|
|
|
|
|
x
|
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
|
|
For the Quarterly Period Ended November 30, 2011
|
o
|
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
|
|
For the Transition Period from _______ to_______
|
|
Commission File Number 0-22496
|
OREGON
|
|
93-0341923
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
3200 NW Yeon Ave.
Portland, OR
|
|
97210
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller Reporting company
|
o
|
|
|
|
|
|
|
PAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS (UNAUDITED)
|
|
November 30, 2011
|
|
August 31, 2011
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,989
|
|
|
$
|
49,462
|
|
Accounts receivable, net of allowance for doubtful accounts of $6,048 and $6,148
|
209,475
|
|
|
229,975
|
|
||
Inventories, net
|
410,119
|
|
|
335,120
|
|
||
Deferred income taxes
|
10,942
|
|
|
11,784
|
|
||
Refundable income taxes
|
13,035
|
|
|
3,541
|
|
||
Prepaid expenses and other current assets
|
30,583
|
|
|
24,117
|
|
||
Total current assets
|
701,143
|
|
|
653,999
|
|
||
Property, plant and equipment, net of accumulated depreciation of $486,737 and $471,305
|
552,833
|
|
|
555,284
|
|
||
Investments in joint venture partnerships
|
17,665
|
|
|
17,208
|
|
||
Goodwill
|
622,382
|
|
|
627,805
|
|
||
Intangibles, net of accumulated amortization of $15,015 and $20,846
|
19,510
|
|
|
20,906
|
|
||
Other assets
|
14,768
|
|
|
14,967
|
|
||
Total assets
|
$
|
1,928,301
|
|
|
$
|
1,890,169
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
14,665
|
|
|
$
|
643
|
|
Accounts payable
|
111,079
|
|
|
141,011
|
|
||
Accrued payroll and related liabilities
|
21,766
|
|
|
36,475
|
|
||
Environmental liabilities
|
2,971
|
|
|
2,983
|
|
||
Accrued income taxes
|
2,788
|
|
|
13,833
|
|
||
Other accrued liabilities
|
40,265
|
|
|
38,368
|
|
||
Total current liabilities
|
193,534
|
|
|
233,313
|
|
||
Deferred income taxes
|
84,845
|
|
|
85,378
|
|
||
Long-term debt, net of current maturities
|
480,943
|
|
|
403,287
|
|
||
Environmental liabilities, net of current portion
|
37,562
|
|
|
37,872
|
|
||
Other long-term liabilities
|
10,315
|
|
|
10,030
|
|
||
Total liabilities
|
807,199
|
|
|
769,880
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
||||
Redeemable noncontrolling interest
|
18,936
|
|
|
19,053
|
|
||
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, 24,395 and 24,241 shares issued and outstanding
|
24,395
|
|
|
24,241
|
|
||
Class B common stock – 25,000 shares $1.00 par value authorized, 2,866 and 3,060 shares issued and outstanding
|
2,866
|
|
|
3,060
|
|
||
Additional paid-in capital
|
3,769
|
|
|
762
|
|
||
Retained earnings
|
1,070,363
|
|
|
1,065,109
|
|
||
Accumulated other comprehensive income (loss)
|
(5,208
|
)
|
|
1,540
|
|
||
Total SSI shareholders’ equity
|
1,096,185
|
|
|
1,094,712
|
|
||
Noncontrolling interests
|
5,981
|
|
|
6,524
|
|
||
Total equity
|
1,102,166
|
|
|
1,101,236
|
|
||
Total liabilities and equity
|
$
|
1,928,301
|
|
|
$
|
1,890,169
|
|
|
