ANNUAL | ||
For the fiscal year ended August 31, 2007 | ||
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
For the transition period from to |
OREGON | 93-0341923 | |||
(State of Incorporation) | (I.R.S. Employer Identification No.) | |||
3200 N.W. Yeon Ave., | ||||
Portland, OR | 97210 | |||
(Address of principal executive offices) | (Zip Code) |
Common Stock, $1 par value | The NASDAQ Stock Market, | |
(Title of Each Class) | (Name of each Exchange on which registered) |
1 | ||||||||
PART I | ||||||||
EXHIBIT | ||||||||
EXHIBIT 10.48 | ||||||||
EXHIBIT 10.49 | ||||||||
EXHIBIT 10.50 | ||||||||
EXHIBIT 21.1 | ||||||||
EXHIBIT 23.1 | ||||||||
EXHIBIT 24.1 | ||||||||
EXHIBIT 31.1 | ||||||||
EXHIBIT 31.2 | ||||||||
EXHIBIT 32.1 | ||||||||
EXHIBIT 32.2 |
1
ITEM 1. | BUSINESS |
1
2
32
2007 | 2006 | 2005 | ||||||||||
Asia | $ | 755 | $ | 562 | $ | 402 | ||||||
North America | 639 | 424 | 178 | |||||||||
Europe | 608 | 373 | - | |||||||||
Africa | 87 | 47 | - | |||||||||
Sales to SMB | (186 | ) | (142 | ) | (137 | ) | ||||||
Revenue from external customers | $ | 1,903 | $ | 1,264 | $ | 443 | ||||||
Year Ended August 31, | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | ||||||||||||||||||||||||||||||||||||||||
Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | |||||||||||||||||||||||||||||||||||||||||||
Recycled Ferrous Metal: | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign-processed | $ | 534 | 2,098 | $ | 336 | 1,175 | $ | 270 | 1,170 | $ | 925,410 | 2,865 | $ | 533,453 | 2,098 | $ | 336,262 | 1,175 | ||||||||||||||||||||||||||||||
Foreign-trading | 330 | 1,272 | — | — | — | — | 381,066 | 1,212 | 330,296 | 1,272 | - | - | ||||||||||||||||||||||||||||||||||||
Steel Manufacturing Business | 142 | 668 | 137 | 625 | 112 | 618 | ||||||||||||||||||||||||||||||||||||||||||
Domestic — processed | 126 | 523 | 15 | 65 | 11 | 57 | ||||||||||||||||||||||||||||||||||||||||||
SMB | 185,699 | 705 | 142,296 | 668 | 137,092 | 625 | ||||||||||||||||||||||||||||||||||||||||||
Domestic - processed | 189,678 | 722 | 125,475 | 523 | 14,852 | 65 | ||||||||||||||||||||||||||||||||||||||||||
Total recycled ferrous metal | $ | 1,132 | 4,561 | $ | 488 | 1,865 | $ | 393 | 1,845 | $ | 1,681,853 | 5,504 | $ | 1,131,520 | 4,561 | $ | 488,206 | 1,865 | ||||||||||||||||||||||||||||||
(1) | Revenues stated in | |
dollars. | ||
(2) | Volume in |
3
Year Ended August 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | |||||||||||||||||||
Recycled Nonferrous Metal | ||||||||||||||||||||||||
Foreign | $ | 151 | 195 | $ | 65 | 117 | $ | 52 | 107 | |||||||||||||||
Domestic | 116 | 107 | 6 | 9 | 5 | 11 | ||||||||||||||||||
Total recycled nonferrous metal | $ | 267 | 302 | $ | 71 | 126 | $ | 57 | 118 | |||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||
Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | |||||||||||||||||||
Foreign | $ | 193,752 | 209,725 | $ | 150,670 | 194,496 | $ | 65,336 | 116,999 | |||||||||||||||
Domestic | 201,985 | 173,361 | 116,103 | 107,114 | 5,411 | 8,746 | ||||||||||||||||||
Total recycled nonferrous metal | $ | 395,737 | 383,086 | $ | 266,773 | 301,610 | $ | 70,747 | 125,745 | |||||||||||||||
(1) | Revenues stated in | |
dollars. | ||
(2) | Volume in |
4
4
5
5
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Revenue | $ | 218 | $ | 108 | $ | 82 | ||||||
Operating Income | $ | 28 | $ | 28 | $ | 26 | ||||||
Operating Margin | 13 | % | 26 | % | 32 | % |
2007 | 2006(1) | |||||||
Self-service locations | 35 | 35 | ||||||
Full-service locations | 17 | 17 | ||||||
Total stores | 52 | 52 | ||||||
(1) | Included in the 2006 self-service locations was one location that was under conversion from a full-service location to a self-service location and was not operational at August 31, 2006. |
6
2007 | 2006 | 2005 | ||||||||||
North America | $ | 266,354 | $ | 218,130 | $ | 107,808 | ||||||
Sales to MRB | (22,209 | ) | (14,513 | ) | (13,253 | ) | ||||||
Revenues from external customers | $ | 244,145 | $ | 203,617 | $ | 94,555 | ||||||
6
7
Year Ended August 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||||||||||
Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | Revenues(1) | Vol.(2) | Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | Revenues(1) | Volume(2) | |||||||||||||||||||||||||||||||||||||
Rebar | $ | 215 | 390 | $ | 163 | 316 | $ | 144 | 340 | $ | 272,602 | 451,624 | $ | 214,955 | 389,603 | $ | 163,075 | 315,562 | ||||||||||||||||||||||||||||||
Coiled products | 124 | 234 | 117 | 216 | 94 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Coiled rebar | 40,742 | 63,742 | 46,603 | 78,133 | 31,984 | 57,664 | ||||||||||||||||||||||||||||||||||||||||||
Merchant bar | 47 | 76 | 34 | 60 | 32 | 66 | 43,584 | 65,578 | 46,243 | 76,145 | 34,346 | 59,656 | ||||||||||||||||||||||||||||||||||||
Wire rod | 66,321 | 129,105 | 77,310 | 155,241 | 85,125 | 158,291 | ||||||||||||||||||||||||||||||||||||||||||
Other products | 1 | 3 | 1 | 1 | 1 | 3 | 1,301 | 2,909 | 1,499 | 3,607 | 946 | 1,514 | ||||||||||||||||||||||||||||||||||||
Total | $ | 387 | 703 | $ | 315 | 593 | $ | 271 | 642 | $ | 424,550 | 712,958 | $ | 386,610 | 702,729 | $ | 315,476 | 592,687 | ||||||||||||||||||||||||||||||
(1) | Revenues stated in | |
dollars. | ||
(2) | Volume in |
8
8
9
9
• | In December 2006, the Company acquired a metals recycling business to provide additional sources of scrap metal for the mega-shredder in Everett, Massachusetts. The acquisition was not material to the Company’s financial position or results of operations. |
10
• | In May 2007, the Company acquired two metals recycling businesses that separately provide scrap metal to the Everett, Massachusetts and Tacoma, Washington facilities. Neither acquisition was material to the Company’s financial position or results of operations. |
• | In September 2005, the Company and the Hugo Neu Corporation (“HNC”) and certain of their subsidiaries closed a transaction to separate and terminate their metals recycling joint venture relationships. As part of the separation and termination agreement, the Company received from HNC various joint venture interests, other businesses and a $37 million cash payment; while HNC received from the Company various other joint venture interests. A dispute exists between the Company and HNC over post-closing adjustments. The Company believes that it has adequately accrued for any disputed amounts. | |
• | In September 2005, the Company acquired GreenLeaf Auto Recyclers, LLC (“GreenLeaf”) and five store properties previously leased by GreenLeaf and assumed certain GreenLeaf liabilities. The purchase price of $45 million was paid in cash. | |
• | In October 2005, the Company acquired substantially all of the assets and assumed certain liabilities of Regional Recycling LLC (“Regional”), a metals recycling business with nine facilities in Georgia and Alabama. The purchase price of $69 million was paid in cash. | |
• | In March 2006, the Company purchased the remaining 40% minority interest in Metals Recycling LLC (“MRL”), its Rhode Island metals recycling subsidiary, and assumed certain liabilities. The purchase price of $25 million was paid in cash. |
1011
• | the Environmental Protection Agency (“EPA”) | |
• | remediation under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) | |
• | the discharge of materials and emissions into the air; | |
• | the remediation of soil and groundwater contamination; | |
• | the management and treatment of wastewater and storm water; | |
• | the treatment, handling and disposal of solid hazardous and Toxic Substances Control Act (“TSCA”) waste; and | |
• | the protection of the Company’s employee health and safety. |
11
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ITEM 1A. | RISK FACTORS |
15
13
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17
• | Inaccurate assessment of undisclosed liabilities; | |
• | Difficulty integrating the acquired businesses’ personnel and operations; | |
• | Potential loss of key employees or customers of the acquired business; and | |
• | Difficulties in realizing anticipated cost savings, efficiencies and synergies. |
15
18
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• | ||
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• | ||
• |
19
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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
17
Location | Acreage | Location | Acreage | |||||||||||||||||||||||
Collection | Collection | Collection and Processing | Collection and Processing | |||||||||||||||||||||||
Location | Acreage | Location | Acreage | Location | Acreage | |||||||||||||||||||||
Bend, OR | 3 | Attalla, AL | 30 | Kapolei, HI | 6 | |||||||||||||||||||||
Grants Pass, OR | 1 | Birmingham, AL | 23 | Everett, MA | 37 | 1 | Anchorage, AK | 18 | ||||||||||||||||||
Millbury, MA | 21 | Fresno, CA | 17 | Madbury, NH | 91 | 21 | Attalla, AL | 30 | ||||||||||||||||||
Manchester, NH | 2 | Oakland, CA | 33 | Eugene, OR | 11 | 2 | Birmingham, AL | 23 | ||||||||||||||||||
Portland, ME | 1 | Sacramento, CA | 13 | Portland, OR | 97 | 1 | Selma, AL | 22 | ||||||||||||||||||
Bainbridge, GA | 2 | Atlanta, GA (3) | 37 | White City, OR | 4 | 2 | Fresno, CA | 17 | ||||||||||||||||||
Rossville, GA | 11 | Cartersville, GA | 19 | Johnston, RI | 22 | |||||||||||||||||||||
Providence, RI | 9 | Gainesville, GA | 8 | Tacoma, WA | 26 | |||||||||||||||||||||
Pasco, WA | 6 | 6 | Oakland, CA | 33 | ||||||||||||||||||||||
Anchorage, AK | <1 | 1 | Sacramento, CA | 13 | ||||||||||||||||||||||
Manchester, NH | 1 | Atlanta, GA(2) | 22 | |||||||||||||||||||||||
Cartersville, GA | 19 | |||||||||||||||||||||||||
Other | Gainesville, GA | 8 | ||||||||||||||||||||||||
Atlanta, GA (inactive) | 15 | Rossville, GA | 11 | |||||||||||||||||||||||
Bainbridge, GA (inactive) | 5 | Kapolei, HI | 6 | |||||||||||||||||||||||
Providence, RI (export facility) | 9 | Everett, MA | 37 | |||||||||||||||||||||||
Chattanooga, TN (inactive) | 6 | Worcester, MA | 9 | |||||||||||||||||||||||
Poplar-Sandquist, NH | 7 | |||||||||||||||||||||||||
Auburn, ME | 18 | |||||||||||||||||||||||||
Concord, NH | 6 | |||||||||||||||||||||||||
Claremont, NH | 14 | |||||||||||||||||||||||||
Madbury, NH | 91 | |||||||||||||||||||||||||
Bend, OR | 3 | |||||||||||||||||||||||||
Eugene, OR | 12 | |||||||||||||||||||||||||
Portland, OR | 97 | |||||||||||||||||||||||||
White City, OR | 4 | |||||||||||||||||||||||||
Johnston, RI | 22 | |||||||||||||||||||||||||
Tacoma, WA | 26 | |||||||||||||||||||||||||
Acreage sub-total | 70 | 568 | ||||||||||||||||||||||||
Total acreage | 638 | |||||||||||||||||||||||||
20
18
Number of | Total | Number of | Total | |||||||||||||
Locations | Acreage | |||||||||||||||
Location | Stores | Acreage | ||||||||||||||
Northern California | 17 | 211 | 17 | 211 | ||||||||||||
Florida | 5 | 93 | 5 | 93 | ||||||||||||
Texas | 7 | 87 | 7 | 87 | ||||||||||||
Massachusetts | 2 | 73 | 2 | 73 | ||||||||||||
Virginia | 3 | 63 | 3 | 63 | ||||||||||||
Canada | 3 | 46 | 3 | 46 | ||||||||||||
Nevada | 3 | 45 | 3 | 45 | ||||||||||||
Missouri | 2 | 38 | 2 | 38 | ||||||||||||
Indiana | 1 | 32 | 1 | 32 | ||||||||||||
Illinois | 2 | 31 | 2 | 31 | ||||||||||||
Ohio | 2 | 25 | 2 | 25 | ||||||||||||
Arizona | 1 | 14 | 1 | 14 | ||||||||||||
Michigan | 1 | 14 | 1 | 14 | ||||||||||||
Georgia | 1 | 13 | 1 | 13 | ||||||||||||
Utah | 1 | 12 | 1 | 12 | ||||||||||||
North Carolina | 1 | 9 | 1 | 9 | ||||||||||||
Total | 52 | 806 | 52 | 806 | ||||||||||||
21
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ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Fiscal 2006 | ||||||||||||||||||||||||||||||||
Dividends | Fiscal 2007 | |||||||||||||||||||||||||||||||
High Price | Low Price | per Share | High Price | Low Price | Dividends Per Share | |||||||||||||||||||||||||||
First Quarter | $ | 35.15 | $ | 28.60 | $ | 0.017 | $ | 42.19 | $ | 30.05 | $ | 0.017 | ||||||||||||||||||||
Second Quarter | $ | 35.49 | $ | 29.43 | $ | 0.017 | $ | 41.93 | $ | 33.26 | $ | 0.017 | ||||||||||||||||||||
Third Quarter | $ | 44.00 | $ | 30.05 | $ | 0.017 | $ | 56.18 | $ | 35.39 | $ | 0.017 | ||||||||||||||||||||
Fourth Quarter | $ | 38.69 | $ | 30.50 | $ | 0.017 | $ | 64.38 | $ | 46.17 | $ | 0.017 |
22
Fiscal 2005 | ||||||||||||||||||||||||||||||||
Dividends | Fiscal 2006 | |||||||||||||||||||||||||||||||
High Price | Low Price | per Share | High Price | Low Price | Dividends Per Share | |||||||||||||||||||||||||||
First Quarter | $ | 38.37 | $ | 26.51 | $ | 0.017 | $ | 35.15 | $ | 28.60 | $ | 0.017 | ||||||||||||||||||||
Second Quarter | $ | 41.33 | $ | 30.06 | $ | 0.017 | $ | 35.49 | $ | 29.43 | $ | 0.017 | ||||||||||||||||||||
Third Quarter | $ | 41.24 | $ | 21.72 | $ | 0.017 | $ | 44.00 | $ | 30.05 | $ | 0.017 | ||||||||||||||||||||
Fourth Quarter | $ | 30.38 | $ | 21.00 | $ | 0.017 | $ | 38.69 | $ | 30.50 | $ | 0.017 |
23
21
Year Ended August 31, | ||||||||||||||||||||
2006(7) | 2005 | 2004 | 2003(1) | 2002 | ||||||||||||||||
(In millions, except per share, per ton and shipment data) | ||||||||||||||||||||
INCOME STATEMENT DATA: | ||||||||||||||||||||
Revenues | $ | 1,855 | $ | 853 | $ | 688 | $ | 497 | $ | 351 | ||||||||||
Operating income | $ | 175 | $ | 231 | $ | 165 | $ | 69 | $ | 10 | ||||||||||
Income before cumulative effect of change in accounting principle, income taxes, minority interests and pre-acquisition interests | $ | 232 | $ | 231 | $ | 164 | $ | 66 | $ | 8 | ||||||||||
Income tax expense | $ | 87 | $ | 82 | $ | 51 | $ | 18 | $ | 1 | ||||||||||
Cumulative effect of change in accounting principle(2) | — | — | — | $ | (1 | ) | — | |||||||||||||
Net income | $ | 143 | $ | 147 | $ | 111 | $ | 43 | $ | 7 | ||||||||||
Basic earnings per share | $ | 4.68 | $ | 4.83 | $ | 3.71 | $ | 1.55 | $ | 0.24 | ||||||||||
Diluted earnings per share | $ | 4.65 | $ | 4.72 | $ | 3.58 | $ | 1.47 | $ | 0.23 | ||||||||||
Dividends per common share | $ | 0.068 | $ | 0.068 | $ | 0.068 | $ | 0.067 | $ | 0.067 | ||||||||||
OTHER DATA: | ||||||||||||||||||||
Shipments (in thousands)(3): | ||||||||||||||||||||
Recycled ferrous metal-processed (tons) | 3,289 | 1,865 | 1,845 | 1,812 | 1,557 | |||||||||||||||
Recycled ferrous metal-traded (tons)(6) | 1,272 | — | — | — | — | |||||||||||||||
Recycled nonferrous metal (pounds) | 301,610 | 125,745 | 117,992 | 113,378 | 112,622 | |||||||||||||||
Finished steel products (tons) | 703 | 593 | 642 | 622 | 569 | |||||||||||||||
Average net selling price(3,4): | ||||||||||||||||||||
Recycled ferrous metal (per ton) | $ | 215 | $ | 230 | $ | 184 | $ | 122 | $ | 94 | ||||||||||
Recycled nonferrous metal (per pound) | $ | 0.87 | $ | 0.56 | $ | 0.48 | $ | 0.42 | $ | 0.36 | ||||||||||
Finished steel products (per ton) | $ | 528 | $ | 512 | $ | 404 | $ | 291 | $ | 276 | ||||||||||
Depreciation and amortization | $ | 31 | $ | 21 | $ | 20 | $ | 19 | $ | 19 | ||||||||||
Cash provided by operations | $ | 105 | $ | 146 | $ | 74 | $ | 41 | $ | 56 | ||||||||||
Number of auto parts stores(5) | 52 | 30 | 26 | 23 | 23 | |||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||
Working capital | $ | 289 | $ | 126 | $ | 73 | $ | 72 | $ | 39 | ||||||||||
Cash and cash equivalents | $ | 25 | $ | 21 | $ | 11 | $ | 2 | $ | 33 | ||||||||||
Total assets | $ | 1,045 | $ | 710 | $ | 606 | $ | 488 | $ | 405 | ||||||||||
Long-term debt, less current | $ | 103 | $ | 8 | $ | 68 | $ | 87 | $ | 8 | ||||||||||
Shareholders’ equity | $ | 734 | $ | 580 | $ | 419 | $ | 303 | $ | 253 |
Total Number | ||||||||||||||||
of Shares | ||||||||||||||||
Purchased as | ||||||||||||||||
Part of | Maximum Number | |||||||||||||||
Publicly | of Shares that may | |||||||||||||||
