | — | 0.03 | — | 0.03 | |||||||||||
Income tax expense (benefit) allocated to adjustments, per share(1) | — | 0.01 | — | 0.03 | |||||||||||
Adjusted(2) | $ | 0.56 | $ | 0.46 | $ | 0.90 | $ | 0.08 |
SCHNITZER STEEL INDUSTRIES, INC. |
(1) | Income tax allocated to the aggregate adjustments reconciling reported and adjusted income (loss) from continuing operations attributable to SSI and diluted earnings (loss) per share from continuing operations attributable to SSI is determined based on a tax provision calculated with and without the adjustments. |
(2) | May not foot due to rounding. |
SCHNITZER STEEL INDUSTRIES, INC. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
SCHNITZER STEEL INDUSTRIES, INC. |
ITEM 4. | CONTROLS AND PROCEDURES |
SCHNITZER STEEL INDUSTRIES, INC. |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
SCHNITZER STEEL INDUSTRIES, INC. |
ITEM 6. | EXHIBITS |
Exhibit Number | Exhibit Description | |
10.1* | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101 | The following financial information from Schnitzer Steel Industries, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended May 31, 2017 and 2016, (ii) Unaudited Condensed Consolidated Balance Sheets as of May 31, 2017 and August 31, 2016, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended May 31, 2017 and 2016, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 2017 and 2016, and (v) the Notes to Unaudited Condensed Consolidated Financial Statements. |
SCHNITZER STEEL INDUSTRIES, INC. |
SCHNITZER STEEL INDUSTRIES, INC. | |||
(Registrant) | |||
Date: | June 26, 2017 | By: | /s/ Tamara L. Lundgren |
Tamara L. Lundgren | |||
President and Chief Executive Officer | |||
Date: | June 26, 2017 | By: | /s/ Richard D. Peach |
Richard D. Peach | |||
Senior Vice President, Chief Financial Officer and Chief of Corporate Operations |
Average TSR Percentile Rank | TSR Payout Factor | ||
less than 25% | 0% | ||
25% | 50% | ||
50% | 100% | ||
90% or more | 200% |
CFROI Payout | ||||
Average CFROI | Factor | |||
Less than ___% | 0% | |||
___% | 50 | % | ||
___% | 100 | % | ||
___% or more | 200 | % |
SCHNITZER STEEL INDUSTRIES, INC. | |||
By: | |||
Authorized Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Schnitzer Steel Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Tamara L. Lundgren |
Tamara L. Lundgren President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Schnitzer Steel Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Richard D. Peach |
Richard D. Peach Senior Vice President, Chief Financial Officer and Chief of Corporate Operations |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Tamara L. Lundgren |
Tamara L. Lundgren President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Richard D. Peach |
Richard D. Peach Senior Vice President, Chief Financial Officer and Chief of Corporate Operations |
Document and Entity Information Document - shares |
9 Months Ended | |
---|---|---|
May 31, 2017 |
Jun. 22, 2017 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | SCHNITZER STEEL INDUSTRIES INC | |
Entity Central Index Key | 0000912603 | |
Current Fiscal Year End Date | --08-31 | |
Entity Filer Category | Accelerated Filer | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 26,857,525 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 200,000 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 17,252 | $ 11,689 | $ 28,243 | $ (34,249) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (694) | 1,485 | (1,488) | (416) |
Cash flow hedges, net | 0 | 0 | 0 | 240 |
Pension obligations, net | 266 | 65 | 281 | 170 |
Total other comprehensive income (loss), net of tax | (428) | 1,550 | (1,207) | (6) |
Comprehensive income (loss) | 16,824 | 13,239 | 27,036 | (34,255) |
Less comprehensive income attributable to noncontrolling interests | (687) | (689) | (1,967) | (1,294) |
Comprehensive income (loss) attributable to SSI | $ 16,137 | $ 12,550 | $ 25,069 | $ (35,549) |
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Cash flows from operating activities: | ||
Net income (loss) | $ 28,243 | $ (34,249) |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation and amortization | 37,459 | 41,943 |
Exit-related (gains), asset impairments and accelerated depreciation, net | (407) | 3,127 |
Goodwill impairment charge | 0 | 8,845 |
Other asset impairment charges (recoveries), net | (643) | 18,458 |
Write-off of debt issuance costs | 0 | 768 |
Share-based compensation expense | 9,182 | 6,636 |
Deferred income taxes | 1,452 | 580 |
Inventory write-down | 0 | 710 |
Undistributed equity in earnings of joint ventures | (3,300) | 61 |
(Gain) loss on disposal of assets | 194 | (529) |
Unrealized foreign exchange (gain) loss, net | 89 | (75) |
Bad debt expense, net | 35 | 154 |
Changes in assets and liabilities: | ||
Accounts receivable | (21,950) | 5,303 |
Inventories | (25,033) | 3,812 |
Income taxes | (935) | 436 |
Prepaid expenses and other current assets | (2,826) | 882 |
Other long-term assets | 421 | (465) |
Accounts payable | 13,365 | 3,527 |
Accrued payroll and related liabilities | 5,795 | (2,880) |
Other accrued liabilities | 5,866 | (5,632) |
Environmental liabilities | 1,936 | (534) |
Other long-term liabilities | (1,050) | (88) |
Distributed equity in earnings of joint ventures | 3,389 | 400 |
Net cash provided by operating activities | 51,282 | 51,190 |
Cash flows from investing activities: | ||
Capital expenditures | (31,508) | (21,442) |
Purchase of cost method investment | (6,017) | 0 |
Joint venture receipts, net | 266 | 7 |
Proceeds from sale of assets | 2,753 | 2,649 |
Net cash used in investing activities | (34,506) | (18,786) |
Cash flows from financing activities: | ||
Borrowings from long-term debt | 360,626 | 112,427 |
Repayment of long-term debt | (368,843) | (137,869) |
Proceeds from line of credit | 0 | 135,500 |
Repayment of line of credit | 0 | (135,500) |
Payment of debt issuance costs | (112) | (879) |
Taxes paid related to net share settlement of share-based payment arrangements | (3,300) | (1,938) |
Repurchase of Class A common stock | 0 | (3,479) |
Distributions to noncontrolling interest | (1,177) | (1,179) |
Dividends paid | (15,322) | (15,275) |
Net cash used in financing activities | (28,128) | (48,192) |
Effect of exchange rate changes on cash | (258) | 51 |
Net decrease in cash and cash equivalents | (11,610) | (15,737) |
Cash and cash equivalents as of beginning of period | 26,819 | 22,755 |
Cash and cash equivalents as of end of period | $ 15,209 | $ 7,018 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements of Schnitzer Steel Industries, Inc. (the “Company”) have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q, including Article 10 of Regulation S-X. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all normal, recurring adjustments considered necessary for a fair statement have been included. Management suggests that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2016. The results for the three and nine months ended May 31, 2017 and 2016 are not necessarily indicative of the results of operations for the entire fiscal year. Accounting Changes In January 2017, an accounting standard update was issued that eliminates the second step of the two-step goodwill impairment test. Under the revised guidance, an entity applies a one-step quantitative test and records the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. To reduce the complexity of the goodwill impairment test, the Company early-adopted the new requirement as of the beginning of the third quarter of fiscal 2017 with no impact to the Unaudited Condensed Consolidated Financial Statements. The Company will apply the amendments to future goodwill impairment tests. See the Goodwill section of this Note for further detail. Discontinued Operations The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the disposed components that may be reasonably segregated from the costs of the ongoing operations of the Company. Asset impairments related to the disposed components are also included in the results of discontinued operations. See Note 10 - Discontinued Operations and the Asset Impairment Charges section of this Note for further detail. Cash and Cash Equivalents Cash and cash equivalents include short-term securities that are not restricted by third parties and have an original maturity date of 90 days or less. Included in accounts payable are book overdrafts representing outstanding checks in excess of funds on deposit of $4 million and $3 million as of May 31, 2017 and August 31, 2016, respectively. Assets Held for Sale An asset is classified as held for sale upon meeting certain criteria specified in the accounting standards. An asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell with no further adjustments for depreciation. During the nine months ended May 31, 2016, the Company recorded an impairment charge for the initial and subsequent write-down of certain equipment assets held for sale of $2 million, which is reported within other asset impairment charges (recoveries), net in the Unaudited Condensed Consolidated Statements of Operations. The Company determined fair value using Level 3 inputs under the fair value hierarchy consisting of information provided by brokers and other external sources along with management's own assumptions. Assets held for sale were less than $1 million as of August 31, 2016. The Company did not have any assets held for sale as of May 31, 2017. During the third quarter of fiscal 2017, the Company sold equipment assets that had been classified as held for sale prior to being fully impaired in fiscal 2015. The Company recorded a gain on the sale of $1 million, which is reported within other asset impairment charges (recoveries), net in the Unaudited Condensed Consolidated Statements of Operations. Long-Lived Assets The Company tests long-lived tangible and intangible assets for impairment at the asset group level, which is determined based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. For the Company's metals recycling operations, an asset group is generally comprised of the regional shredding and export operation along with surrounding feeder yards. For regions with no shredding and export operations, each metals recycling yard is an asset group. For the Company's auto parts operations, generally each auto parts store is an asset group. The Company's steel manufacturing business is a single asset group. The Company tests its asset groups for impairment when certain triggering events or changes in circumstances indicate that the carrying value of the asset group may be impaired. If the carrying value of the asset group is not recoverable because it exceeds the Company’s estimate of future undiscounted cash flows from the use and eventual disposition of the asset group, an impairment loss is recognized by the amount the carrying value exceeds its fair value, if any. The impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group shall not reduce the carrying amount of that asset below its fair value. Fair value is determined primarily using the cost and market approaches. During the three and nine months ended May 31, 2016, the Company recorded impairment charges on long-lived tangible and intangible assets associated with certain regional metals recycling operations and used auto parts store locations. With respect to individual long-lived assets, changes in circumstances may merit a change in the estimated useful lives or salvage values of the assets, which are accounted for prospectively in the period of change. For such assets, the useful life is shortened based on the Company's current plans to dispose of or abandon the asset before the end of its original useful life and depreciation is accelerated beginning when that determination is made. During the nine months ended May 31, 2017, the Company recognized accelerated depreciation primarily due to shortening the useful lives of decommissioned machinery and equipment assets. During the nine months ended May 31, 2016, the Company recognized accelerated depreciation due to shortened useful lives in connection with site closures and idled equipment. See the Asset Impairment Charges section of this Note for tabular presentation of long-lived asset impairment charges and accelerated depreciation. Long-lived asset impairment charges and accelerated depreciation are reported in the Unaudited Condensed Consolidated Statements of Operations within (1) other asset impairment charges (recoveries), net; (2) restructuring charges and other exit-related activities, if related to a site closure not qualifying for discontinued operations reporting; or (3) loss from discontinued operations, if related to a component of the Company qualifying for discontinued operations reporting. Investments in Joint Ventures A loss in value of an investment in a joint venture is recognized when the decline is other than temporary. Management considers all available evidence to evaluate the realizable value of its investments including the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the joint venture business, and the Company’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. Once management determines that an other-than-temporary impairment exists, the investment is written down to its fair value, which establishes a new cost basis. The Company determines fair value using Level 3 inputs under the fair value hierarchy using an income approach based on a discounted cash flow analysis. During the nine months ended May 31, 2016, the Company recorded an impairment charge of $2 million related to an investment in a joint venture, which is reported within other asset impairment charges (recoveries), net in the Unaudited Condensed Consolidated Statements of Operations. During the nine months ended May 31, 2017, one of the Company's other joint venture interests sold real estate resulting in recognition of a $6 million gain by the joint venture, $3 million of which is attributable to the Company's investment. The Company's share of the gain is reported within (income) loss from joint ventures in the Unaudited Condensed Consolidated Statements of Operations for the nine months ended May 31, 2017. Cost Method Investment During the nine months ended May 31, 2017, the Company invested $6 million in a privately-held waste and recycling entity. The Company's influence over the operating and financial policies of the entity is not significant and, thus, the investment is accounted for under the cost method. Under the cost method, the investment is carried at cost and adjusted only for other-than-temporary impairments, certain distributions and additional investments. The investment is presented as part of the Auto and Metals Recycling ("AMR") reportable segment and reported within other assets in the Unaudited Condensed Consolidated Balance Sheets. The Company does not hold any other cost-method investments. As of May 31, 2017, the Company had not identified any events or changes in circumstances that may have a significant adverse effect on the fair value of the investment or indicators of other-than-temporary impairment. Asset Impairment Charges The following asset impairment charges, excluding goodwill impairment charges discussed below in this Note, were recorded in the Unaudited Condensed Consolidated Statements of Operations (in thousands):
