UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, ~~2018~~2019


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4304

COMMERCIAL METALS COMPANY

(Exact Name of Registrant as Specified in Its Charter)

___________________________________



Delaware	75-0725338
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

6565 N. MacArthur Blvd.

Irving, Texas75039

(Address of Principal Executive Offices) (Zip Code)

~~(214)~~ (214) 689-4300

(Registrant's Telephone Number, Including Area Code)

___________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filerx	Accelerated filer¨
Non-accelerated filer ¨~~(Do not check if a smaller reporting company)~~	Smaller reporting company ¨
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CMC	New York Stock Exchange

As of June 25, ~~2018,~~ ~~117,014,019~~2019, 117,924,115 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS




PART I — FINANCIAL INFORMATION	3

Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Statements of Earnings - Three and nine months ended May 31, ~~2018~~2019 and ~~2017~~2018	3
Condensed Consolidated Statements of Comprehensive Income - Three and nine months ended May 31, ~~2018~~2019 and ~~2017~~2018	4
Condensed Consolidated Balance Sheets - May 31, ~~2018~~2019 and August 31, ~~2017~~2018	5
Condensed Consolidated Statements of Cash Flows - Nine months ended May 31, ~~2018~~2019 and ~~2017~~2018	6
Condensed Consolidated Statements of Stockholders' Equity - ~~Nine~~Three and nine months ended May 31, ~~2018~~2019 and ~~2017~~	7
~~Notes to Condensed Consolidated Financial Statements~~2018	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	2628
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	37

~~Item 4. Controls and Procedures~~PART II — OTHER INFORMATION	38

~~PART II — OTHER INFORMATION~~	39

Item 1. Legal Proceedings	3938
Item 1A. Risk Factors	3938
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3. Defaults Upon Senior Securities	38
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	39
~~Item 3. Defaults Upon Senior Securities~~	39
~~Item 4. Mine Safety Disclosures~~	39
~~Item 5. Other Information~~	39
Item 6. Exhibits	40
Signature	41


~~PART I.~~	~~FINANCIAL INFORMATION~~

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)										COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

		Three Months Ended May 31,					Nine Months Ended May 31,					Three Months Ended May 31,						Nine Months Ended May 31,
(in thousands, except share data)		2018			2017		2018		2017			2019			2018			2019			2018
Net sales		$	1,204,484		$	1,044,713	$	3,335,285	$	2,759,939		$	1,605,872		$	1,204,484		$	4,285,997		$	3,335,285
Costs and expenses:
Cost of goods sold		1,035,914			896,277		2,896,531		2,357,867			1,364,242			1,035,914			3,735,168			2,896,531
Selling, general and administrative expenses		101,422			93,415		306,009		282,384			115,461			101,422			331,404			306,009
Interest expense		11,511			12,448		25,303		38,212			18,513			11,511			53,671			25,303
		1,148,847			1,002,140		3,227,843		2,678,463			1,498,216			1,148,847			4,120,243			3,227,843

Earnings from continuing operations before income taxes		55,637			42,573		107,442		81,476			107,656			55,637			165,754			107,442
Income taxes		13,312			11,006		23,465		21,231			29,105			13,312			52,855			23,465
Earnings from continuing operations		42,325			31,567		83,977		60,245			78,551			42,325			112,899			83,977

Earnings (loss) from discontinued operations before income taxes (benefit)		(3,389		)	9,325		5,021		19,687
Earnings (loss) from discontinued operations before income taxes												(190		)	(3,389		)	(808		)	5,021
Income taxes (benefit)		(1,029		)	1,626		2,052		4,059			(29		)	(1,029		)	109			2,052
Earnings (loss) from discontinued operations		(2,360		)	7,699		2,969		15,628			(161		)	(2,360		)	(917		)	2,969

Net earnings		$	39,965		$	39,266	$	86,946	$	75,873		$	78,390		$	39,965		$	111,982		$	86,946

Basic earnings (loss) per share*
Earnings from continuing operations		$	0.36		$	0.27	$	0.72	$	0.52		$	0.67		$	0.36		$	0.96		$	0.72
Earnings (loss) from discontinued operations		(0.02		)	0.07		0.03		0.14			—			(0.02		)	(0.01		)	0.03
Net earnings		$	0.34		$	0.34	$	0.74	$	0.66		$	0.66		$	0.34		$	0.95		$	0.74

Diluted earnings (loss) per share*
Earnings from continuing operations		$	0.36		$	0.27	$	0.71	$	0.51		$	0.66		$	0.36		$	0.95		$	0.71
Earnings (loss) from discontinued operations		(0.02		)	0.07		0.03		0.13			—			(0.02		)	(0.01		)	0.03
Net earnings		$	0.34		$	0.34	$	0.74	$	0.65		$	0.66		$	0.34		$	0.94		$	0.74

Cash dividends per share		$	0.12		$	0.12	$	0.36	$	0.36
Average basic shares outstanding		117,111,799			115,886,372		116,722,504		115,574,289			118,045,362			117,111,799			117,762,945			116,722,504
Average diluted shares outstanding		118,254,791			117,205,369		118,050,864		117,087,341			119,145,566			118,254,791			119,013,014			118,050,864

See notes to ~~unaudited~~ condensed consolidated financial statements.

_________________

* ~~EPS~~Earnings Per Share ("EPS") is calculated independently for each component and may not sum to Net ~~Earnings~~ EPS due to ~~rounding~~rounding.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)													COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

		Three Months Ended May 31,						Nine Months Ended May 31,							Three Months Ended May 31,						Nine Months Ended May 31,
(in thousands)		2018			2017			2018			2017				2019			2018			2019			2018
Net earnings		$	39,965		$	39,266		$	86,946		$	75,873			$	78,390		$	39,965		$	111,982		$	86,946
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustment		(26,434		)	27,109			(11,656		)	15,129				(5,135		)	(26,434		)	(14,278		)	(11,656		)
Reclassification for translation loss realized upon liquidation of investment in foreign entity		1,328			968			1,328			968				19			1,328			856			1,328
Foreign currency translation adjustment		(25,106		)	28,077			(10,328		)	16,097				(5,116		)	(25,106		)	(13,422		)	(10,328		)
Net unrealized gain (loss) on derivatives:
Unrealized holding gain		13			254			38			696
Unrealized holding gain (loss)															(145		)	13			(267		)	38
Reclassification for gain included in net earnings		(56		)	(333		)	(236		)	(853		)		(71		)	(56		)	(154		)	(236		)
Net unrealized loss on derivatives		(43		)	(79		)	(198		)	(157		)		(216		)	(43		)	(421		)	(198		)
Defined benefit obligation:
Amortization of prior services		(7		)	(9		)	(20		)	(27		)		(6		)	(7		)	(21		)	(20		)
Reclassification for settlement losses		—			—			437			—				—			—			1,316			437
Defined benefit obligation		(7		)	(9		)	417			(27		)		(6		)	(7		)	1,295			417
Other comprehensive income (loss)		(25,156		)	27,989			(10,109		)	15,913
Other comprehensive loss															(5,338		)	(25,156		)	(12,548		)	(10,109		)
Comprehensive income		$	14,809		$	67,255		$	76,837		$	91,786			$	73,052		$	14,809		$	99,434		$	76,837

See notes to ~~unaudited~~ condensed consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)							COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)		May 31, 2018			August 31, 2017				May 31, 2019			August 31, 2018
Assets
Current assets:
Cash and cash equivalents		$	600,444		$	252,595			$	120,315		$	622,473
Accounts receivable (less allowance for doubtful accounts of $4,648 and $4,146)		678,343			561,411
Accounts receivable (less allowance for doubtful accounts of $8,584 and $4,489)									1,014,157			749,484
Inventories, net		595,231			462,648				807,593			589,005
Other current assets		109,656			140,136				172,007			116,243
Assets of businesses held for sale & discontinued operations		11,282			297,110
Total current assets		1,994,956			1,713,900				2,114,072			2,077,205
Property, plant and equipment, net		1,074,357			1,051,677				1,473,568			1,075,038
Goodwill		64,316			64,915				64,226			64,310
Other noncurrent assets		111,864			144,639				115,144			111,751
Total assets		$	3,245,493		$	2,975,131			$	3,767,010		$	3,328,304
Liabilities and stockholders' equity
Current liabilities:
Accounts payable-trade		$	241,584		$	226,456			$	278,390		$	261,258
Accrued expenses and other payables		247,635			274,972				318,975			260,939
Current maturities of long-term debt		19,874			19,182
Liabilities of businesses held for sale & discontinued operations		2,843			87,828
Acquired unfavorable contract backlog									51,998			—
Current maturities of long-term debt and short-term borrowings									54,895			19,746
Total current liabilities		511,936			608,438				704,258			541,943
Deferred income taxes		30,760			49,160				63,413			37,834
Other long-term liabilities		110,792			111,023
Other noncurrent liabilities									128,281			116,325
Long-term debt		1,139,103			805,580				1,306,863			1,138,619
Total liabilities		1,792,591			1,574,201				2,202,815			1,834,721
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 16)
Stockholders' equity:
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,014,019 and 115,793,736 shares		1,290			1,290
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,924,115 and 117,015,558 shares									1,290			1,290
Additional paid-in capital		347,744			349,258				352,881			352,674
Accumulated other comprehensive loss		(91,622		)	(81,513		)		(106,225		)	(93,677		)
Retained earnings		1,408,715			1,363,806				1,513,418			1,446,495
Less treasury stock, 12,046,645 and 13,266,928 shares at cost		(213,411		)	(232,084		)
Stockholders' equity attributable to CMC		1,452,716			1,400,757
Less treasury stock, 11,136,549 and 12,045,106 shares at cost									(197,365		)	(213,385		)
Stockholders' equity									1,563,999			1,493,397
Stockholders' equity attributable to noncontrolling interests		186			173				196			186
Total stockholders' equity		1,452,902			1,400,930				1,564,195			1,493,583
Total liabilities and stockholders' equity		$	3,245,493		$	2,975,131			$	3,767,010		$	3,328,304

See notes to ~~unaudited~~ condensed consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended May 31,
(in thousands) 2018 2017
Cash flows from (used by) operating activities:
Net earnings $ 86,946
$ 75,873
Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
Depreciation and amortization 99,443
93,049
Stock-based compensation 18,247
19,716
Asset impairment 14,265
622
Deferred income taxes & other long-term taxes 5,829
(2,538 )
Provision for losses on receivables, net 2,193
856
Net gain on disposals of subsidiaries, assets and other (1,578 ) (343 )
Write-down of inventories 1,358
1,820
Amortization of interest rate swaps termination gain —
(5,698 )
Changes in operating assets and liabilities (135,058 ) (164,443 )
Net cash flows from operating activities 91,645
18,914

Cash flows from (used by) investing activities:
Capital expenditures (144,268 ) (162,082 )
Proceeds from the sale of subsidiaries 75,483
—
Proceeds from settlement of life insurance policies 25,000
—
Decrease in restricted cash, net 23,592
7,492
Acquisitions (6,980 ) (54,425 )
Proceeds from the sale of property, plant and equipment and other 6,315
1,884
Net cash flows used by investing activities (20,858 ) (207,131 )

Cash flows from (used by) financing activities:
Proceeds from issuance of long-term debt 350,000
—
Cash dividends (42,036 ) (41,619 )
Repayments on long-term debt (15,382 ) (8,775 )
Stock issued under incentive and purchase plans, net of forfeitures (9,836 ) (5,516 )
Debt issuance costs (5,254 ) —
Proceeds from New Markets Tax Credit transactions —
2,141
Increase in documentary letters of credit, net 18
569
Contribution from noncontrolling interests 13
14
Net cash flows from (used by) financing activities 277,523
(53,186 )
Effect of exchange rate changes on cash (461 ) (363 )
Increase (decrease) in cash and cash equivalents 347,849
(241,766 )
Cash and cash equivalents at beginning of year 252,595
517,544
Cash and cash equivalents at end of period $ 600,444
$ 275,778

Supplemental information:
Noncash activities:
Liabilities related to additions of property, plant and equipment $ 28,252
$ 31,024

COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended May 31,
(in thousands)	2019			2018
Cash flows from (used by) operating activities:
Net earnings	$	111,982		$	86,946
Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
Depreciation and amortization	117,617			99,443
Amortization of acquired unfavorable contract backlog	(58,202		)	—
Stock-based compensation	17,350			18,247
Net gain on disposals of subsidiaries, assets and other	(1,334		)	(1,578		)
Deferred income taxes and other long-term taxes	36,367			5,829
Write-down of inventories	551			1,358
Provision for losses on receivables, net	100			2,193
Asset impairment	15			14,265
Changes in operating assets and liabilities	(75,422		)	(65,612		)
Beneficial interest in securitized accounts receivable	(367,521		)	(491,577		)
Net cash flows used by operating activities	(218,497		)	(330,486		)

Cash flows from (used by) investing activities:
Acquisitions, net of cash acquired	(700,941		)	(6,980		)
Capital expenditures	(91,753		)	(144,268		)
Proceeds from insurance	4,405			25,000
Proceeds from the sale of property, plant and equipment	2,503			6,315
Proceeds from the sale of discontinued operations and other	1,893			75,483
Advances under accounts receivable programs	—			132,979
Repayments under accounts receivable programs	—			(202,423		)
Beneficial interest in securitized accounts receivable	367,521			491,577
Net cash flows from (used by) investing activities:	(416,372		)	377,683

Cash flows from (used by) financing activities:
Proceeds from issuance of long-term debt	180,000			350,000
Repayments of long-term debt	(24,138		)	(15,382		)
Proceeds from accounts receivable programs	223,143			—
Repayments under accounts receivable programs	(209,363		)	—
Dividends	(42,387		)	(42,036		)
Stock issued under incentive and purchase plans, net of forfeitures	(2,364		)	(9,836		)
Debt issuance costs	—			(5,254		)
Other	10			31
Net cash flows from financing activities	124,901			277,523
Effect of exchange rate changes on cash	(341		)	(461		)
Increase (decrease) in cash, restricted cash and cash equivalents	(510,309		)	324,259
Cash, restricted cash and cash equivalents at beginning of period	632,615			285,881
Cash, restricted cash and cash equivalents at end of period	$	122,306		$	610,140

See notes to ~~unaudited~~ condensed consolidated financial statements.



Supplemental information:	Nine Months Ended May 31,
(in thousands)	2019		2018
Cash paid for income taxes	$	6,852	$	14,802
Cash paid for interest	53,773		30,201

Noncash activities:
Liabilities related to additions of property, plant and equipment	37,602		28,252

Cash and cash equivalents	$	120,315	$	600,444
Restricted cash	1,991		9,696
Total cash, restricted cash and cash equivalents	$	122,306	$	610,140

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, September 1, 2016 129,060,664
$ 1,290
$ 358,745
$ (112,914 ) $ 1,372,988
(14,425,068 ) $ (252,837 ) $ 159
$ 1,367,431
Net earnings 75,873
—
75,873
Other comprehensive income 15,913
15,913
Cash dividends ($0.36 per share) (41,619 ) (41,619 )
Issuance of stock under incentive and purchase plans, net of forfeitures (26,269 ) 1,153,396
20,670
(5,599 )
Stock-based compensation 9,731
9,731
Contribution of noncontrolling interest 14
14
Reclassification of share-based liability awards 1,780
1,780
Reclassification of share-based equity awards (5,439 ) (5,439 )
Balance, May 31, 2017 129,060,664
$ 1,290
$ 338,548
$ (97,001 ) $ 1,407,242
(13,271,672 ) $ (232,167 ) $ 173
$ 1,418,085

Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, September 1, 2017 129,060,664
$ 1,290
$ 349,258
$ (81,513 ) $ 1,363,806
(13,266,928 ) $ (232,084 ) $ 173
$ 1,400,930
Net earnings 86,946
—
86,946
Other comprehensive loss (10,109 ) (10,109 )
Cash dividends ($0.36 per share) (42,037 ) (42,037 )
Issuance of stock under incentive and purchase plans, net of forfeitures (28,509 ) 1,220,283
18,673
(9,836 )
Stock-based compensation 11,747
11,747
Contribution of noncontrolling interest 13
13
Reclassification of share-based liability awards 15,248
15,248
Balance, May 31, 2018 129,060,664
$ 1,290
$ 347,744
$ (91,622 ) $ 1,408,715
(12,046,645 ) $ (213,411 ) $ 186
$ 1,452,902

COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

	Three Months Ended May 31, 2019
	Common Stock			Additional			Accumulated Other						Treasury Stock					Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital			Comprehensive Loss			Retained Earnings			Number of Shares		Amount			controlling Interests		Total
Balance, February 28, 2019	129,060,664	$	1,290	$	346,156		$	(100,887	)	$	1,449,159		(11,139,594	)	$	(197,418	)	$	196	$	1,498,496
Net earnings										78,390										78,390
Other comprehensive loss							(5,338		)											(5,338		)
Dividends ($0.12 per share)										(14,206		)								(14,206		)
Issuance of stock under incentive and purchase plans, net of forfeitures				439									3,045		53					492
Stock-based compensation and other				6,286						75										6,361
Balance, May 31, 2019	129,060,664	$	1,290	$	352,881		$	(106,225	)	$	1,513,418		(11,136,549	)	$	(197,365	)	$	196	$	1,564,195

	Nine Months Ended May 31, 2019
	Common Stock			Additional			Accumulated Other						Treasury Stock					Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital			Comprehensive Loss			Retained Earnings			Number of Shares		Amount			controlling Interests		Total
Balance, September 1, 2018	129,060,664	$	1,290	$	352,674		$	(93,677	)	$	1,446,495		(12,045,106	)	$	(213,385	)	$	186	$	1,493,583
Net earnings										111,982										111,982
Other comprehensive loss							(12,548		)											(12,548		)
Dividends ($0.36 per share)										(42,387		)								(42,387		)
Issuance of stock under incentive and purchase plans, net of forfeitures				(18,384		)							908,557		16,020					(2,364		)
Stock-based compensation and other				18,591						75										18,666
Contribution of noncontrolling interests																		10		10
Adoption of ASC 606 adjustment										(2,747		)								(2,747		)
Balance, May 31, 2019	129,060,664	$	1,290	$	352,881		$	(106,225	)	$	1,513,418		(11,136,549	)	$	(197,365	)	$	196	$	1,564,195



	Three Months Ended May 31, 2018
	Common Stock			Additional			Accumulated Other						Treasury Stock					Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital			Comprehensive Loss			Retained Earnings			Number of Shares		Amount			controlling Interests		Total
Balance, February 28, 2018	129,060,664	$	1,290	$	349,454		$	(66,466	)	$	1,382,791		(12,234,996	)	$	(215,782	)	$	186	$	1,451,473
Net earnings										39,965										39,965
Other comprehensive loss							(25,156		)											(25,156		)
Dividends ($0.12 per share)										(14,041		)								(14,041		)
Issuance of stock under incentive and purchase plans, net of forfeitures				(4,814		)							188,351		2,371					(2,443		)
Stock-based compensation				3,104																3,104
Balance, May 31, 2018	129,060,664	$	1,290	$	347,744		$	(91,622	)	$	1,408,715		(12,046,645	)	$	(213,411	)	$	186	$	1,452,902

	Nine Months Ended May 31, 2018
	Common Stock			Additional			Accumulated Other						Treasury Stock					Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital			Comprehensive Loss			Retained Earnings			Number of Shares		Amount			controlling Interests		Total
Balance, September 1, 2017	129,060,664	$	1,290	$	349,258		$	(81,513	)	$	1,363,806		(13,266,928	)	$	(232,084	)	$	173	$	1,400,930
Net earnings										86,946										86,946
Other comprehensive loss							(10,109		)											(10,109		)
Dividends ($0.36 per share)										(42,037		)								(42,037		)
Issuance of stock under incentive and purchase plans, net of forfeitures				(28,509		)							1,220,283		18,673					(9,836		)
Stock-based compensation				11,747																11,747
Contribution of noncontrolling interest																		13		13
Reclassification of share-based liability awards				15,248																15,248
Balance, May 31, 2018	129,060,664	$	1,290	$	347,744		$	(91,622	)	$	1,408,715		(12,046,645	)	$	(213,411	)	$	186	$	1,452,902

See notes to ~~unaudited~~ condensed consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. ACCOUNTING POLICIES

Accounting Principles

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") on a basis consistent with that used in the Annual Report on Form 10-K for the fiscal year ended August 31, ~~2017~~2018 ("~~2017~~2018 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission ~~("SEC"~~(the "SEC") and include all normal recurring adjustments necessary to present fairly the ~~unaudited~~ condensed consolidated balance sheets and the ~~unaudited~~ condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the ~~audited~~ consolidated financial statements included in the ~~2017~~2018 Form 10-K. The results of operations for the three and nine month periods are not necessarily indicative of the results to be expected for the full fiscal year.

