10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the Quarterly Period Ended November 30, 2012

Or

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

SCHNITZER STEEL INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

OREGON	93-0341923
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3200 NW Yeon Ave. Portland, OR	97210
(Address of principal executive offices)	(Zip Code)

(503) 224-9900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one)

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller Reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No  x

The Registrant had 25,681,272 shares of Class A common stock, par value of $1.00 per share, and 719,823 shares of Class B common stock, par value of $1.00 per share, outstanding as of January 3, 2013.

SCHNITZER STEEL INDUSTRIES, INC.

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of November 30, 2012 and August 31, 2012	3
Condensed Consolidated Statements of Operations for the Three Months Ended November 30, 2012 and 2011	4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended November 30, 2012 and 2011	5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended November 30, 2012 and 2011	6
Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 6. Exhibits	32
SIGNATURES	33

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share amounts)

	November 30, 2012			August 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	24,404		$	89,863
Accounts receivable, net of allowance for doubtful accounts of $1,038 and $4,459	152,860			137,313
Inventories, net	302,626			246,992
Deferred income taxes	5,458			6,362
Refundable income taxes	6,269			7,671
Prepaid expenses and other current assets	23,764			28,618
Total current assets	515,381			516,819
Property, plant and equipment, net of accumulated depreciation of $553,099 and $535,728	564,110			564,185
Investments in joint venture partnerships	16,339			17,126
Goodwill	634,451			635,491
Intangibles, net of accumulated amortization of $20,262 and $19,023	14,544			15,778
Other assets	14,379			14,174
Total assets	$	1,759,204		$	1,763,573
Liabilities and Equity
Current liabilities:
Short-term borrowings	$	9,169		$	683
Accounts payable	97,331			115,007
Accrued payroll and related liabilities	19,741			22,130
Environmental liabilities	2,261			2,185
Accrued income taxes	47			38
Other accrued liabilities	37,911			38,799
Total current liabilities	166,460			178,842
Deferred income taxes	86,068			85,447
Long-term debt, net of current maturities	345,797			334,629
Environmental liabilities, net of current portion	44,939			44,874
Other long-term liabilities	11,585			11,837
Total liabilities	654,849			655,629
Commitments and contingencies (Note 6)
Redeemable noncontrolling interest	23,602			22,248
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, 25,684 and 25,219 shares issued and outstanding	25,684			25,219
Class B common stock – 25,000 shares $1.00 par value authorized, 720 and 1,113 shares issued and outstanding	720			1,113
Additional paid-in capital	3,171			816
Retained earnings	1,049,399			1,056,024
Accumulated other comprehensive loss	(3,629		)	(2,589		)
Total SSI shareholders’ equity	1,075,345			1,080,583
Noncontrolling interests	5,408			5,113
Total equity	1,080,753			1,085,696
Total liabilities and equity	$	1,759,204		$	1,763,573

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

are an integral part of these statements.

3

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

	Three Months Ended November 30,
	2012			2011
Revenues	$	592,820		$	812,176
Operating expense:
Cost of goods sold	541,884			742,215
Selling, general and administrative	47,995			55,992
Loss (income) from joint ventures	135			(1,001		)
Restructuring charges	1,593			—
Operating income	1,213			14,970
Interest expense	(2,017		)	(3,271		)
Other income (expense), net	321			(393		)
Income (loss) before income taxes	(483		)	11,306
Income tax expense	(960		)	(3,561		)
Net income (loss)	(1,443		)	7,745
Net income attributable to noncontrolling interests	(228		)	(727		)
Net income (loss) attributable to SSI	$	(1,671	)	$	7,018
Net income (loss) per share attributable to SSI - basic	$	(0.06	)	$	0.26
Net income (loss) per share attributable to SSI - diluted	$	(0.06	)	$	0.25
Weighted average number of common shares:
Basic	26,567			27,451
Diluted	26,567			27,715
Dividends declared per common share	$	0.188		$	0.017

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

are an integral part of these statements.

4

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

	Three Months Ended November 30,
	2012			2011
Net income (loss)	$	(1,443	)	$	7,745
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(1)	(1,258		)	(6,438		)
Cash flow hedges, net(2)	17			—
Pension obligations, net(3)	375			67
Total other comprehensive loss, net of tax	(866		)	(6,371		)
Comprehensive income (loss)	(2,309		)	1,374
Less amounts attributable to noncontrolling interests:
Net income attributable to noncontrolling interests	(228		)	(727		)
Foreign currency translation adjustment attributable to redeemable noncontrolling interest	(174		)	(377		)
Total amounts attributable to noncontrolling interests	(402		)	(1,104		)
Comprehensive income (loss) attributable to SSI	$	(2,711	)	$	270

_____________________________

(1) Net of tax benefit of $(91) and $(468) for each respective period.

(2) Net of tax expense of $24 and $0 for each respective period.

(3) Net of tax expense of $216 and $39 for each respective period.

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

are an integral part of these statements.

5

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended November 30,
	2012			2011
Cash flows from operating activities:
Net income (loss)	$	(1,443	)	$	7,745
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization	20,899			20,346
Deferred income taxes	2,261			906
Undistributed equity in earnings of joint ventures	(40		)	(963		)
Share-based compensation expense	4,210			4,613
Excess tax benefit from share-based payment arrangements	—			(413		)
(Gain) loss on disposal of assets	226			(116		)
Unrealized foreign exchange loss, net	46			272
Bad debt recoveries	(1,573		)	—
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(20,010		)	8,278
Inventories	(50,776		)	(74,117		)
Income taxes	903			(20,126		)
Prepaid expenses and other current assets	1,173			(1,148		)
Intangibles and other long-term assets	298			(1,079		)
Accounts payable	(10,429		)	(19,193		)
Accrued payroll and related liabilities	(1,950		)	(14,745		)
Other accrued liabilities	(3,687		)	3,452
Environmental liabilities	(74		)	(312		)
Other long-term liabilities	(303		)	(81		)
Distributed equity in earnings of joint ventures	735			525
Net cash used in operating activities	(59,534		)	(86,156		)
Cash flows from investing activities:
Capital expenditures	(26,675		)	(25,551		)
Joint venture receipts, net	222			353
Proceeds from sale of assets	532			251
Net cash used in investing activities	(25,921		)	(24,947		)
Cash flows from financing activities:
Proceeds from line of credit	135,500			173,000
Repayment of line of credit	(127,000		)	(159,000		)
Borrowings from long-term debt	72,742			294,212
Repayment of long-term debt	(61,449		)	(214,396		)
Repurchase of Class A common stock	—			(3,117		)
Taxes paid related to net share settlement of share-based payment arrangements	(1,104		)	(840		)
Excess tax benefit from share-based payment arrangements	—			413
Contributions from noncontrolling interest	1,970			454
Distributions to noncontrolling interest	(375		)	(1,477		)
Dividends paid	—			(468		)
Net cash provided by financing activities	20,284			88,781
Effect of exchange rate changes on cash	(288		)	(151		)
Net decrease in cash and cash equivalents	(65,459		)	(22,473		)
Cash and cash equivalents as of beginning of period	89,863			49,462
Cash and cash equivalents as of end of period	$	24,404		$	26,989

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

are an integral part of these statements.

6

SCHNITZER STEEL INDUSTRIES, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - 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 presentation 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, 2012. The results for the three months ended November 30, 2012 and 2011 are not necessarily indicative of the results of operations for the entire year.

Accounting Changes

In June 2011, the Financial Accounting Standards Board (“FASB”) issued changes to the presentation of comprehensive income. These changes give an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements; the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. No changes were made to the items that must be reported in other comprehensive income, when an item of other comprehensive income must be reclassified to net income, or to the calculation and presentation of earnings (loss) per share. The Company adopted the new requirement in the first quarter of fiscal 2013 with no impact on the Company’s Unaudited Condensed Consolidated Financial Statements except for the change in presentation. The Company has chosen to present a separate statement of comprehensive income.

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 $30 million as of November 30, 2012 and $38 million as of August 31, 2012.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The majority of cash and cash equivalents are maintained with two major financial institutions (Bank of America and Wells Fargo Bank, N.A.). Balances in these institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250,000 as of November 30, 2012. 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, letters of credit, 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 $54 million and $37 million of open letters of credit relating to accounts receivable as of November 30, 2012 and August 31, 2012, respectively.

Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt and derivative contracts. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2). The carrying amounts of the non-derivative financial instruments approximate fair 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:

• Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• 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.

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. See Note 8 - Redeemable Noncontrolling Interest and Note 11 - Derivative Financial Instruments for further detail.

Derivatives

The Company records derivative instruments in other assets or other liabilities in the Unaudited Condensed Consolidated Balance Sheets at fair value and changes in the fair value are either recognized in accumulated other comprehensive income (loss) in the Unaudited Condensed Consolidated Balance Sheets or net income (loss) in the Unaudited Condensed Consolidated Statements of Operations, as applicable, depending on the nature of the underlying exposure, whether the derivative has been designated as a hedge, and if designated as a hedge, the extent to which the hedge is effective. Amounts included in accumulated other comprehensive income (loss) are reclassified to earnings in the period in which earnings are impacted by the hedged items or in the period that the hedged transaction is deemed no longer likely to occur. For cash flow hedges, a formal assessment is made, both at the hedge’s inception and on an ongoing basis, to determine whether the derivatives that are designated as hedging instruments have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. To the extent the hedge is determined to be ineffective, the ineffective portion is immediately recognized in earnings. When available, quoted market prices or prices obtained through external sources are used to measure a derivative instrument’s fair value. The fair value of these instruments is a function of underlying forward commodity prices, related volatility, counterparty creditworthiness and duration of the contracts. Cash flows from derivatives are recognized in the Unaudited Condensed Consolidated Statements of Cash Flows in a manner consistent with the underlying transactions. See Note 11 - Derivative Financial Instruments.

Derivative contracts for commodities used in normal business operations that are settled by physical delivery, among other criteria, are eligible for and may be designated as normal purchases and normal sales. Contracts that qualify as normal purchases or normal sales are not marked-to-market. The Company does not use derivative instruments for trading or speculative purposes.

Restructuring Charges

Restructuring charges consist of severance, contract termination and other exit 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 exit costs is measured at its fair value in the period in which the liability is incurred. See Note 7 - Restructuring Charges for further detail.

Redeemable Noncontrolling Interest

The Company has issued common stock of one of its subsidiaries to a noncontrolling interest holder of that subsidiary that is redeemable both at the option of the holder and upon the occurrence of an event that is not solely within the Company’s control. Since redemption of the noncontrolling interest is outside of the Company’s control, this interest is presented on the Unaudited Condensed Consolidated Balance Sheets in the mezzanine section under the caption redeemable noncontrolling interest. If the interest were to be redeemed, the Company would be required to purchase all of such interest at fair value on the date of redemption. The redeemable noncontrolling interest is presented at the greater of its carrying amount (adjusted for the noncontrolling interest’s share of the allocation of income or loss of the subsidiary, dividends to and contributions from the noncontrolling interest) or its fair value as of each measurement date. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in fair value prior to exercise of the redemption option will be recorded to retained earnings. See Note 8 - Redeemable Noncontrolling Interest for further detail.

Reclassifications

Certain prior year amounts have been reclassified within operating expenses and other income (expense) in the Unaudited Condensed Statements of Operations and cash flows from operating activities in the Unaudited Condensed Statements of Cash Flows to conform to the current period presentation. These changes had no impact on previously reported operating income, net income or net cash used in operating activities.

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Table of Contents	SCHNITZER STEEL INDUSTRIES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Recent Accounting Pronouncements

In December 2011, an accounting standards update was issued increasing disclosures regarding offsetting assets and liabilities. For financial instruments and derivative instruments, the standard requires disclosure of the gross amounts of recognized assets and liabilities, the amounts offset on the balance sheet, and the amounts subject to the offsetting requirements but not offset on the balance sheet. The standard is effective for the Company for fiscal year 2014 and interim periods therein and is to be applied retrospectively. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

In July 2012, an accounting standards update was issued that simplifies how an entity tests indefinite-lived intangible assets for impairment by allowing an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. The Company intends to early adopt this standard for the annual impairment test to be performed in the second quarter of fiscal 2013. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

Note 3 - Inventories, net

Inventories, net consisted of the following (in thousands):

	November 30, 2012		August 31, 2012
Processed and unprocessed scrap metal	$	209,067	$	152,930
Semi-finished steel products (billets)	4,950		7,328
Finished goods	51,797		49,988
Supplies	36,812		36,746
Inventories, net	$	302,626	$	246,992

Note 4 - Business Combinations

In December 2012, the Company made the following acquisitions:

• The Company acquired substantially all of the assets of Ralph’s Auto Supply (B.C.) Ltd., a used auto parts business with four stores in Richmond and Surrey, British Columbia, which expanded the Auto Parts Business (“APB”)’s presence in Western Canada and is near the Metals Recycling Business’ operations in Surrey, British Columbia.

• The Company acquired substantially all of the assets of U-Pick-It, a used auto parts business with two stores in the Kansas City metropolitan area in Missouri and Kansas, which expanded APB’s presence in the Midwestern U.S.

• The Company acquired all of the equity interests of Freetown Self Serve Used Auto Parts, LLC, Freetown Transfer Facility, LLC, Millis Used Auto Parts, Inc. and Millis Industries, Inc., which together operated a used auto parts business with two stores in Massachusetts. This acquisition established a new APB presence in the Northeast near our Metals Recycling Business’ operations.

The aggregate consideration paid for these acquisitions was $23 million. As of January 8, 2013, the initial accounting for determining the acquisition-date fair value for each major class of assets acquired, including goodwill, and liabilities assumed was not yet complete. These acquisitions, individually or in the aggregate, are not material to the Company’s financial position or results of operations, and thus pro forma information is not presented.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Goodwill

The gross changes in the carrying amount of goodwill by reporting segment for the three months ended November 30, 2012 were as follows (in thousands):

	Metals Recycling Business			Auto Parts Business			Total
Balance as of August 31, 2012	$	471,954		$	163,537		$	635,491
Purchase accounting adjustments	(2		)	—			(2		)
Foreign currency translation adjustment	(904		)	(134		)	(1,038		)
Balance as of November 30, 2012	$	471,048		$	163,403		$	634,451

There were no accumulated goodwill impairment charges as of November 30, 2012.

Note 6 - Commitments and Contingencies

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 three months ended November 30, 2012 were as follows (in thousands):

Reporting Segment	Balance as of August 31, 2012		Liabilities Established (Released), Net		Payments and Other			Balance as of November 30, 2012		Short-Term		Long-Term
Metals Recycling Business	$	30,859	$	165	$	(124	)	$	30,900	$	1,707	$	29,193
Auto Parts Business	16,200		100		—			16,300		554		15,746
Total	$	47,059	$	265	$	(124	)	$	47,200	$	2,261	$	44,939

Metals Recycling Business (“MRB”)

As of November 30, 2012, MRB had environmental liabilities of $31 million 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 process to be followed for any cleanup and the allocation of the costs for any cleanup among responsible parties have not yet been determined, but the process of identifying additional PRPs and beginning allocation of costs is underway. 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 is 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 more than 80 other PRPs, including the LWG, in a voluntary process to establish an allocation of costs at the Site. These parties have selected an allocation team and have entered into an allocation process design agreement. The LWG has 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.

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Table of Contents	SCHNITZER STEEL INDUSTRIES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On March 30, 2012, the LWG submitted to the EPA and made available on its website a draft feasibility study (“draft 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 identifies ten possible remedial alternatives which range 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 and estimates a range of two to 28 years to implement the remedial work, depending on the selected alternative. The draft FS does not determine who is responsible for remediation costs, define the precise cleanup boundaries or select remedies. The draft FS is being reviewed, and may be subject to revisions prior to its approval, by the EPA. While the draft FS is an important step in the EPA’s development of a proposed plan for addressing the Site, a final decision on the nature and extent of the required remediation will occur only after the EPA has prepared a proposed plan for public review and issued a record of decision (“ROD”). Currently available information indicates that the EPA does not expect to issue its final ROD selecting a remedy for the Site until at least 2014. Responsibility for implementing and funding EPA’s selected remedy will be determined in a separate allocation process.

Because there has not been a determination of the total cost of the investigations, the remediation that will be required, the amount of natural resource damages or how the costs of the ongoing 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 or reasonably possible that the Company may 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 not known or available 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 and remediation 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) has not yet been determined.

Other MRB Sites

As of November 30, 2012, the Company had environmental liabilities related to various MRB sites other than Portland Harbor of $30 million. The liabilities relate to the potential future remediation of soil contamination, groundwater contamination and storm water runoff issues and were not individually material at any site. No material environmental compliance enforcement proceedings are currently pending related to these sites.

Auto Parts Business

As of November 30, 2012, the Company had environmental liabilities related to various APB sites of $16 million. The liabilities relate to the potential future remediation of soil contamination, groundwater contamination and storm water runoff issues and were not individually material at any site. No material environmental compliance enforcement proceedings are currently pending related to these sites.

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 domestic firm that applies a treatment that allows the EAF dust to be delisted as hazardous waste so it can be disposed of as a non-hazardous solid 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 was renewed through March 1, 2012. The Company timely filed a renewal application, which allows for existing permit conditions to remain in force until the permit is renewed or a new permit is issued.

SMB had no environmental liabilities as of November 30, 2012.

Other than the Portland Harbor Superfund site, which is discussed 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

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Unaudited Condensed 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.

In addition, the Company is party to various legal proceedings arising in the normal course of business. Management believes that adequate provisions have been made for these contingencies. The Company does not anticipate that the resolution of legal proceedings arising in the normal course of business will have a material adverse effect on its results of operations, financial condition, or cash flows.

Note 7 - Restructuring Charges

In the fourth quarter of fiscal 2012, the Company undertook a number of restructuring initiatives designed to extract greater synergies from the significant acquisitions and technology investments made in fiscal 2011, realign the Company’s organization to support its future growth and decrease operating expenses by streamlining functions and reducing organizational layers, including achieving greater synergies between MRB and APB. These initiatives are expected to be substantially complete by the end of fiscal 2013.

The Company expects that total pre-tax charges pursuant to these restructuring initiatives will be approximately $11 million. Of this amount, $7 million were incurred through the first quarter of fiscal 2013, with the balance expected to be incurred by the end of fiscal 2013. The Company expects that the vast majority of the restructuring charges will require cash payments.

The following illustrates the reconciliation of the restructuring liability by major type of costs for the three months ended November 30, 2012 (in thousands):

	Balance as of August 31, 2012		Charges		Payments and Other			Balance as of November 30, 2012		Total Charges to Date		Total Expected Charges
Severance costs	$	2,477	$	939	$	(2,548	)	$	868	$	3,680	$	4,000
Contract termination costs	414		5		(59		)	360		445		4,100
Other exit costs	64		649		(693		)	20		2,480		2,600
Total	$	2,955	$	1,593	$	(3,300	)	$	1,248	$	6,605	$	10,700

Restructuring charges by operating segment were as follows (in thousands):

	As of November 30, 2012
		Current Period Charges		Total Charges to Date		Total Expected Charges
Metals Recycling Business		$	550	$	2,209	$	2,400
Auto Parts Business		187		420		600
Unallocated (Corporate)		856		3,976		7,700
Total		$	1,593	$	6,605	$	10,700

Note 8 - Redeemable Noncontrolling Interest

In March 2011, the Company, through a wholly-owned acquisition subsidiary, acquired substantially all of the metals recycling business assets of Amix Salvage & Sales Ltd. As part of the purchase consideration, the Company issued the seller common shares equal to 20% of the issued and outstanding capital stock of the Company’s acquisition subsidiary. Under the terms of an agreement related to the acquisition, the noncontrolling interest holder has the right to require the Company to purchase its interest in the Company’s acquisition subsidiary for fair value. The noncontrolling interest becomes redeemable within 60 days after the later of (i) the third anniversary of the date of the acquisition and (ii) the date on which certain principals of the minority shareholder are no longer employed by the Company. As of November 30, 2012, the noncontrolling interest was 19% of the outstanding capital stock of the subsidiary and the conditions for redemption had not been met.

As of November 30, 2012, the noncontrolling interest was presented at its adjusted carrying value of $24 million, which approximates its fair value. 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. The determination of fair value requires management to apply significant judgment in formulating estimates and assumptions used in the discounted cash flow model, including primarily revenue growth

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, terminal year growth rates and an appropriate discount rate. The present value of future cash flows is determined using a market-based weighted average cost of capital of 12.8%, including a subject-company risk premium. The subsidiary is presently undertaking significant investments to install a shredder and related processing and sorting equipment. As a result, projections of future cash flows assume volumes and earnings will grow above historical levels once construction activity is complete and the new equipment is put in service. The terminal year growth rate used in the discounted cash flow model is 2%. The Company also used a market approach based on earnings multiple data to corroborate the fair value estimate of the noncontrolling interest determined using the discounted cash flow model.

Significant increases (decreases) in the revenue growth rate driven by commodity prices and volume expectations and the terminal growth rate would result in a significantly higher (lower) fair value measurement. A significant decrease (increase) in the market-based weighted average cost of capital would result in a significantly higher (lower) fair value measurement.