_____________________________
Goodwill Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Impairment of goodwill is tested at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is required to be identified as a reporting unit if the component is a business for which discrete financial information is available and segment management regularly reviews its operating results. When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. Under the accounting guidance in effect for the Company prior to the third quarter of fiscal 2017, in the first step of the two-step quantitative impairment test, the fair value of a reporting unit was compared to its carrying value. If the carrying value of a reporting unit exceeded its fair value, the second step of the impairment test was performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit was allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeded the implied fair value of goodwill, an impairment loss was recognized in an amount equal to that excess. As of the beginning of the third quarter of fiscal 2017, the Company adopted an accounting standard update that eliminates the second step of the two-step goodwill impairment test with no impact to the Unaudited Condensed Consolidated Financial Statements. Under the revised guidance, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The Company estimates the fair value of its reporting units using an income approach based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit. The determination of fair value involves the use of significant estimates and assumptions, including revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, benefits associated with a taxable transaction and synergistic benefits available to market participants. In addition, to corroborate the reporting units’ valuation, the Company uses a market approach based on earnings multiple data and a reconciliation of the Company’s estimate of the aggregate fair value of the reporting units to the Company’s market capitalization, including consideration of a control premium. During the second quarter of fiscal 2016, management identified the combination of sustained weak market conditions at such time, including the adverse effects of lower commodity selling prices and the constraining impact of the lower price environment on the supply of raw materials which negatively impacted volumes, the Company’s financial performance and a decline in the Company’s market capitalization at such time as a triggering event requiring an interim impairment test of goodwill allocated to its reporting units. In connection with the interim impairment test performed in the second quarter of fiscal 2016, the Company used a measurement date of February 1, 2016. For a reporting unit within AMR with $9 million of goodwill as of February 1, 2016, the first step of the impairment test showed that the fair value of the reporting unit was less than its carrying amount, indicating a potential impairment. Based on the second step of the impairment test, the Company concluded that no implied fair value of goodwill remained for the reporting unit, resulting in an impairment of the entire carrying amount of the reporting unit's goodwill totaling $9 million. For the reporting unit within AMR carrying the remainder, or $166 million, of the Company's goodwill as of February 1, 2016, the estimated fair value of the reporting unit exceeded its carrying value by approximately 27% and, thus, the Company did not record a goodwill impairment charge. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and notes and other contractual receivables from suppliers. The majority of cash and cash equivalents is maintained with major financial institutions. Balances with these and certain other institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250,000 as of May 31, 2017. Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company’s customer base. The Company controls credit risk through credit approvals, credit limits, credit insurance, letters of credit or other collateral, cash deposits and monitoring procedures. The Company is exposed to a residual credit risk with respect to open letters of credit by virtue of the possibility of the failure of a bank providing a letter of credit. The Company had $47 million and $40 million of open letters of credit as of May 31, 2017 and August 31, 2016, respectively. Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and debt. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2) and approximates its carrying value. Fair Value Measurements Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are described as follows:
When developing the fair value measurements, the Company uses quoted market prices whenever available or seeks to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available. Restructuring Charges Restructuring charges consist of severance, contract termination and other restructuring-related costs. A liability for severance costs is typically recognized when the plan of termination has been communicated to the affected employees and is measured at its fair value at the communication date. Contract termination costs consist primarily of costs that will continue to be incurred under operating leases for their remaining terms without economic benefit to the Company. A liability for contract termination costs is recognized at the date the Company ceases using the rights conveyed by the lease contract and is measured at its fair value, which is determined based on the remaining contractual lease rentals reduced by estimated sublease rentals. A liability for other restructuring-related costs is measured at its fair value in the period in which the liability is incurred. Restructuring charges that directly involve a discontinued operation are included in the results of discontinued operations in all periods presented. See Note 7 - Restructuring Charges and Other Exit-Related Activities for further detail. |
Recent Accounting Pronouncements |
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May 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, an accounting standard update was issued that clarifies the principles for recognizing revenue from contracts with customers. The update will supersede the existing standard for recognizing revenue. Additional updates have been issued since May 2014 amending aspects of the initial update and providing implementation guidance. The guidance is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Upon becoming effective, an entity may adopt the standard either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is in the process of examining its current revenue streams and significant contracts with customers under the requirements of the new standard and, based on the progress of this examination to date, does not believe the standard will have a material impact on its financial position, net income or cash flows. The Company is also analyzing the expanded disclosure requirements under the new standard, the method of adoption, and potential changes to its accounting policies, processes, systems and internal controls that may be required to support the new standard. In February 2016, an accounting standard was issued that will supersede the existing lease standard and requiring a lessee to recognize a lease liability and a lease asset on its balance sheet for all leases, including those classified as operating leases under the existing lease standard. The update also expands the required quantitative and qualitative disclosures surrounding leases. This standard is effective for the Company beginning in fiscal 2020, including interim periods within that fiscal year. This standard will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is in the process of identifying its population of leases within the scope of the new accounting standard and documenting salient lease terms to support the initial and subsequent measurement of lease liabilities and lease assets. The Company is evaluating the impact of adopting this standard on its financial position, results of operations, cash flows and disclosures. In March 2016, an accounting standard update was issued that amends several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows. The standard is effective for the Company beginning in fiscal 2018, including interim periods within that fiscal year. Early adoption is permitted in any interim or annual period; however, if the Company elects early adoption, it must adopt all of the amendments in the same period. The Company does not expect adoption to have an immediate material impact on its consolidated financial position, results of operations and cash flows. In August 2016, an accounting standard update was issued that addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among the cash flow matters addressed in the update are payments for costs related to debt prepayments or extinguishments, payments related to settlement of certain types of debt instruments, payments of contingent consideration made after a business combination, proceeds from insurance claims and corporate-owned life insurance policies, and distributions received from equity method investees, among others. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period, and all of the amendments must be adopted together in the same period. The amendments will be applied using a retrospective transition method to each period presented, unless impracticable for specific cash flow matters, in which case the amendments would be applied prospectively as of the earliest date practicable. The Company is evaluating the impact of adopting this standard on its consolidated statement of cash flows. In October 2016, an accounting standard update was issued that amends the existing guidance on the accounting for the income tax effects of intra-entity transfers of assets other than inventory. Current accounting standards prohibit the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The amendments in the update require that entities recognize the income tax effects of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments do not change accounting standards for the pre-tax effects of an intra-entity asset transfer under accounting standards applicable to consolidation, or for an intra-entity transfer of inventory. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted in the first interim period of a fiscal year. The amendments will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is evaluating the impact of adopting this standard on its consolidated financial position, results of operations and cash flows. In March 2017, an accounting standard update was issued that modifies the presentation requirements for net periodic pension cost and net periodic postretirement benefit cost within an entity's income statement. The amendments in the update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments also require the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization, when applicable. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted beginning with the first quarter of fiscal 2018. Aspects of the update affecting income statement presentation must be applied retrospectively, while aspects affecting the capitalization of the service cost component in assets must be applied prospectively on and after the effective date. The Company is evaluating the impact of adopting this standard on its consolidated financial position, results of operations and cash flows. |
Inventories |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following (in thousands):
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Goodwill |
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May 31, 2017 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||
Goodwill | Goodwill The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. There were no triggering events identified during the nine months ended May 31, 2017 requiring an interim goodwill impairment test. The gross change in the carrying amount of goodwill for the nine months ended May 31, 2017 was as follows (in thousands):
Accumulated goodwill impairment charges were $471 million as of May 31, 2017 and August 31, 2016. |
Debt |
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May 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt As of August 31, 2016, the Company had $8 million of tax-exempt economic development revenue bonds outstanding with the State of Oregon and scheduled to mature in January 2021. In August 2016, the Company exercised its option to redeem the bonds prior to maturity. The Company repaid the bonds in full in September 2016. The obligation is reported as a current liability within short-term borrowings as of August 31, 2016 on the Unaudited Condensed Consolidated Balance Sheet, and the $8 million repayment is reported as a cash outflow from financing activities for the nine months ended May 31, 2017 on the Unaudited Condensed Consolidated Statement of Cash Flows. |
Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Environmental Liabilities The Company evaluates the adequacy of its environmental liabilities on a quarterly basis. Adjustments to the liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or expenditures are made for which liabilities were established. Changes in the Company’s environmental liabilities for the nine months ended May 31, 2017 were as follows (in thousands):
AMR As of May 31, 2017 and August 31, 2016, AMR had environmental liabilities of $48 million and $46 million, respectively, for the potential remediation of locations where it has conducted business and has environmental liabilities from historical or recent activities. Portland Harbor In December 2000, the Company was notified by the United States Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) that it is one of the potentially responsible parties (“PRPs”) that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (the “Site”). The precise nature and extent of any cleanup of the Site, the parties to be involved, the timing of any specific remedial action and the allocation of the costs for any cleanup among responsible parties have not yet been determined. The process of site investigation, remedy selection, identification of additional PRPs and allocation of costs has been underway for a number of years, but significant uncertainties remain. It is unclear to what extent the Company will be liable for environmental costs or natural resource damage claims or third party contribution or damage claims with respect to the Site. While the Company participated in certain preliminary Site study efforts, it was not party to the consent order entered into by the EPA with certain other PRPs, referred to as the “Lower Willamette Group” (“LWG”), for a remedial investigation/feasibility study (“RI/FS”). During fiscal 2007, the Company and certain other parties agreed to an interim settlement with the LWG under which the Company made a cash contribution to the LWG RI/FS. The Company has also joined with approximately 100 other PRPs, including the LWG members, in a voluntary process to establish an allocation of costs at the Site, including costs incurred by the LWG in the RI/FS process. The LWG members have also commenced federal court litigation, which has been stayed, seeking to bring additional parties into the allocation process. In January 2008, the Natural Resource Damages Trustee Council (“Trustees”) for Portland Harbor invited the Company and other PRPs to participate in funding and implementing the Natural Resource Injury Assessment for the Site. Following meetings among the Trustees and the PRPs, a funding and participation agreement was negotiated under which the participating PRPs agreed to fund the first phase of the natural resource damage assessment. The Company joined in that Phase I agreement and paid a portion of those costs. The Company did not participate in funding the second phase of the natural resource damage assessment. A former Trustee, the Confederated Tribes and Bands of the Yakama Nation, which withdrew from the council in 2009, filed a suit on January 30, 2017 against approximately 30 parties, including the Company, seeking reimbursement of certain past and future response costs in connection with remedial action at the Site and recovery of assessment costs related to natural resources damages from releases at and from the Site to the Multnomah Channel and the Lower Columbia River. The Company does not have sufficient information to determine the likelihood of a loss or to estimate the amount of damages being sought or the amount of such damages that could be allocated to the Company. On March 30, 2012, the LWG submitted to the EPA and made available on its website a draft feasibility study (“FS”) for the Site based on approximately ten years of work and $100 million in costs classified by the LWG as investigation-related. The draft FS submitted by the LWG identified ten possible remedial alternatives which ranged in estimated cost from approximately $170 million to $250 million (net present value) for the least costly alternative to approximately $1.08 billion to $1.76 billion (net present value) for the most costly alternative and estimated a range of two to 28 years to implement the remedial work, depending on the selected alternative. However, the EPA largely rejected this draft FS, and took over the drafting process. The EPA provided their revised draft FS in August 2015 that identified five possible remedial alternatives which ranged in estimated cost from approximately $550 million to $1.19 billion (net present value) for the least costly alternative to approximately $1.71 billion to $3.67 billion (net present value) for the most costly alternative and estimated a range of four to 18 years to implement the remedial work. In June 2016, the EPA issued its final FS and Proposed Plan for the cleanup of the in-river portion of the Site. In the Proposed Plan, the EPA identified its preferred alternative, which included a combination of dredging, capping, and enhanced natural recovery and which the EPA estimated would take approximately seven years to construct with additional time for monitored natural recovery to occur and cost an estimated $746 million (net present value). This is approximately half of the estimated $1.4 billion (net present value) cost of a very similar preferred alternative that EPA Region 10 presented to a peer review group in November 2015. The final FS identified eight possible remedial alternatives (some of which contain two disposal alternatives, for a total of 13 possible alternative remedial scenarios) which ranged in estimated cost from approximately $316 million to $677 million (net present value) for the least costly alternative to approximately $1.21 billion to $2.67 billion (net present value) for the most costly alternative that the EPA did not screen out and estimated a range of four to 19 years to implement the remedial work. The EPA received input on its Proposed Plan from over 5,300 commenters during a 90-day public comment period that closed in September 2016. In their comments, the Company and certain other stakeholders identified a number of serious concerns regarding the EPA's risk and remedial alternatives assessments and the EPA's cost estimates, scheduling assumptions and conclusions regarding the feasibility, effectiveness and assignment of remediation technologies, including that the EPA’s FS and Proposed Plan were based on data that are more than a decade old and may not accurately represent site or background conditions. In January 2017, the EPA issued a Record of Decision (“ROD”) that identified the selected remedy for the Site. The selected remedy is a modified version of one of the alternative remedies in the EPA’s FS that expands the scope of the cleanup and has an estimated cost which is significantly more than their Proposed Plan. The EPA has estimated the total cost of the selected remedy at $1.7 billion with a net present value cost of $1.05 billion (at a 7% discount rate) and an estimated construction period of 13 years following completion of the remedial designs. In the ROD, the EPA stated that the cost estimate is an order-of-magnitude engineering estimate that is expected to be within +50% to -30% of the actual project cost and that changes in the cost elements are likely to occur as a result of new information and data collected during the engineering design. The Company has identified a number of concerns regarding the EPA's estimated cost and time required for the selected remedy. Because of questions regarding cost-effectiveness and other concerns, such as technical feasibility, use of stale data and the need for new baseline data, it is uncertain whether the ROD will be implemented as issued. In addition, the ROD does not determine or allocate the responsibility for remediation costs. In the ROD, the EPA acknowledged that the assumptions used to estimate costs for the selected remedy were developed based on the existing data and will be finalized during the remedial design, after design level data to refine the baseline conditions are obtained. Moreover, the ROD provides only Site-wide cost estimates and does not provide sufficient detail or ranges of certainty and finality to estimate costs for specific sediment management areas. Accordingly, the EPA has indicated and the Company anticipates that additional pre-remedial design investigative work, such as new baseline sampling and monitoring, will be conducted in order to provide a re-baseline and delineate particular remedial actions for specific areas within the Site. This re-baselining will need to occur prior to proceeding with the next phase in the process which is the remedial design. The remedial design phase is an engineering phase during which additional technical information and data will be collected, identified and incorporated into technical drawings and specifications developed for the subsequent remedial action. The EPA is seeking a new coalition of PRPs to perform the re-baselining and remedial design activities. Remediation activities are not expected to commence for a number of years and responsibility for implementing and funding the EPA’s selected remedy will be determined in a separate allocation process. While an allocation process is currently underway, the EPA's ROD has raised questions and uncertainty as to when and how that allocation process will proceed. Because there has not been a determination of the specific remediation actions that will be required, the amount of natural resource damages or how the costs of the investigations and any remedy and natural resource damages will be allocated among the PRPs, the Company believes it is not possible to reasonably estimate the amount or range of costs which it is likely to or which it is reasonably possible that it will incur in connection with the Site, although such costs could be material to the Company’s financial position, results of operations, cash flows and liquidity. Among the facts currently being developed are detailed information on the history of ownership of and the nature of the uses of and activities and operations performed on each property within the Site, which are factors that will play a substantial role in determining the allocation of investigation and remedy costs among the PRPs. The Company has insurance policies that it believes will provide reimbursement for costs it incurs for defense, remediation and mitigation for natural resource damages claims in connection with the Site, although there is no assurance that those policies will cover all of the costs which the Company may incur. The Company previously recorded a liability for its estimated share of the costs of the investigation of $1 million. The Oregon Department of Environmental Quality is separately providing oversight of voluntary investigations by the Company involving the Company’s sites adjacent to the Portland Harbor which are focused on controlling any current “uplands” releases of contaminants into the Willamette River. No liabilities have been established in connection with these investigations because the extent of contamination (if any) and the Company’s responsibility for the contamination (if any) have not yet been determined. Other AMR Sites As of May 31, 2017 and August 31, 2016, the Company had environmental liabilities related to various AMR sites other than Portland Harbor of $47 million and $45 million, respectively. The liabilities relate to the investigation and potential remediation of soil contamination, groundwater contamination, storm water runoff issues and other natural resource damages and were not individually material at any site. Legacy Environmental Loss Contingencies The Company’s environmental loss contingencies as of May 31, 2017 and August 31, 2016, other than Portland Harbor, include actual or possible investigation and cleanup costs from historical contamination at sites currently or formerly owned or operated by the Company or at other sites where the Company may have responsibility for such costs due to past disposal or other activities ("legacy environmental loss contingencies"). These legacy environmental loss contingencies relate to the potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties and claims by third parties for personal injury and property damage. The Company has been notified that it is or may be a potentially responsible party at certain of these sites, and investigation and cleanup activities are ongoing or may be required in the future. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. Where investigation and cleanup activities are ongoing or where the Company has not yet been identified as having responsibility or the contamination has not yet been identified, it is reasonably possible that the Company may need to recognize additional liabilities in connection with such sites but the Company cannot currently reasonably estimate the possible loss or range of loss absent additional information or developments. Such additional liabilities, individually or in the aggregate, may have a material adverse effect on the Company's results of operations, financial condition or cash flows. Steel Manufacturing Business (“SMB”) SMB’s electric arc furnace generates dust (“EAF dust”) that is classified as hazardous waste by the EPA because of its zinc and lead content. As a result, the Company captures the EAF dust and ships it in specialized rail cars to a firm that applies a treatment that allows the EAF dust to be delisted as hazardous waste. SMB has an operating permit issued under Title V of the Clean Air Act Amendments of 1990, which governs certain air quality standards. The permit is based on an annual production capacity of 950 thousand tons. The permit was first issued in 1998 and has since been renewed through February 1, 2018. SMB had no environmental liabilities as of May 31, 2017 and August 31, 2016. Other than the Portland Harbor Superfund site and legacy environmental loss contingencies, which are discussed separately above, management currently believes that adequate provision has been made for the potential impact of these issues and that the ultimate outcomes will not have a material adverse effect on the consolidated financial statements of the Company as a whole. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material in any given period. Other Contingencies The Company is a party to various legal proceedings arising in the normal course of business. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. Legal proceedings include those arising from accidents involving Company-owned vehicles, including Company tractor trailers. In some instances, such accidents and the related litigation involve accidents that have resulted in third party fatalities. It is reasonably possible that the Company may recognize additional losses in connection with such lawsuits at the time such losses are probable and can be reasonably estimated. Such losses may be material to the Company's consolidated financial statements. The Company believes that such losses, if incurred, will be substantially covered by existing insurance coverage. The Company does not anticipate that the resolution of legal proceedings arising in the normal course of business, after taking into consideration expected insurance recoveries, will have a material adverse effect on its results of operations, financial condition, or cash flows. |