Recently ~~Issued~~Adopted Accounting Pronouncements

In August ~~2017,~~2016, the Financial Accounting Standards Board ~~("FASB"~~(the "FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815). The ASU better aligns accounting rules with a company's risk management activities; better reflects economic results of hedging in financial statements; and simplifies hedge accounting treatment. For public companies, this standard is effective for annual periods beginning after December 15, 2018, including interim periods within those periods. The standard must be applied to hedging relationships existing on the date of adoption, and the effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this guidance on its consolidated financial statements as well as determining the Company's planned adoption date.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 and will be effective for the Company beginning September 1, 2018. The Company plans to early adopt ASU 2016-18 in the fourth quarter of fiscal 2018. The provisions of this guidance are to be applied using a retrospective approach, which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

~~In August 2016, the FASB issued ASU~~ 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230). ASU 2016-15 is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. The new standard provides guidance on eight specific cash flow issues, including the statement of cash flows treatment of beneficial interests in securitized financial transactions, which encompasses activities under the Company's accounts receivable programs in the U.S. and Poland. The Company adopted the standard, which requires retrospective application to all periods presented, in the first quarter of fiscal 2019. As a result of adoption, the Company reported reductions in operating cash flows of $367.5 million and $491.6 million, with offsetting increases in investing cash flows related to the collection of previously sold trade accounts receivable in the condensed consolidated statements of cash flows for the nine months ended May 31, 2019 and 2018, respectively. Additionally, upon adoption, the $90.0 million repayment during the first quarter of fiscal 2018 of advances outstanding at August 31, 2017, originally recorded as an outflow from operating activities, was reclassified to investing activities.

On September 1, 2018, the Company adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, including the related amendments. The Company adopted ASC 606 under the modified retrospective approach and applied the guidance only to contracts that were not completed as of the date of adoption. The Company recognized a total cumulative effect of $2.7 million, net of tax, as a reduction to the opening balance of retained earnings as of September 1, 2018. There was no impact to the condensed consolidated statement of cash flows or other comprehensive income.

In accordance with ASC 606, the disclosure below reflects the impact of adoption to the condensed consolidated statement of earnings, as compared to what the results would have been under ASC 605, Revenue Recognition. The impact to the condensed consolidated balance sheet was immaterial.



	Three Months Ended May 31, 2019
(in thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Change - Higher (Lower)
Net sales	$	1,605,872	$	1,607,214	$	(1,342	)
Net earnings	78,390		79,506		(1,116		)



	Nine Months Ended May 31, 2019
(in thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Change - Higher (Lower)
Net sales	$	4,285,997	$	4,291,986	$	(5,989	)
Net earnings	111,982		116,630		(4,648		)

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require a customer in a hosting arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Internal-Use Software, to determine which implementation costs to capitalize or to expense as incurred. This ~~guidance~~ASU is effective for fiscal years ~~and interim reporting periods therein,~~ beginning after December 15, ~~2017, with early adoption permitted.~~2019, and interim periods within those fiscal years, and will be effective for the Company beginning September 1, 2020. The Company ~~plans~~will apply this ASU prospectively to ~~adopt ASU 2016-15 no later than~~all implementation costs incurred after the ~~required adoption~~ date of ~~September 1, 2018.~~adoption. The ~~provisions~~Company concluded the impact of this ~~guidance are to be adopted retrospectively. The Company is continuing to evaluate the impact this guidance will have~~ASU on its consolidated financial ~~statements.~~statements and disclosures will be immaterial.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815). The ASU better aligns accounting rules with a company's risk management activities, better reflects economic results of hedging in financial statements, and simplifies hedge accounting treatment. For public companies, this standard is effective for annual periods beginning after December 15, 2018, including interim periods. The standard must be applied to hedging relationships existing on the date of adoption, and the effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The Company concluded the impact of this guidance on its consolidated financial statements and disclosures will be immaterial.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and has modified the standard thereafter. The standard requires a lessee to recognize a right-of-use ("ROU") asset and a lease liability on its balance sheet for all leases with terms of twelve months or longer. The Company plans to apply the new standard using a modified retrospective approach that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods, and to elect the three packaged transition practical expedients under ASC 842-10-65-1(f). This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2018 and will be effective for the Company beginning September 1, ~~2019, at which point~~2019. Although evaluation and implementation procedures are ongoing, the Company ~~plans to adopt~~currently estimates the ~~standard. The provisions of this guidance are to be applied using a modified retrospective approach, with elective reliefs, which requires application~~ROU assets and lease liabilities will represent less than 5% of the ~~guidance for all periods presented.~~Company's total assets and total liabilities, respectively, as of September 1, 2019. The Company ~~has~~is in the process of implementing a ~~project plan in place~~new lease management, accounting, and administration system and determining appropriate changes to ~~address the effects of ASU 2016-02 and any modifications thereafter, including evaluation of the impact of this guidance on~~ internal processes and ~~systems, internal~~ controls to support recognition and disclosure under the new standard.

NOTE 2. ACQUISITION

On November 5, 2018 (the "Acquisition Date"), the Company completed the acquisition of 33 rebar fabrication facilities in the United States, as well as four electric arc furnace mini mills located in Knoxville, Tennessee; Jacksonville, Florida; Sayreville, New Jersey and Rancho Cucamonga, California from Gerdau S.A., hereinafter collectively referred to as the "Acquired Businesses." The total cash purchase price, including working capital adjustments, was $701.2 million, subject to customary purchase price adjustments, and was funded through a combination of domestic cash on-hand and borrowings under the 2018 Term Loan, as defined in Note 9, Credit Arrangements.

The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at the Acquisition Date fair value. In valuing acquired assets and liabilities, fair value estimates were determined using Level 3 inputs, including expected future cash flows and discount rates. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the Acquisition Date, the Company’s estimates are inherently uncertain and subject to refinement. The results of operations of the Acquired Businesses are reflected in the Company’s condensed consolidated financial ~~statements.~~

~~In May 2014,~~statements from the ~~FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and has modified~~Acquisition Date. The financial statements were not retrospectively adjusted for any measurement-period adjustments that occurred in subsequent periods. Rather, any adjustments to provisional amounts identified during the ~~standard thereafter. Under~~allowable one year measurement period (the "Measurement Period") are recorded in the ~~standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized~~reporting period in ~~an amount that reflects the consideration to~~ which the ~~entity expects~~adjustment was determined.

The table below presents the preliminary fair value that was allocated to the Acquired Businesses' assets and liabilities based upon fair values as determined by the Company, as well as any Measurement Period adjustments made during the third quarter of fiscal 2019. Final determination of the fair values may result in further adjustments to the values presented in the following table:



(in thousands)	Estimated Fair Value^*
Cash and cash equivalents	$	6,399
Accounts receivable	301,740
Inventories	202,082
Other current assets	26,290
Property, plant and equipment	414,237
Deferred income taxes	11,606
Accounts payable-trade, accrued expenses and other payables	(134,702		)
Acquired unfavorable contract backlog	(110,166		)
Other long-term liabilities	(9,920		)
Pension and other post retirement employment benefits	(6,365		)
Total assets acquired and liabilities assumed	$	701,201

_________________

*As previously reported in the Company's Quarterly Report on Form 10-Q for the period ended February 28, 2019. No measurement period adjustments occurred in the third quarter of fiscal 2019.

Inventories

The acquired inventory is comprised of finished goods, work in process and raw materials. The fair value of finished goods was preliminarily calculated as the estimated selling price, adjusted for the selling costs and a reasonable profit margin. The fair value of semi-finished goods was preliminarily calculated as the estimated selling price, adjusted for estimated costs to complete manufacturing, estimated selling costs, and a reasonable profit margin. The fair value of raw materials was determined to approximate the historical carrying value as it represented market cost. The inventory step up recognized for the nine months ended May, 31, 2019 was $10.3 million, which has been reflected in the Company's Americas Mills segment as cost of goods sold as the related inventory has been sold.

Property, Plant and Equipment

The fair value of real property was preliminarily calculated using the cost approach for buildings and improvements and either a sales comparison or market approach for land. The fair value of personal property was preliminarily calculated using the cost approach. The cost approach measures the value by estimating the cost to acquire or construct comparable assets and adjusts for age and condition. The Company assigned real property a useful life ranging from 1 to 35 years and personal property a useful life ranging from 1 to 25 years.

Deferred Income Taxes

Deferred income tax assets include the expected future federal and state tax consequences associated with temporary differences between the preliminary fair values of the assets acquired and liabilities assumed and the respective tax bases. Tax rates utilized in calculating the deferred tax assets represent a preliminary consolidated tax rate which may be adjusted during the Measurement Period as the Company applies the appropriate tax rate for each legal entity.

Pension and Other Postretirement Liabilities

The Company recognized a net liability of $6.4 million, representing the unfunded portion of the acquired defined-benefit pension plan and other postretirement-benefit plan.

Acquired Unfavorable Contract Backlog

The Company determined that the backlog associated with existing contracts at the acquired fabrication facilities in which the selling price was less than estimated costs to fulfill using market participant assumptions represented a separable intangible liability. The unfavorable contract backlog was valued using the income approach. Amortization of the backlog will correspond with completion of the acquired contracts, which is estimated to be ~~entitled in exchange~~between 1 to 2 years.

Other Assets Acquired and Liabilities Assumed

The Company used historical carrying values for trade accounts receivable and payables, as well as certain other current and non-current assets and liabilities, as their carrying values represented the fair value of those ~~goods or services. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 and will be effective~~items as of the Acquisition Date.

Financial Results

The following table summarizes the financial results of the Acquired Businesses from the Acquisition Date for the ~~Company beginning~~three and nine months ended May 31, 2019 included in the Company’s condensed consolidated statement of earnings and condensed consolidated statement of comprehensive income.



(in thousands)	Three Months Ended May 31, 2019		Nine Months Ended May 31, 2019
Net sales	$	453,479	$	958,550
Earnings before income taxes	42,951		78,047

Pro Forma Supplemental Information

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of the Acquired Businesses occurred on September 1, ~~2018, at which point the Company plans to adopt the standard.~~2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company currently expects to adopt the standard using the modified retrospective method. Upon adoption of ASU 2014-09,pro forma financial information is presented for comparative purposes only, based on certain ~~contracts within the Americas~~

Fabrication segment in which revenue is currently recognized on a percentage of completion basis using a cost-to-cost measure of progress, the measure of progress will change to an output measure to align with the pattern of transfer of control on these contracts. In addition, the standard includes expanded disclosure requirements,estimates and assumptions, which the Company ~~continues~~believes to ~~analyze. The Company believes the adoption~~be reasonable, but not necessarily indicative of ~~this standard will not have a material impact on its statement of financial position,~~future results of operations or ~~cash flows. As~~the results that would have been reported if the acquisition of the Acquired Businesses had been completed on September 1, 2017. These results were not used as part of ~~the overall evaluation~~management analysis of the ~~standard,~~financial results and performance of the ~~Company is also identifying~~Company. These results are adjusted, where possible, for transaction and ~~preparing~~integration related costs. These results involve a significant amount of estimates.



	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2019		2018		2019		2018
Pro forma net sales ⁽¹⁾	$	1,582,478	$	1,648,962	$	4,507,485	$	4,560,929
Pro forma net earnings ⁽²⁾	63,018		49,402		88,987		40,311

_________________

(1) Pro forma net sales for the three and nine months ended May 31, 2018 includes estimated fair value adjustments related to ~~implement changes~~amortization of unfavorable contract backlog. The impact of the amortization of unfavorable contract backlog has been removed from the pro forma net sales for the three and nine months ended May 31, 2019.

(2) Pro forma net earnings for the three and nine months ended May 31, 2018 reflects the impact of fair value adjustments related to ~~its accounting policies, practices, and internal controls over financial reporting~~the amortization of unfavorable contract backlog described above. Pro forma net earnings for the nine months ended May 31, 2018 includes estimated fair value adjustments related to ~~support the standard both in the transition period~~inventory step-up, as well as ~~on an on-going basis.~~non-recurring acquisition and integration costs of approximately $49.8 million.

NOTE 2.3. CHANGES IN BUSINESS

~~Pending Acquisition~~

On December 29, 2017, the Company entered into a definitive purchase agreement to acquire certain U.S. rebar steel mill and fabrication assets from Gerdau S.A. (the "Business"), a producer of long and specialty steel products in the Americas for a cash purchase price of $600.0 million, subject to customary purchase price adjustments. The acquisition includes 33 rebar fabrication facilities in the U.S. as well as steel mills located in Knoxville, Tennessee; Jacksonville, Florida; Sayreville, New Jersey and Rancho Cucamonga, California, with annual melt capacity of 2.7 million tons, bringing the Company’s global melt capacity to approximately 7.2 million tons at the close of the transaction. The closing of the transaction is expected before calendar year-end 2018 and is subject to the satisfaction or waiver of customary closing conditions, including customary regulatory review.

The Company expects to fund the purchase price for the acquisition, including related fees and expenses, with proceeds from the offering of the 2026 Notes (as defined in Note 7, Credit Arrangements), together with the proceeds from the incurrence of a new term loan under the Company's existing Credit Agreement (as defined in Note 7, Credit Arrangements) and cash on hand.

~~Dispositions and Businesses Held for Sale~~

During ~~the third quarter of~~ fiscal 2018, the Company ~~sold substantially all~~completed the exit of the assets of its structural steel fabrication operations, which were part of the Americas Fabrication segment. This disposition did not meet the criteria for discontinued operations. As a result of the disposition, during the nine months ended May 31, 2018, the Company recognized impairment charges of $13.0 million, of which $0.9 million was recognized during the third quarter of fiscal 2018. The assets and liabilities related to these operations were included as assets and liabilities of businesses held for sale & discontinued operations in the condensed consolidated balance sheet at August 31, 2017, and consisted of the following:

(in thousands) August 31, 2017*
Assets:
Accounts receivable $ 38,279
Inventories 10,676
Other current assets 77
Assets of businesses held for sale & discontinued operations $ 49,032

Liabilities:
Accounts payable-trade $ 13,108
Accrued expenses and other payables 16,785
Liabilities of businesses held for sale & discontinued operations $ 29,893

~~_________________~~

* At August 31, 2017, $8.8 million of property, plant, and equipment, net of accumulated depreciation and amortization was included in other noncurrent assets on the consolidated balance sheets.

~~Discontinued Operations~~

~~In June 2017, the Company announced a plan to exit its International Marketing and Distribution segment, including~~ its trading operations in the U.S., Asia, and Australia. As an initial step in this plan, on August 31, 2017, the Company completed the sale of its raw materials business, CMC Cometals. Additionally, during the second quarter of fiscal 2018, the remaining operations related to the Company's steel trading business in the U.S. and Asia were substantially wound down. Finally, during the third quarter of fiscal 2018, the Company sold certain assets and liabilities of its Australian steel trading business, resulting in an overall transaction loss, including selling costs, of $5.3 million. Such loss was primarily due to impairment charges related to accumulated

~~foreign currency translation, $4.2 million of which the Company recorded during fiscal 2017.~~ The results of these activities are included in discontinued operations in the ~~unaudited~~ condensed consolidated statements of earnings for all periods presented. With the conclusion of operations in this segment, any activities carried out within the segment are no longer of ongoing significance; accordingly, segment data with respect to International Marketing and Distribution activities will no longer be reported. See Note 14, Business Segments, for further discussion of the exit of the International Marketing and Distribution segment.

The major classes of line items constituting earnings from discontinued operations in the ~~unaudited~~ condensed consolidated statements of earnings ~~which primarily relate to International Marketing and Distribution activities,~~ are presented in the table below.

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Net sales $ 3,262
$ 337,903
$ 304,384
$ 847,338
Costs and expenses:
Cost of goods sold 4,233
312,917
276,371
784,836
Selling, general and administrative expenses 2,418
15,740
23,078
42,919
Interest expense —
(79 ) (86 ) (104 )
Earnings (loss) before income taxes (3,389 ) 9,325
5,021
19,687
Income taxes (benefit) (1,029 ) 1,626
2,052
4,059
Earnings (loss) from discontinued operations $ (2,360 ) $ 7,699
$ 2,969
$ 15,628



	Three Months Ended May 31,			Nine Months Ended May 31,
(in thousands)	2018			2018
Net sales	$	3,262		$	304,384
Costs and expenses:
Cost of goods sold	4,233			276,371
Selling, general and administrative expenses	2,418			23,078
Interest expense	—			(86		)
Earnings (loss) before income taxes	(3,389		)	5,021
Income taxes (benefit)	(1,029		)	2,052
Earnings (loss) from discontinued operations	$	(2,360	)	$	2,969

There were no material operating or investing non-cash items for discontinued operations for the three and nine months ended May 31, ~~2018~~2019 and ~~2017.~~2018.

~~Components of the International Marketing and Distribution segment meeting the criteria for discontinued operations have been re-classified as~~The assets and liabilities of ~~business~~the businesses classified as held for sale &and discontinued operations ~~in the unaudited condensed consolidated balance sheets for all periods presented, the major components of which are presented in the table below.~~

(in thousands) May 31, 2018 August 31, 2017*
Assets:
Accounts receivable $ 6,954
$ 106,905
Inventories, net —
141,135
Other current assets 4,111
38
Property, plant and equipment, net 217
—
Assets of businesses held for sale & discontinued operations $ 11,282
$ 248,078

Liabilities:
Accounts payable-trade $ —
$ 42,563
Accrued expenses and other payables 2,843
15,372
Liabilities of businesses held for sale & discontinued operations $ 2,843
$ 57,935

~~_________________~~

* Property, plant,were immaterial at both May 31, 2019 and ~~equipment, net of accumulated depreciation and amortization of $0.8 million at~~ August 31, ~~2017 was included in other noncurrent assets on the unaudited condensed consolidated balance sheets.~~2018.