Three Months Ended November 30,
|
||||||
|
2011
|
|
2010
|
||||
Revenues
|
$
|
812,176
|
|
|
$
|
675,104
|
|
Operating expense:
|
|
|
|
||||
Cost of goods sold
|
742,215
|
|
|
602,546
|
|
||
Selling, general and administrative
|
56,292
|
|
|
45,075
|
|
||
Environmental reserves charges (releases), net
|
(300
|
)
|
|
(200
|
)
|
||
Income from joint ventures
|
(1,001
|
)
|
|
(757
|
)
|
||
Operating income
|
14,970
|
|
|
28,440
|
|
||
Other income (expense):
|
|
|
|
||||
Interest income
|
163
|
|
|
55
|
|
||
Interest expense
|
(3,271
|
)
|
|
(598
|
)
|
||
Other income (expense), net
|
(556
|
)
|
|
161
|
|
||
Total other expense
|
(3,664
|
)
|
|
(382
|
)
|
||
Income from continuing operations before income taxes
|
11,306
|
|
|
28,058
|
|
||
Income tax expense
|
(3,561
|
)
|
|
(9,164
|
)
|
||
Income from continuing operations
|
7,745
|
|
|
18,894
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
23
|
|
||
Net income
|
7,745
|
|
|
18,917
|
|
||
Net income attributable to noncontrolling interests
|
(727
|
)
|
|
(1,123
|
)
|
||
Net income attributable to SSI
|
$
|
7,018
|
|
|
$
|
17,794
|
|
Basic:
|
|
|
|
||||
Income per share from continuing operations attributable to SSI
|
$
|
0.26
|
|
|
$
|
0.65
|
|
Income per share from discontinued operations
|
—
|
|
|
—
|
|
||
Net income per share attributable to SSI
|
$
|
0.26
|
|
|
$
|
0.65
|
|
Diluted:
|
|
|
|
||||
Income per share from continuing operations attributable to SSI
|
$
|
0.25
|
|
|
$
|
0.64
|
|
Income per share from discontinued operations
|
—
|
|
|
—
|
|
||
Net income per share attributable to SSI
|
$
|
0.25
|
|
|
$
|
0.64
|
|
Weighted average number of common shares:
|
|
|
|
||||
Basic
|
27,451
|
|
|
27,563
|
|
||
Diluted
|
27,715
|
|
|
27,871
|
|
||
Dividends declared per common share
|
$
|
0.017
|
|
|
$
|
0.017
|
|
|
Three Months Ended November 30,
|
||||||
|
2011
|
|
2010
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
7,745
|
|
|
$
|
18,917
|
|
Adjustments to reconcile net income to cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
20,346
|
|
|
16,321
|
|
||
Deferred income taxes
|
906
|
|
|
2,464
|
|
||
Undistributed equity in earnings of joint ventures
|
(963
|
)
|
|
(962
|
)
|
||
Share-based compensation expense
|
4,613
|
|
|
3,568
|
|
||
Excess tax benefit from share-based payment arrangements
|
(413
|
)
|
|
383
|
|
||
Gain on disposal of assets
|
(116
|
)
|
|
(61
|
)
|
||
Environmental reserves charges (releases), net
|
(300
|
)
|
|
(200
|
)
|
||
Net gain on derivatives
|
—
|
|
|
(759
|
)
|
||
Unrealized foreign exchange loss, net
|
272
|
|
|
—
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
8,278
|
|
|
(34,740
|
)
|
||
Inventories
|
(74,117
|
)
|
|
(6,456
|
)
|
||
Refundable income taxes
|
(5,292
|
)
|
|
53
|
|
||
Prepaid expenses and other current assets
|
(1,148
|
)
|
|
740
|
|
||
Intangibles and other long-term assets
|
(1,079
|
)
|
|
(556
|
)
|
||
Accounts payable
|
(19,193
|
)
|
|
(7,387
|
)
|
||
Accrued payroll and related liabilities
|
(14,745
|
)
|
|
(13,942
|
)
|
||