Restructuring Charges and Other Exit-Related Activities |
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Restructuring Charges, Asset Impairment and Accelerated Depreciation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges and Other Exit-Related Activities | Restructuring Charges and Other Exit-Related Activities The Company has implemented a number of restructuring initiatives designed to reduce operating expenses and improve profitability and to achieve further integration and synergistic cost efficiencies in its operating platform. The restructuring charges incurred by the Company during the periods presented primarily pertain to the plan announced in the second quarter of fiscal 2015 and expanded in subsequent periods (the "Q2'15 Plan"). At the end of the second quarter of fiscal 2015, the Company commenced additional restructuring and exit-related initiatives by undertaking strategic actions consisting of idling underutilized assets at AMR and initiating the closure of seven auto parts stores to align the Company's business to market conditions. The Company expanded these initiatives in April 2015 and also announced the integration of the former Metals Recycling Business and Auto Parts Business into the combined AMR platform in order to achieve operational synergies and reduce the Company's annual operating expenses, primarily selling, general and administrative expenses, through headcount reductions, reducing organizational layers, consolidating shared service functions and other non-headcount measures. Additional cost savings and productivity improvement initiatives, including reductions in personnel, savings from procurement activities, streamlining of administrative and supporting services functions, and adjustments to its operating capacity through facility closures, were identified and initiated in subsequent periods. Collectively, these initiatives are referred to as the Q2'15 Plan. The Company incurred restructuring charges of less than $1 million during each of the three and nine months ended May 31, 2017, and less than $1 million and $6 million during the three and nine months ended May 31, 2016, respectively. The remaining charges relating to these initiatives of less than $1 million are expected to be substantially incurred by the end of fiscal 2017, and the significant majority of these remaining charges require the Company to make cash payments. However, the Company may incur additional restructuring charges after fiscal 2017 as a result of remeasuring lease contract termination liabilities to reflect changes in contractual lease rentals and sublease rentals that are not currently estimable. In addition to the restructuring charges recorded related to these initiatives, the Company recognized a net gain from other exit-related activities of less than $1 million during each of the three and nine months ended May 31, 2017, primarily related to a gain recorded in the second quarter of fiscal 2017 in connection with the disposition of business assets related to the elimination of a metals recycling feeder yard operation. The Company incurred charges associated with other exit-related activities of less than $1 million and $3 million during the three and nine months ended May 31, 2016, consisting of asset impairments and accelerated depreciation of assets in connection with site closures. Restructuring charges and other exit-related activities were comprised of the following (in thousands):
The following illustrates the reconciliation of the restructuring liability by major type of costs for the nine months ended May 31, 2017 (in thousands):
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Restructuring charges and other exit-related activities by reportable segment and discontinued operations were as follows (in thousands):
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The Company does not allocate restructuring charges and other exit-related activities to the segments’ operating results because management does not include this information in its measurement of the performance of the operating segments. |
Changes in Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Equity | Changes in Equity Changes in equity were comprised of the following (in thousands):
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss, net of tax, were comprised of the following (in thousands):
Reclassifications from accumulated other comprehensive loss, both individually and in the aggregate, were immaterial to the impacted captions in the Unaudited Condensed Consolidated Statements of Operations for all periods presented. |
Discontinued Operations (Notes) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations In fiscal 2015, the Company ceased operations at seven auto parts stores, six of which qualified for discontinued operations reporting. The operations of the six qualifying stores had previously been reported within the AMR reportable segment. During the nine months ended May 31, 2016, the Company incurred charges totaling $1 million consisting of asset impairments and accelerated depreciation of assets related to discontinued auto parts stores. Impaired assets in the second quarter of fiscal 2016 consisted primarily of capital lease assets associated with the buildings on two leased properties. Operating results of discontinued operations were comprised of the following (in thousands):
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Share-Based Compensation |
9 Months Ended |
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Share-based Compensation [Abstract] | |
Share-Based Compensation | Share-Based Compensation In the first quarter of fiscal 2017, as part of the annual awards under the Company's Long-Term Incentive Plan, the Compensation Committee of the Company's Board of Directors ("Compensation Committee") granted 142,635 restricted stock units ("RSUs") and 134,899 performance share awards to the Company's key employees and officers under the Company's 1993 Amended and Restated Stock Incentive Plan ("SIP"). The RSUs generally have a five-year term and vest 20% per year commencing October 31, 2017. The aggregate fair value of all of the RSUs granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $3 million. The compensation expense associated with the RSUs is recognized over the requisite service period of the awards, net of forfeitures. The performance share awards are comprised of two separate and distinct awards with different vesting conditions. The Compensation Committee granted 65,506 performance share awards based on a relative Total Shareholder Return ("TSR") metric over a performance period spanning November 1, 2016 to August 31, 2019. Award share payouts range from a threshold of 50% to a maximum of 200% based on the relative ranking of the Company's TSR among a designated peer group of 16 companies. The TSR award stipulates certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company's TSR is negative. The TSR awards contain a market condition and, therefore, once the award recipients complete the requisite service period, the related compensation expense based on the grant-date fair value is not changed, regardless of whether the market condition has been satisfied. The estimated fair value of the TSR awards at the date of grant was $2 million. The Company estimated the fair value of the TSR awards using a Monte-Carlo simulation model utilizing several key assumptions including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The remaining 69,393 performance share awards have a three-year performance period consisting of the Company’s 2017, 2018 and 2019 fiscal years. The performance targets are based on the Company's cash flow return on investment ("CFROI") over the three-year performance period, with award payouts ranging from a threshold of 50% to a maximum of 200%. The fair value of the awards granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $2 million. The compensation expense associated with performance share awards is recognized over the requisite service period, net of forfeitures. Performance share awards will be paid in Class A common stock as soon as practicable after the end of the requisite service period and vesting date of October 31, 2019. In the second quarter of fiscal 2017, the Company granted deferred stock units ("DSUs") to each of its non-employee directors under the Company's SIP. Each DSU gives the director the right to receive one share of Class A common stock at a future date. The grant included an aggregate of 30,312 shares that will vest on the day before the Company's 2018 annual meeting, subject to continued Board service. The total value of these awards at the grant date was $1 million. In the third quarter of fiscal 2017, the Compensation Committee granted the second half of the fiscal 2017 annual award comprised of 172,227 RSUs and 167,358 performance share awards, which performance share awards consisted of 81,262 TSR awards and 86,096 CFROI awards, to the Company's key employees and officers under its SIP. The awards granted in the third quarter of fiscal 2017 have terms substantially similar to the awards granted in the first quarter of fiscal 2017, as described above in this Note, except that the performance period for the TSR awards started on April 27, 2017, and the performance period for the CFROI awards started on March 1, 2017. The fair values of RSUs, TSR awards and CFROI awards granted in the third quarter of fiscal 2017 were $3 million, $2 million, and $2 million, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The effective tax rate for the Company’s continuing operations for the three and nine months ended May 31, 2017 was an expense of 0.9% and 2.5%, respectively, compared to an expense of 0.8% and 2.5% for the three and nine months ended May 31, 2016, respectively. A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:
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The effective tax rate from continuing operations for the third quarter and first nine months of fiscal 2017 and 2016 was lower than the federal statutory rate of 35% primarily due to the low projected annual effective tax rate applied to the quarterly results. The low projected annual effective tax rate is the result of the Company’s full valuation allowance positions partially offset by increases in deferred tax liabilities from indefinite-lived assets in all jurisdictions. The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. For U.S. federal income tax returns, fiscal years 2013 to 2016 remain subject to examination under the statute of limitations. The Company's U.S. federal income tax return for fiscal 2015 is currently under examination. |
Net Income (Loss) Per Share |
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Net Income (Loss) Per Share | Net Income (Loss) Per Share The following table sets forth the information used to compute basic and diluted net income (loss) per share attributable to SSI (in thousands):
Common stock equivalent shares of 375,653 and 309,476 were considered antidilutive and were excluded from the calculation of diluted net income (loss) per share for the three and nine months ended May 31, 2017, respectively, compared to 490,984 and 725,548 common stock equivalent shares for the three and nine months ended May 31, 2016, respectively. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company purchases recycled metal from its joint venture operations at prices that approximate fair market value. These purchases totaled $5 million and $3 million for the three months ended May 31, 2017 and 2016, respectively, and $11 million and $9 million for the nine months ended May 31, 2017 and 2016, respectively. |
Segment Information |
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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. Through the end of the third quarter of fiscal 2017, the Company had two reportable segments: AMR and SMB. AMR buys and processes ferrous and nonferrous metal for sale to foreign and other domestic steel producers or their representatives and to SMB, purchases ferrous metal from other processors for shipment directly to SMB, and procures salvaged vehicles and sells serviceable used auto parts from these vehicles through a network of self-service auto parts stores. Additionally, the Company holds noncontrolling ownership interests in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal. The Company's allocable portion of the results of these joint ventures is reported within the AMR reportable segment. SMB operates a steel mini-mill that produces a wide range of finished steel long products using recycled metal and other raw materials. Intersegment sales from AMR to SMB are made at rates that approximate market prices for shipments from the West Coast of the United States. 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 to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes and other income and expense to its reportable segments. Expenses related to shared services that support operational activities and transactions is allocated from Corporate to the segments. Unallocated Corporate expense consists primarily of expense for management and certain administrative services that benefit both reportable segments. In addition, the Company does not allocate restructuring charges and other exit-related activities to the segment operating income because management does not include this information in its measurement of the performance of the operating segments. The table below illustrates the Company’s revenues from continuing operations by reportable segment (in thousands):