Total Number | Average | Announced | yet be Purchased | |||||||||||||
of Shares | Price Paid | Plans or | Under the Plans or | |||||||||||||
Period | Purchased | per Share | Programs | Programs | ||||||||||||
June 1, 2007 – June 30, 2007 | - | $ | - | - | 3,159,790 | |||||||||||
July 1, 2007 – July 31, 2007 | 97,777 | $ | 54.94 | 97,777 | 3,062,013 | |||||||||||
August 1, 2007 – August 31, 2007 | 902,223 | $ | 53.62 | 902,223 | 2,159,790 | |||||||||||
1,000,000 | 1,000,000 | |||||||||||||||
22
Year ended August 31, | ||||||||||||||||||||||||
2007 | 2006(6) | 2005 | 2004 | 2003(1) | ||||||||||||||||||||
INCOME STATEMENT DATA: | ||||||||||||||||||||||||
(in thousands, except per share and dividend data) | ||||||||||||||||||||||||
Revenues | $ | 2,572,265 | $ | 1,854,715 | $ | 853,078 | $ | 688,220 | $ | 496,866 | ||||||||||||||
Operating income | $ | 213,563 | $ | 175,064 | $ | 231,071 | $ | 166,880 | $ | 68,785 | ||||||||||||||
Income before income taxes, minority interests and pre-acquisition interests | $ | 208,965 | $ | 231,689 | $ | 230,886 | $ | 164,326 | $ | 66,467 | ||||||||||||||
Income tax expense | $ | 75,333 | $ | 86,871 | $ | 81,522 | $ | 50,669 | $ | 17,946 | ||||||||||||||
Net income | $ | 131,334 | $ | 143,068 | $ | 146,867 | $ | 111,181 | $ | 43,201 | ||||||||||||||
Basic earnings per share | $ | 4.38 | $ | 4.68 | $ | 4.83 | $ | 3.71 | $ | 1.55 | ||||||||||||||
Diluted earnings per share | $ | 4.32 | $ | 4.65 | $ | 4.72 | $ | 3.58 | $ | 1.47 | ||||||||||||||
Dividends per common share | $ | 0.068 | $ | 0.068 | $ | 0.068 | $ | 0.068 | $ | 0.067 | ||||||||||||||
OTHER DATA: | ||||||||||||||||||||||||
Shipments (in thousands)(2): | ||||||||||||||||||||||||
Recycled ferrous metal-processed (tons) | 4,292 | 3,289 | 1,865 | 1,845 | 1,812 | |||||||||||||||||||
Recycled ferrous metal-traded (tons)(5) | 1,212 | 1,272 | - | - | - | |||||||||||||||||||
Recycled nonferrous metal (pounds) | 383,086 | 301,610 | 125,745 | 117,992 | 113,378 | |||||||||||||||||||
Finished steel products (tons) | 713 | 703 | 593 | 642 | 622 | |||||||||||||||||||
Average net selling price(2,3): | ||||||||||||||||||||||||
Recycled ferrous metal (per ton) | $ | 263 | $ | 215 | $ | 230 | $ | 184 | $ | 122 | ||||||||||||||
Recycled nonferrous metal (per pound) | $ | 1.02 | $ | 0.87 | $ | 0.56 | $ | 0.48 | $ | 0.42 | ||||||||||||||
Finished steel products (per ton) | $ | 575 | $ | 528 | $ | 512 | $ | 404 | $ | 291 | ||||||||||||||
Number of auto parts stores(4) | 52 | 52 | 30 | 26 | 23 | |||||||||||||||||||
BALANCE SHEET DATA (in thousands): | ||||||||||||||||||||||||
Working capital | $ | 269,287 | $ | 287,606 | $ | 125,878 | $ | 73,094 | $ | 72,441 | ||||||||||||||
Cash and cash equivalents | $ | 13,410 | $ | 25,356 | $ | 20,645 | $ | 11,307 | $ | 1,687 | ||||||||||||||
Total assets | $ | 1,151,414 | $ | 1,044,724 | $ | 709,458 | $ | 605,973 | $ | 487,894 | ||||||||||||||
Long-term debt, less current portion | $ | 124,079 | $ | 102,829 | $ | 7,724 | $ | 67,801 | $ | 87,045 | ||||||||||||||
Shareholders’ equity | $ | 765,064 | $ | 734,099 | $ | 579,528 | $ | 418,880 | $ | 302,997 |
(1) | The 2003 data includes the |
24
(2) | ||
Tons for recycled ferrous metal are long tons (2,240 pounds) and for finished steel products are short tons | ||
In accordance with generally accepted accounting principles, the Company reports revenues that include shipping costs billed to | ||
During fiscal 2006, the Company acquired GreenLeaf, which added 22 | ||
As a result of the HNC separation and termination agreement, the Company acquired the assets of | ||
(6) | The 2006 data includes the joint ventures acquired as a result of the | |
MRL as though the acquisition had occurred at the beginning of fiscal 2006. Adjustments have been made for minority interests, which represent the ownership interests the Company did not own during the reporting period, and pre-acquisition interest, which represents the share of income attributable to the former joint venture partners in PNE and MRL for the period from September 1, 2005 through September 30, 2005. |
23
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
25
2624
27
• | In December 2006, the Company acquired a metals recycling business to provide additional sources of scrap metals for the mega-shredder in Everett, Massachusetts. | |
• | In May 2007, the Company acquired two metals recycling businesses that separately provide scrap metal to the Everett, Massachusetts and Tacoma, Washington facilities. |
25
• | On September 30, 2005 the Company completed the separation and termination of its metals recycling joint ventures with HNC. | |
• | On September 30, 2005, the Company acquired GreenLeaf and five store properties leased by GreenLeaf and assumed certain GreenLeaf liabilities. GreenLeaf is engaged in the business of auto dismantling and recycling and sells its products primarily to collision and mechanical repair shops. | |
• | On October 31, 2005, the Company purchased substantially all the assets of Regional. The Company now operates nine metals recycling facilities located in Georgia and Alabama, focused on both ferrous and nonferrous metals. | |
• | On March 21, 2006, the Company purchased the minority interest in its MRL subsidiary. The Company assumed control of the MRL operations upon the separation and termination of its joint venture with HNC. MRL operates a metals recycling facility in Rhode Island. |
26
For the year ended August 31, | ||||||||||||||||||||
% Increase/(Decrease) | ||||||||||||||||||||
2007 | 2006 | 2005 | 2007 vs 2006 | 2006 vs 2005 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Metals Recycling Business(1) | $ | 2,089,271 | $ | 1,406,783 | $ | 580,147 | 49% | 142% | ||||||||||||
Auto Parts Business | 266,354 | 218,130 | 107,808 | 22% | 102% | |||||||||||||||
Steel Manufacturing Business | 424,550 | 386,610 | 315,476 | 10% | 23% | |||||||||||||||
Intercompany revenue eliminations | (207,910 | ) | (156,808 | ) | (150,353 | ) | 33% | 4% | ||||||||||||
Total revenues | 2,572,265 | 1,854,715 | 853,078 | 39% | 117% | |||||||||||||||
Cost of Goods Sold(5) | ||||||||||||||||||||
Metals Recycling Business(1) | 1,850,597 | 1,235,151 | 450,652 | 50% | 174% | |||||||||||||||
Auto Parts Business | 181,859 | 141,741 | 64,136 | 28% | 121% | |||||||||||||||
Steel Manufacturing Business | 353,810 | 306,849 | 268,913 | 15% | 14% | |||||||||||||||
Intercompany cost of goods eliminations | (208,153 | ) | (156,751 | ) | (150,167 | ) | 33% | 4% | ||||||||||||
Total Cost of Goods Sold | 2,178,113 | 1,526,990 | 633,534 | 43% | 141% | |||||||||||||||
Selling, General and Administrative Expense: | ||||||||||||||||||||
Metals Recycling Business(1) | 78,516 | 48,144 | 17,792 | 63% | 171% | |||||||||||||||
Auto Parts Business | 55,445 | 48,055 | 15,592 | 15% | 208% | |||||||||||||||
Steel Manufacturing Business | 6,385 | 4,970 | 3,902 | 28% | 27% | |||||||||||||||
Corporate(3) | 45,684 | 55,693 | 20,817 | (18%) | 168% | |||||||||||||||
Total SG&A Expense | 186,030 | 156,862 | 58,103 | 19% | 170% | |||||||||||||||
Operating Income: | ||||||||||||||||||||
Metals Recycling Business(1) | 165,599 | 127,689 | 111,703 | 30% | 14% | |||||||||||||||
Auto Parts Business | 29,050 | 28,334 | 28,080 | 3% | 1% | |||||||||||||||
Steel Manufacturing Business | 64,355 | 74,791 | 42,661 | (14%) | 75% | |||||||||||||||
Joint Ventures(2) | - | - | 69,630 | N/A | N/A | |||||||||||||||
Total segment operating income | 259,004 | 230,814 | 252,074 | 12% | (8%) | |||||||||||||||
Corporate expense | (45,684 | ) | (55,693 | ) | (20,817 | ) | (18%) | 168% | ||||||||||||
Intercompany (profit) loss elimination(4) | 243 | (57 | ) | (186 | ) | (526%) | (69%) | |||||||||||||
Total operating income | $ | 213,563 | $ | 175,064 | $ | 231,071 | 22% | (24%) | ||||||||||||
(1) | The Company elected to consolidate the results of two of the businesses acquired through the HNC separation and termination agreement as though the transaction had occurred at the beginning of the 2006 fiscal year instead of the date of acquisition. The increases in revenues and operating income that resulted from the election were offset in the Statement of Income by pre-acquisition interests, net of tax. See Note 7 - Business Combinations in the notes to the consolidated financial statements in Part II, Item 8 of this report. | |
(2) | As a result of the HNC joint venture separation and termination agreement, the Joint Venture segment was eliminated and the results for the two entities acquired in this transaction, in which the Company had a previous interest, and all remaining Joint Ventures were consolidated into MRB as of the beginning of fiscal 2006. The Company determined that retroactively adjusting prior period results for entities acquired in this transaction is not meaningful given that the Company was a 50% partner and was not involved in managing the day-to-day operations of these entities prior to the separation. | |
(3) | Corporate expense consists primarily of unallocated corporate expenses for services that benefit all three business segments. Because 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. | |
(4) | Recycled ferrous metal sales from MRB to SMB and autobody sales from APB to MRB are made at negotiated rates per ton that are intended to approximate market prices. Consequently, these intercompany revenues produce intercompany operating income, which is not recognized until the finished products are sold to third parties. | |
(5) | Cost of Goods Sold balances disclosed above include amounts for environmental matters separately stated on the Consolidated Statements of Income. See part II, Item 8 of this report. |
27
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For The Year Ended August 31, | ||||||||||||||||||||
% Increase/(Decrease) | ||||||||||||||||||||
2007 | 2006 | 2005 | 2007 vs 2006 | 2006 vs 2005 | ||||||||||||||||
(In thousands, except for prices) | ||||||||||||||||||||
Ferrous Revenues: | ||||||||||||||||||||
Processing | $ | 1,300,787 | $ | 801,224 | $ | 488,206 | 62% | 64% | ||||||||||||
Trading | 381,066 | 330,296 | — | 15% | N/A | |||||||||||||||
Nonferrous revenues | 395,737 | 266,773 | 70,747 | 48% | 277% | |||||||||||||||
Other | 11,681 | 8,490 | 21,194 | 38% | (60% | ) | ||||||||||||||
Total revenues | 2,089,271 | 1,406,783 | 580,147 | 49% | 142% | |||||||||||||||
Cost of goods sold | 1,850,597 | 1,235,151 | 450,652 | 50% | 174% | |||||||||||||||
Selling, general and administrative expense | 78,516 | 48,144 | 17,792 | 63% | 171% | |||||||||||||||
(Income) from joint ventures(2) | (5,441 | ) | (4,201 | ) | — | 30% | N/A | |||||||||||||
Segment operating income | $ | 165,599 | $ | 127,689 | $ | 111,703 | 30% | 14% | ||||||||||||
Average Ferrous Sales Prices ($/LT)(1) | ||||||||||||||||||||
Domestic | $ | 256 | $ | 217 | $ | 217 | 18% | 0% | ||||||||||||
Export | $ | 266 | $ | 214 | $ | 238 | 24% | (10% | ) | |||||||||||
Average for all processing | $ | 263 | $ | 215 | $ | 230 | 22% | (7% | ) | |||||||||||
Trading | $ | 279 | $ | 226 | $ | — | 23% | N/A | ||||||||||||
Ferrous Processing Sales Volume (LT, in thousands) | ||||||||||||||||||||
Steel Manufacturing Business | 705 | 668 | 625 | 6% | 7% | |||||||||||||||
Other Domestic | 722 | 523 | 65 | 38% | 705% | |||||||||||||||
Total Domestic | 1,427 | 1,191 | 690 | 20% | 73% | |||||||||||||||
Export | 2,865 | 2,098 | 1,175 | 37% | 79% | |||||||||||||||
Total processed ferrous | 4,292 | 3,289 | 1,865 | 30% | 76% | |||||||||||||||
Ferrous Trading Sales Volumes (LT, in thousands) | 1,212 | 1,272 | — | (5% | ) | N/A | ||||||||||||||
Total Ferrous Sales Volume (LT, in thousands) | 5,504 | 4,561 | 1,865 | 21% | 145% | |||||||||||||||
Average Nonferrous Sales Price ($/pound) | $ | 1.02 | $ | 0.87 | $ | 0.56 | 17% | 55% | ||||||||||||
Nonferrous Sales Volumes (pounds, in thousands) | 383,086 | 301,610 | 125,745 | 27% | 140% | |||||||||||||||
Outbound freight included in revenues | $ | 219,382 | $ | 139,258 | $ | 59,336 | 58% | 135% |
(1) | Price information is shown after excluding the cost of freight incurred to deliver the product to the customer. | |
(2) | As a result of the HNC joint venture separation and termination agreement, the Joint Venture segment was eliminated and the results for the two entities acquired in this transaction, in which the Company had a previous interest, and all remaining Joint Ventures were consolidated into MRB as of the beginning of fiscal 2006. The Company determined that retroactively adjusting prior period results for entities acquired in this transaction is not meaningful given that the Company was a 50% partner and was not involved in managing the day-to-day operations of these entities prior to the separation. |
30
31
For the Year Ended August 31, | ||||||||||||||||||
% Increase/(Decrease) | ||||||||||||||||||
(in thousands) | 2007 | 2006 | 2005 | 2007 vs 2006 | 2006 vs 2005 | |||||||||||||
Revenues | $ | 266,354 | $ | 218,130 | $ | 107,808 | 22% | 102% | ||||||||||
Cost of goods sold | 181,859 | 141,741 | 64,136 | 28% | 121% | |||||||||||||
Selling, general and administrative expense | 55,445 | 48,055 | 15,592 | 15% | 208% | |||||||||||||
Segment operating income | $ | 29,050 | $ | 28,334 | $ | 28,080 | 3% | 1% | ||||||||||
32
For the Year Ended August 31, | ||||||||||||||||||
% Increase/(Decrease) | ||||||||||||||||||
(in thousands) | 2007 | 2006 | 2005 | 2007 vs 2006 | 2006 vs 2005 | |||||||||||||
Revenues | $ | 424,550 | $ | 386,610 | $ | 315,476 | 10% | 23% | ||||||||||
Cost of goods sold | 353,810 | 306,849 | 268,913 | 15% | 14% | |||||||||||||
Selling, general and administrative expense | 6,385 | 4,970 | 3,902 | 28% | 27% | |||||||||||||
Segment operating income | $ | 64,355 | $ | 74,791 | $ | 42,661 | (14)% | 75% | ||||||||||
Average sales price ($/ton)(1) | $ | 575 | $ | 528 | $ | 512 | 9% | 3% | ||||||||||
Finished steel products sold (tons, in thousands) | 713 | 703 | 595 | 1% | 18% |
(1) | Price information is shown after excluding the cost of freight incurred to deliver the product to the customer. |
33
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36
Payment Due by Period | ||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | Thereafter | Total | ||||||||||||||||||||||
Contractual Obligations | ||||||||||||||||||||||||||||
Long-term debt | $ | 78 | $ | 66 | $ | 30 | $ | 2 | $ | 115,000 | $ | 7,700 | $ | 122,876 | ||||||||||||||
Interest payments on long-term debt | 7,262 | 7,262 | 7,262 | 7,262 | 6,683 | 2,630 | 38,361 | |||||||||||||||||||||
Capital leases, including interest | 334 | 319 | 274 | 255 | 255 | 574 | 2,011 | |||||||||||||||||||||
Pension funding obligations | 145 | 139 | 139 | 117 | 117 | 1,416 | 2,073 | |||||||||||||||||||||
Operating leases | 12,968 | 11,432 | 8,462 | 6,537 | 4,146 | 7,975 | 51,520 | |||||||||||||||||||||
Service obligation | 1,963 | 1,962 | 654 | - | - | - | 4,579 | |||||||||||||||||||||
Purchase obligations: | ||||||||||||||||||||||||||||
Materials purchase commitment | 2,391 | 1,161 | 1,161 | 1,161 | 774 | - | 6,648 | |||||||||||||||||||||
Gas contract(1) | 9,593 | 9,654 | 9,654 | 7,221 | - | - | 36,122 | |||||||||||||||||||||
Electric contract(2) | 1,925 | 1,925 | 1,925 | 1,925 | 175 | - | 7,875 | |||||||||||||||||||||
Total | $ | 36,659 | $ | 33,920 | $ | 29,561 | $ | 24,480 | $ | 127,150 | $ | 20,295 | $ | 272,065 | ||||||||||||||
(1) | SMB has a take-or-pay natural gas contract that currently requires a minimum purchase of 3,435 MMBTU per day at tiered pricing, whether or not the amount is utilized. Effective April 1, 2006 through October 31, 2007, the blended rate was $8.22 per MMBTU. The blended rate decreases to $7.70 effective November 1, 2007 through October 31, 2008. The contract expires on May 31, 2011. | |