NOTE 3.4. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"):

Three Months Ended May 31, 2018
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, February 28, 2018 $ (66,000 ) $ 1,432
$ (1,898 ) $ (66,466 )
Other comprehensive income (loss) before reclassifications (26,434 ) 16
—
(26,418 )
Amounts reclassified from AOCI 1,328
(70 ) (9 ) 1,249
Income taxes —
11
2
13
Net other comprehensive (loss) (25,106 ) (43 ) (7 ) (25,156 )
Balance, May 31, 2018 $ (91,106 ) $ 1,389
$ (1,905 ) $ (91,622 )



	Three Months Ended May 31, 2019
(in thousands)	Foreign Currency Translation			Unrealized Gain (Loss) on Derivatives			Defined Benefit Obligation			Total AOCI
Balance, February 28, 2019	$	(100,943	)	$	1,151		$	(1,095	)	$	(100,887	)
Other comprehensive loss before reclassifications	(5,135		)	(86		)	(6		)	(5,227		)
Amounts reclassified from AOCI	19			(181		)	—			(162		)
Income taxes	—			51			—			51
Net other comprehensive loss	(5,116		)	(216		)	(6		)	(5,338		)
Balance, May 31, 2019	$	(106,059	)	$	935		$	(1,101	)	$	(106,225	)


	Nine Months Ended May 31, 2018												Nine Months Ended May 31, 2019
(in thousands)	Foreign Currency Translation			Unrealized Gain (Loss) on Derivatives			Defined Benefit Obligation			Total AOCI			Foreign Currency Translation			Unrealized Gain (Loss) on Derivatives			Defined Benefit Obligation			Total AOCI
Balance, August 31, 2017	$	(80,778	)	$	1,587		$	(2,322	)	$	(81,513	)
Other comprehensive income (loss) before reclassifications	(11,656		)	47			—			(11,609		)
Balance, August 31, 2018													$	(92,637	)	$	1,356		$	(2,396	)	$	(93,677	)
Other comprehensive loss before reclassifications													(14,278		)	(190		)	(25		)	(14,493		)
Amounts reclassified from AOCI	1,328			(314		)	647			1,661			856			(330		)	1,666			2,192
Income taxes (benefit)	—			69			(230		)	(161		)	—			99			(346		)	(247		)
Net other comprehensive income (loss)	(10,328		)	(198		)	417			(10,109		)	(13,422		)	(421		)	1,295			(12,548		)
Balance, May 31, 2018	$	(91,106	)	$	1,389		$	(1,905	)	$	(91,622	)
Balance, May 31, 2019													$	(106,059	)	$	935		$	(1,101	)	$	(106,225	)



	Three Months Ended May 31, 2018
(in thousands)	Foreign Currency Translation			Unrealized Gain (Loss) on Derivatives			Defined Benefit Obligation			Total AOCI
Balance, February 28, 2018	$	(66,000	)	$	1,432		$	(1,898	)	$	(66,466	)
Other comprehensive income (loss) before reclassifications	(26,434		)	16			—			(26,418		)
Amounts reclassified from AOCI	1,328			(70		)	(9		)	1,249
Income taxes	—			11			2			13
Net other comprehensive loss	(25,106		)	(43		)	(7		)	(25,156		)
Balance, May 31, 2018	$	(91,106	)	$	1,389		$	(1,905	)	$	(91,622	)

Three Months Ended May 31, 2017
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, February 28, 2017 $ (124,235 ) $ 2,108
$ (2,863 ) $ (124,990 )
Other comprehensive income before reclassifications 27,109
368
—
27,477
Amounts reclassified from AOCI 968
(459 ) (11 ) 498
Income taxes —
12
2
14
Net other comprehensive income (loss) 28,077
(79 ) (9 ) 27,989
Balance, May 31, 2017 $ (96,158 ) $ 2,029
$ (2,872 ) $ (97,001 )

Nine Months Ended May 31, 2017
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, August 31, 2016 $ (112,255 ) $ 2,186
$ (2,845 ) $ (112,914 )
Other comprehensive income before reclassifications 15,129
926
—
16,055
Amounts reclassified from AOCI 968
(1,090 ) (33 ) (155 )
Income taxes —
7
6
13
Net other comprehensive income (loss) 16,097
(157 ) (27 ) 15,913
Balance, May 31, 2017 $ (96,158 ) $ 2,029
$ (2,872 ) $ (97,001 )



	Nine Months Ended May 31, 2018
(in thousands)	Foreign Currency Translation			Unrealized Gain (Loss) on Derivatives			Defined Benefit Obligation			Total AOCI
Balance, August 31, 2017	$	(80,778	)	$	1,587		$	(2,322	)	$	(81,513	)
Other comprehensive income (loss) before reclassifications	(11,656		)	47			—			(11,609		)
Amounts reclassified from AOCI	1,328			(314		)	647			1,661
Income taxes (benefit)	—			69			(230		)	(161		)
Net other comprehensive income (loss)	(10,328		)	(198		)	417			(10,109		)
Balance, May 31, 2018	$	(91,106	)	$	1,389		$	(1,905	)	$	(91,622	)

Items reclassified out of AOCI were not material for the three and nine months ended May 31, ~~2018~~2019 and ~~2017,~~2018, thus the corresponding line items in the ~~unaudited~~ condensed consolidated statements of earnings to which the items were reclassified are not presented.

NOTE 5. REVENUE RECOGNITION

Revenue from Contracts with Customers

Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration received or expected to be received in exchange for those goods or services. The Company's performance obligations arise from (i) sales of steel products, ferrous and nonferrous scrap metals, and construction materials and (ii) services such as steel fabrication and installation. The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and freight are included in net sales, and the related costs are included in cost of goods sold. Net sales is presented net of taxes.

In the Americas Mills, Americas Recycling, and International Mill segments, revenue is recognized at a point in time concurrent with the transfer of control, which usually occurs, depending on shipping terms, upon shipment or customer receipt.

In the Americas Fabrication segment, each contract represents a single performance obligation. Revenue is either recognized over time or equal to billing under an available practical expedient. When the Company provides fabricated product and installation services, revenue is recognized over time using an input method. For the three and nine months ended May 31, 2019, these contracts represent approximately 27% of net sales in the Americas Fabrication segment. For these contracts, the measure of progress is based on contract costs incurred to date compared to total estimated contract costs, which provides a reasonable depiction of the Company’s progress towards satisfaction of the performance obligation as there is a direct relationship between costs incurred by the Company and the transfer of the fabricated product and installation services. Revenue from contracts where the Company does not provide installation services is recognized over time using an output method. For the three and nine months ended May 31, 2019, these contracts represent approximately 19% and 22%, respectively, of total revenue in the Americas Fabrication segment. For these contracts, the Company uses tons shipped compared to total estimated tons, which provides a reasonable depiction of the transfer of contract value to the customer, as there is a direct relationship between the units shipped by the Company and the transfer of the fabricated product. Significant judgment is required to evaluate total estimated costs used in the input method and total estimated tons in the output method. If estimated total consolidated costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to estimates related to net contract revenues, costs to complete, or total planned quantity is recorded in the period in which such revisions are identified. The Company does not exercise significant judgment in determining the transaction price. For the three and nine months ended May 31, 2019, the remaining 54% and 51%, respectively, of revenue in the Americas Fabrication segment is recognized as amounts are billed to the customer and control of the promised goods is transferred to the customer.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing and a liability when revenue is recognized subsequent to invoicing. Payment terms and conditions vary by contract type, although the Company generally requires customers to pay 30 days after the Company satisfies the performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts do not include a significant financing component.

The following table provides information about assets and liabilities from contracts with customers.

1115



(in thousands)	May 31, 2019		August 31, 2018
Contract assets (included in other current assets)	$	96,842	$	49,221
Contract liabilities (included in accrued expenses and other payables)	35,812		6,679

The majority of the increase in contract asset and liability balances was attributable to the acquisition of the Acquired Businesses. The entire contract liability as of August 31, 2018 was recognized as revenue during the nine months ended May 31, 2019.

Remaining Performance Obligations

As of May 31, 2019, a total of $853.1 million has been allocated to remaining performance obligations in the Americas Fabrication segment, excluding those contracts where revenue is recognized equal to billing under an available practical expedient. Of this amount, the Company estimates the remaining performance obligations will be recognized as revenue as follows: 40% in the first twelve months, 49% in the following twelve months, and 11% thereafter. The duration of contracts in the Americas Mills, Americas Recycling, and International Mill segments are typically less than one year.

Disaggregation of Revenue

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.



	Three Months Ended May 31, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	238	$	501,925	$	554,672	$	199,431	$	—	$	1,256,266
Ferrous scrap	106,404		8,916		2		525		—		115,847
Nonferrous scrap	121,581		4,080		—		3,212		—		128,873
Construction materials	—		—		71,228		—		—		71,228
Other	563		21,114		3,608		5,854		2,519		33,658
Total	$	228,786	$	536,035	$	629,510	$	209,022	$	2,519	$	1,605,872

	Nine Months Ended May 31, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	679	$	1,294,217	$	1,392,442	$	584,735	$	—	$	3,272,073
Ferrous scrap	323,311		26,802		2		1,055		—		351,170
Nonferrous scrap	369,660		10,568		—		8,677		—		388,905
Construction materials	—		—		188,589		—		—		188,589
Other	1,205		50,914		9,713		16,173		7,255		85,260
Total	$	694,855	$	1,382,501	$	1,590,746	$	610,640	$	7,255	$	4,285,997



	Three Months Ended May 31, 2018*
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	319	$	305,390	$	303,363	$	193,114	$	—	$	802,186
Ferrous scrap	144,398		8,462		2		351		—		153,213
Nonferrous scrap	147,683		4,851		—		3,286		—		155,820
Construction materials	—		—		70,436		—		—		70,436
Other	279		13,756		1,382		4,687		2,725		22,829
Total	$	292,679	$	332,459	$	375,183	$	201,438	$	2,725	$	1,204,484

	Nine Months Ended May 31, 2018*
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	894	$	766,976	$	830,172	$	605,152	$	—	$	2,203,194
Ferrous scrap	383,358		24,605		2		970		—		408,935
Nonferrous scrap	447,060		12,734		—		10,427		—		470,221
Construction materials	—		—		180,641		—		—		180,641
Other	1,136		37,580		5,119		16,585		11,874		72,294
Total	$	832,448	$	841,895	$	1,015,934	$	633,134	$	11,874	$	3,335,285

_________________

* Prior period amounts have been reported under ASC 605.

NOTE ~~4. SALES OF~~6. ACCOUNTS RECEIVABLE PROGRAMS

~~For added flexibility with~~As an additional source of liquidity, the ~~Company's liquidity, we may sell~~Company sells certain trade accounts receivable both in the U.S. and ~~internationally. CMC has a $200.0 million U.S. sale~~Poland (hereinafter referred to as the “Programs”). For years prior to fiscal 2019, the Company accounted for transfers of trade accounts receivable ~~program which expires in August 2019. Under~~under the program, CMC contributes, and certain of its subsidiaries sell without recourse, certain eligible trade accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly-owned subsidiary of CMC. CMCRV is structured to be a bankruptcy-remote entity formed for the sole purpose of buying and selling trade accounts receivable generated by the Company. CMCRV sells the trade accounts receivable in their entirety to two financial institutions. Under the U.S. sale of trade accounts receivable program, with the consent of both CMCRV and the program's administrative agent, the amount advanced by the financial institutions can be increased to a maximum of $300.0 million for all trade accounts receivable sold. The remaining portion of the purchase price of the trade accounts receivable takes the form of subordinated notes from the respective financial institutions. These notes will be satisfied from the ultimate collection of the trade accounts receivable after payment of certain fees and other costs. The Company accounts forPrograms as sales of ~~the trade accounts receivable as true sales,~~financial assets, and the trade accounts receivable balances ~~that are~~ sold ~~are~~were removed from the consolidated balance sheets. ~~The~~On September 1, 2018, the Company amended certain terms of the Programs, disqualifying the sale of such receivables from being accounted for as sales of financial assets. For activity in the Programs occurring prior to the September 1, 2018 amendment, disclosures required under ASC 860-20-50 are provided below. See Note 9, Credit Arrangements, for further details regarding the Programs.

Prior to September 1, 2018, in exchange for trade receivables transferred into the Programs, the Company received either cash ~~advances~~(referred to as a cash purchase price or “CPP”) or a deferred purchase price (“DPP”). Upon adoption of ASU 2016-15, the CPP received ~~are~~was reflected as cash ~~from~~provided by operating activities onin the Company's ~~unaudited condensed~~ consolidated statements of cash flows, and cash received to settle the DPP related to the transfer of receivables was included as part of investing activities in the Company's consolidated statement of cash flows. ~~Additionally,~~For periods prior to fiscal 2019, DPP on the ~~U.S. sale of trade~~Programs was included in accounts receivable ~~program contains certain cross-default provisions whereby a termination event could occur if~~on the Company defaulted under certain of its credit arrangements. The covenants contained in the receivables purchase agreement are consistent with the Credit Agreement described in Note 7, Credit Arrangements.Company's condensed consolidated balance sheets.

At May 31, 2018 and August 31, 2017, under its U.S. sale of trade accounts receivable program, the Company had sold $272.9 million and $226.9 million of trade accounts receivable, respectively, to the financial institutions.



	Nine Months Ended May 31, 2018
(in thousands)	Total			U.S.			Poland
Deferred purchase price
Balance, August 31, 2017	$	215,123		$	135,623		$	79,500
Transfers of trade receivables	2,116,243			1,741,451			374,792
Less: CPP	(1,576,579		)	(1,311,705		)	(264,874		)
Non-cash increase to DPP	539,664			429,746			109,918
Cash collections of DPP	(491,577		)	(383,955		)	(107,622		)
Net repayments (advances)	69,444			90,000			(20,556		)
Net collections of DPP	(422,133		)	(293,955		)	(128,178		)
Balance, May 31, 2018	$	332,654		$	271,414		$	61,240

At May 31, 2018, the Company had no advance payments outstanding on the sale of its U.S. trade accounts receivable. At August 31, 2017, the Company had $90.0 million in advance payments outstanding on the sale of its U.S. trade accounts receivable.

In addition to the U.S. sale of trade accounts receivable program described above, the Company's international subsidiaries in Poland sell, and previously in Australia have sold, trade accounts receivable to financial institutions without recourse. These arrangements constitute true sales, and once the trade accounts receivable are sold, they are no longer available to the Company's creditors in the event of bankruptcy and are removed from the consolidated balance sheets. The Polish program has a facility limit of 220.0 million Polish zloty ("PLN") ($59.6 million as of May 31, 2018) and allows the Company's Polish subsidiaries to obtain an advance of up to 90% of eligible trade accounts receivable sold under the terms of the arrangement. Under the Polish and Australian programs, the cash advances received were reflected as cash from operating activities on the Company's unaudited condensed consolidated statements of cash flows. During the first quarter of fiscal 2017, the Company's Australian program expired, and the Company did not enter into a new program.

~~At May 31, 2018 and August 31, 2017, under its Polish program, the Company sold $79.3 million and $79.5~~transferred $352.2 million of trade accounts receivable ~~respectively,~~ to the ~~third-party~~ financial ~~institution. At May 31, 2018, the Company~~institutions and had ~~$18.1 million of advance payments outstanding on the sales of its Polish trade accounts receivable. At August 31, 2017, there were~~ no advance payments outstanding under the U.S. Program and $18.1 million outstanding under the Polish ~~program.~~Program.

During the nine months ended May 31, 2018 and 2017, cash proceeds from the U.S. and international sale of trade accounts receivable programs were $145.5 million and $246.0 million, respectively, and cash paymentsDiscounts related to the ~~owners of trade accounts receivable~~Programs were $217.4 million and $250.3 million, respectively. For a nominal servicing fee, the Company is responsible for servicing the trade accounts receivable for the U.S. program. Discounts on U.S. and international sales of trade accounts receivable were $0.3 million and $0.7 millionimmaterial for the three and nine months ended May 31, 2018, respectively, and $0.2 million and $0.7 million for the three and nine months ended May 31, 2017, respectively, and are included in selling, general and administrative expenses in the Company's unaudited condensed consolidated statements of earnings.2018.

As of May 31, 2018 and August 31, 2017, the deferred purchase price on the Company's U.S. and international sale of trade accounts receivable programs was included in accounts receivable on the Company's unaudited condensed consolidated balance sheets. The following tables summarize the activity of the deferred purchase price receivables for the U.S. and international sale of trade accounts receivable programs.

Three Months Ended May 31, 2018
(in thousands) Total U.S. Poland
Beginning balance $ 336,212
$ 244,884
$ 91,328
Transfers of accounts receivable 770,596
653,801
116,795
Collections (774,154 ) (627,271 ) (146,883 )
Ending balance $ 332,654
$ 271,414
$ 61,240

Nine Months Ended May 31, 2018
(in thousands) Total U.S. Poland
Beginning balance $ 215,123
$ 135,623
$ 79,500
Transfers of accounts receivable 2,116,243
1,741,451
374,792
Collections (1,998,712 ) (1,605,660 ) (393,052 )
Ending balance $ 332,654
$ 271,414
$ 61,240

Three Months Ended May 31, 2017
(in thousands) Total U.S.* Poland
Beginning balance $ 312,446
$ 258,719
$ 53,727
Transfers of accounts receivable 777,104
671,429
105,675
Collections (725,336 ) (626,182 ) (99,154 )
Ending balance $ 364,214
$ 303,966
$ 60,248

~~_________________~~

* Includes the sale of trade accounts receivable activities related to discontinued operations, including transfers of trade accounts receivable of $144.1 million and collections of $134.0 million, for the three months ended May 31, 2017.

Nine Months Ended May 31, 2017
(in thousands) Total U.S.* Australia** Poland
Beginning balance $ 289,748
$ 212,762
$ 26,662
$ 50,324
Transfers of accounts receivable 1,977,546
1,702,584
16,914
258,048
Collections (1,869,163 ) (1,611,380 ) (9,659 ) (248,124 )
Program termination (33,917 ) —
(33,917 ) —
Ending balance $ 364,214
$ 303,966
$ —
$ 60,248

~~_________________~~

* Includes the sale of trade accounts receivable activities related to discontinued operations, including transfers of trade accounts receivable of $354.5 million and collections of $325.7 million, for the nine months ended May 31, 2017.


**	~~Includes collections of $3.7 million and program termination of $1.6 million related to discontinued operations and businesses sold, for the nine months ended May 31, 2017.~~

NOTE 5.7. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished goods. Under the Company’s business model, products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be ~~combined.~~combined as finished goods. Work in process inventories were not material at May 31, ~~2018~~2019 and August 31, ~~2017.~~2018. At May 31, ~~2018~~2019 and August 31, ~~2017, $177.6~~2018, $185.1 million and ~~$116.8~~$177.7 million, respectively, of the Company's inventories were in the form of raw materials.

NOTE 6.8. GOODWILL AND OTHER ~~INTANGIBLE ASSETS~~INTANGIBLES

~~The following table details the changes~~Goodwill by reportable segment at May 31, 2019 is detailed in the ~~carrying amount of goodwill by reportable segment:~~following table:

(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other* Consolidated
Goodwill, gross
Balance, August 31, 2017 $ 9,751
$ 4,970
$ 57,943
$ 2,664
$ 1,982
$ 77,310
Foreign currency translation —
—
—
(90 ) —
(90 )
Impairment —
—
(514 ) —
—
(514 )
Reclassification to assets of discontinued operations —
—
—
—
(1,982 ) (1,982 )
Balance, May 31, 2018 $ 9,751
$ 4,970
$ 57,429
$ 2,574
$ —
$ 74,724

Accumulated impairment losses
Balance, August 31, 2017 $ (9,751 ) $ —
$ (493 ) $ (169 ) $ (1,982 ) $ (12,395 )
Foreign currency translation —
—
—
5
—
5
Reclassification to assets of discontinued operations —
—
—
—
1,982
1,982
Balance, May 31, 2018 $ (9,751 ) $ —
$ (493 ) $ (164 ) $ —
$ (10,408 )

Goodwill, net
Balance, August 31, 2017 $ —
$ 4,970
$ 57,450
$ 2,495
$ —
$ 64,915
Foreign currency translation —
—
—
(85 ) —
(85 )
Impairment —
—
(514 ) —
—
(514 )
Balance, May 31, 2018 $ —
$ 4,970
$ 56,936
$ 2,410
$ —
$ 64,316



(in thousands)	Americas Recycling			Americas Mills		Americas Fabrication			International Mill			Consolidated
Goodwill, gross*	$	9,543		$	4,970	$	57,428		$	2,478		$	74,419
Accumulated impairment losses*	(9,543		)	—		(493		)	(157		)	(10,193		)
Goodwill, net*	$	—		$	4,970	$	56,935		$	2,321		$	64,226

_________________

* ~~Other relates to goodwill for the International Marketing and Distribution segment which~~The change in balance from August 31, 2018 was ~~moved to discontinued operations during the second quarter of fiscal 2018.~~immaterial.