The table below illustrates the reconciliation of the Company’s segment operating income to income (loss) from continuing operations before income taxes (in thousands):
The following is a summary of the Company’s total assets by reportable segment (in thousands):
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements of Schnitzer Steel Industries, Inc. (the “Company”) have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q, including Article 10 of Regulation S-X. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all normal, recurring adjustments considered necessary for a fair statement have been included. Management suggests that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2016. The results for the three and nine months ended May 31, 2017 and 2016 are not necessarily indicative of the results of operations for the entire fiscal year. |
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Accounting Changes | Accounting Changes In January 2017, an accounting standard update was issued that eliminates the second step of the two-step goodwill impairment test. Under the revised guidance, an entity applies a one-step quantitative test and records the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. To reduce the complexity of the goodwill impairment test, the Company early-adopted the new requirement as of the beginning of the third quarter of fiscal 2017 with no impact to the Unaudited Condensed Consolidated Financial Statements. The Company will apply the amendments to future goodwill impairment tests. See the Goodwill section of this Note for further detail. |
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Discontinued Operations | Discontinued Operations The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the disposed components that may be reasonably segregated from the costs of the ongoing operations of the Company. Asset impairments related to the disposed components are also included in the results of discontinued operations. See Note 10 - Discontinued Operations and the Asset Impairment Charges section of this Note for further detail. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include short-term securities that are not restricted by third parties and have an original maturity date of 90 days or less. Included in accounts payable are book overdrafts representing outstanding checks in excess of funds on deposit of $4 million and $3 million as of May 31, 2017 and August 31, 2016, respectively. |
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Assets Held for Sale | Assets Held for Sale An asset is classified as held for sale upon meeting certain criteria specified in the accounting standards. An asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell with no further adjustments for depreciation. During the nine months ended May 31, 2016, the Company recorded an impairment charge for the initial and subsequent write-down of certain equipment assets held for sale of $2 million, which is reported within other asset impairment charges (recoveries), net in the Unaudited Condensed Consolidated Statements of Operations. The Company determined fair value using Level 3 inputs under the fair value hierarchy consisting of information provided by brokers and other external sources along with management's own assumptions. Assets held for sale were less than $1 million as of August 31, 2016. The Company did not have any assets held for sale as of May 31, 2017. |
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Long-Lived Assets | Long-Lived Assets The Company tests long-lived tangible and intangible assets for impairment at the asset group level, which is determined based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. For the Company's metals recycling operations, an asset group is generally comprised of the regional shredding and export operation along with surrounding feeder yards. For regions with no shredding and export operations, each metals recycling yard is an asset group. For the Company's auto parts operations, generally each auto parts store is an asset group. The Company's steel manufacturing business is a single asset group. The Company tests its asset groups for impairment when certain triggering events or changes in circumstances indicate that the carrying value of the asset group may be impaired. If the carrying value of the asset group is not recoverable because it exceeds the Company’s estimate of future undiscounted cash flows from the use and eventual disposition of the asset group, an impairment loss is recognized by the amount the carrying value exceeds its fair value, if any. The impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group shall not reduce the carrying amount of that asset below its fair value. Fair value is determined primarily using the cost and market approaches. During the three and nine months ended May 31, 2016, the Company recorded impairment charges on long-lived tangible and intangible assets associated with certain regional metals recycling operations and used auto parts store locations. With respect to individual long-lived assets, changes in circumstances may merit a change in the estimated useful lives or salvage values of the assets, which are accounted for prospectively in the period of change. For such assets, the useful life is shortened based on the Company's current plans to dispose of or abandon the asset before the end of its original useful life and depreciation is accelerated beginning when that determination is made. During the nine months ended May 31, 2017, the Company recognized accelerated depreciation primarily due to shortening the useful lives of decommissioned machinery and equipment assets. During the nine months ended May 31, 2016, the Company recognized accelerated depreciation due to shortened useful lives in connection with site closures and idled equipment. See the Asset Impairment Charges section of this Note for tabular presentation of long-lived asset impairment charges and accelerated depreciation. Long-lived asset impairment charges and accelerated depreciation are reported in the Unaudited Condensed Consolidated Statements of Operations within (1) other asset impairment charges (recoveries), net; (2) restructuring charges and other exit-related activities, if related to a site closure not qualifying for discontinued operations reporting; or (3) loss from discontinued operations, if related to a component of the Company qualifying for discontinued operations reporting. |
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Investments in Joint Ventures | Investments in Joint Ventures A loss in value of an investment in a joint venture is recognized when the decline is other than temporary. Management considers all available evidence to evaluate the realizable value of its investments including the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the joint venture business, and the Company’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. Once management determines that an other-than-temporary impairment exists, the investment is written down to its fair value, which establishes a new cost basis. The Company determines fair value using Level 3 inputs under the fair value hierarchy using an income approach based on a discounted cash flow analysis. During the nine months ended May 31, 2016, the Company recorded an impairment charge of $2 million related to an investment in a joint venture, which is reported within other asset impairment charges (recoveries), net in the Unaudited Condensed Consolidated Statements of Operations. During the nine months ended May 31, 2017, one of the Company's other joint venture interests sold real estate resulting in recognition of a $6 million gain by the joint venture, $3 million of which is attributable to the Company's investment. The Company's share of the gain is reported within (income) loss from joint ventures in the Unaudited Condensed Consolidated Statements of Operations for the nine months ended May 31, 2017. |
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Cost Method Investment | Cost Method Investment During the nine months ended May 31, 2017, the Company invested $6 million in a privately-held waste and recycling entity. The Company's influence over the operating and financial policies of the entity is not significant and, thus, the investment is accounted for under the cost method. Under the cost method, the investment is carried at cost and adjusted only for other-than-temporary impairments, certain distributions and additional investments. The investment is presented as part of the Auto and Metals Recycling ("AMR") reportable segment and reported within other assets in the Unaudited Condensed Consolidated Balance Sheets. The Company does not hold any other cost-method investments. As of May 31, 2017, the Company had not identified any events or changes in circumstances that may have a significant adverse effect on the fair value of the investment or indicators of other-than-temporary impairment. |
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Goodwill | Goodwill Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Impairment of goodwill is tested at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is required to be identified as a reporting unit if the component is a business for which discrete financial information is available and segment management regularly reviews its operating results. When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. Under the accounting guidance in effect for the Company prior to the third quarter of fiscal 2017, in the first step of the two-step quantitative impairment test, the fair value of a reporting unit was compared to its carrying value. If the carrying value of a reporting unit exceeded its fair value, the second step of the impairment test was performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit was allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeded the implied fair value of goodwill, an impairment loss was recognized in an amount equal to that excess. As of the beginning of the third quarter of fiscal 2017, the Company adopted an accounting standard update that eliminates the second step of the two-step goodwill impairment test with no impact to the Unaudited Condensed Consolidated Financial Statements. Under the revised guidance, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The Company estimates the fair value of its reporting units using an income approach based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit. The determination of fair value involves the use of significant estimates and assumptions, including revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, benefits associated with a taxable transaction and synergistic benefits available to market participants. In addition, to corroborate the reporting units’ valuation, the Company uses a market approach based on earnings multiple data and a reconciliation of the Company’s estimate of the aggregate fair value of the reporting units to the Company’s market capitalization, including consideration of a control premium. During the second quarter of fiscal 2016, management identified the combination of sustained weak market conditions at such time, including the adverse effects of lower commodity selling prices and the constraining impact of the lower price environment on the supply of raw materials which negatively impacted volumes, the Company’s financial performance and a decline in the Company’s market capitalization at such time as a triggering event requiring an interim impairment test of goodwill allocated to its reporting units. In connection with the interim impairment test performed in the second quarter of fiscal 2016, the Company used a measurement date of February 1, 2016. For a reporting unit within AMR with $9 million of goodwill as of February 1, 2016, the first step of the impairment test showed that the fair value of the reporting unit was less than its carrying amount, indicating a potential impairment. Based on the second step of the impairment test, the Company concluded that no implied fair value of goodwill remained for the reporting unit, resulting in an impairment of the entire carrying amount of the reporting unit's goodwill totaling $9 million. For the reporting unit within AMR carrying the remainder, or $166 million, of the Company's goodwill as of February 1, 2016, the estimated fair value of the reporting unit exceeded its carrying value by approximately 27% and, thus, the Company did not record a goodwill impairment charge. |
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Concentration Of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and notes and other contractual receivables from suppliers. The majority of cash and cash equivalents is maintained with major financial institutions. Balances with these and certain other institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250,000 as of May 31, 2017. Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company’s customer base. The Company controls credit risk through credit approvals, credit limits, credit insurance, letters of credit or other collateral, cash deposits and monitoring procedures. The Company is exposed to a residual credit risk with respect to open letters of credit by virtue of the possibility of the failure of a bank providing a letter of credit. The Company had $47 million and $40 million of open letters of credit as of May 31, 2017 and August 31, 2016, respectively. |
