Segment Information

12 Months Ended

Aug. 31, 2011

Segment Information [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company is organized by line of business. While the Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. Under the aforementioned criteria, the Company operates in three operating and reporting segments: metal purchasing, processing, recycling and selling (MRB), used auto parts (APB) and mini-mill steel manufacturing (SMB). Additionally, the Company is a noncontrolling partner in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal.

MRB buys and processes ferrous and nonferrous metal for sale to foreign and other domestic steel producers or their representatives and to SMB. MRB also purchases ferrous metal from other processors for shipment directly to SMB.

APB purchases used and salvaged vehicles, sells parts from those vehicles through its retail facilities and wholesale operations, and sells the remaining portion of the vehicles to metal recyclers, including MRB.

SMB operates a steel mini-mill that produces a wide range of finished steel products using recycled metal and other raw materials.

Intersegment sales from MRB to SMB are made at rates that approximate export market prices for shipments from the West Coast of the US. In addition, the Company has intersegment sales of autobodies from APB to MRB at rates that approximate market prices. These intercompany sales tend to produce intercompany profits which are not recognized until the finished products are ultimately sold to third parties.

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision-maker for the purpose of corporate management. The Company uses operating income (loss) to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative services that benefit all three segments. Because of this unallocated expense, the operating income (loss) of each reporting segment does not reflect the operating income (loss) the reporting segment would have as a stand-alone business. All amounts presented exclude the results of operations of the Company’s discontinued full-service used auto parts operation.

The following is a summary of the Company’s total assets as of August 31 (in thousands):

	2011			2010
Total assets:
Metals Recycling Business(1)	$	1,668,778		$	1,405,765
Auto Parts Business	304,060			243,976
Steel Manufacturing Business	324,596			322,601
Total segment assets	2,297,434			1,972,342
Corporate and eliminations	(407,265		)	(628,924		)
Total assets	$	1,890,169		$	1,343,418
Property, plant and equipment, net (2)	$	555,284		$	460,810

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(1) MRB total assets include $17 million and $14 million as of August 31, 2011 and 2010, respectively, for investments in joint venture partnerships.

(2) Property, plant and equipment, net includes $49 million and $3 million as of August 31, 2011 and 2010, respectively, at our Canadian locations.

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

	2011			2010			2009
Metals Recycling Business:
Revenues	$	3,070,004		$	1,979,770		$	1,507,655
Less: Intersegment revenues	(169,331		)	(155,310		)	(109,985		)
MRB external customer revenues	2,900,673			1,824,460			1,397,670
Auto Parts Business:
Revenues	319,833			241,233			153,207
Less: Intersegment revenues	(78,795		)	(49,538		)	(26,916		)
APB external customer revenues	241,038			191,695			126,291
Steel Manufacturing Business:
Revenues	317,483			285,085			263,269
Total revenues	$	3,459,194		$	2,301,240		$	1,787,230
Depreciation and amortization:
Metals Recycling Business	$	49,773		$	38,516		$	35,649
Auto Parts Business	10,131			7,568			6,627
Steel Manufacturing Business	10,782			12,879			12,097
Segment depreciation and amortization	70,686			58,963			54,373
Corporate	4,180			4,265			4,027
Total depreciation and amortization	$	74,866		$	63,228		$	58,400
Capital expenditures:
Metals Recycling Business	$	88,917		$	53,753		$	40,875
Auto Parts Business	7,099			4,682			9,574
Steel Manufacturing Business	3,328			3,255			6,205
Segment capital expenditures	99,344			61,690			56,654
Corporate	5,620			2,634			2,390
Total capital expenditures	$	104,964		$	64,324		$	59,044
Reconciliation of the Company’s segment operating income (loss) to income (loss) from continuing operations before income taxes:
Metals Recycling Business(1)(2)	$	164,646		$	118,449		$	12,552
Auto Parts Business	64,027			51,096			3,564
Steel Manufacturing Business	2,562			(5,862		)	(42,000		)
Segment operating income (loss)	231,235			163,683			(25,884		)
Corporate and eliminations	(45,271		)	(37,786		)	(25,240		)
Operating income (loss)	185,964			125,897			(51,124		)
Interest income	384			459			1,179
Interest expense	(8,436		)	(2,343		)	(3,342		)
Other income, net	2,893			1,320			6,223
Income (loss) from continuing operations before income taxes	$	180,805		$	125,333		$	(47,064	)

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(1) MRB operating income for fiscal 2009 includes bad debt expense of $8 million.

(2) MRB operating income includes $5 million, $3 million and $1 million in income from joint ventures accounted for by the equity method in fiscal 2011, 2010 and 2009, respectively.

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

	2011		2010		2009
Revenues based on sales destination:
Foreign	$	2,471,737	$	1,570,936	$	1,252,782
Domestic	987,457		730,304		534,448
Total revenues from external customers	$	3,459,194	$	2,301,240	$	1,787,230
Major product information:
Ferrous scrap metal	$	2,259,229	$	1,403,354	$	1,139,323
Nonferrous scrap metal and other	641,444		421,106		258,347
Auto parts	241,038		191,695		126,291
Finished steel products	317,338		270,712		245,175
Semi-finished steel products	145		14,373		18,094
Total revenues from external customers	$	3,459,194	$	2,301,240	$	1,787,230

In fiscal 2011, 2010 and 2009, there were no external customers that accounted for more than 10% of the Company’s consolidated revenues. Sales to customers in foreign countries are a significant part of the Company’s business. The schedule below identifies those foreign countries in which the Company’s sales exceeded 10% of consolidated revenues in any of the last three years ended August 31 (in thousands):

	2011		% of Revenue		2010		% of Revenue		2009		% of Revenue
China	$	884,744	25.6	%	$	487,098	21.2	%	$	570,400	31.9	%
South Korea	$	310,977	9.0	%	$	260,456	11.3	%	$	83,821	4.7	%