(2) | SMB has an electricity contract with MWL that requires a minimum purchase of electricity at a rate subject to variable pricing, whether or not the amount is utilized. The fixed portion of the contract obligates SMB to pay $175,000 per month for eleven months each year until the contract expires in September 2011. |
2837
38
• | Current regulations, both at the time the reserve is established and during the course of theclean-up, which specify standards for acceptable remediation; | |
• | Information about the site, which becomes available as the site is studied and remediated; | |
• | The professional judgment of both senior-level internal staff and external consultants, who take into account similar, recent instances of environmental remediation issues, among other considerations; | |
• | Technologies available that can be used for remediation; and | |
• | The number and financial condition of other potentially responsible parties and the extent of their responsibility for the remediation. |
29
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40
Obligation | 2008 | 2009 | 2010 | 2011 | 2012 | Thereafter | Total | |||||||
Natural Gas | 9,593 | 9,654 | 9,654 | 7,221 | - | - | 36,122 |
41
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31
Revenues | ||||||||||||
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business(1): | ||||||||||||
Ferrous-processing | $ | 802 | $ | 488 | $ | 393 | ||||||
Ferrous-trading | 330 | — | — | |||||||||
Nonferrous | 267 | 71 | 57 | |||||||||
Other | 8 | 21 | 6 | |||||||||
Total Metals Recycling Business | 1,407 | 580 | 456 | |||||||||
Auto Parts Business | 218 | 108 | 82 | |||||||||
Steel Manufacturing Business | 387 | 315 | 271 | |||||||||
Intercompany revenue eliminations(3) | (157 | ) | (150 | ) | (121 | ) | ||||||
Total | $ | 1,855 | $ | 853 | $ | 688 | ||||||
Operating Income | ||||||||||||
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business(1) | $ | 128 | $ | 112 | $ | 74 | ||||||
Auto Parts Business | 28 | 28 | 26 | |||||||||
Steel Manufacturing Business | 75 | 43 | 25 | |||||||||
Joint Ventures(2) | — | 69 | 62 | |||||||||
Segment operating income | 231 | 252 | 187 | |||||||||
Corporate expense(3) | (56 | ) | (21 | ) | (16 | ) | ||||||
Intercompany eliminations(4) | — | — | (6 | ) | ||||||||
Operating income | $ | 175 | $ | 231 | $ | 165 | ||||||
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34
35
36
37
Year Ended August 31, | ||||||||
2005 | 2004 | |||||||
(In millions) | ||||||||
Total revenues from external customers recognized by: | ||||||||
Joint Ventures in the Metals Recycling business: | ||||||||
Processing | $ | 1,276 | $ | 1,038 | ||||
Trading | 911 | 489 | ||||||
Joint Venture supplier of metal | 18 | 13 | ||||||
$ | 2,205 | $ | 1,540 | |||||
Operating income from joint ventures recognized by the Company: | ||||||||
Joint Ventures in the Metals Recycling business | $ | 68 | $ | 62 | ||||
Joint Venture suppliers of metal | 1 | — | ||||||
$ | 69 | $ | 62 | |||||
38
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40
Payments Due by Period | ||||||||||||||||||||
Less Than | 1-3 | 3-5 | More Than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Contractual Obligations | ||||||||||||||||||||
Long-term debt(1) | $ | 102,929 | $ | 100 | $ | 97 | $ | 95,032 | $ | 7,700 | ||||||||||
Interest payments on long- term debt | 27,828 | 5,931 | 11,863 | 7,197 | 2,837 | |||||||||||||||
Operating leases | 57,164 | 13,364 | 22,321 | 13,753 | 7,726 | |||||||||||||||
Service obligation | 6,542 | 1,963 | 3,925 | 654 | — | |||||||||||||||
Purchase obligations: | ||||||||||||||||||||
Materials purchase commitment | 14,721 | 7,367 | 3,152 | 3,152 | 1,050 | |||||||||||||||
Capital expenditures commitment | 9,275 | 9,275 | — | — | — | |||||||||||||||
Gas contract(2) | 28,147 | 10,243 | 17,904 | — | — | |||||||||||||||
Electric contract(3) | 9,600 | 1,920 | 3,840 | 3,840 | — | |||||||||||||||
Environmental liabilities | 41,402 | 3,648 | — | — | 37,754 | |||||||||||||||
Long-term supplemental retirement plan liability | 2,201 | 144 | 275 | 232 | 1,550 | |||||||||||||||
Total | $ | 299,809 | $ | 53,955 | $ | 63,377 | $ | 123,860 | $ | 58,617 | ||||||||||
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44
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | ||||
August 31, 2007, 2006 and 2005 | 48 | |||
August 31, 2007, 2006 and 2005 | 49 | |||
August 31, 2007, 2006 and 2005 | 50 | |||
4543
John D. Carter | Gregory J. Witherspoon | |
President and Chief Executive Officer | Chief Financial Officer | |
October 29, 2007 | ||
4644
47
45
46
August 31, | ||||||||
2007 | 2006 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,410 | $ | 25,356 | ||||
Restricted cash | - | 7,725 | ||||||
Accounts receivable, net of reserves of | ||||||||
$1,821 in 2007 and $1,270 in 2006 | 170,212 | 118,839 | ||||||
Inventories, net | 258,568 | 263,583 | ||||||
Deferred income taxes | 8,685 | 7,285 | ||||||
Prepaid expenses and other | 10,601 | 15,956 | ||||||
Total current assets | 461,476 | 438,744 | ||||||
Property, plant and equipment, net | 383,910 | 312,907 | ||||||
Other assets: | ||||||||
Investment in and advances to joint venture partnerships | 9,824 | 8,859 | ||||||
Goodwill | 277,083 | 266,675 | ||||||
Intangibles | 12,090 | 10,958 | ||||||
Other assets | 7,031 | 6,581 | ||||||
Total assets | $ | 1,151,414 | $ | 1,044,724 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Short-term borrowings and capital lease obligations, current | $ | 20,275 | $ | 100 | ||||
Accounts payable | 89,526 | 66,506 | ||||||
Accrued payroll and related liabilities | 43,145 | 32,420 | ||||||
Investigation reserve | - | 15,225 | ||||||
Current portion of environmental liabilities | 4,036 | 3,648 | ||||||
Accrued income taxes | 4,787 | 4,265 | ||||||
Other accrued liabilities | 30,420 | 28,974 | ||||||
Total current liabilities | 192,189 | 151,138 | ||||||
Deferred income taxes | 19,920 | 9,916 | ||||||
Long-term debt and capital lease obligations, net of current maturities | 124,079 | 102,829 | ||||||
Environmental liabilities, net of current portion | 39,249 | 37,754 | ||||||
Other long-term liabilities | 5,540 | 3,855 | ||||||
Minority interests | 5,373 | 5,133 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock–20,000 shares authorized, none issued | - | - | ||||||
Class A common stock–75,000 shares $1.00 par value | ||||||||
authorized, 21,231 and 22,793 shares issued and outstanding | 21,231 | 22,793 | ||||||
Class B common stock–25,000 shares $1.00 par value | ||||||||
authorized, 7,328 and 7,986 shares issued and outstanding | 7,328 | 7,986 | ||||||
Additional paid-in capital | 41,344 | 137,281 | ||||||
Retained earnings | 693,470 | 564,165 | ||||||
Accumulated other comprehensive income | 1,691 | 1,874 | ||||||
Total shareholders’ equity | 765,064 | 734,099 | ||||||
Total liabilities and shareholders’ equity | $ | 1,151,414 | $ | 1,044,724 | ||||
47
Year Ended August 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Revenues | $ | 2,572,265 | $ | 1,854,715 | $ | 853,078 | ||||||
Operating expenses: | ||||||||||||
Cost of goods sold | 2,179,927 | 1,526,990 | 621,583 | |||||||||
Selling, general and administrative | 186,030 | 156,862 | 58,103 | |||||||||
Environmental matters | (1,814 | ) | - | 11,951 | ||||||||
(Income) from joint ventures | (5,441 | ) | (4,201 | ) | (69,630 | ) | ||||||
Operating income | 213,563 | 175,064 | 231,071 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 1,106 | 1,929 | 668 | |||||||||
Interest expense | (8,213 | ) | (3,498 | ) | (847 | ) | ||||||
Gain on divestiture of joint ventures | - | 56,856 | - | |||||||||
Gain (loss) on sale of assets | - | 1,425 | 7 | |||||||||
Other income (expense) | 2,509 | (87 | ) | (13 | ) | |||||||
Total other income (expense) | (4,598 | ) | 56,625 | (185 | ) | |||||||
Income before income taxes, minority interests | ||||||||||||
and pre-acquisition interests | 208,965 | 231,689 | 230,886 | |||||||||
Income tax expense | (75,333 | ) | (86,871 | ) | (81,522 | ) | ||||||
Income before minority interests | �� | |||||||||||
and pre-acquisition interests | 133,632 | 144,818 | 149,364 | |||||||||
Minority interests, net of tax | (2,298 | ) | (1,934 | ) | (2,497 | ) | ||||||
Pre-acquisition interests, net of tax | - | 184 | - | |||||||||
Net income | $ | 131,334 | $ | 143,068 | $ | 146,867 | ||||||
Net income per share - basic | $ | 4.38 | $ | 4.68 | $ | 4.83 | ||||||
Net income per share - diluted | $ | 4.32 | $ | 4.65 | $ | 4.72 | ||||||
48
August 31, | ||||||||
2006 | 2005 | |||||||
(In thousands, except per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 25,356 | $ | 20,645 | ||||
Restricted cash | 7,725 | — | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,270 and $810 | 121,319 | 51,101 | ||||||
Accounts receivable from related parties | 19 | 226 | ||||||
Inventories | 263,583 | 106,189 | ||||||
Deferred income taxes | 7,285 | 3,247 | ||||||
Prepaid expenses and other | 15,105 | 15,505 | ||||||
Total current assets | 440,392 | 196,913 | ||||||
Property, plant and equipment, net | 312,907 | 166,901 | ||||||
Other assets: | ||||||||
Investment in and advances to joint venture partnerships | 8,859 | 184,151 | ||||||
Goodwill | 266,675 | 151,354 | ||||||
Intangibles | 11,092 | 2,644 | ||||||
Other assets | 4,773 | 7,495 | ||||||
Total assets | $ | 1,044,698 | $ | 709,458 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 100 | $ | 71 | ||||
Accounts payable | 70,608 | 33,192 | ||||||
Accrued payroll and related liabilities | 31,791 | 21,783 | ||||||
Investigation reserve | 15,225 | — | ||||||
Current portion of environmental liabilities | 3,648 | 7,542 | ||||||
Accrued income taxes | 4,265 | 140 | ||||||
Other accrued liabilities | 25,475 | 8,307 | ||||||
Total current liabilities | 151,112 | 71,035 | ||||||
Deferred income taxes | 9,916 | 26,987 | ||||||
Long-term debt, less current portion | 102,829 | 7,724 | ||||||
Environmental liabilities, net of current portion | 37,754 | 15,962 | ||||||
Other long-term liabilities | 3,855 | 3,578 | ||||||
Minority interests | 5,133 | 4,644 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock — 20,000 shares authorized, none issued | ||||||||
Class A common stock — 75,000 shares $1.00 par value authorized, 22,490 and 22,022 shares issued and outstanding | 22,793 | 22,490 | ||||||
Class B common stock — 25,000 shares $1.00 par value authorized, 7,986 and 8,306 shares issued and outstanding | 7,986 | 7,986 | ||||||
Additional paid-in capital | 137,281 | 125,845 | ||||||
Retained earnings | 564,165 | 423,178 | ||||||
Accumulated other comprehensive income: | ||||||||
Foreign currency translation adjustment | 1,874 | 29 | ||||||
Total shareholders’ equity | 734,099 | 579,528 | ||||||
Total liabilities and shareholders’ equity | $ | 1,044,698 | $ | 709,458 | ||||
Accumulated | ||||||||||||||||||||||||||||||||
Class A | Class B | Additional | Other | |||||||||||||||||||||||||||||
Common Stock | Common Stock | Paid-in | Retained | Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income | Total | |||||||||||||||||||||||||
Balance at September 1, 2004 | 22,022 | $ | 22,022 | 8,306 | $ | 8,306 | $ | 110,177 | $ | 278,374 | $ | 1 | $ | 418,880 | ||||||||||||||||||
Net income | 146,867 | 146,867 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 28 | 28 | ||||||||||||||||||||||||||||||
Comprehensive income | 146,895 | |||||||||||||||||||||||||||||||
Class B common stock converted | ||||||||||||||||||||||||||||||||
to Class A common stock | 320 | 320 | (320 | ) | (320 | ) | - | |||||||||||||||||||||||||
Class A common stock issued | 148 | 148 | 1,511 | 1,659 | ||||||||||||||||||||||||||||
Tax benefits from stock options exercised | 14,157 | 14,157 | ||||||||||||||||||||||||||||||
Cash dividends paid - common ($0.068 per share) | (2,063 | ) | (2,063 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2005 | 22,490 | 22,490 | 7,986 | 7,986 | 125,845 | 423,178 | 29 | 579,528 | ||||||||||||||||||||||||
Net income | 143,068 | 143,068 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 1,845 | 1,845 | ||||||||||||||||||||||||||||||
Comprehensive income | 144,913 | |||||||||||||||||||||||||||||||
Class A common stock issued | 303 | 303 | 4,296 | 4,599 | ||||||||||||||||||||||||||||
Share-based compensation expense | 3,060 | 3,060 | ||||||||||||||||||||||||||||||
Tax benefits from stock options exercised | 4,080 | 4,080 | ||||||||||||||||||||||||||||||
Cash dividends paid - common ($0.068 per share) | (2,081 | ) | (2,081 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2006 | 22,793 | 22,793 | 7,986 | 7,986 | 137,281 | 564,165 | 1,874 | 734,099 | ||||||||||||||||||||||||
Net income | 131,334 | 131,334 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 631 | 631 | ||||||||||||||||||||||||||||||
Comprehensive income | 131,965 | |||||||||||||||||||||||||||||||
Effect of adopting SFAS 158 (net of tax) | (814 | ) | (814 | ) | ||||||||||||||||||||||||||||
Share repurchases | (2,500 | ) | (2,500 | ) | (107,650 | ) | (110,150 | ) | ||||||||||||||||||||||||
Stock options exercised | 280 | 280 | 832 | 1,112 | ||||||||||||||||||||||||||||
Class B common stock converted | ||||||||||||||||||||||||||||||||
to Class A common stock | 658 | 658 | (658 | ) | (658 | ) | - | |||||||||||||||||||||||||
Share-based compensation expense | 9,801 | 9,801 | ||||||||||||||||||||||||||||||
Tax benefits from stock options exercised | 1,080 | 1,080 | ||||||||||||||||||||||||||||||
Cash dividends paid - common ($0.068 per share) | (2,029 | ) | (2,029 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2007 | 21,231 | $ | 21,231 | 7,328 | $ | 7,328 | $ | 41,344 | $ | 693,470 | $ | 1,691 | $ | 765,064 | ||||||||||||||||||
49
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands, except per share amounts) | ||||||||||||
Revenues | $ | 1,854,715 | $ | 853,078 | $ | 688,220 | ||||||
Operating expenses: | ||||||||||||
Cost of goods sold | 1,526,990 | 621,583 | 532,291 | |||||||||
Selling, general and administrative | 156,862 | 58,103 | 48,795 | |||||||||
Environmental matters and impairment charges | — | 11,951 | 3,500 | |||||||||
Income from wholly-owned operations | 170,863 | 161,441 | 103,634 | |||||||||
Operating income from joint ventures | 4,201 | 69,630 | 61,571 | |||||||||
Operating income | 175,064 | 231,071 | 165,205 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 1,929 | 668 | — | |||||||||
Interest expense | (3,498 | ) | (847 | ) | (2,048 | ) | ||||||
Gain on divestiture of joint ventures | 56,856 | — | — | |||||||||
Gain (loss) on sale of assets | 1,425 | 7 | — | |||||||||
Other income (expense) | (87 | ) | (13 | ) | 1,169 | |||||||
56,625 | (185 | ) | (879 | ) | ||||||||
Income before income taxes, minority interests and pre-acquisition interests | 231,689 | 230,886 | 164,326 | |||||||||
Income tax expense | (86,871 | ) | (81,522 | ) | (50,669 | ) | ||||||
Income before minority interests and pre-acquisition interests | 144,818 | 149,364 | 113,657 | |||||||||
Minority interests, net of tax | (1,934 | ) | (2,497 | ) | (2,476 | ) | ||||||
Pre-acquisition interests, net of tax | 184 | — | — | |||||||||
Net income | $ | 143,068 | $ | 146,867 | $ | 111,181 | ||||||
Net income per share — basic | $ | 4.68 | $ | 4.83 | $ | 3.71 | ||||||
Net income per share — diluted | $ | 4.65 | $ | 4.72 | $ | 3.58 | ||||||
Year Ended August 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 131,334 | $ | 143,068 | $ | 146,867 | ||||||
Noncash items included in income: | ||||||||||||
