Segment Information

6 Months Ended

Feb. 29, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses and 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.

Prior to the fourth quarter of fiscal 2015, the Company's internal organizational and reporting structure supported three operating and reportable segments: the Metals Recycling Business ("MRB"), the Auto Parts Business ("APB") and the Steel Manufacturing Business ("SMB"). In the fourth quarter of fiscal 2015, in accordance with its plan announced in April 2015, the Company combined and integrated its auto parts and metals recycling businesses into a single operating platform. This resulted in a realignment of how the Chief Executive Officer, who is considered the Company's chief operating decision maker, reviews performance and makes decisions on resource allocation. The change in the Company's internal organizational and reporting structure resulted in the formation of a new operating and reportable segment, the Auto and Metals Recycling ("AMR") business, replacing the former MRB and APB segments. The Company began reporting on this new segment in the fourth quarter of fiscal 2015 as reflected in its Annual Report on Form 10-K for the year ended August 31, 2015. The segment data for the comparable periods presented herein has been revised to conform to the current period presentation for all activities of AMR. Recasting this historical information did not have an impact on the Company's consolidated financial performance for any of the periods presented.

AMR buys and processes ferrous and nonferrous metal for sale to foreign and other domestic steel producers or their representatives and to SMB. In addition, AMR purchases ferrous metal from other processors for shipment directly to SMB. AMR also procures salvaged vehicles and sells serviceable used auto parts from these vehicles through a network of self-service auto parts stores.

The Company is a noncontrolling partner in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal, the results of which are reported within the AMR reportable segment.

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 AMR to SMB are made at rates that approximate market prices for shipments from the West Coast of the U.S. These intercompany sales tend to produce intercompany profits which are not recognized until the finished products are ultimately sold to third parties.

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses segment operating income to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes and other income and expense to its reportable segments. Expenses related to shared services that support operational activities and transactions is allocated from Corporate to the segments. Unallocated Corporate expense consists primarily of expense for certain shared services management and administrative services that benefit both reportable segments. In addition, the Company does not allocate restructuring charges and other exit-related costs to the segment operating income because management does not include this information in its measurement of the performance of the operating segments. The results of discontinued operations are excluded from segment operating income and are presented separately, net of tax, from the results of ongoing operations for all periods presented.

The table below illustrates the Company’s revenues from continuing operations by reportable segment (in thousands):

	Three Months Ended						Six Months Ended
	2/29/2016			2/28/2015			2/29/2016			2/28/2015
Revenues:
Auto and Metals Recycling:
Revenues	$	249,812		$	389,057		$	522,777		$	902,745
Less: Intersegment revenues	(19,126		)	(44,734		)	(42,794		)	(100,016		)
AMR external customer revenues	230,686			344,323			479,983			802,729
Steel Manufacturing Business:
Revenues	58,391			93,126			130,292			188,344
Total revenues	$	289,077		$	437,449		$	610,275		$	991,073

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

	Three Months Ended						Six Months Ended
	2/29/2016			2/28/2015			2/29/2016			2/28/2015
Auto and Metals Recycling	$	(26,350	)	$	(188,640	)	$	(24,314	)	$	(183,911	)
Steel Manufacturing Business	(1,202		)	3,799			1,552			10,006
Segment operating loss	(27,552		)	(184,841		)	(22,762		)	(173,905		)
Restructuring charges and other exit-related costs	(5,291		)	(5,394		)	(7,216		)	(5,987		)
Corporate and eliminations	(4,233		)	(10,776		)	(11,126		)	(20,334		)
Operating loss	(37,076		)	(201,011		)	(41,104		)	(200,226		)
Interest expense	(2,015		)	(2,295		)	(3,874		)	(4,669		)
Other income, net	438			1,993			845			2,925
Loss from continuing operations before income taxes	$	(38,653	)	$	(201,313	)	$	(44,133	)	$	(201,970	)

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

	February 29, 2016			August 31, 2015
Auto and Metals Recycling(1)	$	1,452,722		$	1,492,906
Steel Manufacturing Business	369,836			370,955
Total segment assets	1,822,558			1,863,861
Corporate and eliminations	(970,385		)	(901,562		)
Total assets	$	852,173		$	962,299

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(1) AMR total assets include $13 million and $15 million as of February 29, 2016 and August 31, 2015, respectively, for investments in joint ventures.