Segment Information

6 Months Ended

Feb. 29, 2012

Segment Reporting [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 U.S. In addition, the Company has intersegment sales of autobodies from APB to MRB at rates that approximate market prices. These intercompany sales tend to produce intercompany profits which are not recognized until the finished products are ultimately sold to third parties.

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses operating income (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 table below illustrates the Company’s operating results from continuing operations by reporting segment (in thousands):

	Three Months Ended						Six Months Ended
	2/29/2012			2/28/2011			2/29/2012			2/28/2011
Revenues:
Metals Recycling Business:
Revenues	$	781,933		$	637,028		$	1,510,371		$	1,228,736
Less: Intersegment revenues	(39,986		)	(39,049		)	(98,700		)	(70,758		)
MRB external customer revenues	741,947			597,979			1,411,671			1,157,978
Auto Parts Business:
Revenues	78,232			72,533			162,285			139,214
Less: Intersegment revenues	(18,090		)	(18,738		)	(39,593		)	(33,949		)
APB external customer revenues	60,142			53,795			122,692			105,265
Steel Manufacturing Business:
Revenues	84,523			70,068			164,424			133,703
Total revenues	$	886,612		$	721,842		$	1,698,787		$	1,396,946

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

	Three Months Ended						Six Months Ended
	2/29/2012			2/28/2011			2/29/2012			2/28/2011
Metals Recycling Business	$	19,952		$	41,691		$	33,051		$	67,225
Auto Parts Business	8,708			15,957			19,150			29,996
Steel Manufacturing Business	(868		)	(711		)	349			(2,746		)
Segment operating income	27,792			56,937			52,550			94,475
Corporate and eliminations	(9,805		)	(11,000		)	(19,595		)	(20,098		)
Operating income	17,987			45,937			32,955			74,377
Other income (expense)	(2,855		)	1,931			(6,520		)	1,549
Income from continuing operations before income taxes	$	15,132		$	47,868		$	26,435		$	75,926

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

	February 29, 2012			August 31, 2011
Metals Recycling Business(1)	$	1,658,143		$	1,668,778
Auto Parts Business	319,665			304,060
Steel Manufacturing Business	324,247			324,596
Total segment assets	2,302,055			2,297,434
Corporate and eliminations	(428,268		)	(407,265		)
Total assets	$	1,873,787		$	1,890,169

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(1) MRB total assets include $18 million and $17 million as of February 29, 2012 and August 31, 2011, respectively, for investments in joint venture partnerships.