Depreciation and amortization | 40,563 | 31,411 | 20,881 | |||||||||
Minority and pre-acquisition interests | 2,298 | 2,101 | 3,857 | |||||||||
Deferred income taxes | 8,134 | (6,611 | ) | 4,239 | ||||||||
Distributed/(undistributed) equity in earnings of joint ventures | (2,945 | ) | 15,635 | 3,203 | ||||||||
Share-based compensation expense | 9,801 | 3,060 | - | |||||||||
Gain on disposition of joint venture assets | - | (56,856 | ) | - | ||||||||
Tax benefit from employee stock option plan | - | - | 14,157 | |||||||||
Excess tax benefit from stock options exercised | (1,080 | ) | (4,080 | ) | - | |||||||
Environmental matters | (1,814 | ) | - | 11,951 | ||||||||
(Gain) loss on disposal of assets | 1,486 | (1,040 | ) | 111 | ||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable | (42,875 | ) | (840 | ) | (7,883 | ) | ||||||
Inventories | 15,369 | (60,969 | ) | (26,022 | ) | |||||||
Prepaid expenses and other | 3,390 | 10,246 | (8,646 | ) | ||||||||
Intangibles and other assets | (1,095 | ) | 624 | (3,895 | ) | |||||||
Accounts payable | 17,432 | 11,616 | 1,498 | |||||||||
Other accrued liabilities | 12,337 | 10,953 | (3,246 | ) | ||||||||
Investigation reserve | (15,225 | ) | 15,225 | - | ||||||||
Environmental liabilities | (358 | ) | (7,553 | ) | (12,746 | ) | ||||||
Other long-term liabilities | 2,563 | (775 | ) | 2,006 | ||||||||
Net cash provided by operating activities | 179,315 | 105,215 | 146,332 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (80,853 | ) | (86,583 | ) | (48,250 | ) | ||||||
Acquisitions, net of cash acquired | (44,634 | ) | (77,237 | ) | (22,331 | ) | ||||||
(Advances to) payments from joint ventures, net | 1,980 | (1,309 | ) | (1,431 | ) | |||||||
Purchase of minority shareholders’ interest | - | (25,300 | ) | (1,259 | ) | |||||||
Proceeds from sale of assets | 282 | 2,984 | 787 | |||||||||
Cash flows from non-hedge derivatives | (1,908 | ) | (2,617 | ) | - | |||||||
Restricted cash | 7,725 | (7,725 | ) | - | ||||||||
Net cash used in investing activities | (117,408 | ) | (197,787 | ) | (72,484 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from line of credit | 469,900 | 217,500 | 132,300 | |||||||||
Repayment of line of credit | (449,900 | ) | (217,500 | ) | (132,300 | ) | ||||||
Borrowings from long-term debt | 846,511 | 455,577 | 133,100 | |||||||||
Repayment of long-term debt | (826,739 | ) | (360,615 | ) | (193,331 | ) | ||||||
Issuance of Class A common stock | 1,112 | 3,565 | 1,659 | |||||||||
Repurchase of Class A common stock | (110,150 | ) | - | - | ||||||||
Excess tax benefit from stock options exercised | 1,080 | 4,080 | - | |||||||||
Distributions to minority interests | (3,939 | ) | (3,680 | ) | (3,875 | ) | ||||||
Dividends declared and paid | (2,029 | ) | (2,081 | ) | (2,063 | ) | ||||||
Net cash provided by (used in) financing activities | (74,154 | ) | 96,846 | (64,510 | ) | |||||||
Effect of exchange rate changes on cash | 301 | 437 | - | |||||||||
Net increase (decrease) in cash and cash equivalents | (11,946 | ) | 4,711 | 9,338 | ||||||||
Cash and cash equivalents at beginning of period | 25,356 | 20,645 | 11,307 | |||||||||
Cash and cash equivalents at end of period | $ | 13,410 | $ | 25,356 | $ | 20,645 | ||||||
50
Accumulated | ||||||||||||||||||||||||||||||||
Class A | Class B | Additional | Other | |||||||||||||||||||||||||||||
Common Stock | Common Stock | Paid-in | Retained | Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income | Total | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Balance at August 31, 2003 | 12,445 | $ | 12,445 | 7,061 | $ | 7,061 | $ | 104,249 | $ | 179,242 | $ | — | $ | 302,997 | ||||||||||||||||||
Net income | 111,181 | 111,181 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 1 | 1 | ||||||||||||||||||||||||||||||
Comprehensive income | 111,182 | |||||||||||||||||||||||||||||||
Class B common stock converted to Class A common stock | 1,743 | 1,743 | (1,743 | ) | (1,743 | ) | — | |||||||||||||||||||||||||
Class A common stock issued | 802 | 802 | 5,928 | 6,730 | ||||||||||||||||||||||||||||
Stock dividend | 7,032 | 7,032 | 2,988 | 2,988 | (10,020 | ) | — | |||||||||||||||||||||||||
Cash dividends paid — common ($0.068 per share) | (2,029 | ) | (2,029 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2004 | 22,022 | 22,022 | 8,306 | 8,306 | 110,177 | 278,374 | 1 | 418,880 | ||||||||||||||||||||||||
Net income | 146,867 | 146,867 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 28 | 28 | ||||||||||||||||||||||||||||||
Comprehensive income | 146,895 | |||||||||||||||||||||||||||||||
Class B common stock converted to Class A common stock | 320 | 320 | (320 | ) | (320 | ) | — | |||||||||||||||||||||||||
Class A common stock issued | 148 | 148 | 1,511 | 1,659 | ||||||||||||||||||||||||||||
Tax benefits from stock options exercised | 14,157 | 14,157 | ||||||||||||||||||||||||||||||
Cash dividends paid — common ($0.068 per share) | (2,063 | ) | (2,063 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2005 | 22,490 | 22,490 | 7,986 | 7,986 | 125,845 | 423,178 | 29 | 579,528 | ||||||||||||||||||||||||
Net income | 143,068 | 143,068 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax) | 1,845 | 1,845 | ||||||||||||||||||||||||||||||
Comprehensive income | 144,913 | |||||||||||||||||||||||||||||||
Class A common stock issued | 303 | 303 | 4,296 | 4,599 | ||||||||||||||||||||||||||||
Stock based compensation expense | 3,060 | 3,060 | ||||||||||||||||||||||||||||||
Tax benefits from stock options exercised | 4,080 | 4,080 | ||||||||||||||||||||||||||||||
Cash dividends paid — common ($0.068 per share) | (2,081 | ) | (2,081 | ) | ||||||||||||||||||||||||||||
Balance at August 31, 2006 | 22,793 | $ | 22,793 | 7,986 | $ | 7,986 | $ | 137,281 | $ | 564,165 | $ | 1,874 | $ | 734,099 | ||||||||||||||||||
51
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 143,068 | $ | 146,867 | $ | 111,181 | ||||||
Noncash items included in income: | ||||||||||||
Depreciation and amortization | 31,411 | 20,881 | 20,403 | |||||||||
Minority interests | 2,101 | 3,857 | 3,557 | |||||||||
Deferred income taxes | (6,611 | ) | 4,239 | (9,068 | ) | |||||||
Distributed/(undistributed) equity in earnings of joint ventures | 15,635 | 3,203 | (60,618 | ) | ||||||||
Stock-based compensation expense | 3,060 | — | — | |||||||||
Gain on disposition of joint venture assets | (56,856 | ) | — | — | ||||||||
Tax benefit from employee stock option plan | — | 14,157 | — | |||||||||
Excess tax benefit from stock options exercised | (4,080 | ) | — | — | ||||||||
Environmental matters and impairment charges | — | 11,951 | 3,500 | |||||||||
(Gain) loss on disposal of assets | (1,040 | ) | 111 | 310 | ||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable | (840 | ) | (7,883 | ) | (4,461 | ) | ||||||
Inventories | (60,969 | ) | (26,022 | ) | (19,024 | ) | ||||||
Prepaid expenses and other current assets | 10,246 | (8,646 | ) | 541 | ||||||||
Other assets | 624 | (3,895 | ) | (838 | ) | |||||||
Accounts payable | 12,472 | 1,311 | 10,344 | |||||||||
Accrued liabilities | 10,097 | (3,059 | ) | 17,426 | ||||||||
Investigation reserve | 15,225 | — | — | |||||||||
Environmental liabilities | (7,553 | ) | (12,746 | ) | (279 | ) | ||||||
Other liabilities | (775 | ) | 2,006 | 1,200 | ||||||||
Net cash provided by operating activities | 105,215 | 146,332 | 74,174 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (86,583 | ) | (48,250 | ) | (22,192 | ) | ||||||
Acquisitions, net of cash acquired | (77,237 | ) | (22,331 | ) | (23,861 | ) | ||||||
Cash paid to joint ventures | (1,309 | ) | (1,431 | ) | (3,009 | ) | ||||||
Purchase of minority shareholders’ interest | (25,300 | ) | (1,259 | ) | — | |||||||
Proceeds from sale of assets | 2,984 | 787 | 1,649 | |||||||||
Cash flows from non-hedge derivatives | (2,617 | ) | — | — | ||||||||
Restricted cash | (7,725 | ) | — | — | ||||||||
Net cash used in investing activities | (197,787 | ) | (72,484 | ) | (47,413 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from line of credit | 217,500 | 132,300 | 95,000 | |||||||||
Repayment of line of credit | (217,500 | ) | (132,300 | ) | (99,000 | ) | ||||||
Borrowings from long-term debt | 455,577 | 133,100 | 125,000 | |||||||||
Repayment of long-term debt | (360,615 | ) | (193,331 | ) | (140,239 | ) | ||||||
Issuance of Class A common stock | 3,565 | 1,659 | 6,730 | |||||||||
Excess tax benefit from stock options exercised | 4,080 | — | — | |||||||||
Distributions to minority interests | (3,680 | ) | (3,875 | ) | (2,603 | ) | ||||||
Dividends declared and paid | (2,081 | ) | (2,063 | ) | (2,029 | ) | ||||||
Net cash provided (used) by financing activities | 96,846 | (64,510 | ) | (17,141 | ) | |||||||
Effect of exchange rate changes on cash | 437 | — | — | |||||||||
Net increase in cash and cash equivalents | 4,711 | 9,338 | 9,620 | |||||||||
Cash and cash equivalents at beginning of period | 20,645 | 11,307 | 1,687 | |||||||||
Cash and cash equivalents at end of period | $ | 25,356 | $ | 20,645 | $ | 11,307 | ||||||
52
Note 1 - | Nature of Operations |
Note 2 - | Summary of Significant Accounting Policies |
53
51
Buildings | 20 to 40 years | |||
Land improvements | 3 to | |||
Leasehold improvements | 3 to 15 years | |||
Machinery and equipment | 3 to |
52
54
53
5554
55
56
57
56
2005 | 2004 | |||||||||||
(In thousands) | ||||||||||||
Reported net income | $ | 146,867 | $ | 111,181 | $ | 146,867 | ||||||
Add: Stock based compensation expense included in reported net income, net of tax | 673 | 351 | ||||||||||
Deduct: Total stock based employee compensation benefit (expense) under fair value based method for all awards, net of tax | (573 | ) | (552 | ) | ||||||||
Add: Share based compensation expense included in reported net income, net of tax | 673 | |||||||||||
Deduct: Total share based employee compensation benefit (expense) under fair value based method for all awards, net of tax | (573 | ) | ||||||||||
Pro forma net income | $ | 146,967 | $ | 110,980 | $ | 146,967 | ||||||
Reported basic net income per share | $ | 4.83 | $ | 3.71 | $4.83 | |||||||
Pro forma basic net income per share | $ | 4.83 | $ | 3.70 | $4.83 | |||||||
Reported diluted net income per share | $ | 4.72 | $ | 3.58 | $4.72 | |||||||
Pro forma diluted net income per share | $ | 4.73 | $ | 3.57 | $4.73 |
57
Note 3 - | Recent Accounting Pronouncements |
58
59
58
Note 4 - | Inventories |
2006 | 2005 | |||||||||||||||
(In thousands) | 2007 | 2006 | ||||||||||||||
Recycled metal | $ | 170,405 | $ | 38,027 | $ | 139,704 | $ | 170,405 | ||||||||
Work in process | 15,093 | 17,124 | 20,306 | 15,093 | ||||||||||||
Finished goods | 62,151 | 36,304 | 80,888 | 62,151 | ||||||||||||
Supplies | 15,934 | 14,734 | 17,670 | 15,934 | ||||||||||||
$ | 263,583 | $ | 106,189 | $ | 258,568 | $ | 263,583 | |||||||||
60
Note 5 – | Property, Plant and Equipment, Net |
2006 | 2005 | |||||||||||||||
(In thousands) | 2007 | 2006 | ||||||||||||||
Machinery and equipment | $ | 329,348 | $ | 259,759 | $424,997 | $329,348 | ||||||||||
Land and improvements | 110,427 | 70,555 | 152,873 | 110,427 | ||||||||||||
Buildings and leasehold improvements | 59,497 | 32,697 | 74,526 | 59,497 | ||||||||||||
Construction in progress | 65,477 | 23,950 | 12,127 | 65,477 | ||||||||||||
564,749 | 386,961 | 664,523 | 564,749 | |||||||||||||
Less: accumulated depreciation | (251,842 | ) | (220,060 | ) | (280,613 | ) | (251,842 | ) | ||||||||
Net property, plant and equipment | $ | 312,907 | $ | 166,901 | ||||||||||||
Property, plant and equipment, net | $383,910 | $312,907 | ||||||||||||||
Note 6 – | Investment in and Advances to Joint Ventures |
59
August 31, | ||||||||||||||||
2006 | 2005 | August 31, | ||||||||||||||
(In thousands) | 2007 | 2006 | ||||||||||||||
Current assets | $ | 14,430 | $ | 230,471 | $ | 22,037 | $ | 14,430 | ||||||||
Non-current assets | 8,323 | 166,959 | 10,486 | 8,323 | ||||||||||||
$ | 22,753 | $ | 397,430 | $ | 32,523 | $ | 22,753 | |||||||||
Current liabilities | $ | 8,315 | $ | 84,933 | $ | 11,989 | $ | 8,315 | ||||||||
Non-current liabilities | 387 | 8,205 | 677 | 387 | ||||||||||||
Partners’ equity | 14,051 | 304,292 | 19,857 | 14,051 | ||||||||||||
$ | 22,753 | $ | 397,430 | $ | 32,523 | $ | 22,753 | |||||||||
Year Ended August 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | Year Ended August 31, | |||||||||||||||||||||
(In thousands) | 2007 | 2006 | 2005 | |||||||||||||||||||||
Revenues | $ | 46,016 | $ | 2,205,460 | $ | 1,540,435 | $ | 68,831 | $ | 46,016 | $ | 2,205,460 | ||||||||||||
Operating income | $ | 5,903 | $ | 143,191 | $ | 135,153 | $ | 10,484 | $ | 5,903 | $ | 143,191 | ||||||||||||
Net income before taxes | $ | 6,365 | $ | 144,829 | $ | 131,855 | ||||||||||||||||||
Net income | $ | 11,020 | $ | 6,365 | $ | 144,829 |
Note 7 - | Business Combinations |
• | The Company will benefit from the assets and capabilities of these acquisitions, including additional resources, skills and industry expertise; | |
• | Strengthen regional product offering; and | |
• | Anticipated cost savings, efficiencies and synergies. |
• | In December 2006, the Company acquired a metals recycling business to provide additional sources of scrap metals for the mega-shredder in Everett, Massachusetts. | |
• | In May 2007, the Company acquired two metals recycling businesses that separately provide scrap metal to the Everett, Massachusetts and Tacoma, Washington facilities. |
6160
• | Prolerized New England Company (“PNE”), which comprised the joint ventures’ various interests in the Northeast processing and recycling operations that primarily operate in Massachusetts, New Hampshire, Rhode Island and Maine; | |
• | The assets and related liabilities of Hugo Neu Schnitzer Global Trade related to a scrap metal business in parts of Russia and the Baltic region, including Poland, Denmark, Finland, Norway and Sweden. The Company entered into a non-compete agreement | |
• | THS Recycling LLC, dba Hawaii Metals Recycling Company (“HMR”), a Hawaii | |
• | A payment |
• | The joint venture operations in New York, New Jersey and California, including the scrap metal processing facilities, marine terminals and related ancillary satellite sites, the interim New York City recycling contract, and other miscellaneous assets; and | |
• | The assets and related liabilities of Hugo Neu Schnitzer Global Trade that are not related to the Russian and Baltic region. |
62
Cash received from HNC | $ | 37 | ||
Inventory | 36 | |||
Property, plant and equipment | 27 | |||
Goodwill | 56 | |||
Identifiable intangible assets | 3 | |||
Other assets | 22 | |||
Liabilities | (16 | ) | ||
Total purchase price | $ | 165 | ||
Inventory | $ | 20 | ||
Property, plant and equipment | 19 | |||
Goodwill | 5 | |||
Identifiable intangible assets | 4 | |||
Other assets | 21 | |||
Current liabilities | (11 | ) | ||
Environmental liabilities | (13 | ) | ||
Total purchase price | $ | 45 | ||
6361
Accounts Receivable | $ | 27 | ||
Inventory | 5 | |||
Property, plant and equipment | 18 | |||
Goodwill | 28 | |||
Identifiable intangible assets | 1 | |||
Other assets | 5 | |||
Current liabilities | (7 | ) | ||
Environmental liabilities | (8 | ) | ||
Total purchase price | $ | 69 | ||
64
HNC | GreenLeaf | Regional | MRL | Total | ||||||||||||||||||||
Cash received | $ | 37 | $ | 2 | $ | 1 | $ | - | $ | 40 | ||||||||||||||
Receivables | $ | 5 | 20 | 5 | 27 | 5 | 57 | |||||||||||||||||
Inventory | 3 | 36 | 20 | 5 | 3 | 64 | ||||||||||||||||||
Property, plant and equipment | 9 | 27 | 19 | 18 | 9 | 73 | ||||||||||||||||||
Other assets | 1 | 2 | 14 | 4 | 1 | 21 | ||||||||||||||||||