Other accrued liabilities
|
3,452
|
|
|
(1,291
|
)
|
||
Accrued income taxes
|
(14,834
|
)
|
|
5,173
|
|
||
Environmental liabilities
|
(12
|
)
|
|
(65
|
)
|
||
Other long-term liabilities
|
(81
|
)
|
|
3
|
|
||
Distributed equity in earnings of joint ventures
|
525
|
|
|
1,175
|
|
||
Net cash used in operating activities
|
(86,156
|
)
|
|
(17,622
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(25,551
|
)
|
|
(25,168
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(6,956
|
)
|
||
Joint venture receipts (payments), net
|
353
|
|
|
(619
|
)
|
||
Proceeds from sale of assets
|
251
|
|
|
251
|
|
||
Net cash used in investing activities
|
(24,947
|
)
|
|
(32,492
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from line of credit
|
173,000
|
|
|
147,500
|
|
||
Repayment of line of credit
|
(159,000
|
)
|
|
(147,500
|
)
|
||
Borrowings from long-term debt
|
294,212
|
|
|
168,000
|
|
||
Repayment of long-term debt
|
(214,396
|
)
|
|
(88,144
|
)
|
||
Repurchase of Class A common stock
|
(3,117
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement of share-based payment arrangements
|
(840
|
)
|
|
(1,873
|
)
|
||
Excess tax benefit from share-based payment arrangements
|
413
|
|
|
(383
|
)
|
||
Stock options exercised
|
—
|
|
|
16
|
|
||
Contributions from redeemable noncontrolling interests
|
454
|
|
|
—
|
|
||
Distributions to noncontrolling interests
|
(1,477
|
)
|
|
(631
|
)
|
||
Dividends paid
|
(468
|
)
|
|
(466
|
)
|
||
Net cash provided by financing activities
|
88,781
|
|
|
76,519
|
|
||
Effect of exchange rate changes on cash
|
(151
|
)
|
|
288
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(22,473
|
)
|
|
26,693
|
|
||
Cash and cash equivalents as of beginning of period
|
49,462
|
|
|
30,342
|
|
||
Cash and cash equivalents as of end of period
|
$
|
26,989
|
|
|
$
|
57,035
|
|
•
|
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.
|
|
November 30, 2011
|
|
August 31, 2011
|
||||
Processed and unprocessed scrap metal
|
$
|
308,124
|
|
|
$
|
241,093
|
|
Semi-finished steel products (billets)
|
10,168
|
|
|
9,237
|
|
||
Finished goods
|
58,314
|
|
|
54,395
|
|
||
Supplies
|
33,513
|
|
|
30,395
|
|
||
Inventories, net
|
$
|
410,119
|
|
|
$
|
335,120
|
|
|
Three Months Ended
|
||
|
November 30, 2010
|
||
Revenues
|
$
|
718,683
|
|
Operating income
(1)
|
$
|
36,256
|
|
Net income
(1)
|
$
|
23,487
|
|
Net income attributable to SSI
(1)
|
$
|
21,643
|
|
(1)
|
Excludes nonrecurring executive compensation paid to the management of acquired companies that will not be incurred in the future.
|
|
Metals Recycling Business
|
|
Auto Parts Business
|
|
Total
|
||||||
Balance as of August 31, 2011
|
$
|
464,646
|
|
|
$
|
163,159
|
|
|
$
|
627,805
|
|
Purchase accounting adjustments
|
142
|
|
|
—
|
|
|
142
|
|
|||
Foreign currency translation adjustment
|
(4,808
|
)
|
|
(757
|
)
|
|
(5,565
|
)
|
|||
Balance as of November 30, 2011
|
$
|
459,980
|
|
|
$
|
162,402
|
|
|
$
|
622,382
|
|
|
Balance as of August 31, 2011
|
|