Following is a reconciliation of the changes in the redeemable noncontrolling interest for the three months ended November 30, 2012 and 2011 (in thousands):

	2012			2011
Balances - September 1 (Beginning of period)	$	22,248		$	19,053
Net loss attributable to noncontrolling interest	(442		)	(207		)
Currency translation adjustment	(174		)	(377		)
Capital contributions from noncontrolling interest holder	1,970			467
Balances - November 30 (End of period)	$	23,602		$	18,936

Note 9 - Changes in Equity

The following is a summary of the changes in equity for the three months ended November 30, 2012 and 2011 (in thousands):

	Fiscal 2013									Fiscal 2012
	SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity			SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balances - September 1 (Beginning of period)	$	1,080,583		$	5,113		$	1,085,696		$	1,094,712		$	6,524		$	1,101,236
Net income (loss)(1)	(1,671		)	670			(1,001		)	7,018			934			7,952
Other comprehensive loss, net of tax(2)	(1,040		)	—			(1,040		)	(6,748		)	—			(6,748		)
Distributions to noncontrolling interests	—			(375		)	(375		)	—			(1,477		)	(1,477		)
Share repurchases	—			—			—			(3,117		)	—			(3,117		)
Restricted stock withheld for taxes	(1,104		)	—			(1,104		)	(840		)	—			(840		)
Share-based compensation	4,210			—			4,210			5,210			—			5,210
Excess tax (deficiency) benefit from stock options exercised and restricted stock units vested	(681		)	—			(681		)	413			—			413
Cash dividends ($0.188 and $0.017 per share)	(4,952		)	—			(4,952		)	(463		)	—			(463		)
Balances - November 30 (End of period)	$	1,075,345		$	5,408		$	1,080,753		$	1,096,185		$	5,981		$	1,102,166

_____________________________

(1) Net income attributable to noncontrolling interests for the three months ended November 30, 2012 and 2011 excludes net losses of $(442) thousand and $(207) thousand, respectively, allocable to the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

(2) Other comprehensive loss, net of tax for the three months ended November 30, 2012 and 2011 excludes $(174) thousand and $(377) thousand, respectively, relating to foreign currency translation adjustments for the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

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SCHNITZER STEEL INDUSTRIES, INC.

Note 10 - Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

	November 30, 2012			August 31, 2012
Foreign currency translation adjustments	$	2,226		$	3,658
Pension obligations, net	(5,731		)	(6,106		)
Cash flow hedges, net	(124		)	(141		)
Total accumulated other comprehensive loss	$	(3,629	)	$	(2,589	)

Note 11 - Derivative Financial Instruments

Foreign Currency Exchange Rate Risk Management

To manage exposure to foreign exchange rate risk, the Company may enter into foreign currency forward contracts to stabilize the U.S. dollar amount of the transaction at settlement. When such contracts are not designated as hedging instruments for accounting purposes, the realized and unrealized gains and losses on settled and unsettled forward contracts measured at fair value are recognized as other income or expense in the Unaudited Condensed Consolidated Statements of Operations.

The Company entered into forward contracts to mitigate exposure to exchange rate fluctuations on Euro-denominated fixed asset purchases, which were designated as qualifying cash flow hedges for accounting purposes. These foreign currency forward contracts are measured using forward exchange rates based on observable exchange rates quoted in an active market and are classified as Level 2 fair value measurements under the fair value hierarchy. In the first quarter of fiscal 2012, the Company determined that certain forecasted transactions were no longer probable, de-designated these contracts as hedges and subsequently terminated the contracts. The nominal amount and fair value of forward contracts, the amounts reclassified from accumulated other comprehensive income (loss) and the realized losses recorded in other income (expense), net were not material to the Unaudited Condensed Consolidated Financial Statements for all periods presented.

Note 12 - Share-based Compensation

In the first quarter of fiscal 2013, as part of the annual awards under the Company’s Long-Term Incentive Plan, the Compensation Committee granted 209,639 restricted stock units (“RSU”) to its key employees and officers under the Company’s 1993 Stock Incentive Plan. The RSUs have a five-year term and vest 20% per year commencing June 1, 2013. The fair value of the RSUs granted is based on the market closing price of the underlying Class A common stock on the date of grant and totaled $6 million. The compensation expense associated with the RSUs is recognized over the requisite service period of the awards, net of forfeitures.

Note 13 - Income Taxes

The effective tax rate for the Company’s operations for the three months ended November 30, 2012 and 2011 was (198.8)% and 31.5%, respectively.

A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:

	Three Months Ended November 30,
	2012		2011
Federal statutory rate	35.0	%	35.0	%
State taxes, net of credits	7.1		1.3
Foreign income taxed at different rates	(1.0	)	(1.6	)
Section 199 deduction	4.6		(1.7	)
Non-deductible officers’ compensation	(1.1	)	0.7
Noncontrolling interests	48.5		(2.0	)
Research and development credits	21.7		—
Valuation allowance on deferred tax assets	(312.1	)	—
Other	(1.5	)	(0.2	)
Effective tax rate	(198.8	)%	31.5	%

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the first quarter of fiscal 2013, the Company recorded an expense of $2 million to recognize a valuation allowance on deferred tax assets of a foreign subsidiary as a result of negative evidence, including recent losses at the subsidiary, outweighing the more subjective positive evidence, thus indicating that it is more likely than not that the associated tax benefit will not be realized in the future.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. The federal statute of limitations has expired for fiscal 2009 and prior years. The Canadian and several state tax authorities are currently examining returns for fiscal years 2005 to 2009.

Note 14 - 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):

	Three Months Ended November 30,
	2012			2011
Net income (loss)	$	(1,443	)	$	7,745
Net income attributable to noncontrolling interests	(228		)	(727		)
Net income (loss) attributable to SSI	(1,671		)	7,018
Computation of shares:
Weighted average common shares outstanding, basic	26,567			27,451
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs and RSUs	—			264
Weighted average common shares outstanding, diluted	26,567			27,715

Common stock equivalent shares of 864,874 and 351,074 were considered antidilutive and were excluded from the calculation of diluted net income (loss) per share for the three months ended November 30, 2012 and 2011, respectively.

Note 15 - Related Party Transactions

The Company purchases recycled metal from its joint venture operations at prices that approximate fair market value. These purchases totaled $6 million and $10 million for the three months ended November 30, 2012 and 2011. Payments from these joint ventures were less than $1 million for the three months ended November 30, 2012 and 2011. The Company owed $3 million and $2 million to joint ventures as of November 30, 2012 and August 31, 2012.

In connection with the acquisition of the metals recycling business assets of Amix Salvage & Sales Ltd. in March 2011, the Company entered into a series of agreements to obtain barging and other services and lease property with entities owned by the minority shareholder of the Company’s subsidiary that operates its MRB facilities in Vancouver, British Columbia and Alberta, Canada. The Company paid less than $1 million and $3 million, primarily for barging services, under these agreements for the three months ended November 30, 2012 and 2011, respectively. Amounts payable to entities affiliated with this minority shareholder were less than $1 million as of November 30, 2012 and August 31, 2012.

In connection with the acquisition of a metals recycling business in fiscal 2011, the Company entered into an agreement with the selling parties, one of which is an employee of the Company, whereby the selling parties agreed to indemnify the Company for property improvements in excess of a contractually defined threshold on property owned by the selling parties and leased to the Company. The Company recognized an amount receivable from the selling parties of $1 million as of August 31, 2012 under the agreement, for which payment was received in the first quarter of fiscal 2013. 

Thomas D. Klauer, Jr., President of the Company’s Auto Parts Business, is the sole shareholder of a corporation that is the 25% minority partner in a partnership in which the Company is the 75% partner and which operates five self-service stores in Northern California. Mr. Klauer’s 25% share of the profits of this partnership totaled less than $1 million and $1 million for the three months ended November 30, 2012 and 2011, respectively. The partnership leases properties from entities in which Mr. Klauer has ownership interests under agreements that expire in December 2015 with options to renew the leases, upon expiration, for multiple five-year periods. The rent paid by the partnership to the entities in which Mr. Klauer has ownership interests was less than $1 million for the three months ended November 30, 2012 and 2011.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Certain members of the Schnitzer family own significant interests in, or are related to owners of, MMGL Corp (“MMGL”, formerly known as Schnitzer Investment Corp.), which is engaged in the real estate business and was a subsidiary of the Company prior to 1989. MMGL is considered a related party for financial reporting purposes. The Company and MMGL are both potentially responsible parties with respect to Portland Harbor, which has been designated as a Superfund site since December 2000. The Company and MMGL have worked together in response to Portland Harbor matters, and the Company has paid all of the legal and consulting fees for the joint defense, in part due to its environmental indemnity obligation to MMGL with respect to the Portland scrap metal operations property. As these costs have increased substantially in the last two years, the Company and MMGL have agreed to an equitable cost sharing arrangement with respect to defense costs under which MMGL will pay 50% of the legal and consulting costs, net of insurance recoveries. The amounts receivable from (payable to) MMGL vary from period to period because of the timing of incurring legal and consulting fees, payments for cost reimbursements and insurance recoveries. Amounts receivable from MMGL under this agreement were less than $1 million as of November 30, 2012 and August 31, 2012.

Note 16 - Segment Information

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

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

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

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

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

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses operating income to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative services that benefit all three segments. In addition, the Company does not allocate restructuring charges to the segment operating income because management does not include this information in its measurement of the performance of the operating segments. Because of this unallocated income and expense, the operating income of each reporting segment does not reflect the operating income the reporting segment would report as a stand-alone business.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below illustrates the Company’s operating results by reporting segment (in thousands):

	Three Months Ended November 30,
	2012			2011
Revenues:
Metals Recycling Business:
Revenues	$	494,461		$	728,438
Less: Intersegment revenues	(47,255		)	(58,696		)
MRB external customer revenues	447,206			669,742
Auto Parts Business:
Revenues	69,555			84,054
Less: Intersegment revenues	(15,970		)	(21,522		)
APB external customer revenues	53,585			62,532
Steel Manufacturing Business:
Revenues	92,029			79,902
Total revenues	$	592,820		$	812,176

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

	Three Months Ended November 30,
	2012			2011
Metals Recycling Business	$	5,654		$	13,099
Auto Parts Business	6,364			10,442
Steel Manufacturing Business	3,404			1,218
Segment operating income	15,422			24,759
Restructuring charges	(1,593		)	—
Corporate and eliminations	(12,616		)	(9,789		)
Operating income	1,213			14,970
Interest expense	(2,017		)	(3,271		)
Other income (expense), net	321			(393		)
Income (loss) before income taxes	$	(483	)	$	11,306

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

	November 30, 2012			August 31, 2012
Metals Recycling Business(1)	$	1,680,808		$	1,696,296
Auto Parts Business	337,734			329,327
Steel Manufacturing Business	325,741			322,398
Total segment assets	2,344,283			2,348,021
Corporate and eliminations	(585,079		)	(584,448		)
Total assets	$	1,759,204		$	1,763,573

_____________________________

(1) MRB total assets include $16 million and $17 million as of November 30, 2012 and August 31, 2012, respectively, for investments in joint venture partnerships.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a discussion of our operations for the three months ended November 30, 2012 and 2011. The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, 2012 and the Unaudited Condensed Consolidated Financial Statements and the related Notes thereto included in Part I, Item 1 of this report.

Forward-Looking Statements

Statements and information included in this Quarterly Report on Form 10-Q by Schnitzer Steel Industries, Inc. (the “Company”) that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Except as noted herein or as the context may otherwise require, all references to “we,” “our,” “us” and “SSI” refer to the Company and its consolidated subsidiaries.

Forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding our expectations, intentions, beliefs and strategies regarding the future, including statements regarding trends, cyclicality and changes in the markets we sell into; strategic direction; changes to manufacturing and production processes; the cost of compliance with environmental and other laws; expected tax rates, deductions and credits; the realization of deferred tax assets; planned capital expenditures; liquidity positions; ability to generate cash from operations; the potential impact of adopting new accounting pronouncements; expected results, including pricing, sales volumes and profitability; obligations under our retirement plans; savings or additional costs from business realignment and cost containment programs; and the adequacy of accruals.

When used in this report, the words “believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “may,” “could,” “opinions,” “forecasts,” “future,” “forward,” “potential,” “probable,” and similar expressions are intended to identify forward-looking statements.

We may make other forward-looking statements from time to time, including in press releases and public conference calls. All forward-looking statements we make are based on information available to us at the time the statements are made, and we assume no obligation to update any forward-looking statements, except as may be required by law. Our business is subject to the effects of changes in domestic and global economic conditions and a number of other risks and uncertainties that could cause actual results to differ materially from those included in, or implied by, such forward-looking statements. Some of these risks and uncertainties are discussed in Item 1A. Risk Factors of Part I in our Annual Report on Form 10-K for the year ended August 31, 2012. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site; the impact of general economic conditions; volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase; difficulties associated with acquisitions and integration of acquired businesses; the impact of goodwill impairment charges; the realization of expected cost reductions related to restructuring initiatives; the inability of customers to fulfill their contractual obligations; the impact of foreign currency fluctuations; potential limitations on our ability to access capital resources and existing credit facilities; restrictions on our business and financial covenants under our bank credit agreement; the impact of the consolidation in the steel industry; the impact of imports of foreign steel into the U.S.; inability to realize expected benefits from investments in technology; freight rates and availability of transportation; product liability claims; costs associated with compliance with environmental regulations; the adverse impact of climate change; inability to obtain or renew business licenses and permits; compliance with greenhouse gas emission regulations; reliance on employees subject to collective bargaining agreements; and the impact of the underfunded status of multiemployer plans in which we participate.

General

Founded in 1906, Schnitzer Steel Industries, Inc., an Oregon corporation, is one of the nation’s largest recyclers of ferrous and nonferrous scrap metal, a leading recycler of used and salvaged vehicles and a manufacturer of finished steel products.

We operate in three reporting segments: the Metals Recycling Business (“MRB”), the Auto Parts Business (“APB”) and the Steel Manufacturing Business (“SMB”), which collectively provide an end-of-life cycle solution for a variety of products through our integrated businesses. We use operating income to measure our segment’ performance. Restructuring charges are not allocated to segment operating income because we do not include this information in our measurement of the segments’ performance. Corporate expense consists primarily of unallocated expense for management and administrative services that benefit all three reporting segments. As a result of this unallocated expense, the operating income of each reporting segment does not reflect the operating income the reporting segment would report as a stand-alone business. For further information regarding our reporting segments,

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see Note 16 - Segment Information in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Our results of operations depend in large part on the demand and prices for recycled metal in foreign and domestic markets and on the supply of raw materials, including end-of-life vehicles, available to be processed at our facilities. Our deep water port facilities on both the East and West coasts of the U.S. (in Everett, Massachusetts; Providence, Rhode Island; Oakland, California; Portland, Oregon; and Tacoma, Washington) and access to public deep water port facilities (in Kapolei, Hawaii and Salinas, Puerto Rico) allow us to efficiently meet the global demand for ferrous recycled metal by shipping bulk cargoes to steel manufacturers located in Europe, Asia, Central America and Africa. Our exports of nonferrous processed recycled metal are shipped in containers through various public docks to specialty steelmakers, foundries, aluminum sheet and ingot manufacturers, copper refineries and smelters, brass and bronze ingot manufacturers and wire and cable producers globally. We also transport both ferrous and nonferrous metals by truck and rail in order to transfer scrap metal between our facilities for further processing, to load shipments at our export facilities and to meet regional domestic demand.

Executive Overview of Financial Results for the First Quarter of Fiscal 2013

We generated consolidated revenues of $593 million in the first quarter of fiscal 2013, a decrease of 27% from the $812 million of revenues in the first quarter of fiscal 2012. This decrease was primarily due to lower ferrous and nonferrous sales volumes and average net selling prices as a result of weak economic conditions that negatively impacted global demand for recycled metal. In addition, the sluggish U.S. economic growth and the lower price environment adversely impacted the supply of scrap metal.

The weak global economic conditions and the slowdown of economic activity adversely impacted our results in the first quarter of fiscal 2013, leading to operating income of $1 million, which included restructuring charges of $2 million, compared to operating income of $15 million in the prior year quarter. Selling prices for ferrous recycled metal experienced a sharp decline in the first half of the first quarter of fiscal 2013. In these weak market conditions, purchase costs for recycled metal decreased at a slower pace than average net selling prices for shipments resulting in a compression of operating margins compared to the prior year period. This compression was further compounded at MRB by the adverse impact of average inventory costing on costs of goods sold caused by the sharp decline in ferrous recycled metal prices during the quarter. In addition, operating results at MRB and APB were negatively impacted by the reduction in volumes due to the constrained supply of raw materials, including end-of-life vehicles, primarily related to the continued weak domestic economic conditions. This was partially offset by an increase in operating income at SMB primarily as a result of higher finished steel volumes compared to the first quarter of fiscal 2012. Selling, general and administrative (“SG&A”) expenses decreased by $8 million, or 14%, compared to the first quarter of fiscal 2012 primarily as a result of the restructuring initiatives and other operating efficiencies initiated in fiscal 2012 and reduced incentive compensation expense due to lower financial performance.

The following items summarize our consolidated financial results for the first quarter of fiscal 2013:

• Revenues of $593 million, compared to $812 million in the first quarter of fiscal 2012;

• Operating income of $1 million, compared to operating income of $15 million in the first quarter of fiscal 2012;

• Net loss attributable to SSI of $2 million, or $(0.06) per diluted share, compared to net income of $7 million, or $0.25 per diluted share, in the first quarter of fiscal 2012;

• Net cash used in operating activities of $60 million in the first three months of fiscal 2013, compared to $86 million in the first quarter of fiscal 2012;

• Debt, net of cash, of $331 million as of November 30, 2012, compared to $245 million as of August 31, 2012 (see the reconciliation of Debt, net of cash in Non-GAAP Financial Measures at the end of this Item 2).

The following items highlight the financial results for our operating segments for the first quarter of fiscal 2013:

• MRB revenues and operating income of $494 million and $6 million, respectively, compared to $728 million and $13 million in the first quarter of fiscal 2012, respectively;

• APB revenues and operating income of $70 million and $6 million, respectively, compared to $84 million and $10 million in the first quarter of fiscal 2012, respectively; and

• SMB revenues and operating income of $92 million and $3 million, respectively, compared to $80 million and $1 million in the first quarter of fiscal 2012, respectively.

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Results of Operations

	Three Months Ended November 30,
($ in thousands)	2012			2011			% Change
Revenues:
Metals Recycling Business	$	494,461		$	728,438		(32	)%
Auto Parts Business	69,555			84,054			(17	)%
Steel Manufacturing Business	92,029			79,902			15	%
Intercompany revenue eliminations(1)	(63,225		)	(80,218		)	(21	)%
Total revenues	592,820			812,176			(27	)%
Cost of goods sold:
Metals Recycling Business	466,587			686,456			(32	)%
Auto Parts Business	50,044			59,460			(16	)%
Steel Manufacturing Business	86,944			77,005			13	%
Intercompany cost of goods sold eliminations(1)	(61,691		)	(80,706		)	(24	)%
Total cost of goods sold	541,884			742,215			(27	)%
Selling, general and administrative expense:
Metals Recycling Business	22,173			29,865			(26	)%
Auto Parts Business	13,147			14,152			(7	)%
Steel Manufacturing Business	1,681			1,679			—	%
Corporate(2)	10,994			10,296			7	%
Total SG&A expense	47,995			55,992			(14	)%
Loss (income) from joint ventures:
Metals Recycling Business	47			(982		)	NM
Change in intercompany profit elimination(3)	88			(19		)	NM
Total joint venture loss (income)	135			(1,001		)	NM
Operating income:
Metals Recycling Business	5,654			13,099			(57	)%
Auto Parts Business	6,364			10,442			(39	)%
Steel Manufacturing Business	3,404			1,218			179	%
Segment operating income	15,422			24,759			(38	)%
Restructuring charges(4)	(1,593		)	—			NM
Corporate expense(2)	(11,144		)	(10,296		)	8	%
Change in intercompany profit elimination(5)	(1,472		)	507			NM
Total operating income	$	1,213		$	14,970		(92	)%

_____________________________

NM = Not Meaningful

(1) MRB sells ferrous recycled metal to SMB at rates per ton that approximate West Coast U.S. export market prices. In addition, APB sells ferrous and nonferrous material to MRB. These intercompany revenues and cost of goods sold are eliminated in consolidation.

(2) Corporate expense consists primarily of unallocated expenses for services that benefit all three reporting segments. As a consequence of this unallocated expense, the operating income of each segment does not reflect the operating income the segment would have as a stand-alone business.

(3) The joint ventures sell recycled recycled metal to MRB and then subsequently to SMB at rates per ton that approximate West Coast U.S. export market prices. Consequently, these intercompany revenues produce intercompany operating income (loss), which is not recognized until the finished products are sold to third parties; therefore, intercompany profit is eliminated while the products remain in inventory.

(4) Restructuring charges consist of expense for severance, contract termination and other exit costs that management does not include in its measurement of the performance of the operating segments.

(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.

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Revenues

Consolidated revenues in the first quarter of fiscal 2013 were $593 million, a decrease of 27% compared to the same period in the prior year. This decrease was primarily due to lower ferrous and nonferrous sales volumes and lower average net selling prices due to softer global demand for recycled metal resulting from a continued slowdown in global economic growth. In addition, the sluggish U.S. economic growth and the lower price environment adversely impacted the supply of scrap metal compared to the prior year and contributed to the lower sales volumes.

Operating Income

Consolidated operating income in the first three months of fiscal 2013 was $1 million, compared to operating income of $15 million in the prior year period. In the first quarter of fiscal 2013, selling prices for ferrous recycled metal experienced a sharp decline. As a result of the weak market conditions, purchase costs for recycled metal decreased at a slower pace than average net selling prices for shipments resulting in a compression of operating margins compared to the prior year period. This compression was further compounded at MRB by the adverse impact of average inventory costing on costs of goods sold caused by the sharp decline in recycled recycled metal prices during the quarter. In addition, operating results at MRB and APB were negatively impacted by the reduction in volumes due to the constrained supply of raw materials, including end-of-life vehicles, primarily related to the continued weak domestic economic conditions. This was partially offset by an increase in operating income at SMB primarily as a result of higher finished steel volumes compared to the first quarter of fiscal 2012. While the prior year period also experienced a decline in selling prices for recycled metals, operating results for MRB and APB in the first quarter of fiscal 2012 benefited from higher sales volumes and average net selling prices resulting in less margin compression.