Identifiable intangible assets | 3 | 3 | 4 | 1 | 3 | 11 | ||||||||||||||||||
Goodwill | 17 | 56 | 5 | 28 | 17 | 106 | ||||||||||||||||||
Liabilities | (13 | ) | ||||||||||||||||||||||
Other liabilities | (16 | ) | (11 | ) | (7 | ) | (13 | ) | (47 | ) | ||||||||||||||
Environmental liabilities | - | (13 | ) | (8 | ) | - | (21 | ) | ||||||||||||||||
Total purchase price | $ | 25 | $ | 165 | $ | 45 | $ | 69 | $ | 25 | $ | 304 | ||||||||||||
62
August 31, 2006 | ||||||||||||||||||||
Life in | Fair Value | Accumulated | Intangibles, | |||||||||||||||||
Years | Acquired | Amortization | Net | Life in | Fair Value | |||||||||||||||
(In thousands) | Years | Acquired | ||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||
HNC Divestiture: | ||||||||||||||||||||
Schnitzer Global Exchange covenant not to compete | 5 | $ | 2,320 | $ | (425 | ) | $ | 1,895 | ||||||||||||
Schnitzer Global Exchange | ||||||||||||||||||||
Covenants not to compete | 5 | $ | 2,320 | |||||||||||||||||
Purchased backlog | - | 1,000 | ||||||||||||||||||
GreenLeaf: | ||||||||||||||||||||
Leasehold interests | 0.25 - 24 | 1,518 | (84 | ) | 1,434 | 0.25 – 24 | 1,518 | |||||||||||||
Tradename | 20 | 972 | (45 | ) | 927 | 20 | 972 | |||||||||||||
Covenants not to compete | 5 | 563 | (103 | ) | 460 | 5 | 563 | |||||||||||||
Supply contracts | 5 | 906 | (166 | ) | 740 | 5 | 906 | |||||||||||||
Regional: | ||||||||||||||||||||
Covenants not to compete | 5 | 637 | (106 | ) | 531 | 5 | 637 | |||||||||||||
MRL: | ||||||||||||||||||||
Covenants not to compete | 5 | 3,153 | (263 | ) | 2,890 | 5 | 3,153 | |||||||||||||
$ | 10,069 | $ | (1,192 | ) | $ | 8,877 | $ | 11,069 | ||||||||||||
65
For the Years Ended August 31, | ||||||||
2006 | 2005 | |||||||
(Unaudited) | ||||||||
Revenues | $ | 1,902,265 | $ | 1,820,858 | ||||
Net income | 150,285 | (1) | 140,076 | |||||
Net income per share: | ||||||||
Basic | $ | 4.91 | $ | 4.60 | ||||
Diluted | $ | 4.88 | $ | 4.50 |
For the Years Ended August 31, | ||||||||
2006 | 2005 | |||||||
(unaudited) | ||||||||
Revenues | $ | 1,902,265 | $ | 1,820,858 | ||||
Net income | 150,285 | (1) | 140,076 | |||||
Net income per share: | ||||||||
Basic | $4.91 | $4.60 | ||||||
Diluted | $4.88 | $4.50 |
(1) | A tax |
6663
Note 8 – | Goodwill and Other Intangible Assets, Net |
2006 | 2005 | 2007 | 2006 | |||||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | Life | Carrying | Accumulated | Carrying | Accumulated | ||||||||||||||||||||||||||||
Life in Years | Amount | Amortization | Amount | Amortization | In Years | Amount | Amortization | Amount | Amortization | |||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||
Goodwill | Indefinite | $ | 266,675 | $ | — | $ | 151,354 | $ | — | Indefinite | $ | 277,083 | $ | - | $ | 266,675 | $ | - | ||||||||||||||||||
Identifiable intangibles: | ||||||||||||||||||||||||||||||||||||
Tradename — Pick and Pull | Indefinite | 750 | — | 750 | — | |||||||||||||||||||||||||||||||
Tradename — GreenLeaf | 20 | 972 | (45 | ) | — | — | ||||||||||||||||||||||||||||||
Tradename | Indefinite | 1,722 | - | 1,722 | - | |||||||||||||||||||||||||||||||
Tradename | 5 | 398 | (60 | ) | - | - | ||||||||||||||||||||||||||||||
Covenants not to compete | 5 - 6 | 9,373 | (2,466 | ) | 2,700 | (1,163 | ) | 3 – 6 | 11,239 | (4,426 | ) | 9,373 | (2,511 | ) | ||||||||||||||||||||||
Leasehold interests | 0.25 - 24 | 1,518 | (84 | ) | — | — | 4 – 27 | 1,550 | (264 | ) | 1,518 | (84 | ) | |||||||||||||||||||||||
Lease termination fee | 14.8 | 200 | (150 | ) | 200 | (136 | ) | 15 | 200 | (169 | ) | 200 | (150 | ) | ||||||||||||||||||||||
Supply contracts | 5 | 906 | (166 | ) | — | — | Indefinite | 361 | - | - | - | |||||||||||||||||||||||||
Supply contracts | 5 | 1,877 | (488 | ) | 906 | (166 | ) | |||||||||||||||||||||||||||||
Land options | Indefinite | 150 | — | 150 | — | Indefinite | 150 | - | 150 | - | ||||||||||||||||||||||||||
Bond fees | 24 | 221 | (87 | ) | 221 | (78 | ) | |||||||||||||||||||||||||||||
$ | 280,765 | $ | (2,998 | ) | $ | 155,375 | $ | (1,377 | ) | $ | 294,580 | $ | (5,407 | ) | $ | 280,544 | $ | (2,911 | ) | |||||||||||||||||
Metals | MRB | APB | Total | |||||||||||||||||||||
Recycling | Auto Parts | |||||||||||||||||||||||
Business | Business | Total | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance as of August 31, 2004 | $ | 34,771 | $ | 96,407 | $ | 131,178 | ||||||||||||||||||
Pick and Pull acquisition | — | 20,176 | 20,176 | |||||||||||||||||||||
Balance as of August 31, 2005 | 34,771 | 116,583 | 151,354 | |||||||||||||||||||||
Balance as of September 1, 2005 | $ | 34,771 | $ | 116,583 | $ | 151,354 | ||||||||||||||||||
HNC separation and termination agreement | 63,149 | — | 63,149 | 63,149 | - | 63,149 | ||||||||||||||||||
Acquisition of minority interest in MRL | 17,015 | — | 17,015 | 17,015 | - | 17,015 | ||||||||||||||||||
GreenLeaf acquisition | — | 5,300 | 5,300 | - | 5,300 | 5,300 | ||||||||||||||||||
Regional acquisition | 28,171 | — | 28,171 | 28,171 | - | 28,171 | ||||||||||||||||||
Auto Parts Business goodwill adjustments | — | 1,686 | 1,686 | |||||||||||||||||||||
Goodwill adjustments | - | 1,686 | 1,686 | |||||||||||||||||||||
Balance as of August 31, 2006 | $ | 143,106 | $ | 123,569 | $ | 266,675 | 143,106 | 123,569 | 266,675 | |||||||||||||||
Fiscal 2007 acquisitions | 8,432 | - | 8,432 | |||||||||||||||||||||
Goodwill adjustments | 606 | 1,370 | 1,976 | |||||||||||||||||||||
Balance as of August 31, 2007 | $ | 152,144 | $ | 124,939 | $ | 277,083 | ||||||||||||||||||
6764
2007 | $ | 2,081 | ||||||
2008 | 2,077 | $ | 3,005 | |||||
2009 | 1,814 | 2,506 | ||||||
2010 | 1,621 | 2,219 | ||||||
2011 | 548 | 1,133 | ||||||
2012 | 342 | |||||||
Thereafter | 1,079 | 652 | ||||||
$ | 9,220 | $ | 9,857 | |||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Bank unsecured revolving credit facility (5.96% as of August 31, 2006) | $ | 95,000 | $ | — | ||||
Tax-exempt economic development revenue bonds due January 2021, interest payable monthly at a variable rate (3.56% at August 31, 2006), secured by a letter of credit | 7,700 | 7,700 | ||||||
Other | 229 | 95 | ||||||
Total long-term debt | 102,929 | 7,795 | ||||||
Less: Portion due within one year | (100 | ) | (71 | ) | ||||
Long-term debt less current portion | $ | 102,829 | $ | 7,724 | ||||
2007 | 2006 | |||||||
Bank unsecured revolving credit facility (6.04% as of August 31, 2007) | $ | 115,000 | $ | 95,000 | ||||
Tax-exempt economic development revenue bonds due January 2021, interest payable monthly at a variable rate (4.10% at August 31, 2007), secured by a letter of credit | 7,700 | 7,700 | ||||||
Capital lease obligations (6.96% to 9.34%, due through November 2014) | 1,478 | - | ||||||
Other | 176 | 229 | ||||||
Total long-term debt | 124,354 | 102,929 | ||||||
Less: current maturities | (275 | ) | (100 | ) | ||||
Long-term and capital lease obligations, net current maturities | $ | 124,079 | $ | 102,829 | ||||
65
68
Year | Amount | |||||||||||||||
Years ending | Long-term | Capital Lease | ||||||||||||||
August 31: | Debt | Obligation | Total | |||||||||||||
(In thousands) | ||||||||||||||||
2007 | $ | 100 | ||||||||||||||
2008 | 49 | $ | 78 | $ | 334 | $ | 412 | |||||||||
2009 | 48 | 66 | 319 | 385 | ||||||||||||
2010 | 32 | 30 | 274 | 304 | ||||||||||||
2011 | 95,000 | 2 | 255 | 257 | ||||||||||||
2012 | 115,000 | 255 | 115,255 | |||||||||||||
Thereafter | 7,700 | 7,700 | 574 | 8,274 | ||||||||||||
$ | 102,929 | $ | 122,876 | $ | 2,011 | $ | 124,887 | |||||||||
Amounts representing interest | - | (533 | ) | (533 | ) | |||||||||||
$ | 122,876 | $ | 1,478 | $ | 124,354 | |||||||||||
Note 11 – | Commitments and Contingencies |
66
Operating | Service | Purchase | ||||||||||||||||||||||||||||||
Leases | Obligations | Commitments | Total | |||||||||||||||||||||||||||||
(In thousands) | Operating | Service | Purchase | |||||||||||||||||||||||||||||
Leases | Obligations | Commitments | Total | |||||||||||||||||||||||||||||
Fiscal Year | ||||||||||||||||||||||||||||||||
2007 | $ | 12,404 | $ | 1,963 | $ | 28,805 | $ | 43,172 | ||||||||||||||||||||||||
2008 | 11,156 | 1,962 | 13,739 | 26,857 | $ | 11,995 | $ | 1,963 | $ | 13,909 | $ | 27,867 | ||||||||||||||||||||
2009 | 9,206 | 1,963 | 11,157 | 22,326 | 10,446 | 1,962 | 12,740 | 25,148 | ||||||||||||||||||||||||
2010 | 6,901 | 654 | 3,496 | 11,051 | 7,463 | 654 | 12,740 | 20,857 | ||||||||||||||||||||||||
2011 | 5,135 | — | 3,496 | 8,631 | 5,820 | - | 10,307 | 16,127 | ||||||||||||||||||||||||
2012 | 3,564 | - | 949 | 4,513 | ||||||||||||||||||||||||||||
Thereafter | 5,418 | — | 1,050 | 6,468 | 6,250 | - | - | 6,250 | ||||||||||||||||||||||||
Total | $ | 50,220 | $ | 6,542 | $ | 61,743 | $ | 118,505 | $ | 45,538 | $ | 4,579 | $ | 50,645 | $ | 100,762 | ||||||||||||||||
69
Beginning | Reserves | Reserves | Ending | |||||||||||||||||||||||||
Balance | Established, | Balance | Established, | Balance | ||||||||||||||||||||||||
Reporting Segment | 9/1/2005 | Net | Payments | 8/31/2006 | Net(1) | Payments | 8/31/2007 | |||||||||||||||||||||
Metals Recycling Business | $ | 15,383 | $ | 15,345 | $ | (7,603 | ) | $ | 23,125 | $ | 2,241 | $ | (358 | ) | $ | 25,008 | ||||||||||||
Auto Parts Business | 5,500 | 12,777 | - | 18,277 | - | - | 18,277 | |||||||||||||||||||||
Total | $ | 20,883 | $ | 28,122 | $ | (7,603 | ) | $ | 41,402 | $ | 2,241 | $ | (358 | ) | $ | 43,285 | ||||||||||||
During fiscal 2007, the | ||
67
70
71
68
72
69
73
7470
Prior to the | SFAS 158 | After the | ||||||||||
Adoption of | Adoption | Adoption of | ||||||||||
SFAS 158 | Adjustments | SFAS 158 | ||||||||||
debit/(credit) | ||||||||||||
Other assets (net pension asset, long-term) | $ | 3,028 | $ | (1,668 | ) | $ | 1,360 | |||||
Other accrued liabilities (current) | $ | (145 | ) | $ | - | $ | (145 | ) | ||||
Deferred income taxes, net (long-term) | - | 500 | 500 | |||||||||
Other long-term liabilities | (2,282 | ) | 354 | (1,928 | ) | |||||||
Accumulated other comprehensive income - pension (net of tax) | - | 814 | 814 |
2006 | 2005 | Defined Benefit Plan | SERBP | |||||||||||||||||||||
(In thousands) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||
Change in benefit obligation: | ||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 13,141 | $ | 11,339 | $ | 13,752 | $ | 13,141 | $ | 2,026 | $ | 1,988 | ||||||||||||
Service cost | 1,193 | 1,120 | - | 1,193 | 40 | - | ||||||||||||||||||
Interest cost | 809 | 685 | 768 | 809 | 114 | 109 | ||||||||||||||||||
Actuarial loss | 1,543 | 590 | 57 | 1,543 | 44 | 118 | ||||||||||||||||||
Transfers/acquisitions | (1,576 | ) | 163 | - | (1,576 | ) | - | - | ||||||||||||||||
Benefits paid | (1,358 | ) | (756 | ) | (1,085 | ) | (1,358 | ) | (151 | ) | (189 | ) | ||||||||||||
Benefit obligation at end of year | $ | 13,752 | $ | 13,141 | $ | 13,492 | $ | 13,752 | $ | 2,073 | $ | 2,026 | ||||||||||||
Change in plan assets: | ||||||||||||||||||||||||
Change in fair value of plan assets: | ||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 12,931 | $ | 10,000 | $ | 13,938 | $ | 12,931 | - | - | ||||||||||||||
Actual return on plan assets | 1,335 | 1,510 | 1,999 | 1,335 | - | - | ||||||||||||||||||
Transfers/acquisitions | 169 | 163 | - | 169 | - | - | ||||||||||||||||||
Employer contribution | 861 | 2,014 | - | 861 | 151 | 189 | ||||||||||||||||||
Benefits paid | (1,358 | ) | (756 | ) | (1,085 | ) | (1,358 | ) | (151 | ) | (189 | ) | ||||||||||||
Fair value of plan assets at end of year | $ | 13,938 | $ | 12,931 | $ | 14,852 | $ | 13,938 | $ | - | $ | - | ||||||||||||
Funded status: | ||||||||||||||||||||||||
Plan assets, in excess of (less than) benefit obligation | $ | 186 | $ | (210 | ) | |||||||||||||||||||
Unrecognized actuarial loss | 2,838 | 3,618 | ||||||||||||||||||||||
Unrecognized prior service cost | — | 36 | ||||||||||||||||||||||
Plan assets, in excess of benefit obligation | $ | 1,360 | $ | 186 | $ | (2,073 | ) | $ | (2,026 | ) | ||||||||||||||
Unrecognized actuarial loss (gain) | - | 2,838 | - | (418 | ) | |||||||||||||||||||
Net amount recognized | $ | 3,024 | $ | 3,444 | $ | 1,360 | $ | 3,024 | $ | (2,073 | ) | $ | (2,444 | ) | ||||||||||
71
Defined Benefit Plan | SERBP | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Other assets (net pension asset, long-term) | $ | 1,360 | $ | 3,024 | $ | - | $ | - | ||||||||
Restricted Trust Fund | - | - | 2,473 | 2,318 | ||||||||||||
Other accrued liabilities (current) | - | - | (145 | ) | (145 | ) | ||||||||||
Other long-term liabilities | - | - | (1,928 | ) | (2,299 | ) | ||||||||||
Amounts recognized in Accumulated Other Comprehensive Income | ||||||||||||||||
Net actuarial loss (gain) | $ | 1,668 | $ | - | $ | (354 | ) | $ | - | |||||||
Prior service cost (benefit) | - | - | - | - |
Defined Benefit Plan | $ | 87 | ||
SERBP | $ | (20 | ) |
2006 | 2005 | 2004 | Defined Benefit Plan | SERBP | ||||||||||||||||||||||||||||||||
(In thousands) | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||
Service cost | $ | 1,193 | $ | 1,120 | $ | 936 | $ | - | $ | 1,193 | $ | 1,120 | $ | 40 | $ | - | $ | 74 | ||||||||||||||||||
Interest cost | 809 | 685 | 607 | 768 | 809 | 685 | 114 | 109 | 121 | |||||||||||||||||||||||||||
Expected return on plan assets | (1,006 | ) | (840 | ) | (692 | ) | (924 | ) | (1,005 | ) | (840 | ) | - | - | - | |||||||||||||||||||||
Amortization of past service cost | 4 | 4 | 5 | - | 4 | 4 | - | - | 84 | |||||||||||||||||||||||||||
Recognized actuarial loss | 249 | 195 | 172 | |||||||||||||||||||||||||||||||||
Recognized actuarial loss (gain) | 152 | 248 | 195 | (20 | ) | (29 | ) | (177 | ) | |||||||||||||||||||||||||||
Net periodic pension benefit cost | $ | 1,249 | $ | 1,164 | $ | 1,028 | ||||||||||||||||||||||||||||||
Net periodic pension benefit cost (income) | $ | (4 | ) | $ | 1,249 | $ | 1,164 | $ | 134 | $ | 80 | $ | 102 | |||||||||||||||||||||||
Defined Benefit Plan | SERBP | |||||||||||||||||||||||
2006 | 2005 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
Discount rate | 5.90 | % | 5.75% | 6.00 | % | 5.90 | % | 6.00 | % | 5.90 | % | |||||||||||||
Rate of compensation increase | N/A | 3.00% | ||||||||||||||||||||||
Interest to convert Defined Contribution accounts | N/A | N/A | 5.50 | % | 5.50 | % |
75
2006 | 2005 | 2004 | 2007 | 2006 | 2005 | |||||||||||||||||||
Discount rate | 5.75% | 5.83% | 6.08% | 5.90 | % | 5.75 | % | 5.83 | % | |||||||||||||||
Expected long-term return on plan assets | 8.00% | 8.00% | 8.00% | 7.00 | % | 8.00 | % | 8.00 | % | |||||||||||||||
Rate of compensation increase | 3.00% | 3.00% | 3.25% | N/A | 3.00 | % | 3.00 | % |
72
• | The expected long-term rate of return on plan assets is based on | |
• | The assumed discount rate is used to discount future benefit obligations back to today’s dollars. The | |
• |
Actual | Actual | |||||||||||||||||||||||
Target | 2006 | 2005 | Target | Actual 2007 | Actual 2006 | |||||||||||||||||||
Equity | 70-90% | 72 | % | 61 | % | 70-90 | % | 75% | 72% | |||||||||||||||
Real Estate | 0-10% | 8 | 0 | 0-10 | % | 7% | 8% | |||||||||||||||||
Fixed Income | 0-25% | 20 | 39 | 0-25 | % | 18% | 20% | |||||||||||||||||
Total | 100 | % | 100 | % | 100% | 100% | ||||||||||||||||||
76
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Accumulated benefit obligation | $ | 13,752 | $ | 11,400 | $ | 9,908 | ||||||
Defined Benefit Plan | SERBP | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Accumulated benefit obligation | $ | 13,492 | $ | 13,752 | $ | 1,992 | $ | 2,026 | ||||||||
73
Benefits | Defined | |||||||||||
Benefit | ||||||||||||
2007 | $ | 1,472 | ||||||||||
Pension Plan | SERBP | |||||||||||
2008 | 960 | $ | 1,813 | $ | 145 | |||||||
2009 | 1,604 | 1,621 | 139 | |||||||||