Reserves Established (Released), Net
|
|
Payments
|
|
Balance as of November 30, 2011
|
|
Short-Term
|
|
Long-Term
|
||||||||||||
Metals Recycling Business
|
$
|
25,655
|
|
|
$
|
(300
|
)
|
|
$
|
(22
|
)
|
|
$
|
25,333
|
|
|
$
|
2,417
|
|
|
$
|
22,916
|
|
Auto Parts Business
|
15,200
|
|
|
—
|
|
|
—
|
|
|
15,200
|
|
|
554
|
|
|
14,646
|
|
||||||
Total
|
$
|
40,855
|
|
|
$
|
(300
|
)
|
|
$
|
(22
|
)
|
|
$
|
40,533
|
|
|
$
|
2,971
|
|
|
$
|
37,562
|
|
|
Fiscal 2012
|
|
Fiscal 2011
|
||||||||||||||||||||
|
SSI shareholders’
equity
|
|
Noncontrolling
interests
|
|
Total
equity
|
|
SSI shareholders’
equity
|
|
Noncontrolling
interests
|
|
Total
equity
|
||||||||||||
Balances - September 1 (Beginning of period)
|
$
|
1,094,712
|
|
|
$
|
6,524
|
|
|
$
|
1,101,236
|
|
|
$
|
975,326
|
|
|
$
|
4,306
|
|
|
$
|
979,632
|
|
Net income
(1)
|
7,018
|
|
|
934
|
|
|
7,952
|
|
|
17,794
|
|
|
1,123
|
|
|
18,917
|
|
||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation adjustment (net of tax of $(468) and $371)
(2)
|
(6,815
|
)
|
|
—
|
|
|
(6,815
|
)
|
|
660
|
|
|
—
|
|
|
660
|
|
||||||
Pension obligations, net (net of tax of $39 and $54)
|
67
|
|
|
—
|
|
|
67
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||||||
Change in net unrealized gain on cash flow hedges (net of tax of $66)
|
—
|
|
|
—
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|
117
|
|
||||||
Comprehensive income
|
270
|
|
|
934
|
|
|
1,204
|
|
|
18,657
|
|
|
1,123
|
|
|
19,780
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
(1,477
|
)
|
|
(1,477
|
)
|
|
—
|
|
|
(631
|
)
|
|
(631
|
)
|
||||||
Share repurchases
|
(3,117
|
)
|
|
—
|
|
|
(3,117
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock withheld for taxes
|
(840
|
)
|
|
—
|
|
|
(840
|
)
|
|
(1,873
|
)
|
|
—
|
|
|
(1,873
|
)
|
||||||
Stock options exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||||
Share-based compensation expense
|
5,210
|
|
|
—
|
|
|
5,210
|
|
|
3,568
|
|
|
—
|
|
|
3,568
|
|
||||||
Excess tax benefit (deficiency) from stock options exercised and restricted stock units vested
|
413
|
|
|
—
|
|
|
413
|
|
|
(383
|
)
|
|
—
|
|
|
(383
|
)
|
||||||
Cash dividends ($0.017 per share)
|
(463
|
)
|
|
—
|
|
|
(463
|
)
|
|
(467
|
)
|
|
—
|
|
|
(467
|
)
|
||||||
Balances - November 30 (End of period)
|
$
|
1,096,185
|
|
|
$
|
5,981
|
|
|
$
|
1,102,166
|
|
|
$
|
994,844
|
|
|
$
|
4,798
|
|
|
$
|
999,642
|
|
(1)
|
Net income attributable to noncontrolling interests at
November 30, 2011
excludes a loss of
$207 thousand
allocable to the redeemable noncontrolling interest, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets at
November 30, 2011
. See
Note 7
- Redeemable Noncontrolling Interest.
|
(2)
|
Foreign currency translation adjustments exclude
$(886) thousand
relating to redeemable noncontrolling interests for the
three
months ended
November 30, 2011
, which is reported in the mezzanine section of the Unaudited Condensed Consolidated Balance Sheets at
November 30, 2011
. See
Note 7
- Redeemable Noncontrolling Interest.
