SCHN 2017 Annual Report

SCHNITZER STEEL INDUSTRIES, INC. 47 / Schnitzer Steel Industries, Inc. Form 10-K 2017 credit risk. However, domestic recycled ferrous metal sales, nonferrous sales and sales of finished steel are generally made on open account. Nonferrous export sales typically require a deposit prior to shipment. All sales made on open account are evaluated for collectibility prior to revenue recognition. Additionally, when contractual terms support revenue recognition based on transfer of title and risk of loss we recognize revenues on partially loaded shipments, which requires an estimate of the product weight involved in any partial shipments at period end. Retail revenues are recognized when customers pay for parts. Historically, there have been very few sales returns and adjustments that impact the ultimate collection of revenues; therefore, no material provisions have been made when the sale is recognized. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue and are shown as a liability on our Consolidated Balance Sheets until remitted. See the discussion on credit risk contained in Item 7A of this report. Recently Issued Accounting Standards For a description of recent accounting pronouncements that may have an impact on our financial condition, results of operations or cash flows, see Note 3 – Recent Accounting Pronouncements in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report. Non-GAAP Financial Measures Debt, net of cash Debt, net of cash is the difference between (i) the sum of long-term debt and short-term borrowings (i.e., total debt) and (ii) cash and cash equivalents. We believe that debt, net of cash is a useful measure for investors because, as cash and cash equivalents can be used, among other things, to repay indebtedness, netting this against total debt is a useful measure of our leverage. The following is a reconciliation of debt, net of cash (in thousands): August 31, 2017 August 31, 2016 August 31, 2015 Short-term borrowings $ 721 $ 8,374 $ 584 Long-term debt, net of current maturities 144,403 184,144 227,572 Total debt 145,124 192,518 228,156 Less: cash and cash equivalents 7,287 26,819 22,755 Total debt, net of cash $ 137,837 $ 165,699 $ 205,401 Net borrowings (repayment) of debt Net borrowings (repayment) of debt is the sum of borrowings from long-term debt, repayments of long-term debt, proceeds from line of credit, and repayment of line of credit. We present this amount as the net change in our borrowings (repayments) for the period because we believe it is useful for investors as a meaningful presentation of the change in debt. The following is a reconciliation of net borrowings (repayments) of debt (in thousands): Fiscal 2017 Fiscal 2016 Fiscal 2015 Borrowings from long-term debt $ 433,336 $ 152,311 $ 140,536 Proceeds from line of credit — 135,500 266,500 Repayment of long-term debt (481,757) (187,951) (231,103) Repayment of line of credit — (135,500) (266,500) Net repayments of debt $ (48,421) $ (35,640) $ (90,567)