2010 | 824 | 591 | 139 | |||||||||
2011 | 2,063 | 756 | 117 | |||||||||
2012-2016 | 5,343 | |||||||||||
2012 | 1,042 | 117 | ||||||||||
2013-2017 | 5,469 | 1,416 | ||||||||||
Total | $ | 12,266 | $ | 11,292 | $ | 2,073 | ||||||
7774
2006 | 2005 | |||||||
(In thousands) | ||||||||
Restricted trust fund | $ | 2,318 | $ | 2,302 | ||||
Deferred compensation expense | (418 | ) | (564 | ) | ||||
Long-term pension liability | 2,026 | 1,988 | ||||||
Pension expense | 80 | 102 |
78
2006 | 2005 | 2004 | ||||||||||
Risk-free interest rate — stock options | 4.83 | % | 3.90 | % | 3.79 | % | ||||||
Dividend yields | 1.00 | % | 1.00 | % | 1.00 | % | ||||||
Weighted-average expected life of stock options | 6.63 years | 6.50 years | 7.00 years | |||||||||
Volatility — stock options | 46 | % | 48 | % | 43 | % | ||||||
Weighted-average fair value of options granted during the periods | $ | 16.43 | $ | 12.37 | $ | 12.66 | ||||||
2007(1) | 2006 | 2005 | ||||
Risk-free interest rate – stock options | N/A | 4.83% | 3.90% | |||
Dividend yields | N/A | 1.00% | 1.00% | |||
Weighted-average expected life of stock options (in years) | N/A | 6.6 | 6.5 | |||
Price Volatility – stock options | N/A | 46% | 48% | |||
Weighted-average fair value of options granted during the | N/A | $16.43 | $12.37 |
(1) | No options were granted in fiscal 2007. |
75
Weighted- | |||||||||||||||||||||||||||||||
Weighted- | Average | Aggregate | Weighted | Weighted | Aggregate | ||||||||||||||||||||||||||
Average | Remaining | Intrinsic | Average | Average | Intrinsic | ||||||||||||||||||||||||||
Options | Exercise Price | Contractual Term | Value | Options | Exercise | Contractual | Value | ||||||||||||||||||||||||
(In thousands) | (In years) | (In thousands) | (in 000’s) | Price | Term (in years) | (in 000’s) | |||||||||||||||||||||||||
Outstanding at August 31, 2005 | 1,017 | $ | 12.58 | 1,017 | $ | 12.58 | |||||||||||||||||||||||||
Options granted | 496 | 34.44 | 496 | 34.44 | |||||||||||||||||||||||||||
Options exercised | (432 | ) | 8.26 | (432 | ) | 8.26 | |||||||||||||||||||||||||
Options forfeited/canceled | (133 | ) | 12.02 | (133 | ) | 12.02 | |||||||||||||||||||||||||
Outstanding at August 31, 2006 | 948 | $ | 26.06 | 8.4 | $ | 6,734 | 948 | $ | 26.06 | 8.4 | $ | 6,734 | |||||||||||||||||||
Exercisable at August 31, 2006 | 294 | $ | 17.87 | 7.0 | $ | 4,158 | 294 | $ | 17.87 | 7.0 | $ | 4,158 | |||||||||||||||||||
Outstanding at August 31, 2006 | 948 | $ | 26.06 | ||||||||||||||||||||||||||||
Options exercised | (120 | ) | 12.62 | ||||||||||||||||||||||||||||
Options forfeited/canceled | (293 | ) | 33.81 | ||||||||||||||||||||||||||||
Outstanding at August 31, 2007 | 535 | $ | 24.84 | 7.3 | $ | 17,958 | |||||||||||||||||||||||||
Exercisable at August 31, 2007 | 286 | $ | 22.10 | 6.9 | $ | 10,382 | |||||||||||||||||||||||||
79
76
Unvested at beginning of year | - | |||
Granted | 290 | |||
Vested/Paid (net of payroll taxes) | (31 | ) | ||
Forfeited | (10 | ) | ||
Unvested at end of year | 249 | |||
Weighted average of fair value grant | $ | 44.94 |
77
80
2006 | ||||
Risk-free interest rate | 5.00 | % | ||
Dividend yields | 0.20 | % | ||
Weighted-average expected life | 2.9 years | |||
Volatility | 50 | % | ||
Weighted-average fair value of TSR performance component of the LTIP granted during the period | $ | 52.04 |
Risk-free interest rate | 5% | |
Dividend yields | 0.20% | |
Weighted-average expected life (years) | 2.9 | |
Volatility | 50% | |
Weighted-average fair value of TSR performance awards | $ 52.04 |
78
Year Ended August 31, 2006 | ||||||||
Weighted-Average | ||||||||
LTIP Awards | Fair Value | |||||||
(In thousands) | ||||||||
Outstanding at August 31, 2005 | — | $ | — | |||||
LTIP awards granted | 100 | 43.15 | ||||||
LTIP awards forfeited | (5 | ) | 43.25 | |||||
Outstanding at August 31, 2006 | 95 | $ | 43.15 | |||||
Year Ended August 31, 2007 | ||||||||
Weighted- | ||||||||
Performance | Average | |||||||
Awards | Fair Value | |||||||
Outstanding at August 31, 2006 | 95 | $ | 43.15 | |||||
Performance awards granted | 333 | |||||||
Performance awards forfeited | (13 | ) | ||||||
Outstanding at August 31, 2007 | 415 | $ | 41.33 | |||||
81
79
Note 14 - | Income Taxes |
2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||
(in thousands) | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||
Federal | $ | 86,713 | $ | 70,726 | $ | 50,231 | $ | 61,728 | $ | 86,713 | $ | 70,726 | ||||||||||||||||||||
State | 5,453 | 7,250 | 5,322 | 4,069 | 5,453 | 7,250 | ||||||||||||||||||||||||||
Foreign | 1,316 | 874 | 586 | 1,402 | 1,316 | 874 | ||||||||||||||||||||||||||
Total current | 67,199 | 93,482 | 78,850 | |||||||||||||||||||||||||||||
Deferred | ||||||||||||||||||||||||||||||||
Federal | (6,353 | ) | 3,786 | (5,865 | ) | 8,014 | (6,353 | ) | 3,786 | |||||||||||||||||||||||
State | (258 | ) | (1,114 | ) | 395 | 120 | (258 | ) | (1,114 | ) | ||||||||||||||||||||||
Total deferred | 8,134 | (6,611 | ) | 2,672 | ||||||||||||||||||||||||||||
Total income tax expense | $ | 86,871 | $ | 81,522 | $ | 50,669 | $ | 75,333 | $ | 86,871 | $ | 81,522 | ||||||||||||||||||||
2006 | 2005 | 2007 | 2006 | |||||||||||||
(In thousands) | ||||||||||||||||
Deferred tax assets: | ||||||||||||||||
Environmental liabilities | $ | 12,879 | $ | 13,262 | ||||||||||||
Employee benefit accruals | 6,695 | 4,523 | ||||||||||||||
Net operating loss carryforwards | 6,297 | 7,990 | ||||||||||||||
State income tax and other | 4,730 | 5,214 | ||||||||||||||
Inventory valuation methods | 1,282 | 1,248 | ||||||||||||||
Alternative minimum tax credit carryforward | 742 | 742 | ||||||||||||||
California Enterprise Zone credit carryforward | 187 | 563 | ||||||||||||||
Current deferred tax assets (liabilities) | ||||||||||||||||
California Enterprise Zone credit carryforward | $ | 141 | $ | 195 | ||||||||||||
Inventory valuation methods | 1,248 | 1,538 | ||||||||||||||
Employee benefit accruals | 4,523 | 2,953 | ||||||||||||||
State income tax and other | 1,373 | (1,439 | ) | |||||||||||||
Total deferred tax assets | 32,812 | 33,542 | ||||||||||||||
Current deferred tax assets | $ | 7,285 | $ | 3,247 | ||||||||||||
Non-current deferred tax assets (liabilities) | ||||||||||||||||
California Enterprise Zone credit carryforward | $ | 422 | $ | 535 | ||||||||||||
Deferred tax liabilities | ||||||||||||||||
Accelerated depreciation and basis differences | (33,144 | ) | (40,566 | ) | 40,400 | 33,144 | ||||||||||
AMT carryforward | 742 | 742 | ||||||||||||||
Environmental liabilities | 13,262 | 7,375 | ||||||||||||||
Net operating loss carryforwards | 7,990 | 3,718 | ||||||||||||||
Prepaid expense acceleration | 2,248 | 1,984 | ||||||||||||||
Translation adjustment | (1,045 | ) | — | 1,399 | 1,045 | |||||||||||
Other | 1,857 | 1,209 | ||||||||||||||
Non-current deferred tax liabilities | (9,916 | ) | (26,987 | ) | ||||||||||||
Total deferred tax liabilities | 44,047 | 36,173 | ||||||||||||||
Net deferred tax assets (liabilities) | $ | (2,631 | ) | $ | (23,740 | ) | ||||||||||
Net deferred tax liability | $ | 11,235 | $ | 2,631 | ||||||||||||
8280
2006 | 2005 | 2004 | ||||||||||
Federal statutory rate | 35 | % | 35 | % | 35 | % | ||||||
Extraterritorial Income Exclusion | (2 | ) | (3 | ) | (3 | ) | ||||||
Nondeductible Fine | 2 | — | — | |||||||||
State taxes, net of credit | 2 | 2 | 2 | |||||||||
Proler NOLs | — | — | (4 | ) | ||||||||
Section 199 Deduction and Other | — | 1 | 1 | |||||||||
Effective tax rate | 37 | % | 35 | % | 31 | % | ||||||
2007 | 2006 | 2005 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Extraterritorial income exclusion | (1.1 | ) | (1.7 | ) | (2.6 | ) | ||||||
Nondeductible fine | - | 2.1 | - | |||||||||
State taxes, net of federal benefit | 1.5 | 2.2 | 1.9 | |||||||||
Section 199 deduction and other | (0.8 | ) | (0.7 | ) | – | |||||||
Officers’ compensation | 1.5 | 0.6 | 1.0 | |||||||||
Effective tax rate | 36.1 | % | 37.5 | % | 35.3 | % | ||||||
8381
Note 15 - | Earnings and Dividends Per Share |
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Net income | $ | 143,068 | $ | 146,867 | $ | 111,181 | ||||||
Computation of shares: | ||||||||||||
Weighted average common shares outstanding, basic | 30,597 | 30,427 | 29,976 | |||||||||
Incremental common shares attributable to dilutive stock options and LTIP awards | 199 | 670 | 1,082 | |||||||||
Diluted average common shares outstanding | 30,796 | 31,097 | 31,058 | |||||||||
Basic net income per share | $ | 4.68 | $ | 4.83 | $ | 3.71 | ||||||
Diluted net income per share | $ | 4.65 | $ | 4.72 | $ | 3.58 | ||||||
Dividend per share | $ | 0.068 | $ | 0.068 | $ | 0.068 | ||||||
2007 | 2006 | 2005 | ||||||||||
Net income | $ | 131,334 | $ | 143,068 | $ | 146,867 | ||||||
Computation of shares: | ||||||||||||
Weighted average common shares outstanding, basic | 29,997 | 30,597 | 30,427 | |||||||||
Incremental common shares attributable to dilutive stock options and LTIP awards | 403 | 199 | 670 | |||||||||
Diluted average common shares outstanding | 30,400 | 30,796 | 31,097 | |||||||||
Basic net income per share | $ | 4.38 | $ | 4.68 | $ | 4.83 | ||||||
Diluted net income per share | $ | 4.32 | $ | 4.65 | $ | 4.72 | ||||||
Dividend per share | $ | 0.068 | $ | 0.068 | $ | 0.068 | ||||||
Note 16 - | Related Party Transactions |
84
82
Year | Minimum Rents | |||||||
Years ending | ||||||||
August 31, | ||||||||
2007 | $ | 960 | ||||||
2008 | 973 | $ | 973 | |||||
2009 | 986 | 986 | ||||||
2010 | 999 | 1,000 | ||||||
2011 | 717 | 717 | ||||||
2012 | 583 | |||||||
Thereafter | 2,308 | 1,725 | ||||||
Total | $ | 6,943 | $ | 5,984 | ||||
Note 17 - | Segment Information |
83
85
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2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business | $ | 1,407 | $ | 580 | $ | 456 | ||||||
Auto Parts Business | 218 | 108 | 82 | |||||||||
Steel Manufacturing Business | 387 | 315 | 271 | |||||||||
Intersegment revenues | (157 | ) | (150 | ) | (121 | ) | ||||||
Consolidated revenues | $ | 1,855 | $ | 853 | $ | 688 | ||||||
2007 | 2006 | 2005 | ||||||||||
Net revenues | ||||||||||||
Metals Recycling Business | $ | 2,089,271 | $ | 1,406,783 | $ | 580,147 | ||||||
Auto Parts Business | 266,354 | 218,130 | 107,808 | |||||||||
Steel Manufacturing Business | 424,550 | 386,610 | 315,476 | |||||||||
Segment revenue | 2,780,175 | 2,011,523 | 1,003,431 | |||||||||
Intersegment eliminations | (207,910) | (156,808) | (150,353) | |||||||||
Consolidated net revenues | $ | 2,572,265 | $ | 1,854,715 | $ | 853,078 | ||||||
Depreciation and amortization: | ||||||||||||
Metals Recycling Business | $ | 21,990 | $ | 15,893 | $ | 7,141 | ||||||
Auto Parts Business | 7,818 | 6,727 | 4,937 | |||||||||
Steel Manufacturing Business | 8,987 | 8,224 | 8,184 | |||||||||
Segment depreciation and amortization | 38,795 | 30,844 | 20,262 | |||||||||
Corporate | 1,768 | 567 | 619 | |||||||||
Total depreciation and amortization | $ | 40,563 | $ | 31,411 | $ | 20,881 | ||||||
Operating income | ||||||||||||
Metals Recycling Business | $ | 165,599 | $ | 127,689 | $ | 111,703 | ||||||
Auto Parts Business | 29,050 | 28,334 | 28,080 | |||||||||
Steel Manufacturing Business | 64,355 | 74,791 | 42,661 | |||||||||
Joint Ventures(1) | - | - | 69,630 | |||||||||
Segment operating income | 259,004 | 230,814 | 252,074 | |||||||||
Corporate and eliminations | (45,441) | (55,750) | (21,003) | |||||||||
Consolidated operating income | $ | 213,563 | $ | 175,064 | $ | 231,071 | ||||||
Income (loss) before income taxes, minority interests and pre-acquisition interests | ||||||||||||
Metals Recycling Business | $ | 167,543 | $ | 129,216 | $ | 181,192 | ||||||
Auto Parts Business | 30,584 | 29,712 | 29,207 | |||||||||
Steel Manufacturing Business | 63,996 | 74,444 | 42,436 | |||||||||
Segment income before income taxes, minority interests and pre-acquisition interests | 262,123 | 233,372 | 252,835 | |||||||||
Corporate and eliminations | (53,158) | (1,683) | (21,949) | |||||||||
Consolidated income before taxes, minority interests and pre-acquisition interests | $ | 208,965 | $ | 231,689 | $ | 230,886 | ||||||
Capital expenditures: | ||||||||||||
Metals Recycling Business | $ | 41,390 | $ | 53,777 | $ | 33,303 | ||||||
Auto Parts Business | 7,053 | 12,553 | 5,143 | |||||||||
Steel Manufacturing Business | 30,376 | 9,710 | 9,352 | |||||||||
Segment capital expenditures | 78,819 | 76,040 | 47,798 | |||||||||
Corporate | 2,034 | 10,543 | 452 | |||||||||
Total capital expenditures | $ | 80,853 | $ | 86,583 | $ | 48,250 | ||||||
85
(1) | As a result of the HNC joint venture separation and termination agreement, the Joint Venture segment was eliminated and the results for the two entities acquired in this transaction, in which the Company had a previous interest, and all remaining Joint Ventures, were consolidated into MRB as of the beginning of fiscal 2006. Included in the Joint Venture segment for fiscal 2005 is estimated operating income for these two businesses of $12 million for the year then ended. The Company determined that retroactively adjusting prior period results for entities acquired in this transaction is not meaningful given that the Company was a 50% partner and was not involved in managing day-to-day operations of these entities prior to the HNC separation. |
2007 | 2006 | 2005 | ||||||||||
Metals Recycling Business: | ||||||||||||
Africa | $ | 87 | $ | 47 | $ | - | ||||||
Asia | 755 | 562 | 402 | |||||||||
North America | 639 | 424 | 178 | |||||||||
Europe | 608 | 373 | - | |||||||||
Sales to Steel Manufacturing Business | (186 | ) | (142 | ) | (137 | ) | ||||||
Sales to external customers | 1,903 | 1,264 | 443 | |||||||||
Auto Parts Business: | ||||||||||||
North America | 266 | 218 | 108 | |||||||||
Sales to Metals Recycling Business | (22 | ) | (14 | ) | (13 | ) | ||||||
Sales to external customers | 244 | 204 | 95 | |||||||||
Steel Manufacturing Business: | ||||||||||||
Sales to external customers in North America | 425 | 387 | 315 | |||||||||
Total revenue | $ | 2,572 | $ | 1,855 | $ | 853 | ||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business: | ||||||||||||
Africa | $ | 47 | $ | — | $ | — | ||||||
Asia | 627 | 402 | 322 | |||||||||
North America | 162 | 178 | 134 | |||||||||
Europe | 570 | — | — | |||||||||
Sales to Steel Manufacturing Business | (142 | ) | (137 | ) | (112 | ) | ||||||
Sales to external customers | 1,264 | 443 | 344 | |||||||||
Auto Parts Business: | ||||||||||||
North America | 219 | 108 | 82 | |||||||||
Sales to Metals Recycling Business | (15 | ) | (13 | ) | (9 | ) | ||||||
Sales to external customers | 204 | 95 | 73 | |||||||||
Steel Manufacturing Business: | ||||||||||||
Sales to external customers in North America | 387 | 315 | 271 | |||||||||
Total | $ | 1,855 | $ | 853 | $ | 688 | ||||||
2007 | 2006 | 2005 | ||||||||||
China | - | 6 | % | 15 | % | |||||||
South Korea | 3 | % | 4 | % | 19 | % | ||||||
Turkey | 18 | % | 12 | % | - |
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2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business | $ | 128 | $ | 112 | $ | 74 | ||||||
Auto Parts Business | 28 | 28 | 26 | |||||||||
Steel Manufacturing Business | 75 | 43 | 25 | |||||||||
Joint Ventures | — | 69 | 62 | |||||||||
Segment operating income | 231 | 252 | 187 | |||||||||
Corporate and eliminations | (56 | ) | (21 | ) | (22 | ) | ||||||
Total operating income | $ | 175 | $ | 231 | $ | 165 | ||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business | $ | 16 | $ | 7 | $ | 6 | ||||||
Auto Parts Business | 6 | 5 | 5 | |||||||||
Steel Manufacturing Business | 8 | 8 | 9 | |||||||||