|
|
Three Months Ended November 30,
|
||||
|
2011
|
|
2010
|
||
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of credits
|
1.3
|
|
|
1.0
|
|
Foreign income taxed at different rates
|
(1.6
|
)
|
|
(1.1
|
)
|
Section 199 deduction
|
(1.7
|
)
|
|
(1.4
|
)
|
Non-deductible officers’ compensation
|
0.7
|
|
|
0.3
|
|
Noncontrolling interests
|
(2.0
|
)
|
|
(1.4
|
)
|
Other
|
(0.2
|
)
|
|
0.3
|
|
Effective tax rate
|
31.5
|
%
|
|
32.7
|
%
|
|
2011
|
|
2010
|
||||
Income from continuing operations
|
$
|
7,745
|
|
|
$
|
18,894
|
|
Net income attributable to noncontrolling interests
|
(727
|
)
|
|
(1,123
|
)
|
||
Income from continuing operations attributable to SSI
|
7,018
|
|
|
17,771
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
23
|
|
||
Net income attributable to SSI
|
$
|
7,018
|
|
|
$
|
17,794
|
|
Computation of shares:
|
|
|
|
||||
Weighted average common shares outstanding, basic
|
27,451
|
|
|
27,563
|
|
||
Incremental common shares attributable to dilutive stock options, performance share awards, DSUs and RSUs
|
264
|
|
|
308
|
|
||
Weighted average common shares outstanding, diluted
|
27,715
|
|
|
27,871
|
|
|
2011
|
|
2010
|
||||
Revenues:
|
|
|
|
||||
Metals Recycling Business:
|
|
|
|
||||
Revenues
|
$
|
728,438
|
|
|
$
|
591,708
|
|
Less: Intersegment revenues
|
(58,696
|
)
|
|
(31,709
|
)
|
||
MRB external customer revenues
|
669,742
|
|
|
559,999
|
|
||
Auto Parts Business:
|
|
|
|
||||
Revenues
|
84,054
|
|
|
66,681
|
|
||
Less: Intersegment revenues
|
(21,522
|
)
|
|
(15,210
|
)
|
||
APB external customer revenues
|
62,532
|
|
|
51,471
|
|
||
Steel Manufacturing Business:
|
|
|
|
||||
Revenues
|
79,902
|
|
|
63,634
|
|
||
Total revenues
|
$
|
812,176
|
|
|
$
|
675,104
|
|
|
2011
|
|
2010
|
||||
Metals Recycling Business
|
$
|
13,099
|
|
|
$
|
25,533
|
|
Auto Parts Business
|
10,442
|
|
|
14,039
|
|
||
Steel Manufacturing Business
|
1,218
|
|
|
(2,035
|
)
|
||
Segment operating income
|
24,759
|
|
|
37,537
|
|
||
Corporate and eliminations
|
(9,789
|
)
|
|
(9,097
|
)
|
||
Operating income
|
14,970
|
|
|
28,440
|
|
||
Interest income
|
163
|
|
|
55
|
|
||
Interest expense
|
(3,271
|
)
|
|
(598
|
)
|
||
Other income (expense), net
|
(556
|
)
|
|
161
|
|
||
Income from continuing operations before income taxes
|
$
|
11,306
|
|
|
$
|
28,058
|
|
|
November 30, 2011
|
|
August 31, 2011
|
||||
Metals Recycling Business
(1)
|
$
|
1,645,870
|
|
|
$
|
1,668,778
|
|
Auto Parts Business
|
309,551
|
|
|
304,060
|
|
||
Steel Manufacturing Business
|
325,486
|
|
|
324,596
|
|
||
Total segment assets
|
2,280,907
|
|
|
2,297,434
|
|
||
Corporate and eliminations
|
(352,606
|
)
|
|
(407,265
|
)
|
||
Total assets
|
$
|
1,928,301
|
|
|
$
|
1,890,169
|
|
(1)
|
MRB total assets include
$18 million
and
$17 million
as of November 30, 2011 and August 31, 2011, respectively, for investments in joint venture partnerships.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Revenues of
$812 million
, compared to
$675 million
in the
first
quarter of fiscal
2011
;
|
•
|
Operating income of
$15 million
, compared to
$28 million
in the
first
quarter of fiscal
2011
;
|
•
|
Net income attributable to SSI of
$7 million
, or
$0.25
per share (diluted), compared to
$18 million
, or
$0.64
per share (diluted), in the
first
quarter of fiscal
2011
;
|
•
|
Net cash used in operating activities of
$86 million
, compared to
$18 million
in the first
three
months of fiscal
2011
;
|
•
|
Cash and cash equivalents of
$27 million
as of
November 30, 2011
, compared to
$49 million
as of
August 31, 2011
; and
|
•
|
Debt, net of cash, of
$469 million
as of
November 30, 2011
, compared to
$354 million
as of
August 31, 2011
(see the reconciliation of Debt, net of cash in Non-GAAP Financial Measures at the end of this Item 2).