The total gross carrying amounts of the Company's intangible assets subject to amortization were ~~$21.0~~$21.8 million and ~~$19.7~~$20.5 million at May 31, ~~2018~~2019 and August 31, ~~2017,~~2018, respectively, and were included in other noncurrent assets on the Company's ~~unaudited~~ condensed consolidated balance sheets. As part of the Company's purchase of substantially all of the assets of MMFX Technologies Corporation ("MMFX") during the first fiscal quarter of 2018, the Company acquired patents which were assigned a fair value of $7.0 million with a useful life of 7.5 years. See Note 2, Changes in Business, to the unaudited condensed consolidated financial statements included in the Company's November 30, 2017 Quarterly Report on Form 10-Q for more information with respect to the MMFX acquisition. Intangible amortization expense from continuing operations related to such intangible assets was $0.6 million for both the three months ended May 31, 2019 and May 31, 2018, and $1.7 million and $1.6 million for the ~~three and~~ nine months ended May 31, 2019 and 2018, ~~respectively, and $0.8 million and $1.8 million for the three and nine months ended May 31, 2017,~~ respectively. The nine months ended May 31, 2018 included goodwill impairment charges of $0.5 million, recorded during the second fiscal quarter, related to the Company's sale of its structural steel fabrication operations as discussed in Note 2, Changes in Business. See Note 9, Fair Value, for further discussion related to the impairment. Excluding goodwill, the Company did not have any significant intangible assets with indefinite lives as of May 31, ~~2018.~~2019.

The amortizable intangible (liabilities) acquired consisted of:



(in thousands, except life in years)	Life in Years	Estimated Fair Value
Net unfavorable lease contracts	Various	$	(2,705	)
Unfavorable contract backlog	1-2 years*	$	(110,166	)

_________________

* Amortization will correspond with completion of the acquired contracts, which is estimated to occur over the next 1 to 2 years.

In connection with the acquisition of the Acquired Businesses, the Company recorded a preliminary unfavorable contract backlog liability of $110.2 million. Amortization of the backlog for the three and nine months ended May 31, 2019 was $23.4 million and $58.2 million, respectively, and was recorded as an increase to net sales in the Company's condensed consolidated statement of earnings.

NOTE 7.9. CREDIT ARRANGEMENTS

Long-term debt as of May 31, 2019 and August 31, 2018 was as follows:



(in thousands)	Weighted Average Interest Rate as of May 31, 2019	May 31, 2019		August 31, 2018
2027 Notes	5.375%	$	300,000	$	300,000
2026 Notes	5.750%	350,000		350,000
2023 Notes	4.875%	330,000		330,000
Term loans	4.115%	310,125		142,500
Short-term borrowings	*	25,327		—
Other, including equipment notes		56,996		47,629
Total debt		1,372,448		1,170,129
Less debt issuance costs		10,690		11,764
Total amounts outstanding		1,361,758		1,158,365
Less current maturities		29,568		19,746
Less short-term borrowings		25,327		—
Current maturities of long-term debt and short-term borrowings		54,895		19,746
Long-term debt		$	1,306,863	$	1,138,619

(in thousands) Weighted Average
Interest Rate as of May 31, 2018 May 31, 2018 August 31, 2017
2027 Notes 5.375% $ 300,000
$ 300,000
2026 Notes 5.750% 350,000
—
2023 Notes 4.875% 330,000
330,000
2022 Term Loan 3.103% 144,375
150,000
Other, including equipment notes 46,763
52,077
Total debt 1,171,138
832,077
Less debt issuance costs 12,161
7,315
Total amounts outstanding 1,158,977
824,762
Less current maturities 19,874
19,182
Long-term debt $ 1,139,103
$ 805,580
_________________

* As of May 31, 2019, the weighted average interest rates associated with the U.S. Program and Poland Program were 3.120% and 2.410%, respectively.

In July 2017, the Company issued $300.0 million of 5.375% Senior Notes due July 2027 (the "2027 Notes"). Interest on the 2027 Notes is payable semiannually.

In May 2018, the Company issued $350.0 million of 5.75% Senior Notes due April 2026 (the "2026 Notes"). ~~Issuance costs associated with the 2026 Notes were approximately $5.3 million.~~ Interest on the 2026 Notes is payable semiannually.

In May 2013, the Company issued $330.0 million of 4.875% Senior Notes due May 2023 (the "2023 Notes"). Interest on the 2023 Notes is payable semiannually.

The Company has a $350.0 million revolving credit facility (the "Revolver") pursuant to the Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), and atwo senior secured term ~~loan in the maximum~~loans: one drawn on July 13, 2017 with an original principal amount of $150.0 million (the "2022 Term Loan"), ~~each~~and one drawn on November 1, 2018 with an original principal amount of $180.0 million (the "2018 Term Loan"). These term loans are hereinafter collectively referred to as the "Term Loans." The Credit Agreement and the Term Loans are coterminous with a maturity date in June 2022. ~~The 2022 Term Loan was drawn upon on July 13, 2017.~~ The Company is required to make quarterly payments on the ~~2022~~ Term ~~Loan~~Loans equal to 1.25% of the original principal amount. The maximum availability under the ~~Credit Agreement, together with the 2022 Term Loan,~~Revolver can be increased to ~~$750.0~~$600.0 million with bank approval. The Company's obligations under the Credit Agreement are collateralized by its U.S. inventory and U.S. fabrication receivables. The Credit Agreement's capacity includes a $50.0 million sub-limit for the issuance of stand-by letters of credit.

On February 21, 2018, the Company entered into a Joinder Agreement and Fifth Amendment to the Credit Agreement, which allowed for a coterminous delayed draw Term Loan A facility in the maximum aggregate principal amount of up to $200.0 million (the "2018 Term Loan"). The proceeds of the 2018 Term Loan are required to be used to (i) finance the acquisition of the Business, (ii) repay certain existing indebtedness of Gerdau S.A. and its subsidiaries, and (iii) pay transaction fees and expenses related thereto. Once drawn, the Company is required to make quarterly payments on the 2018 Term Loan equal to 1.25% of the original principal amount. The 2018 Term Loan has a maturity date of June 2022.

On December 29, 2017, the Company entered into a Fourth Amendment to the Credit Agreement providing for a Term Loan B Facility, as described in Note 7, Credit Arrangements, in the Company's Quarterly Report on Form 10-Q for the period ended February 28, 2018. During the third fiscal quarter of 2018, the Company terminated the commitment letter governing the Term Loan B Facility.

The Company had no amounts drawn under the Revolver at May 31, ~~2018~~2019 and August 31, ~~2017.~~2018. The Company's availability under the Revolver was reduced by outstanding letters of credit of ~~$3.3~~$3.0 million and ~~$3.0~~$3.3 million at May 31, ~~2018~~2019 and August 31, ~~2017, respectively.~~2018.

Under the Credit Agreement, the Company is required to comply with certain financial and non-financial covenants, including covenants to maintain: (i) an interest coverage ratio (consolidated EBITDA to consolidated interest expense, each as defined in the Credit Agreement) of not less than 2.50 to 1.00 and (ii) a debt to capitalization ratio (consolidated funded debt to total capitalization, each as defined in the Credit Agreement) that does not exceed 0.60 to 1.00. At May 31, ~~2018,~~2019, the Company's interest coverage ratio was ~~7.89~~5.53 to 1.00, and the Company's debt to capitalization ratio was ~~0.45~~0.47 to 1.00. Loans under the Credit Agreement bear interest based onat the Eurocurrency rate, a base rate, or the London Interbank Offered Rate ("LIBOR").

At May 31, ~~2018,~~2019, the Company was in compliance with all covenants contained in its debt agreements.

The Company also has ~~uncommitted~~ credit facilities available from U.S. and international banks. In general, these credit facilities are used to support trade letters of credit (including accounts payable settled under bankers' acceptances), foreign exchange transactions and short-term advances which are priced at market rates.

~~At May 31, 2018 and August 31, 2017,~~in Poland, primarily through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP") ~~had uncommitted~~, available to support global working capital, short-term cash needs, letters of credit, ~~facilities with several banks of PLN 225.0 million ($61.0 million)~~financial assurance and ~~PLN 175.0 million ($49.1 million), respectively. As of May 31, 2018, the uncommitted credit facilities have expiration dates ranging from November 2018 to March 2019.~~other trade finance-related matters. At May 31, ~~2018~~2019, CMCP's credit facilities totaled Polish zloty ("PLN") 275.0 million, or $71.7 million. These facilities will expire in March 2022. At May 31, 2019 and August 31, ~~2017,~~2018, no amounts were outstanding under these facilities. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees, and/or other financial assurance instruments, which totaled ~~$1.7~~$1.3 million and ~~$1.3~~$1.1 million at May 31, ~~2018~~2019 and August 31, ~~2017,~~2018, respectively. During the nine months ended May 31, ~~2018~~2019 and ~~2017,~~2018, CMCP had no borrowings and no repayments under its ~~uncommitted~~ credit facilities.

Accounts Receivable Programs

CMC has a $200.0 million U.S. trade accounts receivable program (the "U.S. Program"), which expires in August 2020. Under the U.S. Program, CMC contributes, and certain of its subsidiaries transfer without recourse, certain eligible trade accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly-owned subsidiary of CMC. CMCRV is structured to be a bankruptcy-remote entity formed for the sole purpose of facilitating transfers of trade accounts receivable generated by the Company. CMCRV transfers the trade accounts receivable in their entirety to two financial institutions. Under the U.S. Program, with the consent of both CMCRV and the program's administrative agent, the amount advanced by the financial institutions can be increased to a maximum of $300.0 million for all trade accounts receivable. The remaining portion of the purchase price of the trade accounts receivable takes the form of subordinated notes from the respective financial institutions. These notes will be satisfied from the ultimate collection of the trade accounts receivable after payment of certain fees and other costs. The U.S. Program contains certain cross-default provisions whereby a termination event could occur if the Company defaulted under certain of its credit arrangements. The covenants contained in the receivables purchase agreement are consistent with the Credit Agreement. Advances taken under the U.S. Program incur interest based on LIBOR plus a margin. The Company ~~capitalized $0.5~~had no advance payments outstanding under the U.S. Program at May 31, 2019.

In addition to the U.S. Program, the Company's international subsidiary in Poland transfers trade accounts receivable to financial institutions without recourse (the "Poland Program"). The Poland Program has a facility limit of PLN 220.0 million ($57.4 million as of May 31, 2019) and allows the Company's Polish subsidiaries to obtain an advance of up to 90% of eligible trade accounts receivable transferred under the terms of the arrangement. Advances taken under the Poland Program incur interest based on the Warsaw Interbank Offered Rate ("WIBOR") plus a margin. The Company had advance payments outstanding of $25.3 million and ~~$7.3~~$12.1 million ~~of interest in~~under the ~~cost of property, plant and equipment during the three and nine months ended~~Poland Program at May 31, ~~2018, respectively,~~2019 and ~~$2.9 million and $6.6 million for the three and nine months ended May 31, 2017, respectively. Cash paid for interest during the nine months ended May~~August 31, 2018, respectively.

Prior to fiscal 2019, the Company accounted for transfers of trade accounts receivable as sales, and ~~2017 was $30.2 million~~the trade accounts receivable balances transferred were removed from the condensed consolidated balance sheets. On September 1, 2018, the Company amended certain terms of both the U.S. and ~~$41.4 million, respectively.~~Poland Programs, disqualifying the accounting of the transfer of such receivables as sales. As a result of the amendments, beginning in fiscal 2019, any advances outstanding under the U.S. and Poland Programs are recorded as debt on the Company's condensed consolidated balance sheets.

NOTE 8.10. DERIVATIVES AND RISK MANAGEMENT

The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, natural gas prices and interest rates. One objective of the Company's risk management program is to mitigate these risks using derivative instruments. The Company enters into (i) metal commodity futures and forward contracts to mitigate the risk of unanticipated changes in gross margin due to the volatility of the commodities' prices, and (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies.

At May 31, 2019, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $112.0 million and $49.7 million, respectively. At May 31, 2018, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were ~~$140.4~~$140.4 million and $64.8 million, respectively. ~~At May 31, 2017, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $262.8 million and $36.9 million, respectively.~~

The following table provides information regarding the Company's commodity contract commitments as of May 31, ~~2018:~~2019:



Commodity	Long/Short	Total
Aluminum	Long	~~6,125~~4,500	MT
Aluminum	Short	~~3,075~~2,350	MT
Copper	Long	~~363~~669	MT
Copper	Short	~~6,021~~5,341	MT

_________________

MT = Metric Ton

The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. These hedges resulted in substantially no ineffectiveness in the Company's ~~unaudited~~ condensed consolidated statements of earnings, and there were no components excluded from the assessment of hedge effectiveness for the three and nine months ended May 31, ~~2018~~2019 and ~~May 31, 2017.~~2018. Certain foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges.

The following tables summarize activities related to the Company's derivative instruments and hedged items recognized in the ~~unaudited~~ condensed consolidated statements of earnings (amounts in thousands):



		Three Months Ended May 31,					Nine Months Ended May 31,
Derivatives Not Designated as Hedging Instruments	Location	2019			2018		2019			2018
Commodity	Cost of goods sold	$	3,408		$	1,498	$	143		$	2,071
Foreign exchange	Cost of goods sold	—			—		—			(50		)
Foreign exchange	SG&A expenses	(72		)	518		(472		)	1,169
Gain (loss) before income taxes		$	3,336		$	2,016	$	(329	)	$	3,190

Three Months Ended May 31, Nine Months Ended May 31,
Derivatives Not Designated as Hedging Instruments Location 2018 2017 2018 2017
Commodity Cost of goods sold $ 1,498
$ 1,654
$ 2,071
$ (3,121 )
Foreign exchange Net sales —
(2 ) —
(2 )
Foreign exchange Cost of goods sold —
(5 ) (50 ) (38 )
Foreign exchange SG&A expenses 518
(1,076 ) 1,169
2,295
Gain (loss) before income taxes $ 2,016
$ 571
$ 3,190
$ (866 )

The Company's fair value hedges are designated for accounting purposes with the gains or losses on the hedged items offsetting the gains or losses on the related derivative transactions. Hedged items relate to firm commitments on commercial sales and purchases and capital expenditures.



	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended May 31,					Location of Gain (Loss) Recognized in Income on Related Hedged Items	Amount of Gain (Loss) Recognized in Income on Related Hedge Items for the Three Months Ended May 31,
	Location of Gain (Loss) Recognized in Income on Derivatives	2019		2018				2019		2018
Foreign exchange	Net sales	$	—	$	163		Net sales	$	—	$	(163	)
Foreign exchange	Cost of goods sold	—		(429		)	Cost of goods sold	—		429
Gain (loss) before income taxes		$	—	$	(266	)		$	—	$	266

	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives for the Nine Months Ended May 31,					Location of Gain (Loss) Recognized in Income on Related Hedged Items	Amount of Gain (Loss) Recognized in Income on Related Hedge Items for the Nine Months Ended May 31,
	Location of Gain (Loss) Recognized in Income on Derivatives	2019		2018				2019		2018
Foreign exchange	Net sales	$	—	$	(66	)	Net sales	$	—	$	66
Foreign exchange	Cost of goods sold	—		1,596			Cost of goods sold	—		(1,596		)
Gain (loss) before income taxes		$	—	$	1,530			$	—	$	(1,530	)

Location of Gain (Loss) Recognized in Income on Derivatives Amount of Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended May 31, Location of gain (loss) recognized in income on related hedged items Amount of Gain (Loss) Recognized in Income on Related Hedge Items for the Three Months Ended May 31,
2018 2017 2018 2017
Foreign exchange Net sales $ 163
$ (102 ) Net sales $ (163 ) $ 102
Foreign exchange Cost of goods sold (429 ) 1,042
Cost of goods sold 429
(1,042 )
Gain (loss) before income taxes $ (266 ) $ 940
$ 266
$ (940 )



Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in AOCI	Three Months Ended May 31,					Nine Months Ended May 31,
	2019			2018		2019			2018
Foreign exchange, net of income taxes	$	(145	)	$	13	$	(267	)	$	38

Location of Gain (Loss) Recognized in Income on Derivatives Amount of Gain (Loss) Recognized in Income on Derivatives for the Nine Months Ended May 31, Location of gain (loss) recognized in income on related hedged items Amount of Gain (Loss) Recognized in Income on Related Hedge Items for the Nine Months Ended May 31,
2018 2017 2018 2017
Foreign exchange Net sales $ (66 ) $ (58 ) Net sales $ 66
$ 58
Foreign exchange Cost of goods sold 1,596
435
Cost of goods sold (1,596 ) (435 )
Gain (loss) before income taxes $ 1,530
$ 377
$ (1,530 ) $ (377 )

Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in AOCI Three Months Ended May 31, Nine Months Ended May 31,
2018 2017 2018 2017
Commodity $ —
$ (9 ) $ —
$ 208
Foreign exchange 13
263
38
488
Gain, net of income taxes $ 13
$ 254
$ 38
$ 696

~~Refer to Note 3, Accumulated Other Comprehensive Income (Loss), for the effective portion of derivatives designated as cash flow hedging instruments reclassified from AOCI.~~

The Company enters into derivative agreements that include provisions to allow the set-off of certain amounts. Derivative instruments are presented on a gross basis on the Company's ~~unaudited~~ condensed consolidated balance sheets. The asset and liability balances in the tables below reflect the gross amounts of derivative instruments at May 31, ~~2018~~2019 and August 31, ~~2017~~2018. The fair value of the Company's derivative instruments on the ~~unaudited~~ condensed consolidated balance sheets was as ~~follows (amounts are in thousands):~~follows:



Derivative Assets (in thousands)	May 31, 2019		August 31, 2018
Commodity — not designated for hedge accounting	$	2,088	$	1,881
Foreign exchange — designated for hedge accounting	—		—
Foreign exchange — not designated for hedge accounting	221		407
Derivative assets (other current assets) ⁽¹⁾	$	2,309	$	2,288

Derivative Assets May 31, 2018 August 31, 2017
Commodity — not designated for hedge accounting $ 901
$ 767
Foreign exchange — designated for hedge accounting —
81
Foreign exchange — not designated for hedge accounting 1,573
1,286
Derivative assets (other current assets)* $ 2,474
$ 2,134


Derivative Liabilities	May 31, 2018		August 31, 2017
Derivative Liabilities (in thousands)					May 31, 2019		August 31, 2018
Commodity — not designated for hedge accounting	$	80	$	3,251	$	322	$	301
Foreign exchange — designated for hedge accounting	—		1,549		373		—
Foreign exchange — not designated for hedge accounting	1,550		3,710		581		1,095
Derivative liabilities (accrued expenses and other payables)*	$	1,630	$	8,510
Derivative liabilities (accrued expenses and other payables) ⁽¹⁾					$	1,276	$	1,396

_________________

*(1) Derivative assets and liabilities do not include the hedged items designated as fair value hedges.

As of May 31, ~~2018~~2019, ~~all~~most of the Company's derivative instruments designated to hedge exposure to the variability in future cash flows of the forecasted transactions will mature within twelve months. All of the instruments are highly liquid and were not entered into for trading purposes.