Included in operating results for the first quarter of fiscal 2013 was a reduction in SG&A expenses of $8 million, or 14%. The decrease was primarily as a result of the restructuring initiatives and other operating efficiencies initiated in fiscal 2012 and reduced incentive compensation expense due to lower financial performance.

Consolidated operating income in the first quarter of fiscal 2013 included restructuring charges of $2 million consisting of severance, contract termination and other exit costs. These charges related to the restructuring initiatives announced in the fourth quarter of fiscal 2012 designed to extract greater synergies from the significant acquisitions and technology investments made in recent years, achieve further integration between MRB and APB, realign our organization to support future growth and decrease operating expenses by streamlining functions and reducing organizational layers. These initiatives are expected to lower annual operating costs by $25 million, comprising approximately $18 million of selling, general and administrative expense and $7 million of cost of goods sold, and be substantially complete by the end of fiscal 2013. Total pre-tax charges pursuant to these restructuring initiatives are expected to amount to $11 million, of which $7 million have been recognized to date with the balance expected to be incurred by the end of fiscal 2013. We expect that the vast majority of the restructuring charges will require us to make cash payments.

Following is a summary of the restructuring charges incurred in the first quarter of fiscal 2013 by major type of cost and the total charges expected to be incurred pursuant to these restructuring initiatives (in thousands):

	MRB		APB		Corporate		Total charges in the Period		Total Expected Charges
Severance costs	$	521	$	111	$	307	$	939	$	4,000
Contract termination costs	5		—		—		5		4,100
Other exit costs	24		76		549		649		2,600
Total	$	550	$	187	$	856	$	1,593	$	10,700

We do not include restructuring charges in the measurement of the performance of our operating segments.

Interest Expense

Interest expense was $2 million and $3 million for the three months ended November 30, 2012 and 2011, respectively. The decrease in interest expense was primarily due to decreased average borrowings under our bank credit facilities compared to the prior year period.

Income Tax Expense

Our effective tax rate for the first quarter of fiscal 2013 was an expense of 198.8%, compared to 31.5% for the same period in the prior year. The effective tax rate in the first quarter of fiscal 2013 was impacted by the near break-even pre-tax results and the recognition of a valuation allowance on deferred tax assets of $2 million. The valuation allowance was recorded on deferred tax assets of a foreign subsidiary as a result of negative evidence, including recent losses at the subsidiary, outweighing the more

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subjective positive evidence, thus indicating that it is more likely than not that the associated tax benefit will not be realized in the future. We will continue to regularly assess the realizability of deferred tax assets. Changes in historical earnings performance and future earnings projections, among other factors, may cause us to adjust our valuation allowance on deferred tax assets, which would impact our income tax expense in the period we determine that these factors have changed.

The effective tax rate for fiscal 2013 is expected to be approximately 36%, subject to financial performance for the remainder of the year.

Financial Results by Segment

We operate our business across three reporting segments: MRB, APB and SMB. Additional financial information relating to these reporting segments is contained in Note 16 - Segment Information in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Metals Recycling Business

	Three Months Ended November 30,
($ in thousands, except for prices)	2012		2011			% Change
Ferrous revenues	$	370,476	$	578,024		(36	)%
Nonferrous revenues	116,601		142,290			(18	)%
Other	7,384		8,124			(9	)%
Total segment revenues	494,461		728,438			(32	)%
Cost of goods sold	466,587		686,456			(32	)%
Selling, general and administrative expense	22,173		29,865			(26	)%
Loss (income) from joint ventures	47		(982		)	NM
Segment operating income	$	5,654	$	13,099		(57	)%
Average ferrous recycled metal sales prices ($/LT):(1)
Domestic	$	354	$	420		(16	)%
Foreign	$	360	$	436		(17	)%
Average	$	358	$	432		(17	)%
Ferrous sales volume (LT, in thousands):
Domestic	279		319			(13	)%
Foreign	675		913			(26	)%
Total ferrous sales volume (LT, in thousands)	954		1,232			(23	)%
Average nonferrous sales price ($/pound)(1)	$	0.95	$	1.00		(5	)%
Nonferrous sales volumes (pounds, in thousands)	118,931		137,243			(13	)%
Outbound freight included in cost of goods sold	$	32,322	$	50,086		(35	)%

_____________________________

LT = Long Ton, which is 2,240 pounds

(1) Price information is shown after netting the cost of freight incurred to deliver the product to the customer.

Revenues

The decrease in ferrous revenues was due to the combination of lower sales volumes and lower average net selling prices. Softer global demand for recycled metal resulting from a continued slowdown in global economic growth compared to the prior year quarter contributed to these declines. In addition, the sluggish U.S. economic growth and the lower price environment adversely impacted the supply of scrap metal compared to the prior year and contributed to the lower sales volumes.

The decrease in nonferrous revenues was driven primarily by the combination of lower sales volumes and lower average net selling prices as a result of the weak market conditions. Nonferrous volumes decreased compared to the first quarter of fiscal 2012 despite the impact of improved recovery of nonferrous materials processed through our enhanced processing technologies.

Segment Operating Income

Operating income for the first quarter of fiscal 2013 decreased by $7 million, or 57%, to $6 million compared to the prior year period. The first half of the first quarter of fiscal 2013 included a decline in selling prices for ferrous recycled metal which led to

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an adverse effect of average inventory costing on cost of goods sold. In addition, operating results in the first quarter of fiscal 2013 were negatively impacted by the reduction in volumes as a result of the constrained supply of raw materials primarily related to the continued weak domestic economic conditions. The combination of these factors led to a compression in operating margins in the first quarter of fiscal 2013. While the prior year period also experienced declining selling prices for recycled metals, MRB’s operating results in the first quarter of fiscal 2012 benefited from higher sales volumes and higher average net selling prices resulting in less margin compression.

Included in operating income was an $8 million reduction in SG&A expenses for the first quarter of fiscal 2013 primarily as a result of the restructuring initiatives and other operating efficiencies initiated in fiscal 2012 and reduced incentive compensation expense due to lower financial performance.

Auto Parts Business

	Three Months Ended November 30,
($ in thousands)	2012		2011		% Change
Revenues	$	69,555	$	84,054	(17	)%
Cost of goods sold	50,044		59,460		(16	)%
Selling, general and administrative expense	13,147		14,152		(7	)%
Segment operating income	$	6,364	$	10,442	(39	)%
Number of stores at period end	51		50		2	%
Cars purchased (in thousands)	79		85		(7	)%

Revenues

The decrease in revenues in the first quarter of fiscal 2013 was primarily due to lower commodity prices and decreased car volumes, both of which adversely impacted ferrous and nonferrous sales compared to the prior year period.

Segment Operating Income

Operating income for the first quarter of fiscal 2013 decreased by 39% compared to the prior year period primarily due to the compression in operating margins caused by the adverse impact of lower car volumes on costs of goods sold and by car purchase costs decreasing at a slower rate than ferrous selling prices.

Operating income in the first quarter of fiscal 2013 reflected lower SG&A expenses of $1 million primarily as a result of the benefits arising from restructuring initiatives and other operational efficiencies.

Steel Manufacturing Business

	Three Months Ended November 30,
($ in thousands, except for price)	2012			2011			% Change
Revenues	$	92,029		$	79,902		15	%
Cost of goods sold	86,944			77,005			13	%
Selling, general and administrative	1,681			1,679			—	%
Segment operating income	$	3,404		$	1,218		179	%
Finished steel products average sales price ($/ton)(1)	$	680		$	722		(6	)%
Finished steel products sold (tons, in thousands)	130			107			21	%
Rolling mill utilization	70		%	60		%

_____________________________

(1) Price information is shown after netting the cost of freight incurred to deliver the product to the customer.

Revenues

The increase in revenues was primarily due to an increase in the volume of finished steel products sold in the first quarter of fiscal 2013 as a result of slightly improved demand in our West Coast markets. The impact on revenue from improved volumes was partially offset by lower average selling prices for our finished steel products as a result of the declining trend in global steel prices.

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Segment Operating Income

The increase in operating income for the first quarter of fiscal 2013 compared to the prior year period was primarily due to the positive impact of higher production volumes on cost of goods sold. In addition, operating results benefited from raw material costs decreasing at a faster rate than the average sales price for our finished steel products and a more favorable product mix.

Liquidity and Capital Resources

We rely on cash provided by operating activities as a primary source of liquidity, supplemented by current cash on hand and borrowings under our existing credit facilities.

Sources and Uses of Cash

We had cash balances of $24 million and $90 million as of November 30, 2012 and August 31, 2012, respectively. Cash balances are intended to be used primarily for working capital, capital expenditures, acquisitions, dividends and share repurchases. We use excess cash on hand to reduce amounts outstanding under our credit facilities. As of November 30, 2012, debt, net of cash, was $331 million compared to $245 million as of August 31, 2012 (refer to Non-GAAP Financial Measures below), an increase of $86 million primarily as a result of the increase in our working capital. Our cash balances as of November 30, 2012 and August 31, 2012 include $5 million and $13 million, respectively, which are indefinitely reinvested in Puerto Rico and Canada.

Operating Activities

Net cash used in operating activities in the first three months of fiscal 2013 was $60 million, compared to $86 million in the first three months of fiscal 2012.

Cash used in operating activities in the first three months of fiscal 2013 included a $51 million increase in inventory due to higher volumes on hand, a $20 million increase in accounts receivable due to the timing of collections and a $10 million decrease in accounts payable due to the timing of payments.

Cash used in operating activities in the first three months of fiscal 2012 included an increase in inventory of $74 million due to higher volumes on hand and a decrease of $19 million in accounts payable due to the timing of payments. Sources of cash included a decrease of $8 million in accounts receivable due to the timing of collections.

Investing Activities

Net cash used in investing activities in the first three months of fiscal 2013 was $26 million, compared to $25 million in the first three months of fiscal 2012.

Cash used in investing activities in the first three months of fiscal 2013 and 2012 included $27 million and $26 million, respectively, in capital expenditures to upgrade our equipment and infrastructure.

Financing Activities

Net cash provided by financing activities in the first three months of fiscal 2013 was $20 million, compared to $89 million in the first three months of fiscal 2012.

Cash provided by financing activities in the first three months of fiscal 2013 included $20 million in net borrowings of debt (refer to Non-GAAP Financial Measures below) mainly used to support higher working capital requirements.

Cash provided by financing activities in the first three months of fiscal 2012 included $94 million in net borrowings of debt (refer to Non-GAAP Financial Measures below) principally used to support higher working capital requirements and $3 million in repurchases of outstanding shares of our Class A common stock.

Credit Facilities

Our credit facility, which provides for revolving loans of $670 million and C$30 million, matures in April 2017 pursuant to an unsecured committed bank credit agreement with Bank of America, N.A. as administrative agent, and other lenders party thereto. Interest rates on outstanding indebtedness under the agreement are based, at our option, on either the London Interbank Offered Rate (or the Canadian equivalent) plus a spread of between 1.25% and 2.25%, with the amount of the spread based on a pricing grid tied to our leverage ratio, or the greater of the prime rate, the federal funds rate plus 0.5% or the British Bankers Association LIBOR Rate plus 1.75%. In addition, annual commitment fees are payable on the unused portion of the credit facility at rates between 0.15% and 0.35% based on a pricing grid tied to our leverage ratio.

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We had borrowings outstanding under the credit facility of $337 million as of November 30, 2012 and $325 million as of August 31, 2012. The weighted average interest rate on amounts outstanding under this facility was 1.80% as of November 30, 2012 and 2.06% as of August 31, 2012.

We also have an unsecured, uncommitted $25 million credit line with Wells Fargo Bank, N.A. that expires on March 1, 2013. Interest rates are set by the bank at the time of borrowing. We had borrowings outstanding of $9 million under this facility as of November 30, 2012 and no borrowings outstanding as of August 31, 2012.

The two bank credit agreements contain various representations and warranties, events of default and financial and other covenants, including covenants regarding maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio. As of November 30, 2012, we were in compliance with these covenants. We use these credit facilities to fund working capital requirements, acquisitions, capital expenditures, dividends and share repurchases.

In addition, as of November 30, 2012 and August 31, 2012, we had $8 million of long-term tax-exempt bonds outstanding that mature in January 2021.

Capital Expenditures

Capital expenditures totaled $27 million for the first three months of fiscal 2013, compared to $26 million for the same period in the prior year. During the first quarter of fiscal 2013, we continued our investments in the construction of a new shredder, advanced processing equipment and related infrastructure in Surrey, British Columbia, which is expected to begin operations in fiscal 2013. In addition, we made further investments in technology to improve the recovery and separation of nonferrous materials from the shredding process and investments in infrastructure to improve efficiency, increase capacity, improve worker safety, enhance environmental systems and replace equipment. We expect our investments in capital expenditures to be up to $90 million in fiscal 2013.

Dividends

On November 12, 2012, our Board of Directors declared a dividend for the first quarter of fiscal 2013 of $0.1875 per common share, which equates to an annual cash dividend of $0.75 per common share.

Acquisitions

We continue to expand our presence in the regions in which we operate and in new locations through the acquisition of businesses. In December 2012, we completed the acquisition of four used auto parts facilities in Richmond and Surrey, British Columbia, near our MRB operations in Surrey, British Columbia; two used auto parts facilities located in Kansas and Missouri; and two used auto parts facilities located in Massachusetts near our MRB operations. The acquired facilities will operate under APB’s Pick-N-Pull brand. The aggregate consideration paid for these acquisitions was $23 million. See Note 4 - Business Combinations in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Environmental Compliance

Our commitment to sustainable recycling and to operating our business in an environmentally responsible manner requires us to continue to invest in facilities that improve our environmental presence in the communities in which we operate. As part of our capital expenditures, we invested $2 million in capital expenditures for environmental projects during the first three months of fiscal 2013, and plan to invest up to $12 million for such projects in fiscal 2013.

We have been identified by the United States Environmental Protection Agency (“EPA”) as 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”). A group of PRPs is conducting an investigation and study to identify and characterize the contamination at the Site and develop alternative approaches to remediation of the contamination. On March 30, 2012 the group submitted to the EPA a draft feasibility study (“draft FS”) based on approximately ten years of work and $100 million in costs classified as investigation-related. The draft FS identifies ten possible remedial alternatives which range 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 and estimates a range of two to 28 years to implement the remedial work, depending on the selected alternative. The draft FS does not determine who is responsible for remediation costs, define the precise cleanup boundaries or select remedies. The draft FS is being reviewed, and may be subject to revisions prior to its approval, by the EPA. A final decision on the nature and extent of the required remediation will occur only after the EPA has prepared a proposed plan for public review and issued a record of decision (“ROD”). Currently available information indicates that the EPA does not expect to issue its final ROD selecting a remedy for the Site until at least 2014. Because there has not been a determination of the total cost of

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the investigations, the remediation that will be required, the amount of natural resource damages or how the costs of the ongoing investigations and any remedy and natural resource damages will be allocated among the PRPs, we believe it is not reasonably possible to estimate the amount or range of costs which we are likely or reasonably possible to incur in connection with the Site, although such costs could be material to our financial position, results of operations, future cash flows and liquidity. Any material liabilities recorded in the future related to the Site could result in our failure to maintain compliance with certain covenants in our debt agreements. Significant cash outflows in the future related to the Site could reduce the amounts available for borrowing that could otherwise be used for investment in capital expenditures, acquisitions, dividends and share repurchases. See Note 6 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Redeemable Noncontrolling Interest

In March 2011, we issued common stock of one of our subsidiaries to a noncontrolling interest holder of that subsidiary that is redeemable both at the option of the holder and upon the occurrence of an event that is not solely within our control. Under the terms of an agreement related to the acquisition, the noncontrolling interest holder has the right to require us to purchase its interest in our subsidiary for fair value. The noncontrolling interest becomes redeemable within 60 days after the later of (i) the third anniversary of the date of the acquisition and (ii) the date on which certain principals of the minority shareholder are no longer employed by the Company. The conditions for redemption of the noncontrolling interest had not been met as of November 30, 2012. If the interest were to be redeemed, we would be required to purchase all of such interest at fair value on the date of redemption. As of November 30, 2012, the fair value of the redeemable noncontrolling interest was $24 million. See Note 8 - Redeemable Noncontrolling Interest in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Assessment of Liquidity and Capital Resources

Historically, our available cash resources, internally generated funds, credit facilities and equity offerings have financed our acquisitions, capital expenditures, working capital and other financing needs.

We generally believe our current cash resources, internally generated funds, existing credit facilities and access to the capital markets will provide adequate short-term and long-term liquidity needs for acquisitions, capital expenditures, working capital, dividends, share repurchases, joint ventures, debt service requirements and environmental obligations. However, in the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate steps to obtain sufficient additional funds. There can be no assurance that any such supplemental funding, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

There were no material changes related to contractual obligations and commitments from the information provided in our Annual Report on Form 10-K for the fiscal year ended August 31, 2012.

Our redeemable noncontrolling interest is a potential future obligation for which the exercise date and future fair value are not known and not solely within our control. See Note 8 - Redeemable Noncontrolling Interest in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

We maintain stand-by letters of credit to provide support for certain obligations, including workers’ compensation and performance bonds. At November 30, 2012, we had $18 million outstanding under these arrangements.

Critical Accounting Policies and Estimates

We reaffirm our critical accounting policies and estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended August 31, 2012, with the following changes:

Goodwill

We evaluate goodwill for impairment annually during the second fiscal quarter 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

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a ‘component’). The Company has determined that its reporting units for which goodwill has been allocated are equivalent to the Company’s operating segments, as all of the components of each segment have similar economic characteristics.

When testing goodwill for impairment, we first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative impairment test. If we believe, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. In the first step of the quantitative impairment test, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. This allocation is similar to a purchase price allocation. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to that excess.

We estimate the fair value of the reporting units using an income approach based on the present value of expected future cash flows utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit. To estimate the present value of the cash flows that extend beyond the final year of the discounted cash flow model, we employ a terminal value technique, whereby we use estimated operating cash flows minus capital expenditures and adjust for changes in working capital requirements in the final year of the model, then discount it by the WACC to establish the terminal value.

The determination of fair value using the income approach requires judgment and involves the use of significant estimates and assumptions about expected future cash flows derived from internal forecasts and the impact of market conditions on those assumptions. Critical assumptions primarily include revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, tax rates, terminal growth rates and appropriate discount rates.

In the third quarter of fiscal 2012, we identified the combination of the then recent but significant decline of the Company’s market capitalization below the carrying value of its net assets, the persistent uncertainty around global macroeconomic conditions and the impact on our fiscal 2012 operating results of current challenging market conditions in our industry as a triggering event requiring an interim impairment test of goodwill. For the APB reporting unit, the calculated fair value using the income approach substantially exceeded its carrying value. For the MRB reporting unit with goodwill of $465 million as of May 31, 2012, the calculated fair value exceeded the carrying value by approximately 11%. The projections used in the income approach for MRB took into consideration the current weak market conditions, including the challenging macroeconomic indicators in the markets in which we operate and those where our customers are based, and the cyclical nature of our industry. The projections assumed a gradual recovery of operating margins over a multi-year period, eventually returning to levels of profitability in the range of average historical levels. The market-based WACC used in the income approach for MRB was 11.7%. The terminal year growth rate used in the discounted cash flow model was 2%. Assuming all other components of the fair value estimate were held constant, an increase in the WACC in excess of 1% could result in a failure of the Step 1 impairment test for the MRB reporting unit.

We also use a market approach based on earnings multiple data and our Company’s market capitalization to corroborate our reporting units’ valuations. We reconcile the Company’s market capitalization to the aggregated estimated fair value of our reporting units, including consideration of a control premium representing the estimated amount an investor would pay to obtain a controlling interest. The implied control premium resulting from the difference between our market capitalization (based on the average trading price of the Company’s Class A common stock for the two-week period ending May 31, 2012) and the higher aggregated estimated fair value of our reporting units was above the historical range of premiums observed in normal market conditions on transactions within the steel making and scrap processing industries and in other comparable sectors. We believe the implied control premium reflected the recent impact on our stock price of current depressed market conditions in our industry, weak macroeconomic indicators and the cyclical nature of our business.

We did not identify triggering events during either the fourth quarter of fiscal 2012 or first quarter of fiscal 2013 requiring an interim impairment test of goodwill.

As a result of the inherent uncertainty associated with forming these estimates, actual results could differ from those estimates. Future events and changing market conditions may impact our assumptions as to future revenue growth rates, pace and extent of operating margins’ recovery, market-based WACC and other factors that may result in changes in our estimates of future cash flows. Although we believe the assumptions used in testing our reporting units’ goodwill for impairment are reasonable, it is reasonably possible that market and economic conditions deteriorate further, including additional declines in or a lack of long-term recovery of market conditions from current levels, a lack of recovery in our share price from current levels, or an increase in the market-based WACC, among other factors, which could significantly impact our impairment analysis and increase the likelihood of future goodwill impairment charges that, if incurred, could be material to our results of operations and financial position.