|
|
Three Months Ended November 30,
|
|||||||||
($ in thousands)
|
2011
|
|
2010
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Metals Recycling Business
|
$
|
728,438
|
|
|
$
|
591,708
|
|
|
23
|
%
|
Auto Parts Business
|
84,054
|
|
|
66,681
|
|
|
26
|
%
|
||
Steel Manufacturing Business
|
79,902
|
|
|
63,634
|
|
|
26
|
%
|
||
Intercompany revenue eliminations
(1)
|
(80,218
|
)
|
|
(46,919
|
)
|
|
71
|
%
|
||
Total revenues
|
812,176
|
|
|
675,104
|
|
|
20
|
%
|
||
Cost of goods sold:
|
|
|
|
|
|
|||||
Metals Recycling Business
|
686,456
|
|
|
545,688
|
|
|
26
|
%
|
||
Auto Parts Business
|
59,460
|
|
|
41,229
|
|
|
44
|
%
|
||
Steel Manufacturing Business
|
77,005
|
|
|
64,218
|
|
|
20
|
%
|
||
Intercompany cost of goods sold eliminations
(1)
|
(80,706
|
)
|
|
(48,589
|
)
|
|
66
|
%
|
||
Total cost of goods sold
|
742,215
|
|
|
602,546
|
|
|
23
|
%
|
||
Selling, general and administrative (“SG&A”) expense:
|
|
|
|
|
|
|||||
Metals Recycling Business
|
30,165
|
|
|
21,648
|
|
|
39
|
%
|
||
Auto Parts Business
|
14,152
|
|
|
11,413
|
|
|
24
|
%
|
||
Steel Manufacturing Business
|
1,679
|
|
|
1,451
|
|
|
16
|
%
|
||
Corporate
(2)
|
10,296
|
|
|
10,563
|
|
|
(3
|
)%
|
||
Total SG&A expense
|
56,292
|
|
|
45,075
|
|
|
25
|
%
|
||
Environmental reserves charges (releases), net:
|
|
|
|
|
|
|||||
Metals Recycling Business
|
(300
|
)
|
|
(200
|
)
|
|
50
|
%
|
||
Total environmental reserves charges (releases), net
|
(300
|
)
|
|
(200
|
)
|
|
50
|
%
|
||
Income from joint ventures:
|
|
|
|
|
|
|||||
Metals Recycling Business
|
(982
|
)
|
|
(961
|
)
|
|
2
|
%
|
||
Change in intercompany profit elimination
(3)
|
(19
|
)
|
|
204
|
|
|
NM
|
|
||
Total joint venture income
|
(1,001
|
)
|
|
(757
|
)
|
|
32
|
%
|
||
Operating income (loss):
|
|
|
|
|
|
|||||
Metals Recycling Business
|
13,099
|
|
|
25,533
|
|
|
(49
|
)%
|
||
Auto Parts Business
|
10,442
|
|
|
14,039
|
|
|
(26
|
)%
|
||
Steel Manufacturing Business
|
1,218
|
|
|
(2,035
|
)
|
|
NM
|
|
||
Corporate expense
|
(10,296
|
)
|
|
(10,563
|
)
|
|
(3
|
)%
|
||
Change in intercompany profit elimination
(4)
|
507
|
|
|
1,466
|
|
|
(65
|
)%
|
||
Total operating income
|
$
|
14,970
|
|
|
$
|
28,440
|
|
|
(47
|
)%
|
(1)
|
MRB sells recycled ferrous metal to SMB at rates per ton that approximate West Coast export market prices. In addition, APB sells auto bodies 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 ferrous metal to MRB and then subsequently to SMB at rates per ton that approximate West Coast 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)
|
Intercompany profits are not recognized until the finished products are sold to third parties; therefore, intercompany profit is eliminated while the products remain in inventory.
