SCHN 2017 Annual Report

SCHNITZER STEEL INDUSTRIES, INC. 39 / Schnitzer Steel Industries, Inc. Form 10-K 2017 Restructuring charges and other exit-related activities incurred in connection with cost reduction and productivity improvement plans for the last three fiscal years ended August 31 were comprised of the following (in thousands): 2017 2016 2015 All Other Plans Q2’15 Plan Total Charges All Other Plans Q2’15 Plan Total Charges All Other Plans Q2’15 Plan Total Charges Restructuring charges: Severance costs $ — $ (24) $ (24) $ — $ 4,915 $ 4,915 $ 391 $ 5,330 $ 5,721 Contract termination costs 255 139 394 311 796 1,107 377 1,245 1,622 Other restructuring costs — — — — — — 1,223 2,048 3,271 Total restructuring charges 255 115 370 311 5,711 6,022 1,991 8,623 10,614 Other exit-related activities: Asset impairments and accelerated depreciation — 158 158 — 3,127 3,127 — 6,502 6,502 Gains on exit-related disposals — (565) (565) — (1,337) (1,337) — — — Total other exit-related activities — (407) (407) — 1,790 1,790 — 6,502 6,502 Total restructuring charges and exit-related activities $ 255 $ (292) $ (37) $ 311 $ 7,501 $ 7,812 $ 1,991 $15,125 $17,116 Restructuring charges and other exit-related activities included in continuing operations $ (109) $ 6,781 $13,008 Restructuring charges and other exit-related activities included in discontinued operations $ 72 $ 1,031 $ 4,108 We do not include restructuring charges and other exit-related activities in the measurement of the performance of our reportable segments. The significant majority of restructuring charges require us to make cash payments. See Note 10 - Restructuring Charges and Other Exit-Related Activities in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report. Other Income, net Other income, net was $1 million, $1 million and $4 million for fiscal 2017, 2016 and 2015, respectively. The change between fiscal 2015 and 2016 was primarily due to changes in foreign currency gains and losses on transactions denominated in Canadian dollars. For more information about our foreign currency transactions, see Note 2 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report. Interest Expense Interest expense was $8 million, $9 million and $9 million for fiscal 2017, 2016 and 2015, respectively. The impact on fiscal 2017 interest expense of reduced average borrowings under our bank credit facilities compared to fiscal 2016 was offset by higher interest rates. The impact on fiscal 2016 interest expense of reduced average borrowings compared to fiscal 2015 was offset by higher interest rates and the write-off of debt issuance costs of $1 million. For more information about our outstanding debt balances, see Note 7 – Debt in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report. Income Tax (Expense) Benefit Year Ended August 31, 2017 2016 2015 Income (loss) from continuing operations before income taxes $ 48,690 $ (15,505) $ (200,464) Income tax (expense) benefit $ (1,322) $ (735) $ 12,615 Effective tax rate 2.7% (4.7)% 6.3% Income tax (expense) benefit from continuing operations was $(1) million, $(1) million and $13 million for fiscal 2017, 2016 and 2015, respectively.