1822

NOTE 9.11. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Levels within the hierarchy are defined as follows:

Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities;

Level 2 - Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly; and

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following tables summarize information regarding the Company's financial assets and financial liabilities that were measured at fair value on a recurring basis:


			Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(in thousands)	May 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		May 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investment deposit accounts ⁽¹⁾	$	522,971	$	522,971	$	—	$	—	$	2,792	$	2,792	$	—	$	—
Commodity derivative assets ⁽²⁾	901		901				—		2,088		2,088		—		—
Foreign exchange derivative assets ⁽²⁾	1,573		—		1,573		—		221		—		221		—
Liabilities:
Commodity derivative liabilities ⁽²⁾	80		80		—		—		322		322		—		—
Foreign exchange derivative liabilities ⁽²⁾	1,550		—		1,550		—		954		—		954		—


			Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(in thousands)	August 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		August 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investment deposit accounts ⁽¹⁾	$	43,553	$	43,553	$	—	$	—	$	541,101	$	541,101	$	—	$	—
Commodity derivative assets ⁽²⁾	767		767		—		—		1,881		1,881		—		—
Foreign exchange derivative assets ⁽²⁾	1,367		—		1,367		—		407		—		407		—
Liabilities:
Commodity derivative liabilities ⁽²⁾	3,251		3,251		—		—		301		301		—		—
Foreign exchange derivative liabilities ⁽²⁾	5,259		—		5,259		—		1,095		—		1,095		—

_________________

(1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The investment portfolio mix can change each period based on the Company's assessment of investment options.

(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Further discussion regarding the Company's use of derivative instruments and the classification of the assets and liabilities is included in Note 8,10, Derivatives and Risk Management.

In connection with the sale of assets related to the Company's structural steel fabrication operations, the Company recorded an impairment ~~charge~~charges of $0.9 million and $13.0 million for the three and nine months ended May 31, 2018, respectively. The signed definitive asset sale agreement ~~and subsequent post-closing adjustments~~ (Level 2) ~~were~~was the basis ~~for~~of the determination of fair value of these operations. There were no other material, non-recurring fair value remeasurements during the three and nine months ended May 31, ~~2018~~2019 and ~~2017.~~2018.

1923

The carrying values of the Company's short-term items ~~including the deferred purchase price of accounts receivable, documentary letters of credit and notes payable,~~ approximate fair ~~value due to their short-term nature.~~value.

The carrying values and estimated fair values of the Company's financial assets and liabilities that are not required to be measured at fair value on the ~~unaudited~~ condensed consolidated balance sheets were as follows:


		May 31, 2018				August 31, 2017					May 31, 2019				August 31, 2018
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
2027 Notes ⁽¹⁾	Level 2	$	300,000	$	287,052	$	300,000	$	314,286	Level 2	$	300,000	$	279,195	$	300,000	$	281,655
2026 Notes ⁽¹⁾	Level 2	350,000		346,966		—		—		Level 2	350,000		345,769		350,000		339,238
2023 Notes ⁽¹⁾	Level 2	330,000		323,430		330,000		340,052		Level 2	330,000		328,964		330,000		326,090
2022 Term Loan ⁽²⁾	Level 2	144,375		144,375		150,000		150,000
Short-term borrowings ⁽²⁾										Level 2	25,327		25,327		—		—
Term loans ⁽²⁾										Level 2	310,125		310,125		142,500		142,500

_________________

(1) The fair value of the notes was determined based on indicated market values.

(2) ~~The 2022 Term Loan contains~~Contains variable interest rates and ~~its~~ carrying value approximates fair value.

NOTE ~~10.~~12. INCOME TAX

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act ("TCJA") which, among other provisions, reduced the federal corporate tax rate to 21.0% effective January 1, 2018. Due to the Company’s August 31^st ~~fiscal year end, this provision will result in a blended statutory U.S. tax rate of 25.7% for fiscal 2018 and a 21.0% statutory U.S. tax rate beginning September 1, 2018.~~

Accounting Standards Codification ("ASC") 740 requires the change in tax law to be accounted for in the period of enactment. Due to complexities involved in accounting for the TCJA, the Securities and Exchange Commission's Staff Accounting Bulletin ("SAB") 118 provides a measurement period, which should not extend beyond one year from the date of enactment, to complete the accounting under ASC 740. The Company recognized additional income tax expense of $9.9 million during the nine months ended May 31, 2018 for the effects of those provisions of the TCJA for which amounts are reasonably estimable, including (i) recognition of the one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries with associated foreign tax credits, in order to transition from a worldwide system with deferral to a territorial-style tax system, and (ii) the remeasurement of the Company’s deferred tax balances as of May 31, 2018 to the lower statutory rates. These provisions of the TCJA, as well as 100% bonus depreciation for qualified assets acquired and placed in service after September 27, 2017, resulted in a $45.8 million reduction to the Company’s net deferred tax liabilities. The impacts of the legislation on the Company’s tax expense and/or the Company’s deferred tax balances may differ from these estimates, possibly materially, and may be adjusted accordingly over the SAB 118 measurement period.

The Company’s current analysis of the following provisions of the TCJA resulted in minimal or no impact on the Company’s financial statements, and as a result, the Company did not record any associated tax expense or benefit as of May 31, 2018: (i) the new tax on global intangible low-taxed income, (ii) the new tax on foreign-derived intangible income, (iii) the base erosion anti-abuse tax, (iv) deductibility limitations on performance-based compensation, (v) deductibility limitations on business interest under Section 163(j) and (vi) deductibility limitations on meal and entertainment related expenses. The Company will continue to evaluate the effect of these provisions and adjust its financial statements if necessary as new information becomes available.

~~The Company's effective income tax rate from continuing operations for the three and nine months ended~~ ~~May 31, 2018~~ ~~was 23.9% and 21.8%, respectively, compared with 25.9% and 26.1% for~~For the three and nine months ended May 31, ~~2017, respectively.~~2019, the Company's effective tax rates from continuing operations were 27.0% and 31.9%, respectively, as compared to the U.S. statutory income tax rate of 21.0%. The effective tax rate is determined by computing the estimated annual effective tax rate, adjusted for discrete items, if any, which are taken into account in the appropriate period. ~~Several factors determine~~Items that impacted the ~~Company's~~ effective tax rate, including the mix and amount of global earnings, the impact of subsidiaries with losses for which no tax benefit is available due to valuation allowances, audit-related adjustments, and the impact of permanent tax adjustments.rates included:


i.	a global intangible low-taxed income (“GILTI”) tax;


ii.	a valuation allowance on foreign tax credits from the one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries as a result of the Tax Cuts and Jobs Act ("TCJA");


iii.	an uncertain tax position related to the one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries as a result of the TCJA;


iv.	non-deductible compensation expense; and


v.	state and local taxes.

For the three and nine months ended May 31, 2018, the Company's effective tax ~~rate was lower than~~rates from continuing operations were 23.9% and 21.8%, respectively, as compared to the blended U.S. statutory income tax rate of 25.7%. ~~The statutory rate for fiscal 2018 was revised during the second quarter of fiscal 2018 due to the provisions of the TCJA, as discussed above.~~ Items that impacted the effective tax ~~rate~~rates included:


i.	the one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries with associated foreign tax credits as a result of the TCJA;


ii.	the remeasurement of the Company’s deferred tax balances to the applicable reduced statutory income tax rates as a result of the TCJA;


iii.	a permanent tax benefit related to a worthless stock deduction from the reorganization and exit of the ~~Company's~~ steel trading business headquartered in the United Kingdom;


iv.	the proportion of the Company's global income from operations in jurisdictions with lower statutory tax rates than the U.S., including Poland, which has a statutory income tax rate of 19.0%;


v.	a permanent tax benefit recorded ~~under ASU 2016-09~~ for stock awards that vested during the first nine months of fiscal 2018; and


vi.	a non-taxable gain on assets related to the Company's non-qualified ~~Benefits Restoration Plan ("BRP").~~benefits restoration plan.

~~For the three and nine months ended May 31, 2017, the Company's effective tax rate was lower than the U.S. statutory income tax rate of 35.0%. Items that impacted the effective tax rate included:~~


i.	~~the proportion of the Company's global income from operations in jurisdictions with lower statutory tax rates than the U.S., including Poland, which has a statutory income tax rate of 19.0%;~~


~~ii.~~	~~a permanent tax benefit under Section 199 of the Internal Revenue Code related to domestic production activity;~~


~~iii.~~	~~a non-taxable gain on assets related to the Company's non-qualified BRP; and~~


~~iv.~~	~~losses from operations in certain jurisdictions in which the Company maintains a valuation allowance, thus providing no benefit for such losses.~~

For the three and nine months ended May 31, 2018, the ~~Company’s~~Company's effective income tax rates from discontinued operations of 30.4% and 40.9%, respectively, were greater than the blended U.S. statutory income tax rate of 25.7%, primarily as a result of losses from operations in certain jurisdictions in which the Company maintains a valuation allowance, thus providing no benefit for such losses. Additionally, the effective income tax rates were unfavorably impacted by state taxes imposed on income earned by the Company’s steel trading operations headquartered in the U.S.

For the three and nine months ended May 31, 2017, the Company’s effective income tax rate from discontinued operations of 17.4% and 20.6%, respectively, was less than the U.S. statutory income tax rate of 35.0% primarily due to pre-tax income earned in foreign jurisdictions that benefit from group loss sharing provisions. Such losses, which carry a full valuation allowance, are utilized to absorb current period income earned in foreign jurisdictions; thus, there is no associated tax expense or benefit.

~~The Company made net cash payments of $14.8 million and $28.2 million for income taxes during the nine months ended May 31, 2018 and 2017, respectively.~~

As of May 31, ~~2018~~2019 and August 31, ~~2017,~~2018, the reserve for unrecognized income tax benefits related to the accounting for uncertainty in income taxes was ~~$8.0~~$6.2 million and ~~$9.3~~$3.1 million, respectively, ~~exclusive of interest and penalties. The decrease in~~which, if recognized, would have decreased the ~~reserve for unrecognized~~Company’s effective income tax ~~benefits resulted from~~rate at the ~~expiration~~end of ~~the statute of limitations for the Company’s fiscal 2014 federal income tax return.~~

each respective period. The Company's policy classifies interest recognized on an underpayment of income taxes and any statutory penalties recognized on a tax position as income tax expense. For the three and

nine months ended May 31, ~~2018~~,2019, the Company recorded immaterial amounts of accrued interest and penalties on unrecognized income tax benefits.

During the twelve months ending May 31, 2019, it is reasonably possible that the statute of limitations pertaining to positions taken by the Company in prior year income tax returns may lapse or that income tax audits in various taxing jurisdictions could be finalized. As a result, the total amount of unrecognized income tax benefits, as well as the provision for income taxes, may decrease by approximately $8.0 million.

The Company ~~files income tax returns~~is subject to varying statutes of limitation in the U.S. and ~~multiple~~ foreign ~~jurisdictions with varying statutes of limitations.~~jurisdictions. In the normal course of business, CMC and its subsidiaries are subject to examination by various taxing authorities. The following ~~is a summary of~~summarizes tax years subject to examination:

U.S. Federal — ~~2015~~2016 and forward ~~with the exception of the R&D credit matter discussed below~~

U.S. States — ~~2009~~2015 and forward

Foreign — ~~2011~~2012 and forward

During the fiscal year ended August 31, 2016, the Company completed an IRS examination for the years 2009 through 2011 and received confirmation from the United States Congress Joint Committee on Taxation that all matters were settled with the exception of R&D credits, which are still under review. In addition, the Company is under examination by certain state revenue authorities for ~~the~~fiscal years ~~2009~~2015 through ~~2015. Management~~2017. The Company believes the ~~Company's~~ recorded income tax liabilities as of May 31, ~~2018 sufficiently~~2019 reflect the anticipated outcome of these examinations.

Beginning in fiscal 2019, the Company is subject to the following provisions of the TCJA: (i) a new tax on GILTI; (ii) a new deduction for foreign-derived intangible income (“FDII”); (iii) deductibility limitations on compensation for covered employees; and (iv) deductibility limitations on business interest expense. The U.S. Department of Treasury continues to release new and clarifying guidance with regard to interpretation of certain provisions of the TCJA, which the Company evaluates during the period of enactment. Based on enacted legislation through the third quarter of fiscal 2019, the Company has included in the estimated annual effective tax rate estimates of the tax impacts related to GILTI and the deductibility limitations on compensation for covered employees. The Company has elected to treat the new GILTI tax as a current period cost. The Company’s current assessment of FDII and the deductibility limitations on business interest expense did not result in an impact to the estimated annual effective tax rate.

In general, it is the practice and intention of the Company to indefinitely reinvest earnings of non-U.S. subsidiaries. Based on the provisions of the TCJA, future distributions of earnings of non-U.S. subsidiaries are not expected to be subject to U.S. income tax. However, such distributions may be subject to other global income tax considerations, such as withholding taxes, but are not expected to materially impact the Company’s financial statements.

NOTE ~~11.~~13. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described, and informational disclosures provided, in Note 15, Stock-Based Compensation Plans, to the ~~audited~~ consolidated financial statements in the ~~2017~~2018 Form 10-K. In general, ~~the~~ restricted stock units granted during fiscal ~~2018~~2019 vest ratably over a period of three years. However, certain restricted stock units granted during fiscal ~~2018~~2019 cliff vest after a period of three years. Subject to the achievement of performance targets established by the Compensation Committee of CMC's Board of Directors, ~~the~~ performance stock units granted during fiscal ~~2018 will~~2019 vest after a period of three years.

During the nine months ended May 31, ~~2018~~2019 and ~~2017,~~2018, the Company granted the following awards under its stock-based compensation plans:



	May 31, 2019			May 31, 2018
(in thousands, except per share data)	Shares Granted	Weighted Average Grant Date Fair Value		Shares Granted	Weighted Average Grant Date Fair Value
Equity method	1,505	$	17.75	1,216	$	20.69
Liability method	374	N/A		323	N/A

2018 2017
(in thousands, except per share data) Shares Granted Weighted Average Grant Date Fair Value Shares Granted Weighted Average Grant Date Fair Value
Equity Method 1,216
$ 20.69
916
$ 16.04
Liability Method 323
N/A
915
N/A

During the three and nine months ended May 31, 2019 and 2018, the Company recorded ~~a benefit of $0.1 million and an expense of $1.6 million~~immaterial amounts for mark-to-market adjustments on liability awards, respectively, compared to a benefit of $2.0 million and an expense of $2.7 million recorded for the three and nine months ended May 31, 2017, respectively, which includes the impact of the modification of certain restricted stock and performance stock units that occurred during the first quarter of fiscal 2017.awards. As of May 31, ~~2018,~~2019, the Company had ~~769 thousand~~outstanding 718,223 equivalent shares accounted for under the liability ~~method outstanding.~~method. The Company expects ~~733 thousand~~683,922 equivalent shares to vest.

The following table summarizes total stock-based compensation expense, including fair value remeasurements, which was mainly included in selling, general and administrative expenses on the Company's ~~unaudited~~ condensed consolidated statements of earnings:



	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2019		2018		2019		2018
Stock-based compensation expense	$	7,342	$	4,910	$	17,350	$	18,247

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Stock-based compensation expense $ 4,910
$ 3,560
$ 18,247
$ 19,716

2225

NOTE 14. EMPLOYEES' RETIREMENT PLANS

Following the acquisition of the Acquired Businesses, the Company sponsors a single employer defined-benefit pension plan (“Plan”) covering certain hourly union employees. The Plan is closed to new entrants. The Plan provides benefits based on length of service. The Company’s funding policy for the Plan is to contribute annually the amount necessary to provide for benefits based on accrued service and to contribute at least the minimum required by the Employee Retirement Income Security Act rules. Service cost is recorded in costs of goods sold, while other components of the net periodic benefit costs are recorded as selling, general and administrative expenses. Net periodic pension expense was immaterial for the three and nine months ended May 31, 2019.

NOTE ~~12.~~15. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

The calculations of basic and diluted earnings per share from continuing operations for the three and nine months ended May 31, ~~2018~~2019 and ~~2017~~2018 were as follows:



	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands, except share data)	2019		2018		2019		2018
Earnings from continuing operations	$	78,551	$	42,325	$	112,899	$	83,977
Basic earnings per share:
Shares outstanding for basic earnings per share	118,045,362		117,111,799		117,762,945		116,722,504
Basic earnings per share from continuing operations	$	0.67	$	0.36	$	0.96	$	0.72
Diluted earnings per share:
Shares outstanding for basic earnings per share	118,045,362		117,111,799		117,762,945		116,722,504
Effect of dilutive securities:
Stock-based incentive/purchase plans	1,100,204		1,142,992		1,250,069		1,328,360
Shares outstanding for diluted earnings per share	119,145,566		118,254,791		119,013,014		118,050,864
Diluted earnings per share from continuing operations	$	0.66	$	0.36	$	0.95	$	0.71

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands, except share data) 2018 2017 2018 2017
Earnings from continuing operations $ 42,325
$ 31,567
$ 83,977
$ 60,245

Basic earnings per share:
Shares outstanding for basic earnings per share 117,111,799
115,886,372
116,722,504
115,574,289

Basic earnings per share from continuing operations $ 0.36
$ 0.27
$ 0.72
$ 0.52

Diluted earnings per share:
Shares outstanding for basic earnings per share 117,111,799
115,886,372
116,722,504
115,574,289
Effect of dilutive securities:
Stock-based incentive/purchase plans 1,142,992
1,318,997
1,328,360
1,513,052
Shares outstanding for diluted earnings per share 118,254,791
117,205,369
118,050,864
117,087,341

Diluted earnings per share from continuing operations $ 0.36
$ 0.27
$ 0.71
$ 0.51

CMC had 32,623 and 26,886 shares that were anti-dilutive for the three months ended May 31, ~~2018.~~2019 and 2018, respectively. There are no anti-dilutive shares for the other periods presented.

CMC's restricted stock is included in the number of shares of common stock issued and outstanding, but is omitted from the basic earnings per share calculation until the shares vest.

During the first quarter of fiscal 2015, CMC's Board of Directors authorized a share repurchase program under which CMC may repurchase up to $100.0 million of shares of common stock. The timing and the amount of repurchases, if any, are determined by management based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require the Company to purchase any dollar amount or number of shares of common stock and may be modified, suspended, extended or terminated at any time without prior notice. During the nine months ended May 31, ~~2018 and 2017,~~2019, CMC did not repurchase any shares of common stock. CMC had remaining authorization to repurchase ~~$27.6~~$27.6 million shares of common stock at May 31, ~~2018.~~2019.

NOTE ~~13.~~16. COMMITMENTS AND CONTINGENCIES

Legal and Environmental Matters

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. See Note 18, Commitments and Contingencies, to the ~~audited~~ consolidated financial statements in the ~~2017~~2018 Form 10-K.

On April 28, 2016, the Company was served with a lawsuit filed by Ector County, Texas and the State of Texas by and through the Texas Commission on Environmental Quality ("TCEQ") alleging violations of the Texas Solid Waste Disposal Act, the Texas Water Code, the Texas Clean Air Act, and TCEQ rules on spill prevention and control. The Plaintiffs amended their petition in February 2017 to include violations of TCEQ rules on recycling and storm water permits. The Plaintiffs further amended their petition in April 2017, broadening their allegations. The lawsuit, filed in the 201st Judicial District Court of Travis County, Texas, alleged improper disposal of solid waste and unauthorized outdoor burning activity at the Company’s recycling facility located in Odessa, Texas. The lawsuit sought a penalty for each day of alleged violation under the Texas Health & Safety Code, the Texas Water Code, or the Texas Administrative Code. The parties agreed to a mediated settlement on December 1, 2017 and entered into an Agreed Final Judgment on June 12, 2018. The Agreed Final Judgment is subject to the formal approval process of the State of Texas. Under the mediated settlement, the Company will pay $1.1 million, net of insurance recoveries. The Company denies any wrongdoing in connection with the alleged claims, and the settlement does not contain an admission of liability from the Company.