|
|
Three Months Ended November 30,
|
|||||||||
($ in thousands, except for prices)
|
2011
|
|
2010
|
|
% Change
|
|||||
Ferrous revenues
|
$
|
578,024
|
|
|
$
|
480,868
|
|
|
20
|
%
|
Nonferrous revenues
|
142,290
|
|
|
108,273
|
|
|
31
|
%
|
||
Other
|
8,124
|
|
|
2,567
|
|
|
216
|
%
|
||
Total segment revenues
|
728,438
|
|
|
591,708
|
|
|
23
|
%
|
||
Cost of goods sold
|
686,456
|
|
|
545,688
|
|
|
26
|
%
|
||
Selling, general and administrative expense
|
30,165
|
|
|
21,648
|
|
|
39
|
%
|
||
Environmental reserves charges (releases), net
|
(300
|
)
|
|
(200
|
)
|
|
50
|
%
|
||
Income from joint ventures
|
(982
|
)
|
|
(961
|
)
|
|
2
|
%
|
||
Segment operating income
|
$
|
13,099
|
|
|
$
|
25,533
|
|
|
(49
|
)%
|
Average ferrous recycled metal sales prices ($/LT):
(1)
|
|
|
|
|
|
|||||
Steel Manufacturing Business
|
$
|
429
|
|
|
$
|
350
|
|
|
23
|
%
|
Other domestic
|
$
|
413
|
|
|
$
|
315
|
|
|
31
|
%
|
Foreign
|
$
|
436
|
|
|
$
|
359
|
|
|
21
|
%
|
Average
|
$
|
432
|
|
|
$
|
353
|
|
|
22
|
%
|
Ferrous sales volume (LT, in thousands):
|
|
|
|
|
|
|||||
Steel Manufacturing Business
|
135
|
|
|
91
|
|
|
48
|
%
|
||
Other domestic
|
184
|
|
|
161
|
|
|
14
|
%
|
||
Total domestic
|
319
|
|
|
252
|
|
|
27
|
%
|
||
Foreign
|
913
|
|
|
979
|
|
|
(7
|
)%
|
||
Total ferrous sales volume (LT, in thousands)
|
1,232
|
|
|
1,231
|
|
|
—
|
%
|
||
Average nonferrous sales price ($/pound)
(1)
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
6
|
%
|
Nonferrous sales volumes (pounds, in thousands)
|
137,243
|
|
|
111,495
|
|
|
23
|
%
|
||
Outbound freight included in cost of goods sold
|
$
|
50,086
|
|
|
$
|
50,797
|
|
|
(1
|
)%
|
(1)
|
Price information is shown after netting the cost of freight incurred to deliver the product to the customer.
|
|
Three Months Ended November 30,
|
|||||||||
($ in thousands)
|
2011
|
|
2010
|
|
% Change
|
|||||
Revenues
|
$
|
84,054
|
|
|
$
|
66,681
|
|
|
26
|
%
|
Cost of goods sold
|
59,460
|
|
|
41,229
|
|
|
44
|
%
|
||
Selling, general and administrative expense
|
14,152
|
|
|
11,413
|
|
|
24
|
%
|
||
Segment operating income
|
$
|
10,442
|
|
|
$
|
14,039
|
|
|
(26
|
)%
|
Number of stores at period end
|
50
|
|
|
45
|
|
|
11
|
%
|
||
Cars purchased (in thousands)
|
85
|
|
|
82
|
|
|
4
|
%
|
|
Three Months Ended November 30,
|
|||||||||
($ in thousands, except for price)
|
2011
|
|
2010
|
|
% Change
|
|||||
Revenues
|
$
|
79,902
|
|
|
$
|
63,634
|
|
|
26
|
%
|
Cost of goods sold
|
77,005
|
|
|
64,218
|
|
|
20
|
%
|
||
Selling, general and administrative expense
|
1,679
|
|
|
1,451
|
|
|
16
|
%
|
||
Segment operating income (loss)
|
$
|
1,218
|
|
|
$
|
(2,035
|
)
|
|
NM
|
|
Finished steel products average sales price ($/ton)
(1)
|
$
|
722
|
|
|
$
|
634
|
|
|
14
|
%
|
Finished steel products sold (tons, in thousands)
|
107
|
|
|
98
|
|
|
9
|
%
|
||
Rolling mill utilization
|
60
|
%
|
|
48
|
%
|
|
|
(1)
|
Price information is shown after netting the cost of freight incurred to deliver the product to the customer.