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Redeemable Noncontrolling Interest

We have issued common stock of one of our subsidiaries to a noncontrolling interest holder of that subsidiary that is redeemable both at the option of the holder and upon the occurrence of an event that is not solely within our control. Since redemption of the noncontrolling interest is outside of our control, this interest is presented on the Consolidated Balance Sheets in the mezzanine section under the caption “Redeemable noncontrolling interest.” If the interest were to be redeemed, we would be required to purchase all of such interest at fair value on the date of redemption. The redeemable noncontrolling interest is presented at the greater of its carrying amount (adjusted for the noncontrolling interest’s share of the allocation of income or loss of the subsidiary, dividends to and contributions from the noncontrolling interest) or its fair value as of each measurement date. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in fair value prior to exercise of the redemption option are recorded to retained earnings.

As of November 30, 2012, the noncontrolling interest was presented at its adjusted carrying value of $24 million, which approximates its fair value. We estimate fair value using Level 3 inputs under the fair value hierarchy based on standard valuation techniques using a discounted cash flow analysis. The determination of fair value requires management to apply significant judgment in formulating estimates and assumptions used in the discounted cash flow model, including primarily revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, terminal growth rates and an appropriate discount rate. The subsidiary is presently undertaking significant investments to install a large-scale shredder and related processing and sorting equipment and increase shipping capabilities. As a result, projections of future cash flows assume volumes to grow above historical levels once construction activity is complete and the new equipment is put in service. The present value of future cash flows are determined using a market-based weighted average cost of capital of 12.8%, including a subject-company risk premium. The terminal year growth rate used in the discounted cash flow model is 2%. A 1% increase (decrease) in the discount rate would decrease (increase) the estimated fair value of the redeemable noncontrolling interest by approximately 7%. We also used a market approach based on earnings multiple data to corroborate the fair value estimate of the noncontrolling interest determined using the discounted cash flow model. As a result of the inherent uncertainty associated with forming these estimates, including changes in general market conditions, actual results could differ from those estimates which may result in a material change in the fair value of the redeemable noncontrolling interest.

Recently Issued Accounting Standards

For a description of recent accounting pronouncements that may have an impact on our financial condition, results of operations or cash flows, see Note 2 - Recent Accounting Pronouncements in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Non-GAAP Financial Measures

Debt, net of cash

Debt, net of cash is the difference between (i) the sum of long-term debt and short-term debt (i.e., total debt) and (ii) cash and cash equivalents. Management believes that debt, net of cash is a useful measure for investors because, as cash and cash equivalents can be used, among other things, to repay indebtedness, netting this against total debt is a useful measure of our leverage.

The following is a reconciliation of debt, net of cash (in thousands):

	November 30, 2012		August 31, 2012
Short-term borrowings	$	9,169	$	683
Long-term debt, net of current maturities	345,797		334,629
Total debt	354,966		335,312
Less: cash and cash equivalents	24,404		89,863
Total debt, net of cash	$	330,562	$	245,449

Net borrowings (repayments) of debt

Net borrowings (repayments) of debt is the sum of borrowings from long-term debt, repayments of long-term debt, proceeds from line of credit, and repayment of line of credit. Management presents this amount as the net change in the Company’s borrowings (repayments) for the period because it believes it is useful for investors as a meaningful presentation of the change in debt.

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The following is a reconciliation of net borrowings (repayments) of debt (in thousands):

	Three Months Ended November 30,
	2012			2011
Borrowings from long-term debt	$	72,742		$	294,212
Proceeds from line of credit	135,500			173,000
Repayment of long-term debt	(61,449		)	(214,396		)
Repayment of line of credit	(127,000		)	(159,000		)
Net borrowings of debt	$	19,793		$	93,816

Adjusted net loss and adjusted diluted loss per share

Management presents adjusted net loss attributable to SSI and adjusted diluted loss per share attributable to SSI because it believes these measures provide a meaningful presentation of the Company’s results from its core business operations excluding adjustments for restructuring charges that are not related to the Company’s ongoing core business operations and improves the period-to-period comparability of the Company’s results from its core business operations.

The following is a reconciliation of adjusted net loss attributable to SSI and adjusted diluted loss per share attributable to SSI for the three months ended November 30, 2012 (in thousands, except per share data):

	November 30, 2012
Net loss attributable to SSI:
As reported	$	(1,671	)
Restructuring charges, net of tax	1,055
Adjusted	$	(616	)
Diluted loss per share attributable to SSI:
As reported	$	(0.06	)
Restructuring charges, net of tax, per share	0.04
Adjusted	$	(0.02	)

Management believes that these non-GAAP financial measures allow for a better understanding of our operating and financial performance. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the most directly comparable U.S. GAAP measures.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We are exposed to commodity price risk, mainly associated with variations in the market price for finished steel products, ferrous and nonferrous metals, including scrap metal, autobodies and other commodities. The timing and magnitude of industry cycles are difficult to predict and are impacted by general economic conditions. We respond to increases and decreases in forward selling prices by adjusting purchase prices on a timely basis. We actively manage our exposure to commodity price risk and monitor the actual and expected spread between forward selling prices and purchase costs and processing and shipping expense. Sales contracts are based on prices negotiated with our customers, and generally orders are placed 30 to 60 days ahead of shipment date. However, financial results may be negatively impacted when forward selling prices fall more quickly than we can adjust purchase prices or when customers fail to meet their contractual obligations. We assess the net realizable value of inventory (“NRV”) each quarter based upon contracted sales orders and estimated future selling prices. Based on contracted sales and estimates of future selling prices at November 30, 2012, a 10% decrease in the selling price per ton of finished steel products would not have caused an NRV inventory write down at any of our operating segments as of November 30, 2012.

Interest Rate Risk

There have been no material changes to the Company’s disclosure regarding interest rate risk set forth in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our Annual Report on Form 10-K for the year ended August 31, 2012.

Credit Risk

As of November 30, 2012 and August 31, 2012, 37% and 28%, respectively, of our trade accounts receivable balance was covered by letters of credit. Of the remaining balance as of November 30, 2012, 91% was less than 60 days past due, compared to 89% as of August 31, 2012.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has completed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of November 30, 2012, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 6 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item I, incorporated by reference herein.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors reported or new factors identified since the filing of our Annual Report on Form 10-K for the year ended August 31, 2012, which was filed with the Securities and Exchange Commission on October 25, 2012.

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ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description
*10.1	Form of Restricted Stock Unit Award Agreement under the 1993 Stock Incentive Plan used for awards granted in fiscal 2013.
*10.2	Form of Long-Term Incentive Award Agreement under the 1993 Stock Incentive Plan used for awards granted in fiscal 2012.
*10.3	Amendment No. 1 to Employment Agreement by and between the Registrant and John D. Carter dated November 6, 2012.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Schnitzer Steel Industries, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three months ended November 30, 2012 and 2011, (ii) Condensed Consolidated Balance Sheets as of November 30, 2012, and August 31, 2012, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended November 30, 2012 and 2011; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2012 and 2011; and (v) the Notes to Condensed Consolidated Financial Statements. (1)

*Management contract or compensatory plan or arrangement.

(1) In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by the specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SCHNITZER STEEL INDUSTRIES, INC.
		(Registrant)
Date:	January 8, 2013	By:	/s/ Tamara L. Lundgren
			Tamara L. Lundgren
			President and Chief Executive Officer
Date:	January 8, 2013	By:	/s/ Richard D. Peach
			Richard D. Peach
			Senior Vice President and Chief Financial Officer

33

EX-10.1

RESTRICTED STOCK UNIT
AWARD AGREEMENT

Pursuant to Section 8 of the 1993 Stock Incentive Plan (the “Plan”) of Schnitzer Steel Industries, Inc., an Oregon corporation (the “Company”), on November 6, 2012, the Compensation Committee of the Board of Directors of the Company authorized and granted to «First_name» «Last_Name» (the“Recipient”) an award of restricted stock units with respect to the Company’s Class A Common Stock (“Common Stock”), subject to the terms and conditions of this agreement between the Company and the Recipient (this “Agreement”). By accepting this award, the Recipient agrees to all of the terms and conditions of this Agreement.

1.    Award and Terms of Restricted Stock Units. The Company awards to the Recipient under the Plan «RSU_Amount» restricted stock units (the “Award”), subject to the restrictions, terms and conditions set forth in this Agreement.

(a)    Rights under Restricted Stock Units. A restricted stock unit (a “RSU”) obligates the Company, upon vesting in accordance with this Agreement, to issue to the Recipient one share of Common Stock for each RSU.  The number of shares of Common Stock issuable with respect to each RSU is subject to adjustment as determined by the Board of Directors of the Company as to the number and kind of shares of stock deliverable upon any merger, reorganization, consolidation, recapitalization, stock dividend, spin-off or other change in the corporate structure affecting the Common Stock generally.

(b)    Vesting Date. The RSUs awarded under this Agreement shall initially be 100% unvested and subject to forfeiture.  The Vesting Reference Date of this Award is June 1, 2012. Subject to Sections 1(c), (d), (e) and (f), the RSUs shall vest in equal annual installments over five years as follows:

	% of RSUs Vested
Prior to first anniversary of the Vesting Reference Date	—%
First anniversary of the Vesting Reference Date	20%
Second anniversary of the Vesting Reference Date	40%
Third anniversary of the Vesting Reference Date	60%
Fourth anniversary of the Vesting Reference Date	80%
Fifth anniversary of the Vesting Reference Date	100%

(c)    Acceleration on Death, Disability or Retirement. If the Recipient ceases to be an employee of the Company or a parent or subsidiary of the Company by reason of the Recipient’s death, disability or retirement, all outstanding but unvested RSUs shall become immediately vested. The term “disability” means a medically determinable physical or mental condition of the Recipient resulting from bodily injury, disease, or mental disorder which is likely to continue for the remainder of the Recipient’s life and which renders the Recipient incapable of performing the job assigned to the Recipient by the Company or any substantially equivalent replacement job. The term “retirement” shall mean (i) normal retirement after reaching age 65, (ii) early retirement after reaching age 55 and completing 10 years of service, or (iii) early retirement after completing 30 years of service without regard to age.

(d)    Certain Transactions. Notwithstanding any provision in this Agreement (but subject to the last sentence of this Section 1(d)), in the event of dissolution of the Company or a merger, consolidation or plan of exchange affecting the Company, the Compensation Committee of the Board of Directors (the “Compensation Committee”) may, in its sole discretion and to the extent possible under the structure of the applicable transaction, select one or a combination of the following alternatives for treating this Award of RSUs:

(i)    The Award shall remain in effect in accordance with its terms;

(ii)    All or a portion of the RSUs shall, to the extent then still subject to the vesting restrictions, be released from the vesting restrictions in connection with the closing of the applicable transaction; or

(iii)    The RSUs shall be converted into restricted stock units or restricted stock of one or more of the corporations that are the surviving or acquiring corporations in the applicable transaction. The amount and type of converted restricted stock units or restricted stock shall be determined by the Company, taking into account the relative values of the companies involved in the applicable transaction and the exchange rate, if any, used in determining shares of the surviving corporation(s) to be held by holders of shares of the Company following the applicable transaction. Unless otherwise determined by the Company, by action of the Compensation Committee, the converted restricted stock units or restricted stock shall continue to be subject to the forfeiture provisions applicable to the RSUs at the time of the applicable transaction.

Notwithstanding the foregoing provisions of this Section 1(d) to the contrary, no such alternative shall occur with respect to the RSUs to the extent that, if it did, a 20% tax would be imposed under Section 409A of the Internal Revenue Code on the Recipient.

(e)    Special Acceleration in Certain Events. Notwithstanding any other provision in this Agreement, upon a change in control of the Company, all outstanding but unvested RSUs shall become immediately vested. The term “change in control of the Company” means the occurrence of any of the following events:

(i)    The consummation of:

(A)    any consolidation, merger or plan of share exchange involving the Company (a “Merger”) as a result of which the holders of outstanding securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the combined voting power of the outstanding Voting Securities of the surviving corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or retained by such holders in respect of securities of any other party to the Merger; or

(B)    any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company;

(ii)    At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof; provided, however, that the term “Incumbent Director” shall also include each new director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in office; or

(iii)    Any person shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing 20% or more of the combined voting power of the then outstanding Voting Securities. For purposes of this Section 1(e), the term “person” means and includes any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 14(d) of the Securities Exchange Act of 1934, other than the Company or any employee benefit plan sponsored by the Company.

Notwithstanding anything in this Section 1(e) to the contrary, unless otherwise determined by the Board of Directors of the Company, no change in control of the Company shall be deemed to have occurred for purposes of this Agreement if (1) the Recipient acquires (other than on the same basis as all other holders of shares of Common Stock of the Company) an equity interest in an entity that acquires the Company in a change in control of the Company otherwise described under subparagraph (i) of this Section 1(e), or (2) the Recipient is part of a group that constitutes a person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a change in control of the Company under subparagraph (iii) of this Section 1(e).

(f)    Forfeiture of RSUs on Termination of Service. If the Recipient ceases to be an employee of the Company or a parent or subsidiary of the Company under circumstances where the RSUs have not previously vested and do not become vested pursuant to Section 1(c) or 1(d), the Recipient shall immediately forfeit all outstanding but unvested RSUs awarded pursuant to this Agreement and the Recipient shall have no right to receive the related Common Stock.

(g)    Restrictions on Transfer. The Recipient may not sell, transfer, assign, pledge or otherwise encumber or dispose of the RSUs subject to this Agreement. The Recipient may designate beneficiaries to receive the shares of Common Stock underlying the RSUs subject to this Agreement if the Recipient dies before delivery of the shares of Common Stock by so indicating on a form supplied by the Company. If the Recipient fails to designate a beneficiary, such Common Stock will be delivered to the person or persons establishing rights of ownership by will or under the laws of descent and distribution.

(h)    No Voting Rights; Dividends. The Recipient shall have no rights as a shareholder with respect to the RSUs or the Common Stock underlying the RSUs until the underlying Common Stock is issued to the Recipient. The Recipient will be entitled to receive any cash dividends declared on the Common Stock underlying the RSUs after the RSUs have vested and the Common Stock has been issued. The Company shall accrue and pay to the Recipient on the vesting of the RSUs an amount in cash equal to dividends that would have been paid on the Common Stock underlying the RSUs after the date of the issuance of the RSUs. No interest shall be paid by the Company on accrued amounts.

(i)    Delivery Date for the Shares Underlying the RSUs. As soon as practicable, but in no event later than thirty days, following a date on which any RSUs vest (a “Vesting Date”), the Company will issue the Recipient the Common Stock underlying the then vested RSUs in the form of uncertificated shares in book entry form; provided, however, that if accelerated vesting of the RSU occurs pursuant to Section 1(c) by reason of the Recipient’s retirement or disability, the date of issuance of the shares underlying the RSUs shall be delayed until the date that is six months after the date of the Recipient’s separation from service (within the meaning of Section 409A of the Internal Revenue Code); provided further, however, that if accelerated vesting of the RSUs occurs pursuant to Section 1(d) or 1(e), the date of issuance of the shares underlying the RSUs shall occur as soon as practicable, but in no event later than thirty days, following the earliest to occur of (1) the Recipient’s separation from service (within the meaning of Section 409A of the Internal Revenue Code (but subject to the immediately preceding proviso)), (2) the Recipient’s death or (3) a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code. The shares of Common Stock will be issued in the Recipient’s name or, in the event of the Recipient’s death, in the name of either (i) the beneficiary designated by the Recipient on a form supplied by the Company or (ii) if the Recipient has not designated a beneficiary, the person or persons establishing rights of ownership by will or under the laws of descent and distribution.

(j)    Taxes and Tax Withholding. The Recipient acknowledges and agrees that no election under Section 83(b) of the Internal Revenue Code can or will be made with respect to the RSUs. The Recipient acknowledges that, except as provided below, on each date that shares underlying the RSUs are issued to the Recipient (the “Payment Date”), the Value (as defined below) on that date of the shares so issued will be treated as ordinary compensation income for federal and state income and FICA tax purposes, and that the Company will be required to withhold taxes on these income amounts. To satisfy the required minimum withholding amount, the Company shall withhold from the shares otherwise issuable the number of shares having a Value equal to the minimum withholding amount. For purposes of this Section 6, the “Value” of a share shall be equal to the closing market price for the Common Stock on the last trading day preceding the Payment Date. Alternatively, the Company may, at its option, permit the Recipient to pay such withholding amount in cash under procedures established by the Company. The Recipient acknowledges that under current tax law, the Company is required to withhold FICA taxes with respect to the RSUs at the earlier of (i) the issuance of shares underlying the RSUs or (ii) the date that the Recipient becomes eligible for retirement (or the date of grant of the RSUs if the Recipient is eligible for retirement at the time the RSUs are granted). To satisfy the required minimum FICA withholding in the event that Recipient is eligible for retirement, the Recipient shall, immediately upon notification of the amount due, pay to the Company in cash or by check amounts necessary to satisfy applicable FICA withholding requirements. If the Recipient fails to pay the amount demanded, the Company or the Recipient’s employer may withhold that amount from other amounts payable to the Recipient, including salary, subject to applicable law.

(k)    Not a Contract of Employment. Nothing in the Plan or this Agreement shall confer upon Recipient any right to be continued in the employment of the Company or any parent or subsidiary of the Company, or to interfere in any way with the right of the Company or any parent or subsidiary by whom Recipient is employed to terminate Recipient’s employment at any time or for any reason, with or without cause, or to decrease Recipient’s compensation or benefits.

2.    Non-Competition.

(a)    Consequences of Violation. If the Company determines that Recipient has engaged in an action prohibited by Section 2(b) below, then:

(i)    Recipient shall immediately forfeit all outstanding RSUs awarded pursuant to this Agreement and shall have no right to receive the underlying shares or the related dividend equivalent payment; and

(ii)    If the Payment Date for any RSUs has occurred, and the Company’s determination of a violation occurs on or before the first anniversary of the Vesting Date for those RSUs, Recipient shall repay to the Company (A) the number of shares of Common Stock issued to Recipient under this Agreement on that Payment Date (the “Forfeited Shares”), plus (B) the amount of cash equal to the withholding taxes paid by withholding shares from Recipient on that Payment Date, plus (C) the amount of any dividend equivalent payment paid to Recipient on that Payment Date. If any Forfeited Shares are sold by Recipient prior to the Company’s demand for repayment, Recipient shall repay to the Company 100% of the proceeds of such sale or sales. The Company may, in its sole discretion, reduce the amount to be repaid by Recipient to take into account the tax consequences of such repayment for Recipient.

(b)    Prohibited Actions. The consequences described in Section 2(a) shall apply if during Recipient’s employment with the Company, or at any time during the period of one year following termination of such employment, Recipient, directly or indirectly, owns, manages, controls, or participates in the ownership, management or control of, or is employed by, consults for, or is connected in any manner with:

(i)    if Recipient is, or was at the time of termination of employment, employed by the Company’s Steel Manufacturing Business (“SMB”), any business that (A) is engaged in the steel manufacturing business, (B) produces any of the same steel products as SMB, and (C) competes with SMB for sales to customers in California, Oregon, Washington, Nevada, British Columbia or Alberta;

(ii)    if Recipient is, or was at the time of termination of employment, employed by the Company’s Metals Recycling Business (“MRB”), any business that (A) is engaged in the metals recycling business, and (B) operates a metal recycling collection or processing facility within 75 miles of any of MRB’s metal recycling facilities;

(iii)    if Recipient is, or was at the time of termination of employment, employed by the Company’s Auto Parts Business (“APB”), any business that (A) is engaged in the self-service used auto parts business, and (B) operates a self-service used auto parts store within 75 miles of any of APB’s stores; or

(iv)    if Recipient is, or was at the time of termination of employment, employed in the Company’s Corporate Shared Services Division, any business that is described in Section 2(b)(i), Section 2(b)(ii) or Section 2(b)(iii).

3.    Miscellaneous.

(a)    Entire Agreement; Amendment. This Agreement and the Plan constitute the entire agreement of the parties with regard to the subjects hereof.

(b)    Interpretation of the Plan and the Agreement. The Compensation Committee shall have the sole authority to interpret the provisions of this Agreement and the Plan and all determinations by it shall be final and conclusive.

(c)    Electronic Delivery. The Recipient consents to the electronic delivery of notices and any prospectus and any other documents relating to this Award in lieu of mailing or other form of delivery.

(d)    Rights and Benefits. The rights and benefits of this Agreement shall inure to the benefit of and be enforceable by the Company’s successors and assigns and, subject to the restrictions on transfer of this Agreement, be binding upon the Recipient’s heirs, executors, administrators, successors and assigns.

(e)    Further Action. The parties agree to execute such instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

(f)    Severability. Each provision of this Agreement will be treated as a separate and independent clause and unenforceability of any one clause will in no way impact the enforceability of any other clause. Should any of the provisions of this Agreement be found to be unreasonable or invalid by a court of competent jurisdiction, such provision will be enforceable to the maximum extent enforceable by the law of that jurisdiction.

SCHNITZER STEEL INDUSTRIES, INC.
By:
	Authorized Officer

EX-10.2

SCHNITZER STEEL INDUSTRIES, INC.

LONG-TERM INCENTIVE AWARD AGREEMENT

(FY 2013-2014 Performance Period)

On July 24, 2012, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Schnitzer Steel Industries, Inc. (the “Company”) authorized and granted a performance-based award to _________________ (“Recipient”) pursuant to Section 11 of the Company’s 1993 Stock Incentive Plan (the “Plan”). Compensation paid pursuant to the award is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). By accepting this award, Recipient agrees to all of the terms and conditions of this Agreement.

1.    Award. Subject to the terms and conditions of this Agreement, the Company shall issue to the Recipient the number of shares of Class A Common Stock of the Company (“Performance Shares”) determined under this Agreement based on (a) the performance of the Company during the two-year period from September 1, 2012 to August 31, 2014 (the “Performance Period”) as described in Section 2, (b) Recipient’s continued employment during the Performance Period as described in Section 3, and (c) Recipient’s not engaging in actions prohibited by Section 4. Recipient’s “Target Share Amount” for purposes of this Agreement is _______ shares.