Segment depreciation and amortization expense | 30 | 20 | 20 | |||||||||
Corporate and eliminations | 1 | 1 | — | |||||||||
Total depreciation and amortization expense | $ | 31 | $ | 21 | $ | 20 | ||||||
2006 | 2005 | |||||||||||||||
(In thousands) | 2007 | 2006 | ||||||||||||||
Metals Recycling Business | $ | 619 | $ | 188 | $ | 905,666 | $ | 728,985 | ||||||||
Auto Parts Business | 310 | 188 | 239,280 | 146,502 | ||||||||||||
Steel Manufacturing Business | 148 | 144 | 308,846 | 243,652 | ||||||||||||
Joint Ventures | — | 184 | ||||||||||||||
Segment assets | 1,077 | 704 | 1,453,792 | 1,119,139 | ||||||||||||
Corporate and eliminations | (32 | ) | 5 | (302,378 | ) | (74,415 | ) | |||||||||
Total assets | $ | 1,045 | $ | 709 | $ | 1,151,414 | $ | 1,044,724 | ||||||||
87
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Metals Recycling Business | $ | 54 | $ | 33 | $ | 12 | ||||||
Auto Parts Business | 13 | 5 | 4 | |||||||||
Steel Manufacturing Business | 10 | 9 | 5 | |||||||||
Segment capital expenditures | 77 | 47 | 21 | |||||||||
Corporate | 10 | 1 | 1 | |||||||||
Total capital expenditures | $ | 87 | $ | 48 | $ | 22 | ||||||
Year Ended August 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Sales to China | 6% | 15 | % | 13 | % | |||||||
Sales to South Korea | 4% | 19 | % | 21 | % | |||||||
Sales to Turkey | 12% | — | — |
Fiscal 2006 | Fiscal 2007 | |||||||||||||||||||||||||||||||
First | Second | Third | Fourth | First | Second | Third | Fourth | |||||||||||||||||||||||||
Revenues | $ | 341,231 | $ | 403,285 | $ | 505,573 | $ | 604,626 | $ | 509,854 | $ | 604,442 | $ | 709,449 | $ | 748,520 | ||||||||||||||||
Operating income | $ | 17,533 | $ | 31,570 | $ | 49,310 | $ | 76,651 | $ | 33,576 | $ | 47,264 | $ | 69,770 | $ | 62,953 | ||||||||||||||||
Net income | $ | 41,530 | $ | 21,118 | $ | 30,205 | $ | 50,215 | $ | 21,158 | $ | 28,446 | $ | 43,754 | $ | 37,976 | ||||||||||||||||
Basic earnings per share | $ | 1.36 | $ | 0.69 | $ | 0.99 | $ | 1.63 | $ | 0.69 | $ | 0.94 | $ | 1.48 | $ | 1.29 | ||||||||||||||||
Diluted earnings per share | $ | 1.34 | $ | 0.68 | $ | 0.98 | $ | 1.62 | $ | 0.69 | $ | 0.93 | $ | 1.47 | $ | 1.28 |
Fiscal 2006 | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Revenues | $ | 341,231 | $ | 403,285 | $ | 505,573 | $ | 604,626 | ||||||||
Operating income | $ | 17,533 | $ | 31,570 | $ | 49,310 | $ | 76,651 | ||||||||
Net income | $ | 41,530 | $ | 21,118 | $ | 30,205 | $ | 50,215 | ||||||||
Basic earnings per share | $ | 1.36 | $ | 0.69 | $ | 0.99 | $ | 1.63 | ||||||||
Diluted earnings per share | $ | 1.34 | $ | 0.68 | $ | 0.98 | $ | 1.62 |
87
Column C | ||||||||||||||||
Column A | Column B | Additions | Column D | Column E | ||||||||||||
Balance at | Charged to | Balance at | ||||||||||||||
beginning | cost and | end of | ||||||||||||||
Description | of period | expenses | Deductions | period | ||||||||||||
Fiscal 2007 | ||||||||||||||||
Allowance for doubtful accounts | $ | 1,271 | $ | 1,342 | $ | 792 | $ | 1,821 | ||||||||
Inventories — net realizable value | $ | 1,890 | $ | — | $ | 24 | $ | 1,866 | ||||||||
Fiscal 2006 | ||||||||||||||||
Allowance for doubtful accounts | $ | 810 | $ | 616 | $ | 155 | $ | 1,271 | ||||||||
Inventories — net realizable value | $ | 3,535 | $ | — | $ | 1,645 | $ | 1,890 | ||||||||
Fiscal 2005 | ||||||||||||||||
Allowance for doubtful accounts | $ | 772 | $ | 45 | $ | 7 | $ | 810 | ||||||||
Inventories — net realizable value | $ | 3,392 | $ | 143 | $ | — | $ | 3,535 |
88
Fiscal 2005 First Second Third Fourth Revenues $ 198,961 $ 215,746 $ 242,691 $ 195,680 Operating income $ 67,306 $ 56,013 $ 54,629 $ 53,123 Net income $ 42,936 $ 35,981 $ 33,508 $ 34,442 Basic earnings per share $ 1.41 $ 1.18 $ 1.10 $ 1.13 Diluted earnings per share $ 1.38 $ 1.15 $ 1.08 $ 1.11
89
Column A | Column B | Column C — Additions | Column D | Column E | ||||||||||||||||
Balance at | Charged to | Charged to | Balance at | |||||||||||||||||
Beginning | Cost and | Other | End of | |||||||||||||||||
Description | of Period | Expenses | Accounts | Deductions | Period | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Fiscal 2006 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 810 | $ | 288 | $ | 328 | $ | 156 | $ | 1,270 | ||||||||||
Inventories — net realizable value | $ | 3,535 | $ | — | $ | — | $ | 1,645 | $ | 1,890 | ||||||||||
Fiscal 2005 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 772 | $ | 45 | $ | — | $ | 7 | $ | 810 | ||||||||||
Inventories — net realizable value | $ | 3,392 | $ | 143 | $ | — | $ | — | $ | 3,535 | ||||||||||
Fiscal 2004 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 712 | $ | 354 | $ | — | $ | 294 | $ | 772 | ||||||||||
Inventories — net realizable value | $ | 1,061 | $ | 2,331 | $ | — | $ | — | $ | 3,392 | ||||||||||
Deferred tax asset valuation allowance | $ | 6,090 | $ | — | $ | — | $ | 6,090 | $ | — |
90
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
91
92
ITEM 9B. | OTHER INFORMATION |
9389
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
Name | Age | Office | ||||
John D. Carter | President and Chief Executive Officer | |||||
Gregory J. Witherspoon | Vice President and Chief Financial Officer | |||||
Richard D. Peach | 44 | Vice President, Deputy Chief Financial Officer and Chief Accounting Officer | ||||
Tamara | Executive Vice President and Chief Operating Officer | |||||
Gary A. Schnitzer | Executive Vice President | |||||
Donald W. Hamaker | President, Metals Recycling Business | |||||
Thomas D. Klauer, Jr. | President, Auto Parts Business | |||||
Jeffrey Dyck | President, Steel Manufacturing Business | |||||
Richard C. Josephson | Vice President, General Counsel and Secretary | |||||
90
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ITEM 11. | EXECUTIVE COMPENSATION |
91
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL |
9592
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | 1. | The following financial statements are filed as part of this report: | ||||||||
See Index to Consolidated Financial Statements and Schedule on page 43 of this report. | ||||||||||
2. | The following schedule and report of independent accountants are filed as part of this report: | |||||||||
Page | ||||||||||
Schedule II Valuation and Qualifying Accounts | ||||||||||
All other schedules are omitted as the information is either not applicable or is not required. | ||||||||||
3. | Exhibits: |
2 | .1 | Agreement of Purchase and Sale, dated December 30, 2004, among Vehicle Recycling Solutions, LLC, a Delaware limited liability company, several wholly-owned subsidiaries of Vehicle Recycling Solutions, LLC, and Pick-N-Pull Auto Dismantlers, a California general partnership and wholly-owned subsidiary of the Registrant. Filed as Exhibit 2.1 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2004, and incorporated herein by reference. | ||
2 | .2 | Master Agreement, dated as of June 8, 2005, by and among Hugo Neu Co., LLC, HNE Recycling LLC, HNW Recycling LLC, and Joint Venture Operations, Inc. and for certain limited purposes Hugo Neu Corporation and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on June 9, 2005, and incorporated herein by reference. | ||
2 | .3 | Unit Purchase Agreement, dated August 5, 2005, between Pick-N-Pull Auto Dismantlers, PNP Commercial Acquisition, LLC, and Tree Acquisition, L.P., related to the acquisition of GreenLeaf Auto Recyclers, LLC. Filed as Exhibit 2.1 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .4 | Agreement of Purchase and Sale, dated August 5, 2005, between PNP Commercial Acquisition, LLC, and Ford Motor Company, related to the acquisition of GreenLeaf Auto Recyclers, LLC. Filed as Exhibit 2.2 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .5 | First Amendment, dated September 30, 2005, to Unit Purchase Agreement dated August 5, 2005 between Pick-N-Pull Auto Dismantlers, PNP Commercial Acquisition, LLC, and Tree Acquisition, L.P. Filed as Exhibit 2.3 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .6 | Asset Purchase Agreement, dated as of September 2, 2005, between RRC Acquisition, LLC, Regional Recycling LLC, Metal Asset Acquisition, LLC, 939 Fortress Investments, LLC, Fortress Apartments, LLC, Integrity Metal, LLC, RCC Recycling, LLC, Alan Dreher, George Dreher, Paul Dreher, James J. Filler, Teja Jouhal and Herbert Miller. Filed as Exhibit 2.1 to the Registrant’s Current Report onForm 8-K filed on September 8, 2005, and incorporated herein by reference. | ||
3 | .1 | 2006 Restated Articles of Incorporation of the Registrant. Filed as Exhibit 3.1 to the Registrant’s Current Report onForm 8-K filed on June 9, 2006, and incorporated herein by reference. | ||
3 | .2 | Restated Bylaws of the Registrant. Filed as Exhibit 3.2 to the Registrant’s Current Report onForm 8-K filed on March 22, 2006, and incorporated herein by reference. | ||
4 | .1 | Amended and Restated Credit Agreement, dated November 8, 2005, between the Registrant, Bank of America, NA, and the Other Lenders Party Thereto. Filed as Exhibit 4.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2005, and incorporated herein by reference. | ||
4 | .2 | Rights Agreement, dated March 21, 2006, between the Registrant and Wells Fargo Bank, N.A. Filed as Exhibit 4.1 to the Registrant’s Current Report onForm 8-K filed on March 22, 2006, and incorporated herein by reference. | ||
9 | .1 | Schnitzer Steel Industries, Inc. 2001 Restated Voting Trust and Buy-Sell Agreement, dated March 26, 2001. Filed as Exhibit 9.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference. |
2 | .1 | Agreement of Purchase and Sale, dated December 30, 2004, among Vehicle Recycling Solutions, LLC, a Delaware limited liability company, several wholly-owned subsidiaries of Vehicle Recycling Solutions, LLC, and Pick-N-Pull Auto Dismantlers, a California general partnership and wholly-owned subsidiary of the Registrant. Filed as Exhibit 2.1 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2004, and incorporated herein by reference. | ||
2 | .2 | Master Agreement, dated as of June 8, 2005, by and among Hugo Neu Co., LLC, HNE Recycling LLC, HNW Recycling LLC, and Joint Venture Operations, Inc. and for certain limited purposes Hugo Neu Corporation and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on June 9, 2005, and incorporated herein by reference. | ||
2 | .3 | Unit Purchase Agreement, dated August 5, 2005, between Pick-N-Pull Auto Dismantlers, PNP Commercial Acquisition, LLC, and Tree Acquisition, L.P., related to the acquisition of GreenLeaf Auto Recyclers, LLC. Filed as Exhibit 2.1 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .4 | Agreement of Purchase and Sale, dated August 5, 2005, between PNP Commercial Acquisition, LLC, and Ford Motor Company, related to the acquisition of GreenLeaf Auto Recyclers, LLC. Filed as Exhibit 2.2 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .5 | First Amendment, dated September 30, 2005, to Unit Purchase Agreement dated August 5, 2005 between Pick-N-Pull Auto Dismantlers, PNP Commercial Acquisition, LLC, and Tree Acquisition, L.P. Filed as Exhibit 2.3 to the Registrant’s Current Report onForm 8-K filed on October 5, 2005, and incorporated herein by reference. | ||
2 | .6 | Asset Purchase Agreement, dated as of September 2, 2005, between RRC Acquisition, LLC, Regional Recycling LLC, Metal Asset Acquisition, LLC, 939 Fortress Investments, LLC, Fortress Apartments, LLC, Integrity Metal, LLC, RCC Recycling, LLC, Alan Dreher, George Dreher, Paul Dreher, James J. Filler, Teja Jouhal and Herbert Miller. Filed as Exhibit 2.1 to the Registrant’s Current Report onForm 8-K filed on September 8, 2005, and incorporated herein by reference. | ||
3 | .1 | 2006 Restated Articles of Incorporation of the Registrant. Filed as Exhibit 3.1 to the Registrant’s Current Report onForm 8-K filed on June 9, 2006, and incorporated herein by reference. |
9693
10 | .1 | Yeon Business Center Lease Agreement (3200 Yeon), dated August 7, 2003, between Schnitzer Investment Corp. and the Registrant, relating to the corporate headquarters at 3200 NW Yeon Ave. Filed as Exhibit 10.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2003, and incorporated herein by reference. | ||
10 | .2 | Yeon Business Center Lease Agreement (3330 Yeon), dated August 7, 2003, between Schnitzer Investment Corp. and the Registrant, relating to the corporate headquarters at 3330 NW Yeon Ave. Filed as Exhibit 10.2 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2003, and incorporated herein by reference. | ||
10 | .3 | Lease Agreement, dated September 1, 1988, between Schnitzer Investment Corp. and the Registrant, as amended, relating to the Portland Metals Recycling operation and which has terminated except for surviving indemnity obligations. Filed as Exhibit 10.3 to the Registrant’s Registration Statement onForm S-1 filed on September 24, 1996 (Commission FileNo. 33-69352), and incorporated herein by reference. | ||
10 | .4 | Amendment No. 1 to Yeon Business Center Lease Agreement (3200 Yeon), dated February 1, 2004. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .5 | Amendment No. 2 to Yeon Business Center Lease Agreement (3200 Yeon), dated October 20, 2005. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .6 | Amendment No. 1 to Yeon Business Center Lease Agreement (3330 Yeon), dated February 1, 2004. Filed as Exhibit 10.3 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .7 | Amendment to Yeon Business Center Lease Agreement, (3330 Yeon), dated October 20, 2005. Filed as Exhibit 10.4 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .8 | Amendment No. 3 to Yeon Business Center Lease Agreement (3200 NW Yeon), dated March 10, 2006. | ||
10 | .9 | Purchase and Sale Agreement, dated May 4, 2005, between Schnitzer Investment Corp. and the Registrant, relating to purchase by the Registrant of the Portland Metals Recycling operations real estate. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on May 10, 2005, and incorporated herein by reference. | ||
10 | .10 | Second Amended Shared Services Agreement, dated September 13, 1993, between the Registrant and certain entities controlled by shareholders of the Registrant. Filed as Exhibit 10.5 to the Registrant’s Registration Statement onForm S-1 filed on September 24, 1996 (Commission FileNo. 33-69352), and incorporated herein by reference. | ||
10 | .11 | Amendment, dated September 1, 1994, to Second Amended Shared Services Agreement between the Registrant and certain entities controlled by shareholders of the Registrant. Filed as Exhibit 10.6 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 1995, and incorporated herein by reference. | ||
10 | .12 | Third Amended Shared Services Agreement, dated July 26, 2006, between the Registrant, Schnitzer Investment Corp. and Island Equipment Company, Inc. Filed as Exhibit 10.5 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. | ||
*10 | .13 | Letter Agreement regarding initial compensation terms, dated July 18, 2005, between John D. Carter and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K/A filed on July 20, 2005, and incorporated herein by reference. | ||
*10 | .14 | Employment Agreement, dated February 17, 2006, between John D. Carter and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on February 22, 2006, and incorporated herein by reference. | ||
*10 | .15 | Change in Control Severance Agreement, dated February 17, 2006, between John D. Carter and the Registrant. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on February 22, 2006, and incorporated herein by reference. | ||