|
|
Payment Due by Period (in thousands)
|
||||||||||||||||||||||||||||||
|
Remainder
of 2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Thereafter
|
|
Total
|
||||||||||||||||
Contractual Obligations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Short-term borrowings
|
$
|
14,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,000
|
|
Long-term debt
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
471,095
|
|
|
—
|
|
|
7,700
|
|
|
478,795
|
|
||||||||
Interest payments on debt
(2)
|
9,095
|
|
|
12,128
|
|
|
12,128
|
|
|
12,128
|
|
|
6,075
|
|
|
22
|
|
|
75
|
|
|
51,651
|
|
||||||||
Purchase obligations
(3)
|
43,648
|
|
|
1,589
|
|
|
735
|
|
|
720
|
|
|
720
|
|
|
720
|
|
|
7,980
|
|
|
56,112
|
|
(1)
|
Long-term debt represents the principal amounts of all outstanding long-term debt, maturities of which extend to
2021
.
|
(2)
|
Interest payments on debt are based on interest rates in effect as of
November 30, 2011
. As the contractual interest rates are variable, actual cash payments may differ from the estimates provided.
|
(3)
|
Purchase obligations include all enforceable, legally binding agreements to purchase goods or services that specify all significant terms, regardless of the duration of the agreement, including purchases of inventory items to be sold in the ordinary course of business.
|
|
November 30, 2011
|
|
August 31, 2011
|
||||
Short-term borrowings
|
$
|
14,665
|
|
|
$
|
643
|
|
Long-term debt, net of current maturities
|
480,943
|
|
|
403,287
|
|
||
Total debt
|
495,608
|
|
|
403,930
|
|
||
Less: cash and cash equivalents
|
26,989
|
|
|
49,462
|
|
||
Total debt, net of cash
|
$
|
468,619
|
|
|
$
|
354,468
|
|
|
Three Months Ended November 30,
|
||||||
|
2011
|
|
2010
|
||||
Borrowings from long-term debt
|
$
|
294,212
|
|
|
$
|
168,000
|
|
Proceeds from line of credit
|
173,000
|
|
|
147,500
|
|
||
Repayment of long-term debt
|
(214,396
|
)
|
|
(88,144
|
)
|
||
Repayment of line of credit
|
(159,000
|
)
|
|
(147,500
|
)
|
||
Net borrowings of debt
|
$
|
93,816
|
|
|
$
|
79,856
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number
of Shares Purchased |
|
Average
Price Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
|
|||||
September 1, 2011 – September 30, 2011
|
68,983
|
|
|
$
|
45.18
|
|
|
68,983
|
|
|
3,127,981
|
|
October 1, 2011 – October 31, 2011
|
—
|
|
|
—
|
|
|
—
|
|
|
3,127,981
|
|
|
November 1, 2011 – November 30, 2011
|
—
|
|
|
—
|
|
|
—
|
|
|
3,127,981
|
|
|
Total First Quarter
|
68,983
|
|
|
|
|
68,983
|
|
|
|
ITEM 6.
|
EXHIBITS
|
Exhibit Number
|
Exhibit Description
|
3.1
|
2006 Restated Articles of Incorporation (as corrected December 2, 2011) of the Registrant.
|
|
|
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, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three months ended November 30, 2011 and 2010, (ii) Condensed Consolidated Balance Sheets as of November 30, 2011, and August 31, 2011, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2011 and 2010, and (iv) the Notes to Condensed Consolidated Financial Statements.
(1)
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
January 9, 2012
|
By:
|
/s/ Tamara L. Lundgren
|
|
|
|
Tamara L. Lundgren
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date:
|
January 9, 2012
|
By:
|
/s/ Richard D. Peach
|
|
|
|
Richard D. Peach
|
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Schnitzer Steel Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Tamara L. Lundgren
|
Tamara L. Lundgren
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Schnitzer Steel Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Richard D. Peach
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Tamara L. Lundgren
|
Tamara L. Lundgren
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Richard D. Peach
|
Richard D. Peach
Senior Vice President and Chief Financial Officer
|