The Company has received notices from the U.S. Environmental Protection Agency ("EPA") or state agencies with similar responsibility that it is considered a potentially responsible party ("PRP") at several sites (none of which are owned by the Company) and may be obligated under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") or similar state statute to conduct remedial investigations, feasibility studies, remediation and/or removal of alleged releases of

hazardous substances or to reimburse the EPA for such activities. The Company is involved in litigation or administrative proceedings with regard to several ~~of these~~ sites in which the Company is contesting, or at the appropriate time may contest, its liability at the sites. In addition, the Company has received information requests with regard to other sites which may be under consideration

by the EPA as potential CERCLA sites. Some of these environmental matters or other proceedings may result in fines, penalties or judgments being assessed against the Company. At both May 31, ~~2018~~2019 and August 31, ~~2017,~~2018, the Company had accrued $0.7 million for estimated cleanup and remediation costs in connection with CERCLA sites. The estimation process is based on currently available information, which is in many cases preliminary and incomplete. As of May 31, ~~2018~~2019 and August 31, ~~2017,~~2018, total environmental liabilities ~~including~~ with respect to CERCLA sites, were ~~$4.0~~$3.8 million and ~~$4.3~~$4.0 million, respectively, of which ~~$2.0~~$1.9 million ~~and $2.1 million, respectively,~~ was classified as other long-term liabilities. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process and other factors, amounts accrued could vary significantly from amounts paid. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material.

Management believes that adequate provisions have been made in the Company's ~~unaudited~~ condensed consolidated financial statements for the potential impact of these contingencies and that the outcomes of the suits and proceedings described above, and other miscellaneous litigation and proceedings now pending, will not have a material adverse effect on the business, results of operations or financial condition of the Company.

NOTE ~~14.~~17. BUSINESS SEGMENTS

The Company's operating segments earn revenues and incur expenses for which discrete financial information is available. Operating results for the operating segments are regularly reviewed by the Company's chief operating decision maker to make decisions about resources to be allocated to the segments and to assess performance. The Company's chief operating decision maker is identified as the Chief Executive Officer. Operating segments are aggregated for reporting purposes when the operating segments are identified as similar in accordance with the basic principles and aggregation criteria in the accounting standards. The Company's reporting segments are based primarily on product lines and secondarily on geographic area. The reporting segments have different lines of management responsibility as each business requires different marketing strategies and management expertise.

The Company structures its business into the following four reporting segments: Americas Recycling, Americas Mills, Americas Fabrication, and International Mill. See Note 1, Nature of Operations, of the ~~audited~~ consolidated financial statements included in the ~~2017~~2018 Form 10-K for more information about the reporting segments, including the types of products and services from which each reporting segment derives its net sales. During the second quarter of fiscal 2018, the Company substantially completed the exit of the International Marketing and Distribution segment. See Note 2, Changes in Business, for further information. Certain components of the International Marketing and Distribution segment which were wound down in prior periods, including the Company's steel trading operations based in the United Kingdom, did not meet the criteria for discontinued operations and thus, are included in continuing operations for all periods presented. Such activities are included in the results of Corporate and Other ~~and are immaterial for the three and nine months ended May 31, 2018. Corporate and Other also~~ contains earnings or losses on assets and liabilities related to the ~~BRP~~Company's Benefit Restoration Plan assets and short-term investments, ~~as well as~~ expenses of the Company's corporate headquarters, ~~and~~ interest expense related to its long-term ~~debt.~~debt and intercompany eliminations.

The Company uses adjusted ~~operating profit (loss)~~EBITDA from continuing operations to compare and evaluate the financial performance of its segments. Adjusted ~~operating profit (loss)~~EBITDA is the sum of the Company's earnings from continuing operations before interest expense, income taxes, depreciation and ~~discounts on sales of accounts receivable.~~amortization, and impairment expense. Intersegment sales are generally priced at prevailing market prices. Certain corporate administrative expenses are allocated to the segments based upon the nature of the expense. The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies, of the ~~audited~~ consolidated financial statements included in the ~~2017~~2018 Form 10-K.

The following is a summary of certain financial information from continuing operations by reportable segment:


	Three Months Ended May 31, 2018																	Three Months Ended May 31, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Eliminations			Continuing Operations		Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Continuing Operations
Net sales-unaffiliated customers	$	292,679	$	332,459	$	375,183		$	201,438	$	2,725		$	—		$	1,204,484	$	228,786	$	536,035	$	629,510		$	209,022	$	2,519		$	1,605,872
Intersegment sales	71,419		220,604		3,058			299		—			(295,380		)	—		60,229		330,868		3,537			343		(394,977		)	—
Net sales	364,098		553,063		378,241			201,737		2,725			(295,380		)	1,204,484		289,015		866,903		633,047			209,365		(392,458		)	1,605,872
Adjusted operating profit (loss) from continuing operations	14,350		70,404		(16,096		)	24,370		(22,678		)	(2,941		)	67,409

	Nine Months Ended May 31, 2018
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Eliminations			Continuing Operations
Net sales-unaffiliated customers	$	832,448	$	841,895	$	1,015,934		$	633,134	$	11,874		$	—		$	3,335,285
Intersegment sales	171,618		550,573		8,059			846		—			(731,096		)	—
Net sales	1,004,066		1,392,468		1,023,993			633,980		11,874			(731,096		)	3,335,285
Adjusted operating profit (loss) from continuing operations	36,580		142,639		(47,995		)	72,297		(65,648		)	(4,413		)	133,460
Total assets as of May 31, 2018*	310,513		1,078,308		684,929			476,946		1,128,360			(467,603		)	3,211,453

	Three Months Ended May 31, 2017
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Eliminations			Continuing Operations
Net sales-unaffiliated customers	$	247,896	$	243,934	$	377,188		$	167,409	$	8,286		$	—		$	1,044,713
Intersegment sales	46,270		183,342		2,788			230		3			(232,633		)	—
Net sales	294,166		427,276		379,976			167,639		8,289			(232,633		)	1,044,713
Adjusted operating profit (loss) from continuing operations	9,247		50,734		1,808			12,971		(20,281		)	772			55,251

	Nine Months Ended May 31, 2017
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Eliminations			Continuing Operations
Net sales-unaffiliated customers	$	590,760	$	667,872	$	1,013,847		$	436,413	$	51,047		$	—		$	2,759,939
Intersegment sales	103,442		483,162		8,355			621		643			(596,223		)	—
Net sales	694,202		1,151,034		1,022,202			437,034		51,690			(596,223		)	2,759,939
Adjusted operating profit (loss) from continuing operations	11,981		139,002		9,025			32,517		(72,176		)	(22		)	120,327
Total assets as of August 31, 2017*	240,371		933,022		683,609			464,428		687,984			(327,883		)	2,681,531
Adjusted EBITDA																		12,331		158,114		(23,289		)	24,120		(27,305		)	143,971



	Nine Months Ended May 31, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Continuing Operations
Net sales-unaffiliated customers	$	694,855	$	1,382,501	$	1,590,746		$	610,640	$	7,255		$	4,285,997
Intersegment sales	183,244		860,964		10,248			947		(1,055,403		)	—
Net sales	878,099		2,243,465		1,600,994			611,587		(1,048,148		)	4,285,997
Adjusted EBITDA	37,889		384,383		(109,863		)	77,436		(111,005		)	278,840
Total assets as of May 31, 2019 ⁽¹⁾	262,620		1,682,255		1,136,996			501,079		184,060			3,767,010

_________________

* Excludes total(1) Total assets listed in Corporate and Other includes assets from discontinued ~~operations of $34.0 million at May 31, 2018~~operations.



	Three Months Ended May 31, 2018
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Continuing Operations
Net sales-unaffiliated customers	$	292,679	$	332,459	$	375,183		$	201,438	$	2,725		$	1,204,484
Intersegment sales	71,419		220,604		3,058			299		(295,380		)	—
Net sales	364,098		553,063		378,241			201,737		(292,655		)	1,204,484
Adjusted EBITDA	19,477		89,590		(8,208		)	31,987		(31,814		)	101,032



	Nine Months Ended May 31, 2018
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication			International Mill		Corporate and Other			Continuing Operations
Net sales-unaffiliated customers	$	832,448	$	841,895	$	1,015,934		$	633,134	$	11,874		$	3,335,285
Intersegment sales	171,618		550,573		8,059			846		(731,096		)	—
Net sales	1,004,066		1,392,468		1,023,993			633,980		(719,222		)	3,335,285
Adjusted EBITDA	51,698		194,975		(14,787		)	95,066		(81,777		)	245,175
Total assets as of August 31, 2018 ⁽¹⁾	291,838		1,115,339		739,151			485,548		696,428			3,328,304

_________________

(1) Total assets listed in Corporate and ~~$293.6 million at August 31, 2017.~~Other includes assets from discontinued operations.

~~Reconciliations~~The following table presents a reconciliation of earnings from continuing operations to adjusted ~~operating profit~~EBITDA from continuing ~~operations are provided below:~~operations:



	Three Months Ended May 31,					Nine Months Ended May 31,
(in thousands)	2019			2018		2019			2018
Earnings from continuing operations	$	78,551		$	42,325	$	112,899		$	83,977
Interest expense	18,513			11,511		53,671			25,303
Income taxes	29,105			13,312		52,855			23,465
Depreciation and amortization	41,181			32,949		117,602			98,898
Amortization of acquired unfavorable contract backlog	(23,394		)	—		(58,202		)	—
Impairment of assets	15			935		15			13,532
Adjusted EBITDA from continuing operations	$	143,971		$	101,032	$	278,840		$	245,175

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Earnings from continuing operations $ 42,325
$ 31,567
$ 83,977

$ 60,245
Income taxes 13,312
11,006
23,465

21,231
Interest expense 11,511
12,448
25,303

38,212
Discounts on sales of accounts receivable 261
230
715

639
Adjusted operating profit from continuing operations $ 67,409
$ 55,251
$ 133,460

$ 120,327

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following discussion, references to "we," "us," "our" or the "Company" mean Commercial Metals Company ("CMC") and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our ~~unaudited~~ condensed consolidated financial statements and the notes thereto, which are included in this Quarterly Report on Form 10-Q (the "Form 10-Q"), and our ~~audited~~ consolidated financial statements and the notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2017~~2018 (the ~~"2017~~"2018 Form

10-K"). This discussion contains or incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this ~~Quarterly Report on~~ Form 10-Q is filed with the Securities and Exchange Commission ("SEC") or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled "Forward-Looking Statements" at the end of this Item 2 of this ~~Quarterly Report on~~ Form 10-Q and in the section entitled "Risk Factors" in Item 1A of the ~~2017~~2018 Form ~~10-K.~~10-K and this Form 10-Q. We do not undertake any obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise, except as required by law.

CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies as set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the ~~2017~~2018 Form ~~10-K.~~10-K, except for the change in revenue recognition as described in Note 1, Accounting Policies, of this Form 10-Q.

RESULTS OF OPERATIONS SUMMARY

Business Overview

As a vertically integrated ~~organization,~~enterprise, we manufacture, recycle, and market steel and metal products, related materials and services through a network of facilities that includes ~~four~~eight electric arc furnace ("EAF") mini mills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the United States ("U.S.") and Poland. Our operations are conducted through the following business segments: Americas Recycling, Americas Mills, Americas Fabrication, and International Mill. ~~See Note 2, Changes in Business, and Note 14, Business Segments, for additional information regarding our exit of the International Marketing and Distribution segment.~~

Financial Results Overview

The following discussion of our results of operations is based on our continuing operations and excludes any results of our discontinued operations. In the table below, we have included financial measures that were not derived in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Refer to the information and reconciliations in the section entitled "Non-GAAP Financial Measures" at the end of this Item 2 of this Quarterly Report on Form 10-Q.

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands, except per share data) 2018 2017 2018 2017
Net sales from continuing operations $ 1,204,484
$ 1,044,713
$ 3,335,285
$ 2,759,939
Earnings from continuing operations 42,325
31,567
83,977
60,245
Adjusted earnings from continuing operations+ 48,985
31,567
116,183
60,245
Adjusted operating profit from continuing operations+ 67,409
55,251
133,460
120,327
Adjusted EBITDA from continuing operations+ 101,032
87,207
245,175
212,847
Diluted net earnings per share 0.34
0.34
0.74
0.65

~~_________________~~

~~+ Non-GAAP financial measure~~



	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands, except per share data)	2019		2018		2019		2018
Net sales	$	1,605,872	$	1,204,484	$	4,285,997	$	3,335,285
Earnings	78,551		42,325		112,899		83,977
Diluted earnings per share	$	0.66	$	0.36	$	0.95	$	0.71

Net sales from continuing operations for the three and nine months ended May 31, ~~2018~~2019 increased ~~15%~~33% and ~~21%~~29%, respectively, compared to the same periods for fiscal ~~2017. The increase in net sales is largely attributable to increased selling prices and~~

volumes, driven by year-over-year improvement in global economic indicators, including increased non-residential construction spending, as well as increased input costs. This has led to increased pricing of our primary product offerings, which favorably impacted our quarter-over-quarter and year-over-year selling prices in our Americas Recycling, Americas Mills, and International Mill segments. In our Americas Fabrication segment, average selling prices related to our backlog, originally contracted at lower prices, have not kept pace with increased input and production costs, as seen in our quarter–over–quarter and year–over–year results. However, new contract bookings indicate that pricing in this segment is beginning to reflect increased input costs.

We have incurred costs throughout fiscal 2018 related to the pending acquisition of certain rebar assets of Gerdau S.A. Such costs have been reflected in the quarter and year-to-date results of our Corporate and Other segment. Additionally, our2018. Our results for the three and nine months ended May 31, 2019 include the Acquired Businesses, as discussed in Note 2, Acquisition, which contributed net sales of $453.5 million quarter-to-date and $958.6 million year-to-date. Third quarter and year-to-date net sales in our Americas Mills segment increased in fiscal 2019, as compared to the same periods in 2018, ~~include expenses related~~due to ~~start-up activities of our new micro mill~~the Acquired Businesses and an increase in ~~Durant, Oklahoma. Our~~year-over-year average selling prices in both fiscal periods. Third quarter average selling prices were down in fiscal 2019, as compared to the same period in fiscal 2018, ~~results also reflect~~in our Americas Recycling and International Mill segments, leading to year-over-year reductions in net sales in the ~~estimated~~Americas Recycling segment on both a quarter and year-to-date ~~discrete impact that the TCJA will have on our net earnings.~~

~~During the third quarter of fiscal 2018, we concluded the wind down of our operations~~basis and in the International ~~Marketing~~Mill segment on a year-to-date basis. Quarter-to-date net sales in the International Mill segment, however, increased as compared to the same period in fiscal 2018 due to an increase in tons shipped. In our Americas Fabrication segment, third quarter average selling prices were up in fiscal 2019, compared to the same period in fiscal 2018, as we have shipped the majority of the lower priced work in our backlog leading to year-over-year increases in net sales on both a quarter and ~~Distribution segment,~~year-to-date basis.

Earnings from continuing operations for the ~~results of which are included in discontinued operations. As of~~three and nine months ended May 31, ~~2018, we have collected substantially all proceeds related~~2019 increased $36.2 million and $28.9 million, respectively, compared to the ~~exit of this segment. See Note 2, Changes~~same periods for fiscal 2018. The increase in ~~Business, for further discussion of~~earnings was primarily driven by the ~~wind down of the International Marketing~~Acquired Businesses and ~~Distribution~~year-over-year increases in quarter-to-date and year-to-date metal margins and tons shipped in our Americas Mills segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ~~from continuing operations~~ increased $8.0 million for the three months ended May 31, 2018 and increased $23.6 million for the nine months ended May 31, 2018, in each case compared to the corresponding periods in fiscal 2017. The three and nine months ended May 31, 2018 include increased impairment charges of $0.9$14.0 million and $13.0 million, respectively, compared to the same periods of fiscal 2017, primarily related to the sale of our structural steel fabrication operations, as discussed in Note 2, Changes in Business. Additionally, we incurred increased professional services-related expenses, primarily as a result of acquisition-related activities, for the three and nine months ended May 31, 2018 of $4.4 million and $11.6 million, respectively. Also contributing to period-over-period increases were increased employee-related expenses of $5.0 million and $0.3$25.4 million for the three and nine months ended May 31, ~~2018,~~2019, respectively. The year-over-year increase in expenses was driven primarily by the acquisition of the Acquired Businesses.

Interest Expense

Interest expense for the three and nine months ended May 31, ~~2018 decreased $0.9~~2019 increased $7.0 million and ~~$12.9~~$28.4 million, respectively, compared to the same periods in fiscal 2018. The increase was primarily the result of financing activities in connection with the acquisition of the Acquired Businesses, including issuance of the 2026 Notes and a draw under the 2018 Term Loan (both defined in Note 9, Credit Arrangements), which drove increases of $5.4 million and $18.2 million for the three and nine months ended May 31, 2017. The overall decrease was a result of refinancing activities during the fourth quarter of fiscal 2017 that reduced our debt obligations by approximately $260 million, which was partially offset by additional interest expense related2019, respectively. Also contributing to the increase in the nine months ended May ~~2018 issuance~~31, 2019 were year-over-year reductions in capitalized interest of $7.2 million, principally due to the completion of the ~~2026 Notes.~~Oklahoma micro mill in fiscal 2018.

Income Taxes

The provisions of the recently enacted TCJA, discussed in Note 10, Income Tax, require a one-time U.S. toll charge related to undistributed earnings of non-U.S. subsidiaries. While this toll charge generally reduces the U.S. tax burden on future distributions from non-U.S. subsidiaries, other global income tax considerations, such as non-U.S. income and withholding taxes, are relevant as it pertains to the taxation of earnings in our non-U.S. subsidiaries. With respect to such earnings, we intend to indefinitely reinvest all undistributed earnings of our non-U.S. subsidiaries.

Our effective income tax rate from continuing operations for the three and nine months ended May 31, ~~2018~~2019 was ~~23.9%~~27.0% and ~~21.8%~~31.9%, respectively, compared with ~~25.9%~~23.9% and ~~26.1%~~21.8%, for the three and nine months ended May 31, ~~2017,~~2018, respectively. The ~~decrease in our~~ effective ~~income~~ tax rate ~~from continuing operations is largely attributable~~for the current period was greater than the effective tax rate for the corresponding period of the prior fiscal year primarily due to the ~~remeasurement~~recognition of tax expense in the ~~Company’s deferred tax balances~~current year compared to benefits recognized in the ~~applicable reduced statutory income tax rates~~prior year, both as a result of the TCJA, a permanent tax benefit related to a reorganization of certain international operations and a permanent tax benefit recorded under ASU 2016-09 for stock awards that vested during the first nine months of fiscal 2018.TCJA. See Note ~~10,~~12, Income Tax, for further ~~discussion~~details of the impacts of the TCJA and other factors impacting our effective tax rate. Our effective income tax rates were also impacted by state and local taxes as well as earnings or losses from foreign jurisdictions. State and local taxes are generally consistent over time, while the composition of domestic and foreign earnings can create larger fluctuations in our effective tax rate.to each comparative period.

SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are from continuing operations and calculated before income taxes. Financial results for our reportable segments are consistent with the basis in which we internally disaggregate financial information for the purpose of making operating decisions. See Note ~~14,~~17, Business Segments. The operational data presented in the tables below is calculated using ~~averages;~~averages and, therefore, it is not meaningful to quantify the effect that any individual component had on the segment's net sales or adjusted ~~operating profit.~~EBITDA.

Americas Recycling


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Net sales	$	364,098	$	294,166	$	1,004,066	$	694,202	$	289,015	$	364,098	$	878,099	$	1,004,066
Adjusted operating profit	14,350		9,247		36,580		11,981
Adjusted EBITDA									12,331		19,477		37,889		51,698

Average selling price (per short ton)
Ferrous									$	252	$	314	$	263	$	286
Nonferrous									2,047		2,252		2,009		2,267

Short tons shipped (in thousands)
Ferrous									597		642		1,746		1,791
Nonferrous									60		65		182		194
Total									657		707		1,928		1,985

Net sales for the three and nine months ended May 31, 2019 decreased $75.1 million, or 21%, and $126.0 million, or 13%, respectively, compared to the corresponding periods in fiscal 2018. For the three and nine months ended May 31, 2019, the primary drivers for the year-over-year decreases in net sales were reductions in the ferrous and nonferrous scrap pricing environment. Average ferrous and nonferrous selling prices decreased approximately 20% and 9%, respectively, for the three months ended May 31, 2019, and decreased approximately 8% and 11%, respectively, for the nine months ended May 31, 2019, as compared to the same periods in fiscal 2018.