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Financial Instruments | Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and debt. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2) and approximates its carrying value. |
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Fair Value Measurements | Fair Value Measurements Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are described as follows:
When developing the fair value measurements, the Company uses quoted market prices whenever available or seeks to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available. |
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Restructuring Charges | Restructuring Charges Restructuring charges consist of severance, contract termination and other restructuring-related costs. A liability for severance costs is typically recognized when the plan of termination has been communicated to the affected employees and is measured at its fair value at the communication date. Contract termination costs consist primarily of costs that will continue to be incurred under operating leases for their remaining terms without economic benefit to the Company. A liability for contract termination costs is recognized at the date the Company ceases using the rights conveyed by the lease contract and is measured at its fair value, which is determined based on the remaining contractual lease rentals reduced by estimated sublease rentals. A liability for other restructuring-related costs is measured at its fair value in the period in which the liability is incurred. Restructuring charges that directly involve a discontinued operation are included in the results of discontinued operations in all periods presented. See Note 7 - Restructuring Charges and Other Exit-Related Activities for further detail. |
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New Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, an accounting standard update was issued that clarifies the principles for recognizing revenue from contracts with customers. The update will supersede the existing standard for recognizing revenue. Additional updates have been issued since May 2014 amending aspects of the initial update and providing implementation guidance. The guidance is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Upon becoming effective, an entity may adopt the standard either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is in the process of examining its current revenue streams and significant contracts with customers under the requirements of the new standard and, based on the progress of this examination to date, does not believe the standard will have a material impact on its financial position, net income or cash flows. The Company is also analyzing the expanded disclosure requirements under the new standard, the method of adoption, and potential changes to its accounting policies, processes, systems and internal controls that may be required to support the new standard. In February 2016, an accounting standard was issued that will supersede the existing lease standard and requiring a lessee to recognize a lease liability and a lease asset on its balance sheet for all leases, including those classified as operating leases under the existing lease standard. The update also expands the required quantitative and qualitative disclosures surrounding leases. This standard is effective for the Company beginning in fiscal 2020, including interim periods within that fiscal year. This standard will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is in the process of identifying its population of leases within the scope of the new accounting standard and documenting salient lease terms to support the initial and subsequent measurement of lease liabilities and lease assets. The Company is evaluating the impact of adopting this standard on its financial position, results of operations, cash flows and disclosures. In March 2016, an accounting standard update was issued that amends several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows. The standard is effective for the Company beginning in fiscal 2018, including interim periods within that fiscal year. Early adoption is permitted in any interim or annual period; however, if the Company elects early adoption, it must adopt all of the amendments in the same period. The Company does not expect adoption to have an immediate material impact on its consolidated financial position, results of operations and cash flows. In August 2016, an accounting standard update was issued that addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among the cash flow matters addressed in the update are payments for costs related to debt prepayments or extinguishments, payments related to settlement of certain types of debt instruments, payments of contingent consideration made after a business combination, proceeds from insurance claims and corporate-owned life insurance policies, and distributions received from equity method investees, among others. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period, and all of the amendments must be adopted together in the same period. The amendments will be applied using a retrospective transition method to each period presented, unless impracticable for specific cash flow matters, in which case the amendments would be applied prospectively as of the earliest date practicable. The Company is evaluating the impact of adopting this standard on its consolidated statement of cash flows. In October 2016, an accounting standard update was issued that amends the existing guidance on the accounting for the income tax effects of intra-entity transfers of assets other than inventory. Current accounting standards prohibit the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The amendments in the update require that entities recognize the income tax effects of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments do not change accounting standards for the pre-tax effects of an intra-entity asset transfer under accounting standards applicable to consolidation, or for an intra-entity transfer of inventory. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted in the first interim period of a fiscal year. The amendments will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is evaluating the impact of adopting this standard on its consolidated financial position, results of operations and cash flows. In March 2017, an accounting standard update was issued that modifies the presentation requirements for net periodic pension cost and net periodic postretirement benefit cost within an entity's income statement. The amendments in the update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments also require the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization, when applicable. The standard is effective for the Company beginning in fiscal 2019, including interim periods within that fiscal year. Early adoption is permitted beginning with the first quarter of fiscal 2018. Aspects of the update affecting income statement presentation must be applied retrospectively, while aspects affecting the capitalization of the service cost component in assets must be applied prospectively on and after the effective date. The Company is evaluating the impact of adopting this standard on its consolidated financial position, results of operations and cash flows. |
Summary of Significant Accounting Policies Schedule of Asset Impairment Charges (Tables) |
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Asset Impairments Charges | The following asset impairment charges, excluding goodwill impairment charges discussed below in this Note, were recorded in the Unaudited Condensed Consolidated Statements of Operations (in thousands):
_____________________________
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Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consisted of the following (in thousands):
|
Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||
Schedule of Goodwill | The gross change in the carrying amount of goodwill for the nine months ended May 31, 2017 was as follows (in thousands):
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Reserves For Environmental Liabilities | Changes in the Company’s environmental liabilities for the nine months ended May 31, 2017 were as follows (in thousands):
|
Restructuring Charges and Other Exit-Related Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges, Asset Impairment and Accelerated Depreciation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges and Other Exit-Related Activities | Restructuring charges and other exit-related activities were comprised of the following (in thousands):
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Schedule of Restructuring Reserve by Type of Cost | The following illustrates the reconciliation of the restructuring liability by major type of costs for the nine months ended May 31, 2017 (in thousands):
___________________________
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Schedule of Restructuring and Other Exit-Related Activities By Segment | Restructuring charges and other exit-related activities by reportable segment and discontinued operations were as follows (in thousands):
___________________________
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Changes in Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders' Equity | Changes in equity were comprised of the following (in thousands):
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss, net of tax, were comprised of the following (in thousands):
|
Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | Operating results of discontinued operations were comprised of the following (in thousands):
|
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:
_____________________________
|
Net Income (Loss) Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | The following table sets forth the information used to compute basic and diluted net income (loss) per share attributable to SSI (in thousands):
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue form Segments to Consolidated | The table below illustrates the Company’s revenues from continuing operations by reportable segment (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Income from Segments to Consolidated | The table below illustrates the reconciliation of the Company’s segment operating income to income (loss) from continuing operations before income taxes (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Assets from Segment to Consolidated | The following is a summary of the Company’s total assets by reportable segment (in thousands):
_____________________________
|
Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
Aug. 31, 2016 |
Feb. 01, 2016 |
|
Significant Accounting Policies [Line Items] | ||||||
Book Overdrafts | $ 4,000,000 | $ 4,000,000 | $ 3,000,000 | |||
Assets Held-for-sale | 0 | 0 | 1,000,000 | |||
Cost Method Investments, Original Cost | 6,000,000 | 6,000,000 | ||||
Goodwill | 166,273,000 | 166,273,000 | 166,847,000 | |||
Goodwill impairment charge | 0 | $ 0 | 0 | $ 8,845,000 | ||
Cash, FDIC Insured Amount | 250,000 | 250,000 | ||||
Customer Issued Letters Of Credit | 47,000,000 | 47,000,000 | $ 40,000,000 | |||
Regionally Defined Reporting Unit Consisting of Two Components | ||||||
Significant Accounting Policies [Line Items] | ||||||
Goodwill | $ 9,000,000 | |||||
Regionally Defined Reporting Unit Consisting Of One Component | ||||||
Significant Accounting Policies [Line Items] | ||||||
Goodwill | $ 166,000,000 | |||||
Goodwill | Income Approach Valuation Technique | Regionally Defined Reporting Unit Consisting Of One Component | ||||||
Significant Accounting Policies [Line Items] | ||||||
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 27.00% | |||||
Other Asset Impairment Charge (Recoveries), Net | ||||||
Significant Accounting Policies [Line Items] | ||||||
Impairment of Assets Held-for-sale | 2,000,000 | |||||
Gain (Loss) on Disposition of Assets | $ 1,000,000 | |||||
Asset Impairment, Investment in Joint Venture | $ 2,000,000 | |||||
Corporate Joint Venture | ||||||
Significant Accounting Policies [Line Items] | ||||||
Joint Venture, Gain (Loss) on Disposition of Assets | 6,000,000 | |||||
Gain (Loss) on Disposition of Assets from Joint Venture | $ 3,000,000 |
Summary of Significant Accounting Policies Asset Impairment Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Asset Impairment, Investment in Joint Venture | $ 2,000 | |||
Impairment of Assets Held-for-sale | 2,000 | |||
Asset Impairment Charges, Excluding Goodwill Impairment Loss | $ 0 | $ 0 | $ 401 | 18,458 |
Restructuring Charges, Asset Impairment and Accelerated Depreciation | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 0 | 119 | 0 | 448 |
Accelerated depreciation | 0 | 0 | 96 | 630 |
Other Asset Impairment Charges | 0 | 0 | 62 | 1,102 |
Asset Impairment Charges, Excluding Goodwill Impairment Loss | 0 | 119 | 158 | 2,180 |
Income (Loss) from Discontinued Operations, Net of Tax | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Accelerated depreciation | 0 | 0 | 0 | 274 |
Impairment of Long-lived Assets, Discontinued Operations | 0 | 0 | 0 | 673 |
Asset Impairment Charges, Excluding Goodwill Impairment Loss | 0 | 0 | 0 | 947 |
Auto and Metals Recycling | Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 0 | 0 | 0 | 7,336 |
Asset Impairment, Investment in Joint Venture | 0 | 0 | 0 | 1,968 |
Impairment of Assets Held-for-sale | 0 | 0 | 0 | 1,659 |
Other Asset Impairment Recoveries | 1,044 | 1,044 | ||
Autos and Metals Recycling and Steel Manufacturing Business | Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Accelerated depreciation | 0 | 0 | 401 | 6,208 |
Corporate and Other | Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Other Asset Impairment Charges | 0 | 0 | 0 | 1,287 |
Steel Manufacturing Business | Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Accelerated depreciation | 401 | |||