*10 | .16 | Agreement, dated August 31, 2005, between Gregory J. Witherspoon and the Registrant regarding Mr. Witherspoon’s position as Interim Chief Financial Officer. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K/A filed on September 6, 2005, and incorporated herein by reference. |
3 | .2 | Restated Bylaws of the Registrant. Filed as Exhibit 3.2 to the Registrant’s Current Report onForm 8-K filed on August 3, 2007, and incorporated herein by reference. | ||
4 | .1 | Amended and Restated Credit Agreement, dated November 8, 2005, between the Registrant, Bank of America, NA, and the Other Lenders Party Thereto. Filed as Exhibit 4.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2005, and incorporated herein by reference. | ||
4 | .2 | Amendment to Amended and Restated Credit Agreement, dated July 20, 2007, between the Company, Bank of America, NA, and Other Lenders Party Thereto. Filed as Exhibit 4.1 to the Registrant’s Current Report onForm 8-K filed on July 24, 2007, and incorporated herein by reference. | ||
4 | .3 | Rights Agreement, dated March 21, 2006, between the Registrant and Wells Fargo Bank, N.A. Filed as Exhibit 4.1 to the Registrant’s Current Report onForm 8-K filed on March 22, 2006, and incorporated herein by reference. | ||
9 | .1 | Schnitzer Steel Industries, Inc. 2001 Restated Voting Trust and Buy-Sell Agreement, dated March 26, 2001. Filed as Exhibit 9.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference. | ||
10 | .1 | Yeon Business Center Lease Agreement (3200 Yeon), dated August 7, 2003, between Schnitzer Investment Corp. and the Registrant, relating to the corporate headquarters at 3200 NW Yeon Ave. Filed as Exhibit 10.1 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2003, and incorporated herein by reference. | ||
10 | .2 | Yeon Business Center Lease Agreement (3330 Yeon), dated August 7, 2003, between Schnitzer Investment Corp. and the Registrant, relating to the corporate headquarters at 3330 NW Yeon Ave. Filed as Exhibit 10.2 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2003, and incorporated herein by reference. | ||
10 | .3 | Lease Agreement, dated September 1, 1988, between Schnitzer Investment Corp. and the Registrant, as amended, relating to the Portland Metals Recycling operation and which has terminated except for surviving indemnity obligations. Filed as Exhibit 10.3 to the Registrant’s Registration Statement onForm S-1 filed on September 24, 1996 (Commission FileNo. 33-69352), and incorporated herein by reference. | ||
10 | .4 | Amendment No. 1 to Yeon Business Center Lease Agreement (3200 Yeon), dated February 1, 2004. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .5 | Amendment No. 2 to Yeon Business Center Lease Agreement (3200 Yeon), dated October 20, 2005. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .6 | Amendment No. 1 to Yeon Business Center Lease Agreement (3330 Yeon), dated February 1, 2004. Filed as Exhibit 10.3 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .7 | Amendment to Yeon Business Center Lease Agreement, (3330 Yeon), dated October 20, 2005. Filed as Exhibit 10.4 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2005, and incorporated herein by reference. | ||
10 | .8 | Amendment No. 3 to Yeon Business Center Lease Agreement (3200 NW Yeon), dated March 10, 2006. Filed as Exhibit 10.8 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2007 and incorporated herein by reference. |
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10 | .9 | Purchase and Sale Agreement, dated May 4, 2005, between Schnitzer Investment Corp. and the Registrant, relating to purchase by the Registrant of the Portland Metals Recycling operations real estate. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on May 10, 2005, and incorporated herein by reference. | ||
10 | .10 | Second Amended Shared Services Agreement, dated September 13, 1993, between the Registrant and certain entities controlled by shareholders of the Registrant. Filed as Exhibit 10.5 to the Registrant’s Registration Statement onForm S-1 filed on September 24, 1996 (Commission FileNo. 33-69352), and incorporated herein by reference. | ||
10 | .11 | Amendment, dated September 1, 1994, to Second Amended Shared Services Agreement between the Registrant and certain entities controlled by shareholders of the Registrant. Filed as Exhibit 10.6 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 1995, and incorporated herein by reference. | ||
10 | .12 | Third Amended Shared Services Agreement, dated July 26, 2006, between the Registrant, Schnitzer Investment Corp. and Island Equipment Company, Inc. Filed as Exhibit 10.5 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. | ||
*10 | .13 | Letter Agreement regarding initial compensation terms, dated July 18, 2005, between John D. Carter and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K/A filed on July 20, 2005, and incorporated herein by reference. | ||
*10 | .14 | Employment Agreement, dated February 17, 2006, between John D. Carter and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on February 22, 2006, and incorporated herein by reference. | ||
*10 | .15 | Change in Control Severance Agreement, dated February 17, 2006, between John D. Carter and the Registrant. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on February 22, 2006, and incorporated herein by reference. | ||
*10 | .16 | Agreement, dated August 31, 2005, between Gregory J. Witherspoon and the Registrant regarding Mr. Witherspoon’s position as Interim Chief Financial Officer. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K/A filed on September 6, 2005, and incorporated herein by reference. | ||
*10 | .17 | Letter agreement, dated January 6, 2006, between Gregory J. Witherspoon and the Registrant, regarding Mr. Witherspoon’s position as Chief Financial Officer. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on January 10, 2006, and incorporated herein by reference. | ||
*10 | .18 | Letter agreement, dated January 6, 2006, between Richard C. Josephson and the Registrant, regarding Mr. Josephson’s position as Vice President and General Counsel. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on January 10, 2006, and incorporated herein by reference. | ||
*10 | .19 | Employment Agreement, dated September 13, 2005, between Donald Hamaker and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on September 19, 2005, and incorporated herein by reference. | ||
*10 | .20 | Employment Agreement, dated April 10, 2006, between Tamara L. Adler (Lundgren) and the Registrant. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on April 12, 2006, and incorporated herein by reference. |
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*10 | .21 | Change in Control Severance Agreement, dated April 10, 2006, between Tamara L. Adler (Lundgren) and the Registrant. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on April 12, 2006, and incorporated herein by reference. | |||
*10 | .22 | 1993 Stock Incentive Plan of the Registrant. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report onForm 10-Q for quarter ended February 28, 2002, and incorporated herein by reference. | |||
*10 | .23 | 1993 Stock Incentive Plan of the Registrant as amended as of January 30, 2006. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on February 3, 2006, and incorporated herein by reference. | |||
*10 | .24 | Form of Stock Option Agreement used for option grants to employees under the 1993 Stock Incentive Plan. Filed as Exhibit 10.14 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2004, and incorporated herein by reference. | |||
*10 | .25 | Form of Stock Option Agreement used for option grants to non-employee directors under the 1993 Stock Incentive Plan. Filed as Exhibit 10.15 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2004, and incorporated herein by reference. | |||
*10 | .26 | Form of Long-Term Incentive Award Agreement under the 1993 Stock Incentive Plan. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on February 3, 2006, and incorporated herein by reference. | |||
*10 | .28 | Supplemental Executive Retirement Bonus Plan of the Registrant. Filed as Exhibit 10.24 to the Registrant’s Annual Report onForm 10-K for fiscal year ended August 31, 2001, and incorporated herein by reference. | |||
*10 | .29 | Amendment to the Supplemental Executive Retirement Bonus Plan of the Registrant effective January 1, 2002. Filed as Exhibit 10.25 to the Registrant’s Annual Report onForm 10-K for fiscal year ended August 31, 2001, and incorporated herein by reference. | |||
*10 | .30 | Schnitzer Steel Industries, Inc. Amended and Restated Economic Value Added Bonus Plan. Filed as Exhibit 10.19 to the Registrant’s Annual Report onForm 10-K for the fiscal year ended August 31, 2004, and incorporated herein by reference. | |||
*10 | .31 | Executive Annual Bonus Plan. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on February 3, 2005, and incorporated herein by reference. | |||
*10 | .32 | Non-Employee Director Compensation Schedule, effective as of September 1, 2005. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on July 20, 2005, and incorporated herein by reference. | |||
*10 | .33 | Non-Employee Director Compensation Schedule, effective as of July 26, 2006. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K/A filed on September 19, 2006, and incorporated herein by reference. | |||
*10 | .34 | Form of Deferred Stock Unit Award Agreement for non-employee directors. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. | |||
*10 | .35 | Deferred Compensation Plan for Non-Employee Directors. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. |
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*10 | .36 | Form of Indemnity Agreement for Directors and Executive Officers. Filed as Exhibit 10.3 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. | ||
*10 | .37 | Form of Restricted Stock Unit Award Agreement. Filed as Exhibit 10.1 to Registrant’s Current Report onForm 8-K filed on November 8, 2006, and incorporated herein by reference. | ||
10 | .38 | Deferred Prosecution Agreement (including Statement of Facts), dated October 16, 2006, between the Registrant and the United States Department of Justice. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. | ||
10 | .39 | Plea Agreement by SSI International Far East, Ltd., dated October 10, 2006. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. | ||
10 | .40 | Criminal Information, United States of America vs. SSI International Far East, Ltd., dated October 10, 2006. Filed as Exhibit 10.3 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. | ||
10 | .41 | Offer of Settlement to the United States Securities and Exchange Commission, dated July 26, 2006. Filed as Exhibit 10.4 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. | ||
10 | .42 | Order InstitutingCease-and-Desist Proceedings, Making Findings, and Imposing aCease-and-Desist Order Pursuant to Section 21C of the Securities and Exchange Act of 1934, dated October 16, 2006. Filed as Exhibit 10.5 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. | ||
*10 | .43 | Form of Long-Term Incentive Award Agreement under the 1993 Stock Incentive Plan. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on December 1, 2006, and incorporated herein by reference. | ||
*10 | .44 | Fiscal 2007 Annual Performance Bonus Program. Filed as Exhibit 10.4 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended November 30, 2006, and incorporated herein by reference. | ||
*10 | .45 | Annual Incentive Compensation Plan, effective September 1, 2006. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report onForm 10-Q for the quarter ended February 28, 2007, and incorporated herein by reference. | ||
*10 | .46 | Letter Agreement, dated March 2, 2007, between the Registrant and Richard D. Peach, regarding Mr. Peach’s position as Deputy Chief Financial Officer. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on March 22, 2007, and incorporated herein, by reference. | ||
*10 | .47 | Form of Restricted Stock Unit Award Agreement, as amended as of August 9, 2007 | ||
*10 | .48 | Form of Long-Term Incentive Award Agreement under the 1993 Stock Incentive Plan, as amended as of August 9, 2007. | ||
*10 | .49 | Form of Non-Statutory Stock Option Agreement under the 1993 Stock Incentive Plan. | ||
*10 | .50 | Amendment to Equity Award Agreements. | ||
21 | .1 | Subsidiaries of Registrant. |
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23 | .1 | Consent of Independent Registered Public Accounting Firm. | ||
24 | .1 | Powers of Attorney. | ||
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. | ||
*Management contract or compensatory plan or arrangement |
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*10 .36 Form of Indemnity Agreement for Directors and Executive Officers. Filed as Exhibit 10.3 to the Registrant’s Current Report onForm 8-K filed on July 28, 2006, and incorporated herein by reference. *10 .37 Form of Restricted Stock Unit Award Agreement. Filed as Exhibit 10.1 to Registrant’s Current Report onForm 8-K filed on November 8, 2006, and incorporated herein by reference. 10 .38 Deferred Prosecution Agreement (including Statement of Facts), dated October 16, 2006, between the Registrant and the United States Department of Justice. Filed as Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. 10 .39 Plea Agreement by SSI International Far East, Ltd., dated October 10, 2006. Filed as Exhibit 10.2 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. 10 .40 Criminal Information, United States of America vs. SSI International Far East, Ltd., dated October 10, 2006. Filed as Exhibit 10.3 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. 10 .41 Offer of Settlement to the United States Securities and Exchange Commission, dated July 26, 2006. Filed as Exhibit 10.4 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. 10 .42 Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of the Securities and Exchange Act of 1934, dated October 16, 2006. Filed as Exhibit 10.5 to the Registrant’s Current Report onForm 8-K filed on October 19, 2006, and incorporated herein by reference. 21 .1 Subsidiaries of Registrant. 23 .1 Consent of Registered Independent Public Accounting Firm. 24 .1 Powers of Attorney. 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.
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SCHNITZER STEEL INDUSTRIES, INC. | ||
Dated October 29, 2007 | By: /s/ GREGORY J. WITHERSPOON Gregory J. Witherspoon Chief Financial Officer |
Signature | Title | |||||
Principal Executive Officer: | ||||||
John D. Carter | President and Chief Executive Officer | |||||
Principal Financial Officer: | ||||||
/s/ GREGORY J. WITHERSPOON Gregory J. Witherspoon | Chief Financial Officer | |||||
Principal Accounting Officer: | ||||||
/s/ | ||||||
Directors: | ||||||
*ROBERT S. BALL Robert S. Ball | Director | |||||
*WILLIAM A. FURMAN William A. Furman | Director | |||||
*JUDITH JOHANSEN Judith Johansen | Director | |||||
*WILLIAM LARSSON William Larsson | Director | |||||
*SCOTT LEWIS Scott Lewis | Director | |||||
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*KENNETH M. NOVACK Kenneth M. Novack | Director | |||
*MARK L. PALMQUIST Mark L. Palmquist | Director |
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*JEAN S. REYNOLDS Jean S. Reynolds | Director | |||
*JILL SCHNITZER EDELSON Jill Schnitzer Edelson | Director | |||
*RALPH R. SHAW Ralph R. Shaw | Director | |||
*By: | /s/ GREGORY J. WITHERSPOON Attorney-in-fact, Gregory J. Witherspoon |
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