Adjusted EBITDA for the three and nine months ended May 31, 2019 decreased $7.1 million and $13.8 million, respectively, as third quarter nonferrous margins, though still strong, have declined approximately 5% on a year-over-year basis due to a decrease

in the scrap pricing environment in fiscal 2019 which compressed margins. Adjusted EBITDA included non-cash stock compensation expense of $0.3 million and $1.0 million for the three and nine months ended May 31, 2019 and 2018, respectively.

Americas Mills

Average selling price (per short ton)
Ferrous $ 314
$ 264
$ 286
$ 236
Nonferrous 2,252
2,017
2,267
1,969



	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2019		2018		2019		2018
Net sales	$	866,903	$	553,063	$	2,243,465	$	1,392,468
Adjusted EBITDA	158,114		89,590		384,383		194,975

Average price (per short ton)
Total selling price	$	670	$	632	$	674	$	587
Cost of ferrous scrap utilized	284		329		297		293
Metal margin	386		303		377		294

Short tons (in thousands)
Melted	1,164		790		3,199		2,108
Rolled	1,118		737		3,007		1,936
Shipped	1,236		811		3,178		2,172

Short tons shipped (in thousands)
Ferrous 642
590
1,791
1,416
Nonferrous 65
61
194
163
Total 707
651
1,985
1,579

Net sales for the three and nine months ended May 31, ~~2018~~2019 increased ~~$69.9~~$313.8 million, or ~~24%~~57%, and ~~$309.9~~$851.0 million, or ~~45%~~61%, respectively, compared to the corresponding periods in fiscal ~~2017.~~2018. The increase in net sales was primarily due to shipments from the Acquired Businesses of 469 thousand short tons and 974 thousand short tons for the three ~~months ended May 31, 2018 was due to increases in average ferrous~~ and nonferrous selling prices of $50 and $235 per short ton, respectively, coupled with increases in ferrous and nonferrous tons shipped of 9% and 7%, respectively, in each case compared to the corresponding period in fiscal 2017. The increase in net sales for the nine months ended May 31, ~~2018 was due~~2019, respectively. Also contributing to ~~increases in~~increased net sales were increased average ~~ferrous and nonferrous~~ selling prices of ~~$50 and $298~~$38 per short ton and $87 per short ton for the three and nine months ended May 31, 2019, respectively, ~~coupled with increases~~as trade actions recently implemented in ~~ferrous~~the U.S., aimed at unfairly priced steel imports, have favorably impacted the pricing environment.

Adjusted EBITDA for the three and ~~nonferrous tons shipped of 26%~~nine months ended May 31, 2019 increased $68.5 million and ~~19%,~~$189.4 million, respectively, ~~in each case~~ compared to the corresponding ~~period~~periods in fiscal ~~2017.~~2018, with the Acquired Businesses contributing $53.6 million and $87.9 million, respectively. The ~~increases~~increase in ~~tons shipped resulted from continued strong scrap demand~~adjusted EBITDA for the three and nine months ended May 31, 2019 was primarily driven by the Acquired Businesses and metal margin expansion of 27% and 28%, respectively, due to ~~increased U.S. steel mill capacity utilization, an improved pricing environment across many commodities,~~decreases in ferrous scrap prices and ~~an increase in our internal capacity as a result~~manufacturing costs due to higher production levels. Adjusted EBITDA included non-cash stock compensation expense of ~~our acquisition of seven recycling facilities during~~$1.1 million and $3.6 million for the ~~third quarter of fiscal 2017, which accounted for approximately 40%~~three and ~~70% of the total increase in tons shipped~~nine months ended May 31, 2019, respectively, and $1.1 million and $3.9 million for the three and nine months ended May 31, 2018, ~~respectively, compared to the corresponding periods in fiscal 2017.~~respectively.

Adjusted operating profit for the three and nine months ended May 31, 2018 was $14.4 million and $36.6 million, respectively, compared to adjusted operating profit of $9.2 million and $12.0 million for the three and nine months ended May 31, 2017, respectively. For the third fiscal quarter of 2018, the increase was primarily due to a 17% increase in average ferrous metal margins compared to the corresponding period in fiscal 2017. Partially offsetting the benefit of margin expansion for the three months ended May 31, 2018 were increased per ton freight costs of 9%. The improvement in adjusted operating profit for the nine months ended May 31, 2018 as compared to the same period in fiscal 2017 was primarily due to increases of 17% and 9% in ferrous and nonferrous metal margins, respectively. Also contributing to the increase in adjusted operating profit was the improved volumes in ferrous and nonferrous shipments described above.

Americas ~~Mills~~Fabrication


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,						Nine Months Ended May 31,
(in thousands)	2018		2017		2018		2017		2019			2018			2019			2018
Net sales	$	553,063	$	427,276	$	1,392,468	$	1,151,034	$	633,047		$	378,241		$	1,600,994		$	1,023,993
Adjusted operating profit	70,404		50,734		142,639		139,002
Adjusted EBITDA									(23,289		)	(8,208		)	(109,863		)	(14,787		)

Average selling price (excluding stock and buyout sales) (per short ton)
Rebar and other									$	925		$	777		$	886		$	784

Total short tons shipped
Rebar and other									469			302			1,184			808

Average price (per short ton)
Total sales $ 632
$ 540
$ 587
$ 522
Cost of ferrous scrap utilized 329
266
293
239
Metal margin 303
274
294
283

Short tons (in thousands)
Melted 790
670
2,108
1,941
Rolled 737
626
1,936
1,846
Shipped 811
722
2,172
2,015

Net sales for the three and nine months ended May 31, ~~2018~~2019 increased ~~$125.8~~$254.8 million, or ~~29%~~67%, and ~~$241.4~~$577.0 million, or ~~21%~~56%, respectively, compared to the ~~corresponding~~same periods in fiscal ~~2017.~~2018. The increase in net sales for the three and nine months ended May 31, ~~2018~~2019 was ~~due to an increase in average selling price of $92 and $65 per short ton, respectively, largely~~ driven by ~~selling price~~ increases in ~~response to the increased scrap prices described in our Americas Recycling segment. Also contributing to increased net sales were 12% and 8% increases in~~short tons shipped ~~in the three~~of 167 thousand and nine months ended May 31, 2018, respectively, compared to the corresponding periods in fiscal 2017, as a result of improved demand from the service center industry and increased non-residential construction spending.

~~Adjusted operating profit~~376 thousand for the three and nine months ended May 31, ~~2018 increased $19.7 million~~2019, respectively, due to shipments by the Acquired Businesses during fiscal 2019, and ~~$3.6 million,~~by increases in average selling prices of $148 and $102 per ton, respectively, compared to the ~~corresponding periods~~same period in fiscal ~~2017. Offsetting the increase~~2018, as selling prices have increased in ~~adjusted operating profit for the three and nine months ended May 31, 2018 was increased period-over-period costs during fiscal 2018 related~~response to our new micro mill in Durant, Oklahoma of approximately $2.2 million and $12.0 million, respectively, which includes $3.0 million of incentives recorded as income during the quarter. Other items adversely impacting adjusted operating profit during the third quarter and the first nine months of fiscal 2018, compared to the same periods in fiscal 2017, were increased freight costs on a per ton basis of 4%, as well as increased manufacturing supply costs due to inflationary pressures for electrodes and alloys compared to the same periods of fiscal 2017.

~~Americas Fabrication~~

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Net sales $ 378,241
$ 379,976
$ 1,023,993
$ 1,022,202
Adjusted operating (loss) profit (16,096 ) 1,808
(47,995 ) 9,025

Average selling price (excluding stock and buyout sales) (per short ton)
Rebar and other $ 777
$ 775
$ 784
$ 772

Short tons shipped (in thousands)
Rebar and other 302
310
808
836

rising input costs. Net sales for the three and nine months ended May 31, ~~2018 were flat compared~~2019 included amortization benefit of $23.4 million and $58.2 million, respectively, related to the ~~same periods in fiscal 2017, with~~unfavorable contract backlog of the impact of modest period-over-period increases in price and reductions in shipments offsetting one another. Average selling prices in this segment were largely driven by projects from our backlog, which were generally contracted prior to the escalation of scrap and other input costs.Acquired Businesses.

For the three and nine months ended May 31, ~~2018,~~2019, Americas Fabrication reported an adjusted ~~operating~~EBITDA loss ~~was $16.1~~of $23.3 million and ~~$48.0~~$109.9 million, respectively, compared to an adjusted ~~operating profit~~EBITDA loss of ~~$1.8~~$8.2 million and ~~$9.0~~$14.8 million in the corresponding periods in fiscal ~~2017. Included~~2018. The primary driver for the year-over-year increase in adjusted ~~operating~~EBITDA loss for the three and nine months ended May 31, ~~2018 were impairment charges of $0.9 million~~2019 was the additional volume and ~~$13.5~~

~~million, respectively, primarily related to~~loss associated with the ~~sale~~Acquired Businesses and compression in metal margins as average selling prices have not increased as much as rebar prices. As the majority of our ~~structural steel~~rebar fabrication ~~business during~~projects in this segment are fixed price, there is a lag between current market prices and average selling price of material we ship as we work through the project backlog. However, in the third quarter of fiscal ~~2018. Impacting~~2019, the ~~period-over-period change~~existing business approached break-even levels at current rebar selling prices, while the unfavorable contract backlog associated with the Acquired Businesses had a lower per ton value and is expected to turn profitable in fiscal 2020. Adjusted EBITDA included non-cash stock compensation expense of $0.4 million and $1.7 million for ~~both~~the three and nine months ended May 31, 2019, respectively, and $0.3 million and $1.7 million for the three and nine months ended May 31, 2018, was a 31% and 19% reduction, respectively, in average rebar fabrication metal margin, driven by the lag in our fabrication project backlog where average selling prices did not keep pace with increasing raw material costs.respectively.

International Mill


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Net sales	$	201,737	$	167,639	$	633,980	$	437,034	$	209,365	$	201,737	$	611,587	$	633,980
Adjusted operating profit	24,370		12,971		72,297		32,517
Adjusted EBITDA									24,120		31,987		77,436		95,066

Average price (per short ton)
Total selling price									$	524	$	599	$	539	$	562
Cost of ferrous scrap utilized									288		329		295		317
Metal margin									236		270		244		245

Short tons (in thousands)
Melted									368		389		1,135		1,137
Rolled									341		316		902		974
Shipped									376		320		1,072		1,066

Average price (per short ton)
Total sales $ 599
$ 443
$ 562
$ 415
Cost of ferrous scrap utilized 329
253
317
229
Metal margin 270
190
245
186

Short tons (in thousands)
Melted 389
380
1,137
1,066
Rolled 316
326
974
948
Shipped 320
354
1,066
983

Net sales for the three and nine months ended May 31, ~~2018~~2019 increased ~~$34.1~~$7.6 million, or ~~20%~~4%, and ~~$196.9~~decreased $22.4 million, or ~~45%~~4%, respectively, compared to the corresponding periods in fiscal 2017, driven largely by increased construction activity and economic improvements in the Polish and surrounding markets, resulting in an increase in average selling prices of 35% for both the three and nine months ended May 31, 2018. ~~Short tons shipped during~~For the three months ended May 31, 2019, the increase in net sales was due to a year-over-year increase in shipments of 18%, as compared to the same period in fiscal 2018, ~~decreased~~partially offset by ~~approximately 10% as~~ a 13% decrease in average selling prices. The reduction in average selling prices was primarily the result of increased imports into the ~~Polish market; however,~~European Union. For the ~~impact of such decreased~~nine months ended May 31, 2019, the decrease in net sales compared to the same period in fiscal 2018 was primarily due to a 4% decrease in average selling price while shipments ~~was more than offset by our increased selling prices. The increase in net~~remained relatively flat. Net sales for the three and nine months ended May 31, 2019 were also impacted by unfavorable foreign currency translation adjustments of approximately $20.2 million and $46.9 million, respectively, due to the fluctuations of the U.S. dollar in relation to the Polish zloty.

Adjusted EBITDA for the three months ended May 31, 2019 decreased $7.9 million compared to the corresponding period in fiscal 2018, ~~also reflects favorable~~primarily due to a decrease in metal margins. Adjusted EBITDA for the nine months ended May 31, 2019 decreased $17.6 million compared to the corresponding period in fiscal 2018, driven, in part, by the decrease in average selling prices described above and an increase in manufacturing costs on a per ton basis due to a decrease in melt shop volumes. Adjusted EBITDA included non-cash stock compensation expense of $0.4 million and $0.7 million for the three and nine months ended May 31, 2019, respectively, and $0.2 million and $1.2 million for the three and nine months ended May 31, 2018, respectively. Adjusted EBITDA for the three and nine months ended May 31, 2019 reflected unfavorable foreign currency translation impacts of approximately ~~$22.3~~$2.3 million and ~~$76.0~~$5.7 million, respectively, due to the fluctuations of the U.S. dollar in relation to the Polish zloty.

~~Adjusted operating profit~~

Corporate and Other

Corporate and Other reported an adjusted EBITDA loss of $27.3 million and $111.0 million for the three and nine months ended May 31, ~~2018 increased $11.4~~2019, respectively, compared to an adjusted EBITDA loss of $31.8 million and ~~$39.8~~$81.8 million ~~respectively, compared to~~for the corresponding periods in fiscal 2017. The increases in adjusted operating profit for the three and nine months ended May 31, 2018 resulted from increases of 42% and 32%, respectively, in average metal margin compared to the corresponding periods in fiscal 2017. Metal margin expansion occurred across all product lines during the first nine months of fiscal 2018, as increased selling prices outpaced average cost increases, particularly for higher-margin merchant products. Partially offsetting these increases in adjusted operating profit were increases in per ton employee-related costs of 38% and 20% for the three and nine months ended May 31, 2018, respectively, as compared to the same periods in fiscal 2017. Additionally, fluctuations in the U.S. dollar relative to the Polish zloty resulted in increases of approximately $2.5 million and $8.0 million of this segment's adjusted operating profit for the three and nine months ended May 31, 2018, respectively.

~~Corporate and Other~~

~~Corporate and Other adjusted operating loss increased $2.4 million for the three months ended May 31, 2018 and decreased $6.5 million for~~ For the nine months ended May 31, ~~2018, compared to~~2019, the ~~corresponding periods in fiscal 2017. The increase for the three months ended May 31, 2018 was primarily the result of a $4.8 million~~ increase in ~~professional services driven by acquisition-related activities, partially offset by a $3.1 million reduction in depreciation expense~~adjusted EBITDA loss, as compared to the ~~three months ended May 31, 2017. The decrease for the nine months ended May 31,~~same period in fiscal 2018, was ~~primarily~~largely driven by a result of a $5.4 million reduction in depreciation expense, a $7.1 million decrease in employee-related expenses and a $1.6 million reduction in other fees including bank fees and insurance, as compared to the nine months ended May 31, 2017. Partially offsetting the reduced costs during the nine months ended May 31, 2018 was an $11.9$25.3 million increase in corporate expenses due to an increase in professional ~~services that were primarily a result of acquisition-related activities, as compared~~fees related to the ~~nine months ended May 31, 2017.~~acquisition of the Acquired Businesses and other legal expenses.

Also impacting our year-over-year change in adjusted operating loss was the impact of prior year operating results of certain operations related to our former International Marketing and Distribution segment which did not meet the criteria for discontinued operations, and are now included in our results of Corporate and Other, as discussed in Note 14, Business Segments. These results had an immaterial impact on adjusted operating loss for the three and nine months ended May 31, 2018. For the three and nine months ended May 31, 2017, these operations had adjusted operating income of $0.9 million and adjusted operating loss of $2.4 million, respectively.

~~DISCONTINUED OPERATIONS DATA~~

~~See Note 2, Changes in Business, for information regarding discontinued operations.~~

LIQUIDITY AND CAPITAL RESOURCES

~~See Note 7, Credit Arrangements, for additional information.~~

While we believe the lending institutions participating in our credit arrangements are financially capable, it is important to note that the banking and capital markets periodically experience volatility that may limit our ability to raise capital in a cost efficient manner. ~~Additionally,~~In addition, our financing costs associated with raising capital may be affected by changes to our credit rating made by any rating agency.

~~The table below reflects our sources, facilities and availability of liquidity as of May 31, 2018:~~

(in thousands) Total Facility Availability
Cash and cash equivalents $ 600,444
$ 600,444
Notes due from 2023 to 2027 980,000
*
Revolving credit facility 350,000
346,728
U.S. receivables sale facility 200,000
172,695
2022 Term Loan 144,375
—
International accounts receivable sales facilities 54,179
36,117
Bank credit facilities — uncommitted 60,951
59,284
Other, including equipment notes 46,763
*

~~_________________~~

* We believe we have access to additional financing and refinancing, if needed.

Sources of Liquidity and Capital Resources

We expect cash on hand and cash generated from operations to be sufficient to meet all interest payments due within the next twelve months. See Note 7, Credit Arrangements, for further information regarding such interest payment obligations.

~~Our U.S. operations~~ have access to the $350.0 million revolving credit facility ~~described in Note 7, Credit Arrangements,~~ and ~~the $200.0 million~~availability under our sale of accounts receivable ~~program~~programs, as described ~~below.~~in Note 9, Credit Arrangements.

~~We regularly maintain a substantial amount of accounts receivable.~~ We actively monitor our accounts receivable and, based on market conditions and customers' financial condition, we record allowances as soon as we believe accounts are uncollectible. Continued pressure on the liquidity of our customers could result in additional allowances as we make our assessments in the future. We use credit insurance ~~both in the U.S. and~~ internationally to mitigate the risk of customer insolvency. We estimate that the amount of credit insured receivables (and those covered by export letters of credit) was approximately ~~14%~~12% of total trade receivables at May 31, ~~2018. For added flexibility, we may sell certain accounts receivable both in the U.S.~~2019.

The table below shows our sources, facilities and ~~internationally. See Note 4, Sales of Accounts Receivable, for further information.~~

~~Stock Repurchase Program~~

~~During the first quarter of fiscal 2015, CMC's Board of Directors authorized a share repurchase program under which we may repurchase up to $100.0 million of shares of common stock. As~~available liquidity as of May 31, ~~2018, the approximate value of shares of common stock that may yet be purchased under this program is $27.6 million.~~2019:



(in thousands)	Total Facility		Availability
Cash and cash equivalents	$	120,315	$	120,315
Notes due from 2023 to 2027	980,000		*
Revolving credit facility	350,000		346,971
U.S. accounts receivable facility	200,000		172,975
Term loans	310,125		—
Poland accounts receivable facility	57,375		26,833
Poland credit facilities	71,719		70,464
Other, including equipment notes	56,996		*

_________________

* We ~~may repurchase shares from time~~believe we have access to ~~time for cash in the open market or privately-negotiated transactions in accordance with applicable federal securities laws. The timing~~additional financing and ~~the amount of repurchases,~~refinancing, if any, are determined by management based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require us to purchase any dollar amount or number of shares of common stock and may be modified, suspended, extended or terminated at any time without prior notice. We did not purchase any shares of common stock during the three and nine months ended May 31, 2018 and 2017.needed.

~~Pending Acquisition~~Cash Flows

On December 29, 2017, we entered into a definitive purchase agreement to acquire certain U.S. rebar steel mill and fabrication assets from Gerdau S.A. See Note 2, Changes in Business, for further information. The Company expects to fund the purchase price for the acquisition with cash on hand together with proceeds from the 2026 Notes and borrowings under the 2018 Term Loan (as defined in Note 7, Credit Arrangements).

In connection with the issuance of the 2026 Notes during the third quarter of fiscal 2018, we terminated the commitment letter governing the Term Loan B Facility, which we entered into on December 29, 2017. See Note 7, Credit Arrangements, for further information.