2.    Performance Conditions.

2.1    Payout Factor. Subject to adjustment under Sections 3, 4, 5, 6 and 7, the number of Performance Shares to be issued to Recipient shall be determined by multiplying the Payout Factor by the Target Share Amount. The “Payout Factor” shall be equal to the sum of (a) 50% of the EBITDA Payout Factor as determined under Section 2.2 below, plus (b) 50% of the ROE Payout Factor as determined under Section 2.3 below.

2.2    EBITDA Payout Factor.

2.2.1    The “EBITDA Payout Factor” shall be equal to the average of the Annual EBITDA Payout Factors determined for each of the two fiscal years of the Performance Period. The “Annual EBITDA Payout Factor” for each fiscal year shall be determined under the table below based on the EBITDA Improvement for the fiscal year; provided, however, that if the Adjusted Operating Income for any fiscal year is less than $0, the “Annual EBITDA Payout Factor” for that fiscal year shall be 0%.

Fiscal 2013	Fiscal 2014	Annual EBITDA
EBITDA Improvement	EBITDA Improvement	Payout Factor
[Intentionally Omitted]

If the EBITDA Improvement for any fiscal year is between any two data points set forth in the applicable column of the above table for that fiscal year, the Annual EBITDA Payout Factor shall be determined by interpolation between the corresponding data points in the third column of the table as follows: the difference between the EBITDA Improvement and the lower data point shall

71717497.5 0068163-00004

be divided by the difference between the higher data point and the lower data point, the resulting fraction shall be multiplied by the difference between the two corresponding data points in the third column of the table, and the resulting product shall be added to the lower corresponding data point in the third column of the table, with the resulting sum being the Annual EBITDA Payout Factor.

2.2.2    The “EBITDA Improvement” for any fiscal year shall be calculated by subtracting the Adjusted EBITDA for the immediately preceding fiscal year from the Adjusted EBITDA for that fiscal year, dividing the resulting amount by the Adjusted EBITDA for the immediately preceding fiscal year, and then expressing the quotient as a percentage and rounding to the nearest tenth of a percentage point. “Adjusted EBITDA” for any fiscal year shall mean the sum of the Company’s operating income for that fiscal year and the Company’s depreciation and amortization for that fiscal year, in each case as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, and as adjusted in accordance with Section 2.4 below.

2.2.3    The “Adjusted Operating Income” for any fiscal year shall mean the Company’s operating income for that fiscal year as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, and as adjusted in accordance with Section 2.4 below.

2.3    ROE Payout Factor.

2.3.1    The “ROE Payout Factor” shall be equal to the average of the Annual ROE Payout Factors determined for each of the two fiscal years of the Performance Period. The “Annual ROE Payout Factor” for each fiscal year shall be determined under the table below based on the ROE Improvement for the fiscal year; provided, however, that if the Adjusted ROE for any fiscal year is less than 0%, the “Annual ROE Payout Factor” for that fiscal year shall be 0%.

Fiscal 2013	Fiscal 2014	Annual ROE
ROE Improvement	ROE Improvement	Payout Factor
[Intentionally Omitted]

If the ROE Improvement for any fiscal year is between any two data points set forth in the applicable column of the above table for that fiscal year, the Annual ROE Payout Factor shall be determined by interpolation between the corresponding data points in the third column of the table as follows: the difference between the ROE Improvement and the lower data point shall be divided by the difference between the higher data point and the lower data point, the resulting fraction shall be multiplied by the difference between the two corresponding data points in the third column of the table, and the resulting product shall be added to the lower corresponding data point in the third column of the table, with the resulting sum being the Annual ROE Payout Factor.

2.3.2    The “ROE Improvement” for any fiscal year shall be equal to the Adjusted ROE for that fiscal year minus the Adjusted ROE for the immediately preceding fiscal year. “Adjusted ROE” for any fiscal year shall be equal to Adjusted Net Income for that fiscal year divided by Average Adjusted Shareholders’ Equity for that fiscal year, expressed as a percentage and rounded to the nearest hundredth of a percentage point. “Adjusted Net Income” for any fiscal

71717497.5 0068163-00004    2

year shall mean the net income (loss) attributable to SSI for that fiscal year as set forth in the audited consolidated statement of operations of the Company and its subsidiaries for the fiscal year, and as adjusted in accordance with Section 2.4 below. “Average Adjusted Shareholders’ Equity” for any fiscal year shall mean the average of five (5) numbers consisting of the Adjusted Shareholders’ Equity as of the last day of the fiscal year and as of the last day of the four preceding fiscal quarters. “Adjusted Shareholders’ Equity” as of any date shall mean the total SSI shareholders’ equity as set forth in the consolidated balance sheet of the Company and its subsidiaries as of the applicable date, and as adjusted in accordance with Section 2.4 below.

2.4    Adjustments.

2.4.1    Change in Accounting Principle. If the Company implements a change in accounting principle during the three-year period from September 1, 2011 to August 31, 2014 (the “the Measurement Period”) either as a result of issuance of new accounting standards or otherwise, and the effect of the accounting change was not reflected in the Company’s business plan at the time of approval of this award, then the Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted Shareholders’ Equity for each affected period shall be adjusted to eliminate the impact of the change in accounting principle.

2.4.2    Restructuring Charges. Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period shall be adjusted to eliminate the impact of any restructuring charges incurred by the Company during the Measurement Period.

2.4.3    Impairments. Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period, and Adjusted Shareholders’ Equity as of each quarter end during the Measurement Period, shall be adjusted to eliminate the impact of any charges taken by the Company during the Measurement Period for impairment of goodwill or other intangible assets.

2.4.4    Discontinued Operations. Adjusted Net Income for each fiscal year during the Measurement Period shall be adjusted to eliminate any profit or loss reported in the Company’s financial statements as discontinued operations and any gain or loss from the disposition of a Company subsidiary, all or substantially all of the assets of a Company subsidiary or a division, or any material amount of assets of a Company subsidiary.

2.4.5    Portland Harbor Accruals and Expenses. Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period, and Adjusted Shareholders’ Equity as of each quarter end during the Measurement Period, shall be adjusted to eliminate the impact of any changes in environmental liabilities recorded during the Measurement Period in connection with the Portland Harbor Superfund Site investigation and remediation costs and natural resource damage claims (“Portland Harbor Accruals”). Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period shall also be adjusted to eliminate any fees, costs and expenses incurred in connection with the Portland Harbor Superfund Site (net of any insurance or other reimbursements thereof and excluding Portland Harbor Accruals).

71717497.5 0068163-00004    3

2.4.6    Inventory Adjustments. Adjusted EBITDA and Adjusted Operating Income for each fiscal year during the Measurement Period (but not Adjusted Net Income) shall be adjusted to eliminate the impact of any charges taken by the Company during the Measurement Period to reduce the recorded value of any inventories to net realizable value.

2.4.7    Tax and Noncontrolling Interest Impacts. All adjustments to Adjusted Net Income for the items listed in Sections 2.4.1 to 2.4.5 in any fiscal year shall be net of income taxes based on the Company’s consolidated effective tax rate for the fiscal year and net of any impacts of such items on net income attributable to noncontrolling interests.

3.    Employment Condition.

3.1    Full Payout. In order to receive the full number of Performance Shares determined under Section 2, Recipient must be employed by the Company on the October 31 immediately following the end of the Performance Period (the “Vesting Date”). For purposes of Sections 3 and 4, all references to the “Company” shall include the Company and its subsidiaries.

3.2    Retirement; Termination Without Cause After 12 Months. If Recipient’s employment with the Company is terminated at any time prior to the Vesting Date because of retirement (as defined in paragraph 6(a)(iv)(D) of the Plan), or if Recipient’s employment is terminated by the Company without Cause (as defined below) after the end of the 12^th month of the Performance Period and prior to the Vesting Date, Recipient shall, subject to Section 4.1, be entitled to receive a pro-rated award to be paid following completion of the Performance Period. The number of Performance Shares to be issued as a pro-rated award under this Section 3.2 shall be determined by multiplying the number of Performance Shares determined under Section 2 by a fraction, the numerator of which is the number of days Recipient was employed by the Company since the beginning of the Performance Period and the denominator of which is the number of days in the period from the beginning of the Performance Period to the Vesting Date. Any obligation of the Company to issue a pro-rated award under this Section 3.2 shall be subject to and conditioned upon the execution and delivery by Recipient of a Release of Claims in such form as may be requested by the Company. For purposes of this Section 3.2, “Cause” shall mean (a) the conviction (including a plea of guilty or nolo contendere) of Recipient of a felony involving theft or moral turpitude or relating to the business of the Company, other than a felony predicated on Recipient's vicarious liability, (b) Recipient’s continued failure or refusal to perform with reasonable competence and in good faith any of the lawful duties assigned by (or any lawful directions of) the Company that are commensurate with Recipient’s position with the Company (not resulting from any illness, sickness or physical or mental incapacity), which continues after the Company has given notice thereof (and a reasonable opportunity to cure) to Recipient, (c) deception, fraud, misrepresentation or dishonesty by Recipient in connection with Recipient’s employment with the Company, (d) any incident materially compromising Recipient’s reputation or ability to represent the Company with the public, (e) any willful misconduct by Recipient that substantially impairs the Company’s business or reputation, or (f) any other willful misconduct by Recipient that is clearly inconsistent with Recipient’s position or responsibilities.

3.3    Death or Disability. If Recipient’s employment with the Company is terminated at any time prior to the Vesting Date because of death or disability, Recipient shall be

71717497.5 0068163-00004    4

entitled to receive a pro-rated award to be paid as soon as reasonably practicable following such event. The term “disability” means a medically determinable physical or mental condition of Recipient resulting from bodily injury, disease, or mental disorder which is likely to continue for the remainder of Recipient’s life and which renders Recipient incapable of performing the job assigned to Recipient by the Company or any substantially equivalent replacement job. For purposes of calculating the pro-rated award under this Section 3.3, the EBITDA Payout Factor and the ROE Payout Factor shall both be calculated as if the Performance Period ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of death or disability. For this purpose, the Adjusted EBITDA and Adjusted Operating Income for any partial fiscal year shall both be annualized (e.g., multiplied by 4/3 if the partial period is three quarters) before determining the Annual EBITDA Payout Factor for that fiscal year, and the EBITDA Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual EBITDA Payout Factor shall have been determined. Also for this purpose, the Adjusted Net Income for any partial fiscal year shall be annualized and the Average Adjusted Shareholders’ Equity shall be determined based on the average of Adjusted Shareholders’ Equity as of the last day of only those quarters that have been completed, before determining the Annual ROE Payout Factor for that partial fiscal year, and the ROE Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual ROE Payout Factor shall have been determined. The number of Performance Shares to be issued as a pro-rated award under this Section 3.3 shall be determined by multiplying the number of Performance Shares determined after applying the modifications described in the preceding sentences by a fraction, the numerator of which is the number of days Recipient was employed by the Company since the beginning of the Performance Period and the denominator of which is the number of days in the period from the beginning of the Performance Period to the Vesting Date.

3.4    Other Terminations. If Recipient’s employment by the Company is terminated at any time prior to the Vesting Date and neither Section 3.2 nor Section 3.3 applies to such termination, Recipient shall not be entitled to receive any Performance Shares.

4.    Non-Competition.

4.1    Consequences of Violation. If the Company determines that Recipient has engaged in an action prohibited by Section 4.2 below, then:

4.1.1    Recipient shall immediately forfeit all rights under this Agreement to receive any unissued Performance Shares; and

4.1.2    If Performance Shares were issued to Recipient following completion of the Performance Period, and the Company’s determination of a violation occurs on or before the first anniversary of the Vesting Date, Recipient shall repay to the Company (a) the number of shares of Common Stock issued to Recipient under this Agreement (the “Forfeited Shares”), plus (b) the amount of cash equal to the withholding taxes paid by withholding shares of Common Stock from Recipient as provided in Section 7. If any Forfeited Shares are sold by Recipient prior to the Company’s demand for repayment, Recipient shall repay to the Company 100% of the proceeds of such sale or sales. The Company may, in its sole discretion, reduce the amount to be repaid by Recipient to take into account the tax consequences of such repayment for Recipient.

71717497.5 0068163-00004    5

4.2    Prohibited Actions. The consequences described in Section 4.1 shall apply if during Recipient’s employment with the Company, or at any time during the period of one year following termination of such employment, Recipient, directly or indirectly, owns, manages, controls, or participates in the ownership, management or control of, or is employed by, consults for, or is connected in any manner with:

4.2.1    if Recipient is, or was at the time of termination of employment, employed by the Company’s Steel Manufacturing Business (“SMB”), any business that (a) is engaged in the steel manufacturing business, (b) produces any of the same steel products as SMB, and (c) competes with SMB for sales to customers in California, Oregon, Washington, Nevada, British Columbia or Alberta;

4.2.2    if Recipient is, or was at the time of termination of employment, employed by the Company’s Metals Recycling Business (“MRB”), any business that (a) is engaged in the metals recycling business, and (b) operates a metal recycling collection or processing facility within 75 miles of any of MRB’s metal recycling facilities;

4.2.3    if Recipient is, or was at the time of termination of employment, employed by the Company’s Auto Parts Business (“APB”), any business that (a) is engaged in the self-service used auto parts business, and (b) operates a self-service used auto parts store within 75 miles of any of APB’s stores; or

4.2.4    if Recipient is, or was at the time of termination of employment, employed in the Company’s Corporate Shared Services Division, any business that is described in Section 4.2.1, Section 4.2.2 or Section 4.2.3.

5.    Company Sale.

5.1    If a Company Sale (as defined below) occurs before the Vesting Date, Recipient shall be entitled to receive an award payout no later than the earlier of fifteen (15) days following such event or the last day on which the Performance Shares could be issued so that Recipient may participate as a shareholder in receiving proceeds from the Company Sale. The amount of the award payout under this Section 5.1 shall be the amount determined using a Payout Factor equal to the greater of (a) 100%, or (b) the Payout Factor calculated as if the Performance Period ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of the Company Sale. For this purpose, the Adjusted EBITDA and Adjusted Operating Income for any partial fiscal year shall both be annualized (e.g., multiplied by 4/3 if the partial period is three quarters) before determining the Annual EBITDA Payout Factor for that fiscal year, and the EBITDA Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual EBITDA Payout Factor shall have been determined. Also for this purpose, the Adjusted Net Income for any partial fiscal year shall be annualized and the Average Adjusted Shareholders’ Equity shall be determined based on the average of Adjusted Shareholders’ Equity as of the last day of only those quarters that have been completed, before determining the Annual ROE Payout Factor for that partial fiscal year, and the ROE Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual ROE Payout Factor shall have been determined.

71717497.5 0068163-00004    6

5.2    For purposes of this Agreement, a “Company Sale” shall mean the occurrence of any of the following events:

5.2.1    any consolidation, merger or plan of share exchange involving the Company (a “Merger”) in which the Company is not the continuing or surviving corporation or pursuant to which outstanding shares of Class A Common Stock would be converted into cash, other securities or other property; or

5.2.2    any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company.

6.    Certification and Payment. As soon as practicable following the completion of the audit of the Company’s consolidated financial statements for the final fiscal year of the Performance Period, the Company shall calculate the Payout Factor and the corresponding number of Performance Shares issuable to Recipient. This calculation shall be submitted to the Committee. No later than the Vesting Date the Committee shall certify in writing (which may consist of approved minutes of a Committee meeting) the levels of EBITDA Improvement and ROE Improvement attained by the Company for the Performance Period and the number of Performance Shares issuable to Recipient based on such performance. Subject to applicable tax withholding, the number of Performance Shares so certified shall be issued to Recipient as soon as practicable following the Vesting Date, but no Performance Shares shall be issued prior to certification. No fractional shares shall be issued and the number of Performance Shares deliverable shall be rounded to the nearest whole share. In the event of the death or disability of Recipient as described in Section 3.3 or a Company Sale as described in Section 5, each of which requires an award payout earlier than the Vesting Date, a similar calculation and certification process shall be followed within the time frames required by those sections.

7.    Tax Withholding. Recipient acknowledges that, on the date the Performance Shares are issued to Recipient (the “Payment Date”), the Value (as defined below) on that date of the Performance Shares will be treated as ordinary compensation income for federal and state income and FICA tax purposes, and that the Company will be required to withhold taxes on these income amounts. To satisfy the required minimum withholding amount, the Company shall withhold the number of Performance Shares having a Value equal to the minimum withholding amount. For purposes of this Section 7, the “Value” of a Performance Share shall be equal to the closing market price for Class A Common Stock on the last trading day preceding the Payment Date.

8.    Changes in Capital Structure. If the outstanding Class A Common Stock of the Company is hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares or dividend payable in shares, recapitalization or reclassification, appropriate adjustment shall be made by the Committee in the number and kind of shares subject to this Agreement so that the Recipient’s proportionate interest before and after the occurrence of the event is maintained.

9.    Approvals. The obligations of the Company under this Agreement are subject to the approval of state, federal or foreign authorities or agencies with jurisdiction in the matter. The Company will use its reasonable best efforts to take steps required by state, federal or foreign law

71717497.5 0068163-00004    7

or applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange on which the Company’s shares may then be listed, in connection with the award evidenced by this Agreement. The foregoing notwithstanding, the Company shall not be obligated to deliver Class A Common Stock under this Agreement if such delivery would violate or result in a violation of applicable state or federal securities laws.

10.    No Right to Employment. Nothing contained in this Agreement shall confer upon Recipient any right to be employed by the Company or to continue to provide services to the Company or to interfere in any way with the right of the Company to terminate Recipient’s services at any time for any reason, with or without cause.

11.    Miscellaneous.

11.1    Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subjects hereof.

11.2    Notices. Any notice required or permitted under this Agreement shall be in writing and shall be deemed sufficient when delivered personally to the party to whom it is addressed or when deposited into the United States Mail as registered or certified mail, return receipt requested, postage prepaid, addressed to the Company, Attention: Corporate Secretary, at its principal executive offices or to Recipient at the address of Recipient in the Company’s records, or at such other address as such party may designate by ten (10) days’ advance written notice to the other party.

11.3    Assignment; Rights and Benefits. Recipient shall not assign this Agreement or any rights hereunder to any other party or parties without the prior written consent of the Company. The rights and benefits of this Agreement shall inure to the benefit of and be enforceable by the Company’s successors and assigns and, subject to the foregoing restriction on assignment, be binding upon Recipient’s heirs, executors, administrators, successors and assigns.

11.4    Further Action. The parties agree to execute such instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

11.5    Applicable Law; Attorneys’ Fees. The terms and conditions of this Agreement shall be governed by the laws of the State of Oregon. In the event either party institutes litigation hereunder, the prevailing party shall be entitled to reasonable attorneys’ fees to be set by the trial court and, upon any appeal, the appellate court.

11.6    Severability. Each provision of this Agreement will be treated as a separate and independent clause and unenforceability of any one clause will in no way impact the enforceability of any other clause. Should any of the provisions of this Agreement be found to be unreasonable or invalid by a court of competent jurisdiction, such provision will be enforceable to the maximum extent enforceable by the law of that jurisdiction.

SCHNITZER STEEL INDUSTRIES, INC.

By

Title

71717497.5 0068163-00004    8

EX-10.3

Execution Version

AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT

This Amendment (“Amendment”), dated as of November __, 2012, is made by and between Schnitzer Steel Industries, Inc. (the “Company”) and John D. Carter (“Executive”).

WHEREAS, the Company and Executive are parties to an amended and restated employment agreement, dated as of June 29, 2011 (the “Employment Agreement”); and

WHEREAS, the Company and Executive have agreed that Executive’s employment shall terminate due to Executive’s Retirement (as defined in the Employment Agreement) effective as of December 28, 2012; and

WHEREAS, the Company and Executive desire to amend the Employment Agreement in connection with Executive’s impending Retirement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained, the Company and Executive hereby agree as follows:

1.Amendment to Section 5(a). Section 5(a) of the Employment Agreement shall, as of the date of this Amendment, be null and void and of no further force and effect and shall be amended by deleting it in its entirety and replacing it with the following:

“Intentionally omitted.”

2.Amendment to Section 5(b). Section 5(b) of the Employment Agreement shall, as of the date of this Amendment, be null and void and of no further force and effect and shall be amended by deleting it in its entirety and replacing it with the following:

“Intentionally omitted.”