Operating Segments And Corporate, Non-Segment | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Asset Impairment Charges, Excluding Goodwill Impairment Loss | $ 0 | $ 119 | $ 559 | 21,585 |
Corporate | Other Asset Impairment Charge (Recoveries), Net | ||||
Schedule of Asset Impairments Charges [Line Items] | ||||
Other Asset Impairment Charges | $ 79 |
Inventories (Details) - USD ($) $ in Thousands |
May 31, 2017 |
Aug. 31, 2016 |
---|---|---|
Inventory, Net [Abstract] | ||
Processed and unprocessed scrap metal | $ 78,846 | $ 49,061 |
Semi-finished goods (billets) | 7,875 | 8,320 |
Finished goods | 44,887 | 40,646 |
Supplies | 34,224 | 34,945 |
Inventories | $ 165,832 | $ 132,972 |
Goodwill Schedule of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
May 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
August 31, 2016 | $ 166,847 |
May 31, 2017 | 166,273 |
Auto and Metals Recycling | |
Goodwill [Roll Forward] | |
August 31, 2016 | 166,847 |
Foreign currency translation adjustment | (574) |
May 31, 2017 | $ 166,273 |
Goodwill (Details) - USD ($) $ in Millions |
May 31, 2017 |
Aug. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Accumulated goodwill impairment charges | $ 471 | $ 471 |
Debt (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
May 31, 2017 |
Aug. 31, 2016 |
|
Debt Disclosure [Abstract] | ||
Tax Exempt Economic Development Revenue Bond | $ 8 | |
Repayment of Tax Exempt Economic Development Revenue Bond | $ 8 |
Commitments and Contingencies Schedule of Environmental Liabilities (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
May 31, 2017 |
Aug. 31, 2016 |
|
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning balance | $ 46,350 | |
Liabilities Established (Released), Net | 2,407 | |
Payments and Other | (570) | |
Ending balance | 48,187 | |
Short-Term | 1,903 | $ 1,967 |
Long-Term | 46,284 | $ 44,383 |
Auto and Metals Recycling | ||
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning balance | 46,122 | |
Liabilities Established (Released), Net | 2,349 | |
Payments and Other | (404) | |
Ending balance | 48,067 | |
Short-Term | 1,903 | |
Long-Term | 46,164 | |
Corporate | ||
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning balance | 228 | |
Liabilities Established (Released), Net | 58 | |
Payments and Other | (166) | |
Ending balance | 120 | |
Short-Term | 0 | |
Long-Term | $ 120 |
Commitments and Contingencies (Details) T in Thousands |
1 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jan. 30, 2017
party
|
Mar. 30, 2012
USD ($)
remediation_alternative
|
Jan. 31, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
alternatives
remediation_alternative
|
Nov. 30, 2015
USD ($)
|
Aug. 31, 2015
USD ($)
alternatives
|
May 31, 2017
USD ($)
potentially_responsible_party
T
|
Sep. 30, 2016
commentors
|
Aug. 31, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | |||||||||
Parties Liable in Litigation | party | 30 | ||||||||
Litigation Liability | $ 48,187,000 | $ 46,350,000 | |||||||
Auto and Metals Recycling | |||||||||
Loss Contingencies [Line Items] | |||||||||
Litigation Liability | 48,067,000 | 46,122,000 | |||||||
Steel Manufacturing Business | |||||||||
Loss Contingencies [Line Items] | |||||||||
Litigation Liability | $ 0 | 0 | |||||||
Permitted Annual production capacity | T | 950 | ||||||||
Permit Expiration Date | Feb. 01, 2018 | ||||||||
Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Number Of Potentially Responsible Parties | potentially_responsible_party | 100 | ||||||||
Litigation Liability | $ 1,000,000 | ||||||||
Number of comments submitted | commentors | 5,300 | ||||||||
Other Auto and Metals Recycling Sites | |||||||||
Loss Contingencies [Line Items] | |||||||||
Litigation Liability | $ 47,000,000 | $ 45,000,000 | |||||||
Lower Willamette Group | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Period Of Feasibility Study | 10 years | ||||||||
Feasibility Study, Investigation Costs | $ 100,000,000 | ||||||||
Site Contingency, Number of Remedial Alternatives | remediation_alternative | 10 | ||||||||
Lower Willamette Group | Minimum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 170,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 1,080,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 2 years | ||||||||
Lower Willamette Group | Maximum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 250,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 1,760,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 28 years | ||||||||
EPA Region 10 | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Number of Remedial Alternatives | alternatives | 8 | ||||||||
Alternative Implementation Period on Regulatory Actions | 7 years | ||||||||
Estimated Cost on Alternative Regulatory Action Plan | $ 746,000,000 | $ 1,400,000,000 | |||||||
Number of Possible Disposal Alternatives for Site Contingency Remedial Alternatives | remediation_alternative | 2 | ||||||||
Site Contingency, Number of Remedial Alternatives Scenarios | remediation_alternative | 13 | ||||||||
EPA Region 10 | Minimum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 316,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 1,210,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 4 years | ||||||||
EPA Region 10 | Maximum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 677,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 2,670,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 19 years | ||||||||
Potential Responsible Parties | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Number of Remedial Alternatives | alternatives | 5 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 13 years | ||||||||
Estimated Cost of Selected Remedy | $ 1,700,000,000 | ||||||||
Estimated Cost of Selected Remedy, Discount | $ 1,050,000,000 | ||||||||
Estimated Cost of Selected Remedy, Discount Rate | 7.00% | ||||||||
Potential Responsible Parties | Minimum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 550,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 1,710,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 4 years | ||||||||
Estimated Cost of Selected Remedy, Range | 30.00% | ||||||||
Potential Responsible Parties | Maximum | Portland Harbor Superfund Site | |||||||||
Loss Contingencies [Line Items] | |||||||||
Site Contingency, Least Costly Remediation Plan | $ 1,190,000,000 | ||||||||
Site Contingency, Most Costly Remediation Plan | $ 3,670,000,000 | ||||||||
Site Contingency, Estimated Time Frame to Remediate | 18 years | ||||||||
Estimated Cost of Selected Remedy, Range | 50.00% |
Restructuring and Charges and Other Exit-Related Activities (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2017
USD ($)
|
May 31, 2016
USD ($)
|
May 31, 2017
USD ($)
|
May 31, 2016
USD ($)
|
Aug. 31, 2015
store
|
Feb. 28, 2015
store
|
|
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and Related Costs, Remaining Charges (less than $1 million) | $ 1,000 | |||||
Restructuring Charges | 103 | $ 442 | $ 240 | $ 5,570 | ||
Restructuring Charges and Other Exit-Related Activities | 100 | 561 | (167) | 8,697 | ||
Total restructuring charges to date | 14,394 | 14,394 | ||||
Total expected restructuring charges | 14,460 | 14,460 | ||||
All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 43 | 76 | 180 | 201 | ||
Restructuring Charges and Other Exit-Related Activities | 43 | 76 | 180 | 201 | ||
Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 60 | 366 | 60 | 5,369 | ||
Restructuring Charges and Other Exit-Related Activities | 57 | 485 | (347) | 8,496 | ||
Total restructuring charges to date | 14,394 | 14,394 | ||||
Total expected restructuring charges | 14,460 | 14,460 | ||||
Severance costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 36 | 340 | (23) | 4,686 | ||
Total restructuring charges to date | 10,252 | 10,252 | ||||
Total expected restructuring charges | 10,252 | 10,252 | ||||
Severance costs | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 0 | 0 | 0 | 0 | ||
Severance costs | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 36 | 340 | (23) | 4,686 | ||
Contract termination costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 67 | 102 | 263 | 884 | ||
Total restructuring charges to date | 2,093 | 2,093 | ||||
Total expected restructuring charges | 2,159 | 2,159 | ||||
Contract termination costs | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 43 | 76 | 180 | 201 | ||
Contract termination costs | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 24 | 26 | 83 | 683 | ||
Other restructuring costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 0 | 0 | 0 | 0 | ||
Total restructuring charges to date | 2,049 | 2,049 | ||||
Total expected restructuring charges | 2,049 | 2,049 | ||||
Other restructuring costs | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 0 | 0 | 0 | 0 | ||
Other restructuring costs | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 0 | 0 | 0 | 0 | ||
Asset impairments and accelerated depreciation | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Asset impairment and accelerated depreciation | 0 | 119 | 158 | 3,127 | ||
Asset impairments and accelerated depreciation | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Asset impairment and accelerated depreciation | 0 | 0 | 0 | 0 | ||
Asset impairments and accelerated depreciation | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Asset impairment and accelerated depreciation | 0 | 119 | 158 | 3,127 | ||
Gain on exit-related disposal | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Gain on exit-related disposal | (3) | 0 | (565) | 0 | ||
Gain on exit-related disposal | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Gain on exit-related disposal | 0 | 0 | 0 | 0 | ||
Gain on exit-related disposal | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Gain on exit-related disposal | (3) | 0 | (565) | 0 | ||
Other Exit-Related Activity | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Other Exit-Related Activities | (3) | 119 | (407) | 3,127 | ||
Other Exit-Related Activity | All Other Plans | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Other Exit-Related Activities | 0 | 0 | 0 | 0 | ||
Other Exit-Related Activity | Q2’15 Plan | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Other Exit-Related Activities | (3) | 119 | (407) | 3,127 | ||
Segment Reconciling Items | Continuing Operations | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges and Other Exit-Related Activities | 93 | 542 | (200) | 7,758 | ||
Segment Reconciling Items | Discontinued Operations | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 7 | 19 | 33 | (8) | ||
Restructuring Charges and Other Exit-Related Activities | 7 | 19 | 33 | 939 | ||
Total restructuring charges to date | 1,696 | 1,696 | ||||
Total expected restructuring charges | 1,713 | 1,713 | ||||
Segment Reconciling Items | Other Exit-Related Activity | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Other Exit-Related Activities | (3) | 119 | (407) | 3,127 | ||
Segment Reconciling Items | Other Exit-Related Activity | Discontinued Operations | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Other Exit-Related Activities | $ 0 | $ 0 | $ 0 | $ 947 | ||
Auto Parts Stores | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of Stores | store | 7 | 7 |
Restructuring Charges and Other Exit-Related Activities Restructuring Reserve Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Restructuring Reserve [Roll Forward] | ||||
Charges | $ 103 | $ 442 | $ 240 | $ 5,570 |
Total charges to date | 14,394 | 14,394 | ||
Total expected charges | 14,460 | 14,460 | ||
Q2’15 Plan | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 2,077 | |||
Charges | 60 | 366 | 60 | 5,369 |
Payments and Other | (1,113) | |||
Restructuring reserve, ending balance | 1,024 | 1,024 | ||
Total charges to date | 14,394 | 14,394 | ||
Total expected charges | 14,460 | 14,460 | ||
Severance costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Charges | 36 | 340 | (23) | 4,686 |
Total charges to date | 10,252 | 10,252 | ||
Total expected charges | 10,252 | 10,252 | ||
Severance costs | Q2’15 Plan | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 918 | |||
Charges | 36 | 340 | (23) | 4,686 |
Payments and Other | (776) | |||
Restructuring reserve, ending balance | 119 | 119 | ||
Contract termination costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Charges | 67 | 102 | 263 | 884 |
Total charges to date | 2,093 | 2,093 | ||
Total expected charges | 2,159 | 2,159 | ||
Contract termination costs | Q2’15 Plan | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 1,159 | |||
Charges | 24 | 26 | 83 | 683 |
Payments and Other | (337) | |||
Restructuring reserve, ending balance | 905 | 905 | ||
Other restructuring costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Charges | 0 | 0 | 0 | 0 |
Total charges to date | 2,049 | 2,049 | ||
Total expected charges | 2,049 | 2,049 | ||
Other restructuring costs | Q2’15 Plan | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 0 | |||
Charges | 0 | $ 0 | 0 | $ 0 |
Payments and Other | 0 | |||
Restructuring reserve, ending balance | $ 0 | $ 0 |
Restructuring Charges and Other Exit-Related Activites by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | $ 103 | $ 442 | $ 240 | $ 5,570 |
Total Restructuring Charges and Other Exit-Related Activities | 100 | 561 | (167) | 8,697 |
Total charges to date | 14,394 | 14,394 | ||
Total expected charges | 14,460 | 14,460 | ||
Total restructuring charges and other exit-related costs, incurred to date | 22,279 | 22,279 | ||
Other Exit-Related Activity | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Exit-Related Activities | (3) | 119 | (407) | 3,127 |
Operating Segments | Auto and Metals Recycling | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | 60 | 423 | 173 | 4,766 |
Total charges to date | 9,486 | 9,486 | ||
Total expected charges | 9,535 | 9,535 | ||
Operating Segments | Auto and Metals Recycling | Other Exit-Related Activity | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Exit-Related Activities | (3) | 119 | (407) | 2,180 |
Other Exit-Related Activities, Activity to Date | 4,272 | 4,272 | ||
Unallocated (Corporate) | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | 36 | 0 | 34 | 812 |
Total charges to date | 3,212 | 3,212 | ||
