SCHN 2017 Annual Report

SCHNITZER STEEL INDUSTRIES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 73 / Schnitzer Steel Industries, Inc. Form 10-K 2017 Operating results of discontinued operations were comprised of the following for the years ended August 31 (in thousands): 2017 2016 2015 Revenues $ — $ — $ 8,263 Loss from discontinued operations before income taxes $ (390) $ (1,348) $ (7,227) Income tax expense — — — Loss from discontinued operations, net of tax $ (390) $ (1,348) $ (7,227) Note 9 – Commitments and Contingencies Commitments The Company leases a portion of its capital equipment and certain of its facilities under leases that expire at various dates through fiscal 2047. The majority of the Company's facility lease agreements include renewal options and rent escalation clauses. Rent expense was $25 million, $24 million and $26 million for fiscal 2017, 2016 and 2015, respectively. The table below sets forth the Company’s future minimum obligations under non-cancelable operating leases as of August 31, 2017 (in thousands): Year Ending August 31, Operating Leases 2018 $ 19,572 2019 16,824 2020 13,333 2021 7,894 2022 5,317 Thereafter 22,410 Total $ 85,350 Contingencies – Environmental Changes in the Company’s environmental liabilities for the years ended August 31, 2017 and 2016 were as follows (in thousands): Balance 8/31/2015 Liabilities Established (Released), Net Payments and Other Ending Balance 8/31/2016 Liabilities Established (Released), Net Payments and Other Ending Balance 8/31/2017 Short-Term Long-Term $ 46,793 $ 480 $ (923) $ 46,350 $ 2,560 $ (512) $ 48,398 $ 2,007 $ 46,391 Portland Harbor In December 2000, the Company was notified by the United States Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation and LiabilityAct (“CERCLA”) that it is one of the potentially responsible parties (“PRPs”) that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (the “Site”). The precise nature and extent of any cleanup of the Site, the parties to be involved, the timing of any specific remedial action and the allocation of the costs for any cleanup among responsible parties have not yet been determined. The process of site investigation, remedy selection, identification of additional PRPs and allocation of costs has been underway for a number of years, but significant uncertainties remain. It is unclear to what extent the Company will be liable for environmental costs or natural resource damage claims or third party contribution or damage claims with respect to the Site. While the Company participated in certain preliminary Site study efforts, it was not party to the consent order entered into by the EPAwith certain other PRPs, referred to as the “Lower Willamette Group” (“LWG”), for a remedial investigation/feasibility study (“RI/FS”). During fiscal 2007, the Company and certain other parties agreed to an interim settlement with the LWG under which the Company made a cash contribution to the LWG RI/FS. The LWG has indicated that it had incurred over $115 million in investigation-related costs over an approximately 10 year period working on the RI/FS. Following submittal of draft RI and FS documents which the EPA largely rejected, the EPA took over the RI/FS process.