3.Amendment to Section 7(e)(i). Subsection (i) of Section 7(e) of the Employment Agreement shall be amended by deleting it in its entirety and replacing it with the following:

“(i)    the Company shall arrange to provide Executive and his spouse with (A) health insurance benefits for a 60-month period after the date of termination, and (B) life and accident insurance benefits for a 24-month period after the date of termination, in each case, substantially similar to those benefits which Executive was receiving immediately prior to such termination (including, without limitation, under the Company’s executive health plan); provided, that the Company shall not provide any benefit otherwise receivable by Executive pursuant to this Section 7(e)(i) to the extent that a similar benefit is actually received by Executive from a subsequent employer during the applicable 60-month or 24-month period, and such benefit actually received by Executive shall be reported to the Company;”

083400-0004-13924-Active.13364566.3

4.Amendment to Section 7(e)(ii). Section 7(e)(ii) of the Employment Agreement shall be amended by deleting it in its entirety and replacing it with the following:

“(ii)     all options to purchase Company common stock then held by Executive shall become immediately vested and exercisable in full, all restricted stock and all restricted stock units then held by Executive shall become immediately vested and all related forfeiture provisions shall lapse, and all performance shares then held by Executive shall vest to the extent provided in the applicable plan and award agreements pursuant to which such performance shares were granted. Each award agreement pursuant to which options to purchase Company common stock currently held by Executive have been granted (an “Option Agreement”) is hereby amended to provide that “employment by the Company” shall include Executive’s service as a member of the Board such that each option may be exercised at any time prior to the earlier of such option’s Expiration Date (as defined in the applicable Option Agreement) or the expiration of 12 months following the date on which Executive ceases to serve as a member of the Board; and”

5.Amendment to Section 7(e). Section 7(e) of the Employment Agreement shall be amended by adding a new subsection (iii) as follows:

“(iii)     from December 29, 2012 through December 31, 2014 (the “Service Period”), Executive shall serve as the non-executive Chairman of the Board. During the Service Period, Executive shall receive an annual fee of $500,000 for such services, payable in arrears in quarterly installments. If Executive ceases to serve as non-executive Chairman of the Board for any reason, such annual fee will be pro-rated for the number of days served by Executive during the applicable calendar quarter. In addition, for so long as Executive serves in such position, Executive shall be entitled to access to an office at the Company’s Portland, Oregon headquarters and appropriate administrative assistant support, as well as comparable communications and information technology access and support as in effect for Executive as of December 28, 2012. The Company and Executive agree that the annual fee shall be the sole remuneration received by Executive for his services to the Board during the Service Period and that Executive shall not be eligible to receive fees for meetings or any other fees, retainers or equity-based awards that would otherwise be granted to Executive as a non-employee member of the Board.”

6.Legal Fees. Upon proper substantiation, the Company shall reimburse Executive for reasonable legal fees and expenses incurred by Executive in connection with the negotiation and preparation of this Amendment.

7.Counterparts. This Amendment may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

8.Ratification. All other provisions of the Employment Agreement remain unchanged and are hereby ratified by the Company and Executive.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first set forth above.

SCHNITZER STEEL INDUSTRIES, INC.

By: Name:     Judith K. Johansen
Title:    Chair of the Compensation Committee

EXECUTIVE

By: John D. Carter

[Signature Page to Carter Employment Agreement Amendment]

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Tamara L. Lundgren, certify that:

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.

January 8, 2013

/s/ Tamara L. Lundgren

Tamara L. Lundgren

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Richard D. Peach, certify that:

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.

January 8, 2013

/s/ Richard D. Peach

Richard D. Peach

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Schnitzer Steel Industries, Inc. (the “Company”) on Form 10-Q for the quarter ended November 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(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.

January 8, 2013

/s/ Tamara L. Lundgren

Tamara L. Lundgren

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Schnitzer Steel Industries, Inc. (the “Company”) on Form 10-Q for the quarter ended November 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(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.

January 8, 2013

/s/ Richard D. Peach

Richard D. Peach

Senior Vice President and Chief Financial Officer

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Commitments and Contingencies (Details) (USD $)	3 Months Ended		3 Months Ended						0 Months Ended		0 Months Ended
	Nov. 30, 2012	Aug. 31, 2012	Nov. 30, 2012 Metal Recycling Business [Member]	Nov. 30, 2012 Auto Parts Business [Member]	Nov. 30, 2012 Steel Manufacturing Business [Member] T	Nov. 30, 2012 Portland Harbor Superfund Site [Member]	Mar. 30, 2012 Portland Harbor Superfund Site [Member] alternatives	Nov. 30, 2012 Other Metals Recycling Business Sites [Member]	Mar. 30, 2012 Minimum [Member] Portland Harbor Superfund Site [Member]	Nov. 30, 2012 Minimum [Member] Portland Harbor Superfund Site [Member] potentially_responsible_party	Mar. 30, 2012 Maximum [Member] Portland Harbor Superfund Site [Member]	Mar. 30, 2012 Lower Willamette Group [Member] Portland Harbor Superfund Site [Member]	Mar. 30, 2012 Potential Responsible Parties [Member] Minimum [Member] Portland Harbor Superfund Site [Member]	Mar. 30, 2012 Potential Responsible Parties [Member] Maximum [Member] Portland Harbor Superfund Site [Member]
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning balance	$ 47,059,000		$ 30,859,000	$ 16,200,000	$ 0	$ 1,000,000		$ 30,000,000
Liabilities Established (Released), Net	265,000		165,000	100,000
Payments and Other	(124,000)		(124,000)	0
Ending balance	47,200,000		30,900,000	16,300,000	0	1,000,000		30,000,000
Short-Term	2,261,000	2,185,000	1,707,000	554,000
Long-Term	44,939,000	44,874,000	29,193,000	15,746,000
Number Of Potentially Responsible Parties										80
Site Contingency Number of Years For Feasibility Study												10 years
Feasibiility Study Investigation Costs												100,000,000
Site Contingency Number of Remedial Alternatives							10
Site Contingency Least Costly Remediation Plan													170,000,000	250,000,000
Site Contingency Most Costly Remediation Plan													$ 1,080,000,000	$ 1,760,000,000
Site Contingency, Estimated Time Frame to Remediate									2 years		28 years
Annual production capacity (in tons)					950,000

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2012 segments		Nov. 30, 2011	Aug. 31, 2012
Segment Reporting [Abstract]
Number Of Operating and Reporting Segments	3
Segment Reporting Information [Line Items]
Revenues from external customers	$ 592,820		$ 812,176
Operating Income	1,213		14,970
Restructuring Charges	(1,593)		0
Interest expense	(2,017)		(3,271)
Other income (expense), net	321		(393)
Income (loss) before income taxes	(483)		11,306
Total assets	1,759,204			1,763,573
Investments in joint venture partnerships	16,339			17,126
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating Income	15,422		24,759
Total assets	2,344,283			2,348,021
Metal Recycling Business [Member]
Segment Reporting Information [Line Items]
Revenues including intercompany	494,461		728,438
Less: Intersegment revenues	(47,255)		(58,696)
Revenues from external customers	447,206		669,742
Operating Income	5,654		13,099
Restructuring Charges	(550)
Total assets	1,680,808	[1]		1,696,296	[1]
Investments in joint venture partnerships	16,000			17,000
Auto Parts Business [Member]
Segment Reporting Information [Line Items]
Revenues including intercompany	69,555		84,054
Less: Intersegment revenues	(15,970)		(21,522)
Revenues from external customers	53,585		62,532
Operating Income	6,364		10,442
Restructuring Charges	(187)
Total assets	337,734			329,327
Steel Manufacturing Business [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	92,029		79,902
Operating Income	3,404		1,218
Total assets	325,741			322,398
Corporate Elimination [Member]
Segment Reporting Information [Line Items]
Operating Income	(12,616)		(9,789)
Restructuring Charges	(856)
Total assets	$ (585,079)			$ (584,448)

[1] MRB total assets include $16 million and $17 million as of November 30, 2012 and August 31, 2012, respectively, for investments in joint venture partnerships.

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Net Income (Loss) Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Earnings Per Share [Abstract]
Net income (loss)	$ (1,443)	$ 7,745
Net income attributable to noncontrolling interests	(228)	(727)
Net income (loss) attributable to SSI	$ (1,671)	$ 7,018
Computation of shares:
Weighted average common shares outstanding, basic	26,567,000	27,451,000
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs and RSUs	0	264,000
Weighted average common shares outstanding, diluted	26,567,000	27,715,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	864,874	351,074

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Net Income (Loss) Per Share (Tables)

3 Months Ended

Nov. 30, 2012

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block]

The following table sets forth the information used to compute basic and diluted net income (loss) per share attributable to SSI (in thousands):

	Three Months Ended November 30,
	2012			2011
Net income (loss)	$	(1,443	)	$	7,745
Net income attributable to noncontrolling interests	(228		)	(727		)
Net income (loss) attributable to SSI	(1,671		)	7,018
Computation of shares:
Weighted average common shares outstanding, basic	26,567			27,451
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs and RSUs	—			264
Weighted average common shares outstanding, diluted	26,567			27,715

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Inventories, net (Tables)

3 Months Ended

Nov. 30, 2012

Inventory, Net [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories, net consisted of the following (in thousands):

	November 30, 2012		August 31, 2012
Processed and unprocessed scrap metal	$	209,067	$	152,930
Semi-finished steel products (billets)	4,950		7,328
Finished goods	51,797		49,988
Supplies	36,812		36,746
Inventories, net	$	302,626	$	246,992

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Changes in Equity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2012		Nov. 30, 2011
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Beginning of Period	$ 1,085,696		$ 1,101,236
Net Income (loss)	(1,001)	[1]	7,952	[1]
Net income (loss)	(1,443)		7,745
Other comprehensive loss, net of tax	(1,040)	[2]	(6,748)	[2]
Distributions to Noncontrolling Interests	(375)		(1,477)
Share Repurchases	0		(3,117)
Restricted Stock Withheld for Taxes	(1,104)		(840)
Share-based Compensation	4,210		5,210
Excess tax benefit (deficiency) from stock options exercised and restricted stock units vested	(681)		(413)
Cash Dividends (0.188 and 0.017 per share)	(4,952)		(463)
Dividends declared per common share	$ 0.188		$ 0.017
Stockholders' Equity, End of Period	1,080,753		1,102,166
Net loss attributable to redeemable noncontrolling interest	(442)		(207)
Foreign Currency Translation Adjustment Attributable to Redeemable Noncontrolling Interest	(174)		(377)
Parent [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Beginning of Period	1,080,583		1,094,712
Net income (loss)	(1,671)		7,018
Other comprehensive loss, net of tax	(1,040)	[2]	(6,748)	[2]
Distributions to Noncontrolling Interests	0		0
Share Repurchases	0		(3,117)
Restricted Stock Withheld for Taxes	(1,104)		(840)
Share-based Compensation	4,210		5,210
Excess tax benefit (deficiency) from stock options exercised and restricted stock units vested	(681)		(413)
Cash Dividends (0.188 and 0.017 per share)	(4,952)		(463)
Stockholders' Equity, End of Period	1,075,345		1,096,185
Noncontrolling Interest [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Beginning of Period	5,113		6,524
Net Income (loss)	670	[1]	934	[1]
Other comprehensive loss, net of tax	0	[2]	0	[2]
Distributions to Noncontrolling Interests	(375)		(1,477)
Share Repurchases	0		0
Restricted Stock Withheld for Taxes	0		0
Share-based Compensation	0		0
Excess tax benefit (deficiency) from stock options exercised and restricted stock units vested	0		0
Cash Dividends (0.188 and 0.017 per share)	0		0
Stockholders' Equity, End of Period	$ 5,408		$ 5,981

[1] Net income attributable to noncontrolling interests for the three months ended November 30, 2012 and 2011 excludes net losses of $(442) thousand and $(207) thousand, respectively, allocable to the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

[2] Other comprehensive loss, net of tax for the three months ended November 30, 2012 and 2011 excludes $(174) thousand and $(377) thousand, respectively, relating to foreign currency translation adjustments for the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

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Business Combinations (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Business Acquisition [Line Items]
Business Acquisition, Cost of Acquired Entity, Purchase Price	$ 23
Ralph's Auto Supply (B.C.) Ltd. [Member]
Business Acquisition [Line Items]
Number of Stores	4
U-Pick-It [Member]
Business Acquisition [Line Items]
Number of Stores	2
Freetown/Millis Used Auto Parts [Member]
Business Acquisition [Line Items]
Number of Stores	2

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified				3 Months Ended										3 Months Ended
	Nov. 30, 2012 Corporate Joint Venture [Member]	Aug. 31, 2012 Corporate Joint Venture [Member]	Aug. 31, 2012 Other Affiliates [Member]	Nov. 30, 2012 Immediate Family Member of Management or Principal Owner [Member]	Nov. 30, 2012 Corporate Joint Venture [Member]	Nov. 30, 2011 Corporate Joint Venture [Member]	Nov. 30, 2012 Maximum [Member] Corporate Joint Venture [Member]	Nov. 30, 2011 Maximum [Member] Corporate Joint Venture [Member]	Nov. 30, 2012 Maximum [Member] Minority Shareholder Of Subsidiary [Member]	Aug. 31, 2012 Maximum [Member] Minority Shareholder Of Subsidiary [Member]	Nov. 30, 2012 Maximum [Member] Immediate Family Member of Management or Principal Owner [Member]	Aug. 31, 2012 Maximum [Member] Immediate Family Member of Management or Principal Owner [Member]	Nov. 30, 2012 Partnership Interest [Member] store	Nov. 30, 2012 Partnership Interest [Member] Auto Parts Business Segment President [Member]	Nov. 30, 2011 Partnership Interest [Member] Auto Parts Business Segment President [Member]	Nov. 30, 2012 Partnership Interest [Member] Maximum [Member] Auto Parts Business Segment President [Member]	Nov. 30, 2011 Partnership Interest [Member] Maximum [Member] Auto Parts Business Segment President [Member]	Nov. 30, 2011 Amix Salvage And Sales Ltd [Member] Minority Shareholder Of Subsidiary [Member]	Nov. 30, 2012 Amix Salvage And Sales Ltd [Member] Maximum [Member] Minority Shareholder Of Subsidiary [Member]
Related Party Transaction [Line Items]
Purchases from joint ventures					$ 6	$ 10
Advances to (payments from)							1	1
Due to Affiliate	3	2
Related Party Transaction, Expenses from Transactions with Related Party																		3	1
Accounts Payable, Related Parties									1	1
Related Party Noncontrolling Ownership Percentage By Noncontrolling Owners														25.00%
Related Party Noncontrolling Ownership Percentage By Parent														75.00%
Related Party Number Of Stores													5
Related Party Transaction Related Party Share Of Profit															1	1
Related Party Transaction Rent Expense																1	1
Related Party Transaction Lease Term														5 years
Related Party Transaction Percentage Of Shared Legal And Consulting Costs				50.00%
Accounts Receivable, Related Parties			$ 1								$ 1	$ 1

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Recent Accounting Pronouncements

3 Months Ended

Nov. 30, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2011, an accounting standards update was issued increasing disclosures regarding offsetting assets and liabilities. For financial instruments and derivative instruments, the standard requires disclosure of the gross amounts of recognized assets and liabilities, the amounts offset on the balance sheet, and the amounts subject to the offsetting requirements but not offset on the balance sheet. The standard is effective for the Company for fiscal year 2014 and interim periods therein and is to be applied retrospectively. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

In July 2012, an accounting standards update was issued that simplifies how an entity tests indefinite-lived intangible assets for impairment by allowing an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. The Company intends to early adopt this standard for the annual impairment test to be performed in the second quarter of fiscal 2013. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

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Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified	Nov. 30, 2012	Aug. 31, 2012
Accumulated Other Comprehensive Income [Abstract]
Foreign currency translation adjustments	$ 2,226	$ 3,658
Pension obligations, net	(5,731)	(6,106)
Cash flow hedges, net	(124)	(141)
Total accumulated other comprehensive loss	$ (3,629)	$ (2,589)

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Redeemable Noncontrolling Interest (Tables)

3 Months Ended

Nov. 30, 2012

Redeemable Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interest [Table Text Block]

Following is a reconciliation of the changes in the redeemable noncontrolling interest for the three months ended November 30, 2012 and 2011 (in thousands):

	2012			2011
Balances - September 1 (Beginning of period)	$	22,248		$	19,053
Net loss attributable to noncontrolling interest	(442		)	(207		)
Currency translation adjustment	(174		)	(377		)
Capital contributions from noncontrolling interest holder	1,970			467
Balances - November 30 (End of period)	$	23,602		$	18,936

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Restructuring charges (Tables)

3 Months Ended

Nov. 30, 2012

Restructuring Charges [Abstract]

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

The following illustrates the reconciliation of the restructuring liability by major type of costs for the three months ended November 30, 2012 (in thousands):

	Balance as of August 31, 2012		Charges		Payments and Other			Balance as of November 30, 2012		Total Charges to Date		Total Expected Charges
Severance costs	$	2,477	$	939	$	(2,548	)	$	868	$	3,680	$	4,000
Contract termination costs	414		5		(59		)	360		445		4,100
Other exit costs	64		649		(693		)	20		2,480		2,600
Total	$	2,955	$	1,593	$	(3,300	)	$	1,248	$	6,605	$	10,700

Schedule of Restructuring and Related Activities By Segment [Table Text Block]

Restructuring charges by operating segment were as follows (in thousands):

	As of November 30, 2012
		Current Period Charges		Total Charges to Date		Total Expected Charges
Metals Recycling Business		$	550	$	2,209	$	2,400
Auto Parts Business		187		420		600
Unallocated (Corporate)		856		3,976		7,700
Total		$	1,593	$	6,605	$	10,700

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Share-based Compensation (Details) (Restricted Stock Units (RSUs) [Member], USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2012
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	209,639
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Annual Vesting Percent	20.00%
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period Total Fair Value	$ 6

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Changes in Equity (Tables)

3 Months Ended

Nov. 30, 2012

Changes in Equity and Comprehensive Income [Abstract]

Schedule of Stockholders Equity [Table Text Block]

The following is a summary of the changes in equity for the three months ended November 30, 2012 and 2011 (in thousands):

	Fiscal 2013									Fiscal 2012
	SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity			SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balances - September 1 (Beginning of period)	$	1,080,583		$	5,113		$	1,085,696		$	1,094,712		$	6,524		$	1,101,236
Net income (loss)(1)	(1,671		)	670			(1,001		)	7,018			934			7,952
Other comprehensive loss, net of tax(2)	(1,040		)	—			(1,040		)	(6,748		)	—			(6,748		)
Distributions to noncontrolling interests	—			(375		)	(375		)	—			(1,477		)	(1,477		)
Share repurchases	—			—			—			(3,117		)	—			(3,117		)
Restricted stock withheld for taxes	(1,104		)	—			(1,104		)	(840		)	—			(840		)
Share-based compensation	4,210			—			4,210			5,210			—			5,210
Excess tax (deficiency) benefit from stock options exercised and restricted stock units vested	(681		)	—			(681		)	413			—			413
Cash dividends ($0.188 and $0.017 per share)	(4,952		)	—			(4,952		)	(463		)	—			(463		)
Balances - November 30 (End of period)	$	1,075,345		$	5,408		$	1,080,753		$	1,096,185		$	5,981		$	1,102,166

_____________________________

(1) Net income attributable to noncontrolling interests for the three months ended November 30, 2012 and 2011 excludes net losses of $(442) thousand and $(207) thousand, respectively, allocable to the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

(2) Other comprehensive loss, net of tax for the three months ended November 30, 2012 and 2011 excludes $(174) thousand and $(377) thousand, respectively, relating to foreign currency translation adjustments for the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Nov. 30, 2012

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Loss [Table Text Block]

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

	November 30, 2012			August 31, 2012
Foreign currency translation adjustments	$	2,226		$	3,658
Pension obligations, net	(5,731		)	(6,106		)
Cash flow hedges, net	(124		)	(141		)
Total accumulated other comprehensive loss	$	(3,629	)	$	(2,589	)

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Summary of Significant Accounting Policies

3 Months Ended

Nov. 30, 2012

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 presentation 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, 2012. The results for the three months ended November 30, 2012 and 2011 are not necessarily indicative of the results of operations for the entire year.

Accounting Changes

In June 2011, the Financial Accounting Standards Board (“FASB”) issued changes to the presentation of comprehensive income. These changes give an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements; the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. No changes were made to the items that must be reported in other comprehensive income, when an item of other comprehensive income must be reclassified to net income, or to the calculation and presentation of earnings (loss) per share. The Company adopted the new requirement in the first quarter of fiscal 2013 with no impact on the Company’s Unaudited Condensed Consolidated Financial Statements except for the change in presentation. The Company has chosen to present a separate statement of comprehensive income.

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 $30 million as of November 30, 2012 and $38 million as of August 31, 2012.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The majority of cash and cash equivalents are maintained with two major financial institutions (Bank of America and Wells Fargo Bank, N.A.). Balances in these institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250,000 as of November 30, 2012. 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, letters of credit, 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 $54 million and $37 million of open letters of credit relating to accounts receivable as of November 30, 2012 and August 31, 2012, respectively.

Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt and derivative contracts. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2). The carrying amounts of the non-derivative financial instruments approximate fair 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:

• 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.

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. See Note 8 - Redeemable Noncontrolling Interest and Note 11 - Derivative Financial Instruments for further detail.

Derivatives

The Company records derivative instruments in other assets or other liabilities in the Unaudited Condensed Consolidated Balance Sheets at fair value and changes in the fair value are either recognized in accumulated other comprehensive income (loss) in the Unaudited Condensed Consolidated Balance Sheets or net income (loss) in the Unaudited Condensed Consolidated Statements of Operations, as applicable, depending on the nature of the underlying exposure, whether the derivative has been designated as a hedge, and if designated as a hedge, the extent to which the hedge is effective. Amounts included in accumulated other comprehensive income (loss) are reclassified to earnings in the period in which earnings are impacted by the hedged items or in the period that the hedged transaction is deemed no longer likely to occur. For cash flow hedges, a formal assessment is made, both at the hedge’s inception and on an ongoing basis, to determine whether the derivatives that are designated as hedging instruments have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. To the extent the hedge is determined to be ineffective, the ineffective portion is immediately recognized in earnings. When available, quoted market prices or prices obtained through external sources are used to measure a derivative instrument’s fair value. The fair value of these instruments is a function of underlying forward commodity prices, related volatility, counterparty creditworthiness and duration of the contracts. Cash flows from derivatives are recognized in the Unaudited Condensed Consolidated Statements of Cash Flows in a manner consistent with the underlying transactions. See Note 11 - Derivative Financial Instruments.