Total expected charges | 3,212 | 3,212 | ||
Segment Reconciling Items | Other Exit-Related Activity | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Exit-Related Activities | (3) | 119 | (407) | 3,127 |
Other Exit-Related Activities, Activity to Date | 7,885 | 7,885 | ||
Discontinued Operations | Segment Reconciling Items | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | 7 | 19 | 33 | (8) |
Total Restructuring Charges and Other Exit-Related Activities | 7 | 19 | 33 | 939 |
Total charges to date | 1,696 | 1,696 | ||
Total expected charges | 1,713 | 1,713 | ||
Discontinued Operations | Segment Reconciling Items | Other Exit-Related Activity | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Exit-Related Activities | 0 | $ 0 | 0 | $ 947 |
Other Exit-Related Activities, Activity to Date | $ 3,613 | $ 3,613 |
Changes in Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance - Beginning of period | $ 501,432 | $ 538,551 | ||
Net income (loss) | $ 17,252 | $ 11,689 | 28,243 | (34,249) |
Other comprehensive loss, net of tax | (428) | 1,550 | (1,207) | (6) |
Distributions to noncontrolling interests | (1,177) | (1,179) | ||
Share repurchases | 0 | (3,479) | ||
Restricted stock withheld for taxes | (3,300) | (1,938) | ||
Share-based compensation | 9,182 | 6,636 | ||
Dividends | (15,615) | (15,406) | ||
Balance - May 31 (End of period) | 517,558 | 488,930 | 517,558 | 488,930 |
SSI Shareholders’ Equity | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance - Beginning of period | 497,721 | 534,535 | ||
Net income (loss) | 26,276 | (35,543) | ||
Other comprehensive loss, net of tax | (1,207) | (6) | ||
Distributions to noncontrolling interests | 0 | 0 | ||
Share repurchases | 0 | (3,479) | ||
Restricted stock withheld for taxes | (3,300) | (1,938) | ||
Share-based compensation | 9,182 | 6,636 | ||
Dividends | (15,615) | (15,406) | ||
Balance - May 31 (End of period) | 513,057 | 484,799 | 513,057 | 484,799 |
Noncontrolling Interests | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance - Beginning of period | 3,711 | 4,016 | ||
Net income (loss) | 1,967 | 1,294 | ||
Other comprehensive loss, net of tax | 0 | 0 | ||
Distributions to noncontrolling interests | (1,177) | (1,179) | ||
Share repurchases | 0 | 0 | ||
Restricted stock withheld for taxes | 0 | 0 | ||
Share-based compensation | 0 | 0 | ||
Dividends | 0 | 0 | ||
Balance - May 31 (End of period) | $ 4,501 | $ 4,131 | $ 4,501 | $ 4,131 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Increase (Decrease) In Accumulated Other Comprehensive Loss [Roll Forward} | ||||
Balance - Beginning of period | $ 501,432 | $ 538,551 | ||
Other comprehensive income (loss) before reclassifications | $ (694) | $ 1,485 | (1,439) | (416) |
Income tax expense | 0 | 0 | (194) | 0 |
Other comprehensive income (loss) before reclassifications, net of tax | (694) | 1,485 | (1,633) | (416) |
Amounts reclassified from accumulated other comprehensive loss | 420 | 102 | 670 | 580 |
Income tax benefit | (154) | (37) | (244) | (170) |
Amounts reclassified from accumulated other comprehensive loss, net of tax | 266 | 65 | 426 | 410 |
Total other comprehensive income (loss), net of tax | (428) | 1,550 | (1,207) | (6) |
Balance - May 31 (End of period) | 517,558 | 488,930 | 517,558 | 488,930 |
Foreign Currency Translation Adjustments | ||||
Increase (Decrease) In Accumulated Other Comprehensive Loss [Roll Forward} | ||||
Balance - Beginning of period | (35,333) | (35,910) | (34,539) | (34,009) |
Other comprehensive income (loss) before reclassifications | (694) | 1,485 | (1,488) | (416) |
Income tax expense | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) before reclassifications, net of tax | (694) | 1,485 | (1,488) | (416) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Income tax benefit | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss, net of tax | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss), net of tax | (694) | 1,485 | (1,488) | (416) |
Balance - May 31 (End of period) | (36,027) | (34,425) | (36,027) | (34,425) |
Pension Obligations, net | ||||
Increase (Decrease) In Accumulated Other Comprehensive Loss [Roll Forward} | ||||
Balance - Beginning of period | (5,561) | (4,168) | (5,576) | (4,273) |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 49 | 0 |
Income tax expense | 0 | 0 | (194) | 0 |
Other comprehensive income (loss) before reclassifications, net of tax | 0 | 0 | (145) | 0 |
Amounts reclassified from accumulated other comprehensive loss | 420 | 102 | 670 | 268 |
Income tax benefit | (154) | (37) | (244) | (98) |
Amounts reclassified from accumulated other comprehensive loss, net of tax | 266 | 65 | 426 | 170 |
Total other comprehensive income (loss), net of tax | 266 | 65 | 281 | 170 |
Balance - May 31 (End of period) | (5,295) | (4,103) | (5,295) | (4,103) |
Net Unrealized Gain (Loss) on Cash Flow Hedges | ||||
Increase (Decrease) In Accumulated Other Comprehensive Loss [Roll Forward} | ||||
Balance - Beginning of period | 0 | (240) | ||
Other comprehensive income (loss) before reclassifications | 0 | 0 | ||
Income tax expense | 0 | 0 | ||
Other comprehensive income (loss) before reclassifications, net of tax | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 312 | ||
Income tax benefit | 0 | (72) | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 0 | 240 | ||
Total other comprehensive income (loss), net of tax | 0 | 240 | ||
Balance - May 31 (End of period) | 0 | 0 | ||
AOCI Attributable to Parent | ||||
Increase (Decrease) In Accumulated Other Comprehensive Loss [Roll Forward} | ||||
Balance - Beginning of period | (40,894) | (40,078) | (40,115) | (38,522) |
Balance - May 31 (End of period) | $ (41,322) | $ (38,528) | $ (41,322) | $ (38,528) |
Discontinued Operations Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
May 31, 2017
USD ($)
|
May 31, 2016
USD ($)
|
May 31, 2017
USD ($)
|
May 31, 2016
USD ($)
|
Feb. 29, 2016
Property
|
Aug. 31, 2015
store
|
Feb. 28, 2015
store
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Asset Impairments and Accelerated Depreciation | $ | $ (1,044) | $ 0 | $ (643) | $ 18,458 | |||
Capital Leased Assets, Number of Units Impaired | Property | 2 | ||||||
Auto Parts Stores | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Number of Stores | store | 7 | 7 | |||||
Income (Loss) from Discontinued Operations, Net of Tax | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Asset Impairments and Accelerated Depreciation | $ | $ 1,000 | ||||||
Discontinued Operations | Auto Parts Stores | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Number of Stores | store | 6 |
Discontinued Operations Schedule (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss from discontinued operations, net of tax | $ (127) | $ (116) | $ (275) | $ (1,206) |
Auto Parts Stores | Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Loss from discontinued operations before income taxes | (120) | (130) | (278) | (1,225) |
Income tax benefit (expense) | (7) | 14 | 3 | 19 |
Loss from discontinued operations, net of tax | $ (127) | $ (116) | $ (275) | $ (1,206) |
Share-Based Compensation (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
May 31, 2017
USD ($)
company
shares
|
Feb. 28, 2017
USD ($)
shares
|
Nov. 30, 2016
USD ($)
company
shares
|
|
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (in shares) | 172,227 | 142,635 | |
Vesting term | 5 years | 5 years | |
Vesting percentage per year | 20.00% | 20.00% | |
Shares granted, fair value | $ | $ 3 | $ 3 | |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (in shares) | 167,358 | 134,899 | |
Performance Shares | Total Shareholder Return (TSR) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (in shares) | 81,262 | 65,506 | |
Shares granted, fair value | $ | $ 2 | $ 2 | |
Total Shareholder Return Designated Peer Group | company | 16 | 16 | |
Performance period | 2 years 4 months 5 days | 2 years 10 months | |
Performance Shares | Total Shareholder Return (TSR) | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance Based Awards Award Payouts Threshold | 50.00% | 50.00% | |
Performance Shares | Total Shareholder Return (TSR) | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance Based Awards Award Payouts Threshold | 200.00% | 200.00% | |
Performance Shares | Cash Flow Return on Investment (CFROI) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (in shares) | 86,096 | 69,393 | |
Shares granted, fair value | $ | $ 2 | $ 2 | |
Performance period | 2 years 6 months | 3 years | |
Performance Shares | Cash Flow Return on Investment (CFROI) | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance Based Awards Award Payouts Threshold | 50.00% | 50.00% | |
Performance Shares | Cash Flow Return on Investment (CFROI) | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance Based Awards Award Payouts Threshold | 200.00% | 200.00% | |
Non-employee Directors | Deferred Stock Units (DSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (in shares) | 30,312 | ||
Shares granted, fair value | $ | $ 1 |
Income Taxes -Narrative (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 0.90% | 0.80% | 2.50% | (2.50%) |
Federal statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
Income Taxes -Schedule (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Federal statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
State taxes, net of credits | 2.00% | 1.70% | 2.00% | 1.40% |
Foreign income taxed at different rates | (2.30%) | (2.40%) | (2.10%) | (6.10%) |
Non-deductible officers’ compensation | 2.20% | 0.70% | 1.90% | (1.30%) |
Noncontrolling interests | (1.60%) | (1.60%) | (2.50%) | 3.00% |
Research and development credits | (0.90%) | (2.10%) | (0.80%) | 1.60% |
Tax return to provision adjustment | (4.70%) | (1.10%) | (2.80%) | 0.40% |
Valuation allowance on deferred tax assets | (31.20%) | (31.20%) | (30.30%) | (33.50%) |
Non-deductible goodwill | 0.00% | 0.30% | 0.00% | (0.60%) |
Unrecognized tax benefits | 0.70% | 1.40% | 0.90% | (1.40%) |
Other non-deductible expenses | 1.60% | 0.70% | 1.30% | (1.80%) |
Other | 0.10% | (0.60%) | (0.10%) | 0.80% |
Effective tax rate | 0.90% | 0.80% | 2.50% | (2.50%) |
Net Income (Loss) Per Share (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Earnings Per Share [Abstract] | ||||
Income (loss) from continuing operations | $ 17,379 | $ 11,805 | $ 28,518 | $ (33,043) |
Net income attributable to noncontrolling interests | (687) | (689) | (1,967) | (1,294) |
Income (loss) from continuing operations attributable to SSI | 16,692 | 11,116 | 26,551 | (34,337) |
Loss from discontinued operations, net of tax | (127) | (116) | (275) | (1,206) |
Net income (loss) attributable to SSI | $ 16,565 | $ 11,000 | $ 26,276 | $ (35,543) |
Computation of shares: | ||||
Weighted average common shares outstanding, basic (in shares) | 27,601,000 | 27,261,000 | 27,499,000 | 27,195,000 |
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs, and RSUs (in shares) | 102,000 | 66,000 | 193,000 | 0 |
Weighted average common shares outstanding, diluted (in shares) | 27,703,000 | 27,327,000 | 27,692,000 | 27,195,000 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 375,653 | 490,984 | 309,476 | 725,548 |
Related Party Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Corporate Joint Venture | ||||
Related Party Transaction [Line Items] | ||||
Purchases from joint ventures | $ 5 | $ 3 | $ 11 | $ 9 |
Segment Information (Details) |
9 Months Ended |
---|---|
May 31, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of Reportable Segments | 2 |
Segment Information Segment Revenue Reconciliation to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Revenues | $ 477,088 | $ 351,604 | $ 1,193,333 | $ 961,880 |
Auto and Metals Recycling | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 395,124 | 280,680 | 1,000,482 | 760,663 |
Steel Manufacturing Business | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 81,964 | 70,924 | 192,851 | 201,217 |
Operating Segments | Auto and Metals Recycling | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 430,047 | 306,851 | 1,084,354 | 829,628 |
Less: Intersegment revenues | Auto and Metals Recycling | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ (34,923) | $ (26,171) | $ (83,872) | $ (68,965) |
Segment Information Segment Operating Income Reconciliation to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ 19,147 | $ 14,886 | $ 33,905 | $ (26,217) |
Restructuring charges and other exit-related activities | (93) | (542) | 200 | (7,758) |
Interest expense | (2,131) | (2,905) | (5,969) | (6,779) |
Other income (expense), net | 524 | (81) | 1,318 | 763 |
Income (loss) from continuing operations before income taxes | 17,540 | 11,900 | 29,254 | (32,233) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 30,212 | 28,116 | 64,163 | 5,354 |
Operating Segments | Auto and Metals Recycling | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 29,801 | 26,870 | 68,579 | 2,555 |
Operating Segments | Steel Manufacturing Business | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 411 | 1,246 | (4,416) | 2,799 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring charges and other exit-related activities | (93) | (542) | 200 | (7,758) |
Corporate and eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ (10,972) | $ (12,688) | $ (30,458) | $ (23,813) |
Segment Information Segment Assets Reconciliation to Consolidated (Details) - USD ($) $ in Thousands |
May 31, 2017 |
Aug. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Assets | $ 921,225 | $ 891,429 |
Investments in joint ventures | 13,385 | 13,616 |
Auto and Metals Recycling | ||
Segment Reporting Information [Line Items] | ||
Investments in joint ventures | 13,000 | 14,000 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,957,605 | 1,883,818 |
Operating Segments | Auto and Metals Recycling | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,597,410 | 1,510,688 |
Operating Segments | Steel Manufacturing Business | ||
Segment Reporting Information [Line Items] | ||
Assets | 360,195 | 373,130 |
Corporate and eliminations | ||
Segment Reporting Information [Line Items] | ||
Assets | $ (1,036,380) | $ (992,389) |
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