Derivative contracts for commodities used in normal business operations that are settled by physical delivery, among other criteria, are eligible for and may be designated as normal purchases and normal sales. Contracts that qualify as normal purchases or normal sales are not marked-to-market. The Company does not use derivative instruments for trading or speculative purposes.

Restructuring Charges

Restructuring charges consist of severance, contract termination and other exit 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 exit costs is measured at its fair value in the period in which the liability is incurred. See Note 7 - Restructuring Charges for further detail.

Redeemable Noncontrolling Interest

The Company has issued common stock of one of its subsidiaries to a noncontrolling interest holder of that subsidiary that is redeemable both at the option of the holder and upon the occurrence of an event that is not solely within the Company’s control. Since redemption of the noncontrolling interest is outside of the Company’s control, this interest is presented on the Unaudited Condensed Consolidated Balance Sheets in the mezzanine section under the caption redeemable noncontrolling interest. If the interest were to be redeemed, the Company would be required to purchase all of such interest at fair value on the date of redemption. The redeemable noncontrolling interest is presented at the greater of its carrying amount (adjusted for the noncontrolling interest’s share of the allocation of income or loss of the subsidiary, dividends to and contributions from the noncontrolling interest) or its fair value as of each measurement date. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in fair value prior to exercise of the redemption option will be recorded to retained earnings. See Note 8 - Redeemable Noncontrolling Interest for further detail.

Reclassifications

Certain prior year amounts have been reclassified within operating expenses and other income (expense) in the Unaudited Condensed Statements of Operations and cash flows from operating activities in the Unaudited Condensed Statements of Cash Flows to conform to the current period presentation. These changes had no impact on previously reported operating income, net income or net cash used in operating activities.

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Income Taxes (Tables)

3 Months Ended

Nov. 30, 2012

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:

	Three Months Ended November 30,
	2012		2011
Federal statutory rate	35.0	%	35.0	%
State taxes, net of credits	7.1		1.3
Foreign income taxed at different rates	(1.0	)	(1.6	)
Section 199 deduction	4.6		(1.7	)
Non-deductible officers’ compensation	(1.1	)	0.7
Noncontrolling interests	48.5		(2.0	)
Research and development credits	21.7		—
Valuation allowance on deferred tax assets	(312.1	)	—
Other	(1.5	)	(0.2	)
Effective tax rate	(198.8	)%	31.5	%

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Restructuring charges (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	$ 10,700
Total Charges to Date	6,605
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	2,955
Charges	1,593	0
Payments and Other	(3,300)
Restructuring reserve, ending balance	1,248
Severance costs [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	4,000
Total Charges to Date	3,680
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	2,477
Charges	939
Payments and Other	(2,548)
Restructuring reserve, ending balance	868
Contract termination costs [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	4,100
Total Charges to Date	445
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	414
Charges	5
Payments and Other	(59)
Restructuring reserve, ending balance	360
Other exit costs [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	2,600
Total Charges to Date	2,480
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	64
Charges	649
Payments and Other	(693)
Restructuring reserve, ending balance	20
Metal Recycling Business [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	2,400
Total Charges to Date	2,209
Restructuring Reserve [Roll Forward]
Charges	550
Auto Parts Business [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	600
Total Charges to Date	420
Restructuring Reserve [Roll Forward]
Charges	187
Unallocated (Corporate) [Member]
Restructuring Cost and Reserve [Line Items]
Total Expected Charges	7,700
Total Charges to Date	3,976
Restructuring Reserve [Roll Forward]
Charges	$ 856

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Nov. 30, 2012	Aug. 31, 2012
Current assets:
Cash and cash equivalents	$ 24,404	$ 89,863
Accounts receivable, net of allowance for doubtful accounts of $1,038 and $4,459	152,860	137,313
Inventories, net	302,626	246,992
Deferred income taxes	5,458	6,362
Refundable income taxes	6,269	7,671
Prepaid expenses and other current assets	23,764	28,618
Total current assets	515,381	516,819
Property, plant and equipment, net of accumulated depreciation of $553,099 and $535,728	564,110	564,185
Investments in joint venture partnerships	16,339	17,126
Goodwill	634,451	635,491
Intangibles, net of accumulated amortization of $20,262 and $19,023	14,544	15,778
Other assets	14,379	14,174
Total assets	1,759,204	1,763,573
Current liabilities:
Short-term borrowings	9,169	683
Accounts payable	97,331	115,007
Accrued payroll and related liabilities	19,741	22,130
Environmental liabilities	2,261	2,185
Accrued income taxes	47	38
Other accrued liabilities	37,911	38,799
Total current liabilities	166,460	178,842
Deferred income taxes	86,068	85,447
Long-term debt, net of current maturities	345,797	334,629
Environmental liabilities, net of current portion	44,939	44,874
Other long-term liabilities	11,585	11,837
Total liabilities	654,849	655,629
Commitments and contingencies (Note 6)
Redeemable noncontrolling interest	23,602	22,248
Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity:
Preferred stock – 20,000 shares $1.00 par value authorized, none issued
Additional paid-in capital	3,171	816
Retained earnings	1,049,399	1,056,024
Accumulated other comprehensive loss	(3,629)	(2,589)
Total SSI shareholders’ equity	1,075,345	1,080,583
Noncontrolling interests	5,408	5,113
Total equity	1,080,753	1,085,696
Total liabilities and equity	1,759,204	1,763,573
Common Class A [Member]
Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity:
Common stock, value	25,684	25,219
Common Class B [Member]
Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity:
Common stock, value	$ 720	$ 1,113

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Income Tax Disclosure [Abstract]
Federal statutory rate	35.00%	35.00%
State taxes, net of credits	7.10%	1.30%
Foreign income taxed at different rates	(1.00%)	(1.60%)
Section 199 deduction	4.60%	(1.70%)
Non-deductible officers’ compensation	(1.10%)	0.70%
Noncontrolling interests	48.50%	(2.00%)
Research and development credits	21.70%	0.00%
Valuation allowance on deferred tax assets	(312.10%)	0.00%
Other	(1.50%)	(0.20%)
Effective tax rate	(198.80%)	31.50%
Valuation Allowance, Deferred Tax Asset, Change in Amount	$ 2

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Statement of Comprehensive Income (Loss) [Abstract]
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax	$ (91)	$ (468)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax Effect	24	0
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Tax	$ 216	$ 39

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Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended
	Nov. 30, 2012	Aug. 31, 2011
Accounting Policies [Abstract]
Number of Days Used To Determine Short Term Highly Liquid Investments Treatment As Cash Equivalents	90 days
Book Overdrafts	$ 30,000,000	$ 38,000,000
Cash, FDIC Insured Amount	250,000
Customer Issued Letters Of Credit	$ 54,000,000	$ 37,000,000

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Related Party Transactions

3 Months Ended

Nov. 30, 2012

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 $6 million and $10 million for the three months ended November 30, 2012 and 2011. Payments from these joint ventures were less than $1 million for the three months ended November 30, 2012 and 2011. The Company owed $3 million and $2 million to joint ventures as of November 30, 2012 and August 31, 2012.

In connection with the acquisition of the metals recycling business assets of Amix Salvage & Sales Ltd. in March 2011, the Company entered into a series of agreements to obtain barging and other services and lease property with entities owned by the minority shareholder of the Company’s subsidiary that operates its MRB facilities in Vancouver, British Columbia and Alberta, Canada. The Company paid less than $1 million and $3 million, primarily for barging services, under these agreements for the three months ended November 30, 2012 and 2011, respectively. Amounts payable to entities affiliated with this minority shareholder were less than $1 million as of November 30, 2012 and August 31, 2012.

In connection with the acquisition of a metals recycling business in fiscal 2011, the Company entered into an agreement with the selling parties, one of which is an employee of the Company, whereby the selling parties agreed to indemnify the Company for property improvements in excess of a contractually defined threshold on property owned by the selling parties and leased to the Company. The Company recognized an amount receivable from the selling parties of $1 million as of August 31, 2012 under the agreement, for which payment was received in the first quarter of fiscal 2013. 

Thomas D. Klauer, Jr., President of the Company’s Auto Parts Business, is the sole shareholder of a corporation that is the 25% minority partner in a partnership in which the Company is the 75% partner and which operates five self-service stores in Northern California. Mr. Klauer’s 25% share of the profits of this partnership totaled less than $1 million and $1 million for the three months ended November 30, 2012 and 2011, respectively. The partnership leases properties from entities in which Mr. Klauer has ownership interests under agreements that expire in December 2015 with options to renew the leases, upon expiration, for multiple five-year periods. The rent paid by the partnership to the entities in which Mr. Klauer has ownership interests was less than $1 million for the three months ended November 30, 2012 and 2011.

Certain members of the Schnitzer family own significant interests in, or are related to owners of, MMGL Corp (“MMGL”, formerly known as Schnitzer Investment Corp.), which is engaged in the real estate business and was a subsidiary of the Company prior to 1989. MMGL is considered a related party for financial reporting purposes. The Company and MMGL are both potentially responsible parties with respect to Portland Harbor, which has been designated as a Superfund site since December 2000. The Company and MMGL have worked together in response to Portland Harbor matters, and the Company has paid all of the legal and consulting fees for the joint defense, in part due to its environmental indemnity obligation to MMGL with respect to the Portland scrap metal operations property. As these costs have increased substantially in the last two years, the Company and MMGL have agreed to an equitable cost sharing arrangement with respect to defense costs under which MMGL will pay 50% of the legal and consulting costs, net of insurance recoveries. The amounts receivable from (payable to) MMGL vary from period to period because of the timing of incurring legal and consulting fees, payments for cost reimbursements and insurance recoveries. Amounts receivable from MMGL under this agreement were less than $1 million as of November 30, 2012 and August 31, 2012.

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Inventories, net (Details) (USD $) In Thousands, unless otherwise specified	Nov. 30, 2012	Aug. 31, 2012
Inventory, Net [Abstract]
Processed and unprocessed scrap metal	$ 209,067	$ 152,930
Semi-finished steel products (billets)	4,950	7,328
Finished goods	51,797	49,988
Supplies	36,812	36,746
Inventories, net	$ 302,626	$ 246,992

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Nov. 30, 2012

Accounting Policies [Abstract]

Accounting Changes and Error Corrections [Text Block]

Accounting Changes

In June 2011, the Financial Accounting Standards Board (“FASB”) issued changes to the presentation of comprehensive income. These changes give an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements; the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. No changes were made to the items that must be reported in other comprehensive income, when an item of other comprehensive income must be reclassified to net income, or to the calculation and presentation of earnings (loss) per share. The Company adopted the new requirement in the first quarter of fiscal 2013 with no impact on the Company’s Unaudited Condensed Consolidated Financial Statements except for the change in presentation. The Company has chosen to present a separate statement of comprehensive income.

Cash and Cash Equivalents [Policy Text Block]

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 $30 million as of November 30, 2012 and $38 million as of August 31, 2012.

Concentration Of Credit Risk [Policy Text Block]

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The majority of cash and cash equivalents are maintained with two major financial institutions (Bank of America and Wells Fargo Bank, N.A.). Balances in these institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250,000 as of November 30, 2012. 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, letters of credit, 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 $54 million and $37 million of open letters of credit relating to accounts receivable as of November 30, 2012 and August 31, 2012, respectively.

Financial Instruments [Policy Text Block]

Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt and derivative contracts. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2). The carrying amounts of the non-derivative financial instruments approximate fair value.

Fair Value Measurements [Policy Text Block]

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:

• 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.

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. See Note 8 - Redeemable Noncontrolling Interest and Note 11 - Derivative Financial Instruments for further detail.

Derivatives [Policy Text Block]

Derivatives

The Company records derivative instruments in other assets or other liabilities in the Unaudited Condensed Consolidated Balance Sheets at fair value and changes in the fair value are either recognized in accumulated other comprehensive income (loss) in the Unaudited Condensed Consolidated Balance Sheets or net income (loss) in the Unaudited Condensed Consolidated Statements of Operations, as applicable, depending on the nature of the underlying exposure, whether the derivative has been designated as a hedge, and if designated as a hedge, the extent to which the hedge is effective. Amounts included in accumulated other comprehensive income (loss) are reclassified to earnings in the period in which earnings are impacted by the hedged items or in the period that the hedged transaction is deemed no longer likely to occur. For cash flow hedges, a formal assessment is made, both at the hedge’s inception and on an ongoing basis, to determine whether the derivatives that are designated as hedging instruments have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. To the extent the hedge is determined to be ineffective, the ineffective portion is immediately recognized in earnings. When available, quoted market prices or prices obtained through external sources are used to measure a derivative instrument’s fair value. The fair value of these instruments is a function of underlying forward commodity prices, related volatility, counterparty creditworthiness and duration of the contracts. Cash flows from derivatives are recognized in the Unaudited Condensed Consolidated Statements of Cash Flows in a manner consistent with the underlying transactions. See Note 11 - Derivative Financial Instruments.

Derivative contracts for commodities used in normal business operations that are settled by physical delivery, among other criteria, are eligible for and may be designated as normal purchases and normal sales. Contracts that qualify as normal purchases or normal sales are not marked-to-market. The Company does not use derivative instruments for trading or speculative purposes.

Costs Associated with Exit or Disposal Activities or Restructurings, Policy

Restructuring Charges

Restructuring charges consist of severance, contract termination and other exit 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 exit costs is measured at its fair value in the period in which the liability is incurred. See Note 7 - Restructuring Charges for further detail.

Redeemable Noncontrolling Interest [Policy Text Block]

Redeemable Noncontrolling Interest

The Company has issued common stock of one of its subsidiaries to a noncontrolling interest holder of that subsidiary that is redeemable both at the option of the holder and upon the occurrence of an event that is not solely within the Company’s control. Since redemption of the noncontrolling interest is outside of the Company’s control, this interest is presented on the Unaudited Condensed Consolidated Balance Sheets in the mezzanine section under the caption redeemable noncontrolling interest. If the interest were to be redeemed, the Company would be required to purchase all of such interest at fair value on the date of redemption. The redeemable noncontrolling interest is presented at the greater of its carrying amount (adjusted for the noncontrolling interest’s share of the allocation of income or loss of the subsidiary, dividends to and contributions from the noncontrolling interest) or its fair value as of each measurement date. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in fair value prior to exercise of the redemption option will be recorded to retained earnings. See Note 8 - Redeemable Noncontrolling Interest for further detail.

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. The determination of fair value requires management to apply significant judgment in formulating estimates and assumptions used in the discounted cash flow model, including primarily revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, terminal year growth rates and an appropriate discount rate. The present value of future cash flows is determined using a market-based weighted average cost of capital of 12.8%, including a subject-company risk premium.

Comparability of Prior Year Financial Data, Policy [Policy Text Block]

Reclassifications

Certain prior year amounts have been reclassified within operating expenses and other income (expense) in the Unaudited Condensed Statements of Operations and cash flows from operating activities in the Unaudited Condensed Statements of Cash Flows to conform to the current period presentation. These changes had no impact on previously reported operating income, net income or net cash used in operating activities.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Cash flows from operating activities:
Net income (loss)	$ (1,443)	$ 7,745
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization	20,899	20,346
Deferred income taxes	2,261	906
Undistributed equity in earnings of joint ventures	(40)	(963)
Share-based compensation expense	4,210	4,613
Excess tax benefit from share-based payment arrangements	0	(413)
(Gain) loss on disposal of assets	226	(116)
Unrealized foreign exchange loss, net	46	272
Bad debt recoveries	(1,573)	0
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(20,010)	8,278
Inventories	(50,776)	(74,117)
Income taxes	903	(20,126)
Prepaid expenses and other current assets	1,173	(1,148)
Intangibles and other long-term assets	298	(1,079)
Accounts payable	(10,429)	(19,193)
Accrued payroll and related liabilities	(1,950)	(14,745)
Other accrued liabilities	(3,687)	3,452
Environmental liabilities	(74)	(312)
Other long-term liabilities	(303)	(81)
Distributed equity in earnings of joint ventures	735	525
Net cash used in operating activities	(59,534)	(86,156)
Cash flows from investing activities:
Capital expenditures	(26,675)	(25,551)
Joint venture receipts, net	222	353
Proceeds from sale of assets	532	251
Net cash used in investing activities	(25,921)	(24,947)
Cash flows from financing activities:
Proceeds from line of credit	135,500	173,000
Repayment of line of credit	(127,000)	(159,000)
Borrowings from long-term debt	72,742	294,212
Repayment of long-term debt	(61,449)	(214,396)
Repurchase of Class A common stock	0	(3,117)
Taxes paid related to net share settlement of share-based payment arrangements	(1,104)	(840)
Excess tax benefit from share-based payment arrangements	0	413
Contributions from noncontrolling interest	1,970	454
Distributions to noncontrolling interest	(375)	(1,477)
Dividends paid	0	(468)
Net cash provided by financing activities	20,284	88,781
Effect of exchange rate changes on cash	(288)	(151)
Net decrease in cash and cash equivalents	(65,459)	(22,473)
Cash and cash equivalents as of beginning of period	89,863	49,462
Cash and cash equivalents as of end of period	$ 24,404	$ 26,989

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Nov. 30, 2012	Aug. 31, 2012
Accounts receivable, allowance for doubtful accounts	$ 1,038	$ 4,459
Property, plant and equipment, accumulated depreciation	553,099	535,728
Intangibles, accumulated amortization	$ 20,262	$ 19,023
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares issued	0	0
Common Class A [Member]
Common stock, shares authorized	75,000,000	75,000,000
Common stock, par value	$ 1	$ 1
Common stock, shares issued	25,684,000	25,219,000
Common stock, shares outstanding	25,684,000	25,219,000
Common Class B [Member]
Common stock, shares authorized	25,000,000	25,000,000
Common stock, par value	$ 1	$ 1
Common stock, shares issued	720,000	1,113,000
Common stock, shares outstanding	720,000	1,113,000

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Accumulated Other Comprehensive Loss

3 Months Ended

Nov. 30, 2012

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Loss

Note 10 - Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows (in thousands):

	November 30, 2012			August 31, 2012
Foreign currency translation adjustments	$	2,226		$	3,658
Pension obligations, net	(5,731		)	(6,106		)
Cash flow hedges, net	(124		)	(141		)
Total accumulated other comprehensive loss	$	(3,629	)	$	(2,589	)

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Document and Entity Information Document	3 Months Ended
	Nov. 30, 2012	Jan. 03, 2013 Common Class A [Member]	Jan. 03, 2013 Common Class B [Member]
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 30, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Entity Registrant Name	SCHNITZER STEEL INDUSTRIES INC
Entity Central Index Key	0000912603
Current Fiscal Year End Date	--08-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		25,681,272	719,823

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Derivative Financial Instruments

3 Months Ended

Nov. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Foreign Currency Exchange Rate Risk Management

To manage exposure to foreign exchange rate risk, the Company may enter into foreign currency forward contracts to stabilize the U.S. dollar amount of the transaction at settlement. When such contracts are not designated as hedging instruments for accounting purposes, the realized and unrealized gains and losses on settled and unsettled forward contracts measured at fair value are recognized as other income or expense in the Unaudited Condensed Consolidated Statements of Operations.

The Company entered into forward contracts to mitigate exposure to exchange rate fluctuations on Euro-denominated fixed asset purchases, which were designated as qualifying cash flow hedges for accounting purposes. These foreign currency forward contracts are measured using forward exchange rates based on observable exchange rates quoted in an active market and are classified as Level 2 fair value measurements under the fair value hierarchy. In the first quarter of fiscal 2012, the Company determined that certain forecasted transactions were no longer probable, de-designated these contracts as hedges and subsequently terminated the contracts. The nominal amount and fair value of forward contracts, the amounts reclassified from accumulated other comprehensive income (loss) and the realized losses recorded in other income (expense), net were not material to the Unaudited Condensed Consolidated Financial Statements for all periods presented.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Revenues	$ 592,820	$ 812,176
Operating expense:
Cost of goods sold	541,884	742,215
Selling, general and administrative	47,995	55,992
Loss (income) from joint ventures	135	(1,001)
Restructuring Charges	1,593	0
Operating income	1,213	14,970
Interest expense	(2,017)	(3,271)
Other income (expense), net	321	(393)
Income (loss) before income taxes	(483)	11,306
Income tax expense	(960)	(3,561)
Net income (loss)	(1,443)	7,745
Net income attributable to noncontrolling interests	(228)	(727)
Net income (loss) attributable to SSI	$ (1,671)	$ 7,018
Net income (loss) per share attributable to SSI - basic	$ (0.06)	$ 0.26
Net income (loss) per share attributable to SSI - diluted	$ (0.06)	$ 0.25
Weighted average number of common shares:
Basic	26,567	27,451
Diluted	26,567	27,715
Dividends declared per common share	$ 0.188	$ 0.017

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Goodwill

3 Months Ended

Nov. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The gross changes in the carrying amount of goodwill by reporting segment for the three months ended November 30, 2012 were as follows (in thousands):

	Metals Recycling Business			Auto Parts Business			Total
Balance as of August 31, 2012	$	471,954		$	163,537		$	635,491
Purchase accounting adjustments	(2		)	—			(2		)
Foreign currency translation adjustment	(904		)	(134		)	(1,038		)
Balance as of November 30, 2012	$	471,048		$	163,403		$	634,451

There were no accumulated goodwill impairment charges as of November 30, 2012.

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Business Combinations

3 Months Ended

Nov. 30, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

In December 2012, the Company made the following acquisitions:

• The Company acquired substantially all of the assets of Ralph’s Auto Supply (B.C.) Ltd., a used auto parts business with four stores in Richmond and Surrey, British Columbia, which expanded the Auto Parts Business (“APB”)’s presence in Western Canada and is near the Metals Recycling Business’ operations in Surrey, British Columbia.

• The Company acquired substantially all of the assets of U-Pick-It, a used auto parts business with two stores in the Kansas City metropolitan area in Missouri and Kansas, which expanded APB’s presence in the Midwestern U.S.

• The Company acquired all of the equity interests of Freetown Self Serve Used Auto Parts, LLC, Freetown Transfer Facility, LLC, Millis Used Auto Parts, Inc. and Millis Industries, Inc., which together operated a used auto parts business with two stores in Massachusetts. This acquisition established a new APB presence in the Northeast near our Metals Recycling Business’ operations.

The aggregate consideration paid for these acquisitions was $23 million. As of January 8, 2013, the initial accounting for determining the acquisition-date fair value for each major class of assets acquired, including goodwill, and liabilities assumed was not yet complete. These acquisitions, individually or in the aggregate, are not material to the Company’s financial position or results of operations, and thus pro forma information is not presented.

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Segment Information

3 Months Ended

Nov. 30, 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 for which discrete financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company is organized by line of business. While the Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. Under the aforementioned criteria, the Company operates in three operating and reporting segments: metal purchasing, processing, recycling and selling (MRB), used auto parts (APB) and mini-mill steel manufacturing (SMB). Additionally, the Company is a noncontrolling partner in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal.

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

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

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

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

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses operating income to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative services that benefit all three segments. In addition, the Company does not allocate restructuring charges to the segment operating income because management does not include this information in its measurement of the performance of the operating segments. Because of this unallocated income and expense, the operating income of each reporting segment does not reflect the operating income the reporting segment would report as a stand-alone business.

The table below illustrates the Company’s operating results by reporting segment (in thousands):

	Three Months Ended November 30,
	2012			2011
Revenues:
Metals Recycling Business:
Revenues	$	494,461		$	728,438
Less: Intersegment revenues	(47,255		)	(58,696		)
MRB external customer revenues	447,206			669,742
Auto Parts Business:
Revenues	69,555			84,054
Less: Intersegment revenues	(15,970		)	(21,522		)
APB external customer revenues	53,585			62,532
Steel Manufacturing Business:
Revenues	92,029			79,902
Total revenues	$	592,820		$	812,176

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

	Three Months Ended November 30,
	2012			2011
Metals Recycling Business	$	5,654		$	13,099
Auto Parts Business	6,364			10,442
Steel Manufacturing Business	3,404			1,218
Segment operating income	15,422			24,759
Restructuring charges	(1,593		)	—
Corporate and eliminations	(12,616		)	(9,789		)
Operating income	1,213			14,970
Interest expense	(2,017		)	(3,271		)
Other income (expense), net	321			(393		)
Income (loss) before income taxes	$	(483	)	$	11,306

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

	November 30, 2012			August 31, 2012
Metals Recycling Business(1)	$	1,680,808		$	1,696,296
Auto Parts Business	337,734			329,327
Steel Manufacturing Business	325,741			322,398
Total segment assets	2,344,283			2,348,021
Corporate and eliminations	(585,079		)	(584,448		)
Total assets	$	1,759,204		$	1,763,573

_____________________________

(1) MRB total assets include $16 million and $17 million as of November 30, 2012 and August 31, 2012, respectively, for investments in joint venture partnerships.

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Share-based Compensation

3 Months Ended

Nov. 30, 2012

Share-based Compensation [Abstract]

Share-based Compensation

Share-based Compensation

In the first quarter of fiscal 2013, as part of the annual awards under the Company’s Long-Term Incentive Plan, the Compensation Committee granted 209,639 restricted stock units (“RSU”) to its key employees and officers under the Company’s 1993 Stock Incentive Plan. The RSUs have a five-year term and vest 20% per year commencing June 1, 2013. The fair value of the RSUs granted is based on the market closing price of the underlying Class A common stock on the date of grant and totaled $6 million. The compensation expense associated with the RSUs is recognized over the requisite service period of the awards, net of forfeitures.

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Redeemable Noncontrolling Interest

3 Months Ended

Nov. 30, 2012

Redeemable Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interest

Redeemable Noncontrolling Interest

In March 2011, the Company, through a wholly-owned acquisition subsidiary, acquired substantially all of the metals recycling business assets of Amix Salvage & Sales Ltd. As part of the purchase consideration, the Company issued the seller common shares equal to 20% of the issued and outstanding capital stock of the Company’s acquisition subsidiary. Under the terms of an agreement related to the acquisition, the noncontrolling interest holder has the right to require the Company to purchase its interest in the Company’s acquisition subsidiary for fair value. The noncontrolling interest becomes redeemable within 60 days after the later of (i) the third anniversary of the date of the acquisition and (ii) the date on which certain principals of the minority shareholder are no longer employed by the Company. As of November 30, 2012, the noncontrolling interest was 19% of the outstanding capital stock of the subsidiary and the conditions for redemption had not been met.

As of November 30, 2012, the noncontrolling interest was presented at its adjusted carrying value of $24 million, which approximates its fair value. 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. The determination of fair value requires management to apply significant judgment in formulating estimates and assumptions used in the discounted cash flow model, including primarily revenue growth rates driven by future commodity prices and volume expectations, operating margins, capital expenditures, working capital requirements, terminal year growth rates and an appropriate discount rate. The present value of future cash flows is determined using a market-based weighted average cost of capital of 12.8%, including a subject-company risk premium. The subsidiary is presently undertaking significant investments to install a shredder and related processing and sorting equipment. As a result, projections of future cash flows assume volumes and earnings will grow above historical levels once construction activity is complete and the new equipment is put in service. The terminal year growth rate used in the discounted cash flow model is 2%. The Company also used a market approach based on earnings multiple data to corroborate the fair value estimate of the noncontrolling interest determined using the discounted cash flow model.

Significant increases (decreases) in the revenue growth rate driven by commodity prices and volume expectations and the terminal growth rate would result in a significantly higher (lower) fair value measurement. A significant decrease (increase) in the market-based weighted average cost of capital would result in a significantly higher (lower) fair value measurement.

Following is a reconciliation of the changes in the redeemable noncontrolling interest for the three months ended November 30, 2012 and 2011 (in thousands):

	2012			2011
Balances - September 1 (Beginning of period)	$	22,248		$	19,053
Net loss attributable to noncontrolling interest	(442		)	(207		)
Currency translation adjustment	(174		)	(377		)
Capital contributions from noncontrolling interest holder	1,970			467
Balances - November 30 (End of period)	$	23,602		$	18,936

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Commitments and Contingencies

3 Months Ended

Nov. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

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 three months ended November 30, 2012 were as follows (in thousands):

Reporting Segment	Balance as of August 31, 2012		Liabilities Established (Released), Net		Payments and Other			Balance as of November 30, 2012		Short-Term		Long-Term
Metals Recycling Business	$	30,859	$	165	$	(124	)	$	30,900	$	1,707	$	29,193
Auto Parts Business	16,200		100		—			16,300		554		15,746
Total	$	47,059	$	265	$	(124	)	$	47,200	$	2,261	$	44,939

Metals Recycling Business (“MRB”)

As of November 30, 2012, MRB had environmental liabilities of $31 million 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 process to be followed for any cleanup and the allocation of the costs for any cleanup among responsible parties have not yet been determined, but the process of identifying additional PRPs and beginning allocation of costs is underway. 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 is 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 more than 80 other PRPs, including the LWG, in a voluntary process to establish an allocation of costs at the Site. These parties have selected an allocation team and have entered into an allocation process design agreement. The LWG has 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.

On March 30, 2012, the LWG submitted to the EPA and made available on its website a draft feasibility study (“draft 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 identifies ten possible remedial alternatives which range 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 and estimates a range of two to 28 years to implement the remedial work, depending on the selected alternative. The draft FS does not determine who is responsible for remediation costs, define the precise cleanup boundaries or select remedies. The draft FS is being reviewed, and may be subject to revisions prior to its approval, by the EPA. While the draft FS is an important step in the EPA’s development of a proposed plan for addressing the Site, a final decision on the nature and extent of the required remediation will occur only after the EPA has prepared a proposed plan for public review and issued a record of decision (“ROD”). Currently available information indicates that the EPA does not expect to issue its final ROD selecting a remedy for the Site until at least 2014. Responsibility for implementing and funding EPA’s selected remedy will be determined in a separate allocation process.

Because there has not been a determination of the total cost of the investigations, the remediation that will be required, the amount of natural resource damages or how the costs of the ongoing 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 or reasonably possible that the Company may 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 not known or available 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 and remediation 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) has not yet been determined.

Other MRB Sites

As of November 30, 2012, the Company had environmental liabilities related to various MRB sites other than Portland Harbor of $30 million. The liabilities relate to the potential future remediation of soil contamination, groundwater contamination and storm water runoff issues and were not individually material at any site. No material environmental compliance enforcement proceedings are currently pending related to these sites.

Auto Parts Business

As of November 30, 2012, the Company had environmental liabilities related to various APB sites of $16 million. The liabilities relate to the potential future remediation of soil contamination, groundwater contamination and storm water runoff issues and were not individually material at any site. No material environmental compliance enforcement proceedings are currently pending related to these sites.

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 domestic firm that applies a treatment that allows the EAF dust to be delisted as hazardous waste so it can be disposed of as a non-hazardous solid 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 was renewed through March 1, 2012. The Company timely filed a renewal application, which allows for existing permit conditions to remain in force until the permit is renewed or a new permit is issued.

SMB had no environmental liabilities as of November 30, 2012.

Other than the Portland Harbor Superfund site, which is discussed 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 Unaudited Condensed 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.

In addition, the Company is party to various legal proceedings arising in the normal course of business. Management believes that adequate provisions have been made for these contingencies. The Company does not anticipate that the resolution of legal proceedings arising in the normal course of business will have a material adverse effect on its results of operations, financial condition, or cash flows.

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Restructuring charges

3 Months Ended

Nov. 30, 2012

Restructuring Charges [Abstract]

Restructuring Charges

Restructuring Charges

In the fourth quarter of fiscal 2012, the Company undertook a number of restructuring initiatives designed to extract greater synergies from the significant acquisitions and technology investments made in fiscal 2011, realign the Company’s organization to support its future growth and decrease operating expenses by streamlining functions and reducing organizational layers, including achieving greater synergies between MRB and APB. These initiatives are expected to be substantially complete by the end of fiscal 2013.

The Company expects that total pre-tax charges pursuant to these restructuring initiatives will be approximately $11 million. Of this amount, $7 million were incurred through the first quarter of fiscal 2013, with the balance expected to be incurred by the end of fiscal 2013. The Company expects that the vast majority of the restructuring charges will require cash payments.

The following illustrates the reconciliation of the restructuring liability by major type of costs for the three months ended November 30, 2012 (in thousands):

	Balance as of August 31, 2012		Charges		Payments and Other			Balance as of November 30, 2012		Total Charges to Date		Total Expected Charges
Severance costs	$	2,477	$	939	$	(2,548	)	$	868	$	3,680	$	4,000
Contract termination costs	414		5		(59		)	360		445		4,100
Other exit costs	64		649		(693		)	20		2,480		2,600
Total	$	2,955	$	1,593	$	(3,300	)	$	1,248	$	6,605	$	10,700

Restructuring charges by operating segment were as follows (in thousands):

	As of November 30, 2012
		Current Period Charges		Total Charges to Date		Total Expected Charges
Metals Recycling Business		$	550	$	2,209	$	2,400
Auto Parts Business		187		420		600
Unallocated (Corporate)		856		3,976		7,700
Total		$	1,593	$	6,605	$	10,700

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Changes in Equity

3 Months Ended

Nov. 30, 2012

Changes in Equity [Abstract]

Changes in Equity

Changes in Equity

The following is a summary of the changes in equity for the three months ended November 30, 2012 and 2011 (in thousands):

	Fiscal 2013									Fiscal 2012
	SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity			SSI Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balances - September 1 (Beginning of period)	$	1,080,583		$	5,113		$	1,085,696		$	1,094,712		$	6,524		$	1,101,236
Net income (loss)(1)	(1,671		)	670			(1,001		)	7,018			934			7,952
Other comprehensive loss, net of tax(2)	(1,040		)	—			(1,040		)	(6,748		)	—			(6,748		)
Distributions to noncontrolling interests	—			(375		)	(375		)	—			(1,477		)	(1,477		)
Share repurchases	—			—			—			(3,117		)	—			(3,117		)
Restricted stock withheld for taxes	(1,104		)	—			(1,104		)	(840		)	—			(840		)
Share-based compensation	4,210			—			4,210			5,210			—			5,210
Excess tax (deficiency) benefit from stock options exercised and restricted stock units vested	(681		)	—			(681		)	413			—			413
Cash dividends ($0.188 and $0.017 per share)	(4,952		)	—			(4,952		)	(463		)	—			(463		)
Balances - November 30 (End of period)	$	1,075,345		$	5,408		$	1,080,753		$	1,096,185		$	5,981		$	1,102,166

_____________________________

(1) Net income attributable to noncontrolling interests for the three months ended November 30, 2012 and 2011 excludes net losses of $(442) thousand and $(207) thousand, respectively, allocable to the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

(2) Other comprehensive loss, net of tax for the three months ended November 30, 2012 and 2011 excludes $(174) thousand and $(377) thousand, respectively, relating to foreign currency translation adjustments for the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets. See Note 8 - Redeemable Noncontrolling Interest.

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Segment Information (Tables)

3 Months Ended

Nov. 30, 2012

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The table below illustrates the Company’s operating results by reporting segment (in thousands):

	Three Months Ended November 30,
	2012			2011
Revenues:
Metals Recycling Business:
Revenues	$	494,461		$	728,438
Less: Intersegment revenues	(47,255		)	(58,696		)
MRB external customer revenues	447,206			669,742
Auto Parts Business:
Revenues	69,555			84,054
Less: Intersegment revenues	(15,970		)	(21,522		)
APB external customer revenues	53,585			62,532
Steel Manufacturing Business:
Revenues	92,029			79,902
Total revenues	$	592,820		$	812,176

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

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

	Three Months Ended November 30,
	2012			2011
Metals Recycling Business	$	5,654		$	13,099
Auto Parts Business	6,364			10,442
Steel Manufacturing Business	3,404			1,218
Segment operating income	15,422			24,759
Restructuring charges	(1,593		)	—
Corporate and eliminations	(12,616		)	(9,789		)
Operating income	1,213			14,970
Interest expense	(2,017		)	(3,271		)
Other income (expense), net	321			(393		)
Income (loss) before income taxes	$	(483	)	$	11,306

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

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

	November 30, 2012			August 31, 2012
Metals Recycling Business(1)	$	1,680,808		$	1,696,296
Auto Parts Business	337,734			329,327
Steel Manufacturing Business	325,741			322,398
Total segment assets	2,344,283			2,348,021
Corporate and eliminations	(585,079		)	(584,448		)
Total assets	$	1,759,204		$	1,763,573

_____________________________

(1) MRB total assets include $16 million and $17 million as of November 30, 2012 and August 31, 2012, respectively, for investments in joint venture partnerships.

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Net Income (Loss) Per Share

3 Months Ended

Nov. 30, 2012

Earnings Per Share [Abstract]

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):

	Three Months Ended November 30,
	2012			2011
Net income (loss)	$	(1,443	)	$	7,745
Net income attributable to noncontrolling interests	(228		)	(727		)
Net income (loss) attributable to SSI	(1,671		)	7,018
Computation of shares:
Weighted average common shares outstanding, basic	26,567			27,451
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs and RSUs	—			264
Weighted average common shares outstanding, diluted	26,567			27,715

Common stock equivalent shares of 864,874 and 351,074 were considered antidilutive and were excluded from the calculation of diluted net income (loss) per share for the three months ended November 30, 2012 and 2011, respectively.

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Goodwill (Tables)

3 Months Ended

Nov. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

The gross changes in the carrying amount of goodwill by reporting segment for the three months ended November 30, 2012 were as follows (in thousands):

	Metals Recycling Business			Auto Parts Business			Total
Balance as of August 31, 2012	$	471,954		$	163,537		$	635,491
Purchase accounting adjustments	(2		)	—			(2		)
Foreign currency translation adjustment	(904		)	(134		)	(1,038		)
Balance as of November 30, 2012	$	471,048		$	163,403		$	634,451

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Redeemable Noncontrolling Interest (Details) (USD $)	3 Months Ended		1 Months Ended				3 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Mar. 31, 2011 Common Stock [Member] Subsidiaries [Member]	Nov. 30, 2012 Common Stock [Member] Subsidiaries [Member]	Nov. 30, 2012 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Nov. 30, 2012 Estimate of Fair Value, Fair Value Disclosure [Member] Fair Value, Inputs, Level 3 [Member]	Nov. 30, 2012 Income Approach Valuation Technique [Member]
Redeemable Noncontrolling Interest [Line Items]
Business Acquisition, Effective Date of Acquisition	March 2011
Business Acquisition Equity Interests Issued Or Issuable Percent Of Shares Issued			20.00%
Period In Which Noncontrolling Interest Becomes Redeemable	60 days
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				19.00%
Redeemable Noncontrolling Interest, Equity, Fair Value					$ 24,000,000	$ 24,000,000
Weighted average cost of capital							12.80%
Terminal growth rate of cash flows							2.00%
Increase (Decrease) in Temporary Equity [Roll Forward]
Redeemable Noncontrolling Interest, beginning of period	22,248,000	19,053,000
Net loss attributable to noncontrolling interest	(442,000)	(207,000)
Currency Translation Adjustment	(174,000)	(377,000)
Capital contributions from noncontrolling interest holder	1,970,000	467,000
Redeemable Noncontrolling Interest, end of period	$ 23,602,000	$ 18,936,000

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2012		Nov. 30, 2011
Net income (loss)	$ (1,443)		$ 7,745
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1,258)	[1]	(6,438)	[1]
Cash flow hedges, net	17	[2]	0	[2]
Pension obligations, net	375	[3]	67	[3]
Total other comprehensive loss, net of tax	(866)		(6,371)
Comprehensive income (loss)	(2,309)		1,374
Less amounts attributable to noncontrolling interests:
Net income attributable to noncontrolling interests	(228)		(727)
Foreign Currency Translation Adjustment Attributable to Redeemable Noncontrolling Interest	(174)		(377)
Total amounts attributable to noncontrolling interest	(402)		(1,104)
Comprehensive income (loss) attributable to SSI	$ (2,711)		$ 270

[1] Net of tax benefit of $(91) and $(468) for each respective period.

[2] Net of tax expense of $24 and $0 for each respective period.

[3] Net of tax expense of $216 and $39 for each respective period.

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Inventories, net

3 Months Ended

Nov. 30, 2012

Inventory, Net [Abstract]

Inventories, net

Inventories, net

Inventories, net consisted of the following (in thousands):

	November 30, 2012		August 31, 2012
Processed and unprocessed scrap metal	$	209,067	$	152,930
Semi-finished steel products (billets)	4,950		7,328
Finished goods	51,797		49,988
Supplies	36,812		36,746
Inventories, net	$	302,626	$	246,992

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Commitments and Contingencies (Tables)

3 Months Ended

Nov. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Reserves For Environmental Liabilities [Table Text Block]

Changes in the Company’s environmental liabilities for the three months ended November 30, 2012 were as follows (in thousands):

Reporting Segment	Balance as of August 31, 2012		Liabilities Established (Released), Net		Payments and Other			Balance as of November 30, 2012		Short-Term		Long-Term
Metals Recycling Business	$	30,859	$	165	$	(124	)	$	30,900	$	1,707	$	29,193
Auto Parts Business	16,200		100		—			16,300		554		15,746
Total	$	47,059	$	265	$	(124	)	$	47,200	$	2,261	$	44,939

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Goodwill (Details) (USD $)	3 Months Ended
	Nov. 30, 2012
Goodwill [Line Items]
Accumulated goodwill impairment charges	$ 0
Goodwill [Roll Forward]
Goodwill, beginning of period	635,491,000
Purchase accounting adjustments	(2,000)
Foreign currency translation adjustment	(1,038,000)
Goodwill, end of period	634,451,000
Metal Recycling Business [Member]
Goodwill [Roll Forward]
Goodwill, beginning of period	471,954,000
Purchase accounting adjustments	(2,000)
Foreign currency translation adjustment	(904,000)
Goodwill, end of period	471,048,000
Auto Parts Business [Member]
Goodwill [Roll Forward]
Goodwill, beginning of period	163,537,000
Purchase accounting adjustments	0
Foreign currency translation adjustment	(134,000)
Goodwill, end of period	$ 163,403,000

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Income Taxes

3 Months Ended

Nov. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate for the Company’s operations for the three months ended November 30, 2012 and 2011 was (198.8)% and 31.5%, respectively.

A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:

	Three Months Ended November 30,
	2012		2011
Federal statutory rate	35.0	%	35.0	%
State taxes, net of credits	7.1		1.3
Foreign income taxed at different rates	(1.0	)	(1.6	)
Section 199 deduction	4.6		(1.7	)
Non-deductible officers’ compensation	(1.1	)	0.7
Noncontrolling interests	48.5		(2.0	)
Research and development credits	21.7		—
Valuation allowance on deferred tax assets	(312.1	)	—
Other	(1.5	)	(0.2	)
Effective tax rate	(198.8	)%	31.5	%

In the first quarter of fiscal 2013, the Company recorded an expense of $2 million to recognize a valuation allowance on deferred tax assets of a foreign subsidiary as a result of negative evidence, including recent losses at the subsidiary, outweighing the more subjective positive evidence, thus indicating that it is more likely than not that the associated tax benefit will not be realized in the future.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. The federal statute of limitations has expired for fiscal 2009 and prior years. The Canadian and several state tax authorities are currently examining returns for fiscal years 2005 to 2009.