~~Operating Cash Flow and Capital Expenditures~~

Operating Activities

Our cash flows from operating activities result primarily from the sale of steel, nonferrous metals and related ~~products, and to a lesser extent, sales of nonferrous metal products and other raw materials used in steel manufacturing.~~products. We have a diverse and generally stable customer base. From time to time, we use futures or forward contracts to mitigate the risks from fluctuations in ~~metal~~ commodity prices, foreign currency exchange rates, natural gas prices and interest rates. See Note 8,10, Derivatives and Risk Management, for further information.

Net cash flows ~~from~~used by operating activities ~~increased $72.7~~were $218.5 million for the nine months ended May 31, ~~2018,~~2019, compared to $330.5 million for the nine months ended May 31, ~~2017. Year-over-year~~2018. The decrease in cash ~~flows from~~used by operating activities ~~increased as~~was primarily due to a ~~result~~$124.1 million decrease in cash collections of ~~improved earnings after taking into consideration non-cash charges, as compared to~~the DPP from the Programs described in Note 6, Accounts Receivable Programs, for the nine months ended May 31, ~~2017. Our~~2019, as compared to the same period in 2018. This decrease was partially offset by a $9.8 million year-over-year increase in cash ~~flows from changes~~used in operating assets and liabilities ("working capital") for the nine months ended May 31, 2018 reflect a net increase in working capital, largely driven by increased input costs and volumes. Also included are net inflows related to the wind down of our International Marketing and Distribution operations, which was partially offset by net repayments of $71.9 million of advance payments outstanding on our sale of trade accounts receivable programs.2019. For continuing operations, operating working capital days ~~sales outstanding improved by 5~~deteriorated four days ~~while days sales in inventory was flat compared to the nine months ended May 31, 2017.~~on a year-over-year basis.

Investing Activities

Net cash flows used by investing activities ~~decreased $186.3~~increased $794.1 million for the nine months ended May 31, ~~2018~~2019 as compared to the nine months ended May 31, ~~2017.~~2018. The ~~overall~~ year-over-year ~~reduction~~increase in cash used by investing activities was ~~largely~~primarily due to ~~cash receipts during~~ the ~~third fiscal quarter~~acquisition of ~~2018 related to~~ the ~~sale of our structural steel operations~~Acquired Businesses, as described in ~~the U.S. and our trading operations in Australia. The sale of our remaining assets in Australia concludes the exit of our International Marketing and Distribution segment. Also contributing to the~~Note 2, Acquisition. Partially offsetting this increase was a year-over-year decrease in cash flows used by investing activities was the collection of $25.0 million from the settlement of certain life insurance policies received during the second quarter of fiscal 2018. Additional items impacting year-over-year changes in cash used by investing activities include decreased cash outflows in fiscal 2018 of $47.4 million related to acquisitions, and decreased outflows for capital spending in fiscal 2018 of $17.8 million, primarily related to reduced year-over-year spending required at our new micro mill in Durant, Oklahoma, in each case compared to the nine months ended May 31, 2017.

~~During fiscal 2018, we anticipate~~ capital expenditures ~~ranging from $175 million to $200~~of $52.5 million.

We ~~expect~~estimate that our fiscal 2019 capital spending will ~~be funded from internally generated capital.~~range between $150 million to $175 million. We regularly assess our capital spending ~~and reevaluate our requirements~~ based on current and expected results.

Financing Activities

Net year-over-year cash flows from financing activities during fiscal ~~2018 increased~~2019 decreased by ~~$330.7~~$152.6 million compared to the nine months ended May 31, ~~2017.~~2018. The ~~increase~~decrease was primarily due to ~~the receipt of funds received~~a $170 million reduction in ~~connection with the~~ issuance of

~~the 2026 Notes. This increase was partially offset by increased outflows of $6.6 million related to repayments~~ of long-term debt ~~during~~in fiscal ~~2018, including required minimum principal payments associated with the 2022 Term Loan (as defined in Note 7, Credit Arrangements).~~2019 as compared to fiscal 2018. We regularly evaluate the use of our cash in efforts to maximize total shareholder return, including debt repayment, capital deployment, share repurchases and dividends.

We anticipate our current cash balances, cash flows from operations and our available sources of liquidity will be sufficient to meet our cash requirements, including our scheduled debt repayments, payments for our contractual obligations, capital expenditures, working capital needs, share repurchases, dividends and other prudent uses of ~~our~~ capital, such as future acquisitions. However, in the event of sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate ~~steps to obtain sufficient additional funds.~~actions.

CONTRACTUAL OBLIGATIONS

Our contractual obligations ~~increased approximately $302.7 million to $2.0 billion~~ at May 31, ~~2018~~2019 increased by approximately $316 million from ~~$1.7 billion at~~ August 31, ~~2017. This~~2018, primarily due to the acquisition of the Acquired Businesses. The increase ~~was primarily~~includes financing and related interest obligations, as well as incremental open purchase orders of the Acquired Businesses related to the ~~issuance~~ordinary course of ~~the 2026 Notes during the third quarter of fiscal 2018.~~business. Our estimated contractual obligations for the twelve months ending May 31, ~~2019~~2020 are approximately ~~$413.2~~$527 million and primarily consist of expenditures incurred in connection with normal revenue producing activities.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that our insurance providers and suppliers request. At May 31, ~~2018,~~2019, we had committed ~~$24.1~~$28.1 million under these arrangements, of which ~~$3.3~~$3.0 million reduced availability under the ~~Revolver.~~Revolver, as defined in Note 9, Credit Arrangements.

OFF-BALANCE SHEET ARRANGEMENTS

~~For added flexibility,~~As described in Note 9, Credit Arrangements, we ~~may sell certain~~have trade accounts receivable programs in both in the U.S. and ~~internationally. We utilize proceeds from~~Poland. As of September 1, 2018, the ~~sales~~Programs were amended such that they no longer qualify for off-balance sheet treatment. For periods prior to September 1, 2018, we accounted for transfers of the trade accounts receivable as an alternative to short-term borrowings, effectively managing our overall borrowing costs and providing an additional source of working capital. We account for sales of the trade accounts receivable as true sales and the tradesales. Trade accounts receivable balances ~~that are sold are~~transferred were removed from the ~~unaudited~~ condensed consolidated balance ~~sheets. The~~sheets, and cash advances received ~~are~~were reflected as cash provided by operating activities on our ~~unaudited~~ condensed consolidated statements of cash flows. ~~See Note 4, Sales of Accounts Receivable, for additional information.~~

CONTINGENCIES

~~See Note 13, Commitments and Contingencies, for further information.~~

In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings and governmental investigations, including ~~with respect to~~ environmental matters. We may incur settlements, fines, penalties or judgments ~~in connection with~~as a result of these matters. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when a loss is probable and we can reasonably estimate the amount of the loss. We evaluate the measurement of recorded liabilities each reporting period based on the current facts and circumstances specific to each matter. The ultimate losses incurred upon final resolution of litigation-related loss contingencies may differ materially from the estimated liability recorded at a particular balance sheet date. Changes in estimates are recorded in earnings in the period in which such changes occur. We do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect, individually or in the aggregate, on our results of operations, cash flows or financial condition. See Note 16, Commitments and Contingencies, for more information.

3334

~~NON-GAAP FINANCIAL MEASURES~~

~~Adjusted Operating Profit from Continuing Operations~~

Adjusted operating profit from continuing operations is the sum of our earnings from continuing operations before interest expense, income taxes and discounts on sales of accounts receivable. Adjusted operating profit from continuing operations should not be considered as an alternative to earnings from continuing operations or net earnings, as determined by GAAP. However, we believe that adjusted operating profit from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties as it allows: (i) a supplemental measure of our ongoing core performance and (ii) the assessment of period-to-period performance trends. Management uses adjusted operating profit from continuing operations to evaluate our financial performance. For added flexibility, we may sell certain trade accounts receivable both in the U.S. and internationally. We consider sales of accounts receivable as an alternative source of liquidity to finance our operations, and we believe that removing these costs provides a clearer perspective of our operating performance. Adjusted operating profit from continuing operations may be inconsistent with similar measures presented by other companies.

~~Reconciliations of earnings from continuing operations to adjusted operating profit from continuing operations are provided below:~~

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Earnings from continuing operations $ 42,325
$ 31,567
$ 83,977
$ 60,245
Income taxes 13,312
11,006
23,465
21,231
Interest expense 11,511
12,448
25,303
38,212
Discounts on sales of accounts receivable 261
230
715
639
Adjusted operating profit from continuing operations $ 67,409
$ 55,251
$ 133,460
$ 120,327

~~Adjusted EBITDA from Continuing Operations~~

Adjusted EBITDA from continuing operations is the sum of earnings from continuing operations before interest expense and income taxes. It also excludes our largest recurring non-cash charge, depreciation and amortization, as well as long-lived asset and goodwill impairment charges, which are also non-cash charges. Adjusted EBITDA from continuing operations should not be considered as an alternative to earnings from continuing operations or net earnings, or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that adjusted EBITDA from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties as it allows: (i) comparison of our earnings to those of our competitors; (ii) a supplemental measure of our ongoing core performance; and (iii) the assessment of period-to-period performance trends. Additionally, adjusted EBITDA from continuing operations is the target benchmark for our annual and long-term cash incentive performance plans for management. Adjusted EBITDA from continuing operations may be inconsistent with similar measures presented by other companies.

~~Reconciliations of earnings from continuing operations to adjusted EBITDA from continuing operations are provided below:~~

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2018 2017 2018 2017
Earnings from continuing operations $ 42,325
$ 31,567
$ 83,977
$ 60,245
Interest expense 11,511
12,448
25,303
38,212
Income taxes 13,312
11,006
23,465
21,231
Depreciation and amortization 32,949
32,116
98,898
92,610
Impairment charges 935
70
13,532
549
Adjusted EBITDA from continuing operations $ 101,032
$ 87,207
$ 245,175
$ 212,847

~~Adjusted Earnings from Continuing Operations~~

Adjusted earnings from continuing operations is a non-GAAP financial measure that is equal to earnings from continuing operations before certain material acquisition and integration costs, mill operational start-up costs, CMC Steel Oklahoma incentives, asset impairments, debt restructuring and extinguishment gains and losses and severance expenses, including the estimated income tax effects thereof. Additionally, we adjust adjusted earnings from continuing operations for the effects of the TCJA as well as the tax benefit associated with an international reorganization. Adjusted earnings from continuing operations should not be considered as an alternative to earnings from continuing operations or any other performance measure derived in accordance with GAAP. However, we believe that adjusted earnings from continuing operations provides relevant and useful information to investors as it allows: (i) a supplemental measure of our ongoing core performance and (ii) the assessment of period-to-period performance trends. Management uses adjusted earnings from continuing operations to evaluate our financial performance. Adjusted earnings from continuing operations may be inconsistent with similar measures presented by other companies. Adjusted earnings from continuing operations per diluted share is defined as adjusted earnings from continuing operations on a diluted per share basis.

~~A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations is provided below:~~

Three Months Ended Nine Months Ended
(in thousands, except per share amounts) 5/31/2018 5/31/2017 5/31/2018 5/31/2017

Earnings from continuing operations $ 42,325
$ 31,567
$ 83,977
$ 60,245

Acquisition and integration related costs 4,975
—
14,600
—
Mill operational start-up costs 6,456
—
18,016
—
CMC Steel Oklahoma incentives (3,000 ) —
(3,000 ) —
Asset impairments —
—
12,136
—
Loss (gain) on debt extinguishment —
—
—
—
Severance —
—
—
—
Total adjustments (pre-tax) $ 8,431
$ —
$ 41,752
$ —

Related tax effects on adjustments $ (1,771 ) $ —
$ (10,946 ) $ —
TCJA impact —
—
10,600
—
International reorganization —
—
(9,200 ) —
Total tax impact $ (1,771 ) $ —
$ (9,546 ) $ —

Adjusted earnings from continuing operations $ 48,985
$ 31,567
$ 116,183
$ 60,245

Adjusted earnings from continuing operations per diluted share $ 0.41
$ 0.27
$ 0.98
$ 0.51

FORWARD-LOOKING STATEMENTS

This ~~Quarterly Report on~~ Form 10-Q contains or incorporates by reference a number of "forward-looking statements" within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the effects of ongoing trade actions, the effects of continued pressure on the liquidity of our customers, potential synergies provided by our recent acquisitions, demand for our products, steel margins, the ability to operate our mills at full capacity, future supplies of raw materials and energy for our operations, share repurchases, legal proceedings, renewing the credit facilities of our Polish subsidiary, the reinvestment of undistributed earnings of our non-U.S. subsidiaries, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, our new Oklahoma micro mill, estimated contractual obligations, the ~~planned acquisition~~effects of ~~substantially all of~~ the U.S. rebar fabrication facilities and the steel mini mills located in or around Rancho Cucamonga, California, Jacksonville, Florida, Sayreville, New Jersey and Knoxville, Tennessee currently owned by Gerdau S.A. and certain of its subsidiaries (collectively, the “Business”) and the timing thereof, the ability to obtain regulatory approvals and meet other closing conditions for the planned acquisition of the ~~Business,~~Acquired Businesses, and our expectations or beliefs concerning future events. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements.

Our forward-looking statements are based on management's expectations and beliefs as of the time this ~~Quarterly Report on~~ Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference into this ~~Quarterly Report on~~ Form 10-Q, as of the time such document was prepared. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. ~~Some of the important~~Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of the 2018 Form 10-K as well as the following:

changes in economic conditions which affect demand for our products or construction activity generally, and the impact of such changes on the highly cyclical steel industry;

rapid and significant changes in the price of metals, potentially impairing our inventory values due to declines in commodity ~~prices;~~prices or reducing the profitability of our fabrication contracts due to rising commodity pricing;

excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing;

compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions;

involvement in various environmental matters that may result in fines, penalties or judgments;

potential limitations in our or our customers' abilities to access credit and non-compliance by our customers with our contracts;

activity in repurchasing shares of our common stock under our repurchase program;

financial covenants and restrictions on the operation of our business contained in agreements governing our debt;

our ability to successfully identify, consummate, and integrate acquisitions and the effects that acquisitions may have on our financial leverage;

risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals;

failure to retain key management and employees of the ~~Business;~~Acquired Businesses;

issues or delays in the successful integration of the ~~Business’~~Acquired Businesses’ operations with those of the Company, including the inability to substantially increase utilization of the ~~Business'~~Acquired Businesses' steel mini mills, and incurring or experiencing unanticipated costs and/or delays or difficulties;

difficulties or delays in the successful transition of the ~~Business~~Acquired Businesses to the information technology systems of the Company as well as risks associated with other integration or transition of the operations, systems and personnel of the ~~Business;~~Acquired Businesses;

unfavorable reaction to the acquisition of the Acquired Businesses by customers, competitors, suppliers and employees;

lower than expected future levels of revenues ~~being lower~~and higher than expected ~~and costs being higher than expected;~~future costs;

failure or inability to implement growth strategies in a timely manner;

~~unfavorable reaction to the acquisition of the Business by customers, competitors, suppliers and employees;~~

impact of goodwill impairment charges;

impact of long-lived asset impairment charges;

currency fluctuations;

global factors, including political uncertainties and military conflicts;

availability and pricing of electricity, electrodes and natural gas for mill operations;

~~our~~ ability to hire and retain key executives and other employees;

competition from other materials or from competitors that have a lower cost structure or access to greater financial resources;

information technology interruptions and breaches in ~~data~~ security;

ability to make necessary capital expenditures;

availability and pricing of raw materials and other items over which we exert little influence, including scrap metal, energy ~~insurance~~ and ~~supply prices;~~insurance;

unexpected equipment failures;

~~our~~ ability to realize the anticipated benefits of our investment in our new micro mill in Durant, Oklahoma;

losses or limited potential gains due to hedging transactions;

litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks;

risk of injury or death to employees, customers or other visitors to our operations;

impacts ~~from~~of the TCJA; and

increased costs related to health care reform ~~legislation; and~~legislation.

~~those factors listed under Part I, Item 1A, Risk Factors, included in the 2017 Form 10-K.~~

You should refer to the “Risk Factors” disclosed in our periodic and current reports filed with the SEC for specific risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed herein may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on the forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments decreased ~~$160.0~~$7.5 million, or 6%, compared to August 31, ~~2017.~~2018. Forward contracts denominated in ~~Polish zloty~~Euro with a ~~U.S. dollar~~Polish zloty functional currency, forward contracts denominated in ~~Euro~~U.S. dollars with a Polish zloty functional currency, and forward contracts denominated in ~~U.S. dollars~~Euro with ~~an Australian~~a U.S. dollar functional currency ~~decreased $33.2~~increased $11.8 million, ~~$34.0~~$4.0 million, and ~~$76.4~~$5.1 million, respectively, compared to August 31, ~~2017.~~2018. Forward contracts denominated in Australian dollar with a U.S. dollar functional currency decreased $28.5 million compared to August 31, 2018. As of May 31, 2019, the Company had no forward contracts denominated in Australian dollar.

The Company's total commodity contract commitments ~~increased $5.5~~decreased $5.6 million, or ~~9.3%~~10%, compared to August 31, ~~2017.~~2018.

There were no other material changes to the information set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, included in the ~~2017~~2018 Form 10-K.

3736

ITEM 4. CONTROLS AND PROCEDURES

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods, and includes controls and procedures designed to ensure that such information is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this ~~Quarterly Report on~~ Form 10-Q, and they have concluded that as of that date, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended May 31, ~~2018~~2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3837

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a defendant in lawsuits associated with the normal conduct of its businesses and operations. It is not possible to predict the outcome of the pending actions, and as with any litigation, it is possible that these actions could be decided unfavorably to the Company. We believe that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested.

~~On April 28, 2016,~~We are the subject of civil actions, or have received notices from the EPA or state agencies with similar responsibility, that we ~~were served with~~and numerous other parties are considered a ~~lawsuit filed by Ector County,~~potentially responsible party ("PRP") and may be obligated under CERCLA, or similar state statutes, to pay for the cost of remedial investigation, feasibility studies and ultimately remediation to correct alleged releases of hazardous substances at eleven locations. The actions and notices refer to the following locations, none of which involve real estate we ever owned or upon which we ever conducted operations: the Sapp Battery Site in Cottondale, Florida, the Interstate Lead Company Site in Leeds, Alabama, the Ross Metals Site in Rossville, Tennessee, the Li Tungsten Site in Glen Cove, New York, the Peak Oil Site in Tampa, Florida, the R&H Oil Site in San Antonio, Texas, the SoGreen/Parramore Site in Tifton, Georgia, the Jensen Drive site in Houston, Texas, the Industrial Salvage site in Corpus Christi, Texas, Chemetco site in Hartford, Illinois and the ~~State of Texas by and through~~Ward Transformer site in Raleigh, North Carolina. We may contest our designation as a PRP with regard to certain sites, while at other sites we are participating with other named PRPs in agreements or negotiations that have resulted or that we expect will result in agreements to remediate the ~~Texas Commission on Environmental Quality ("TCEQ") alleging violations~~sites. During 2010, we acquired a 70% interest in the real property at Jensen Drive as part of the ~~Texas Solid Waste Disposal Act,~~remediation of that site. We have periodically received information requests from government environmental agencies with regard to other sites that are apparently under consideration for designation as listed sites under CERCLA or similar state statutes. Often we do not receive any further communication with regard to these sites, and as of the ~~Texas Water Code,~~date of this Form 10-Q, we do not know if any of these inquiries will ultimately result in a demand for payment from us.

The EPA notified us and other alleged PRPs that under Section 106 of CERCLA, we and the ~~Texas Clean Air Act,~~other PRPs could be subject to a maximum fine of $25,000 per day and ~~TCEQ rules on spill prevention~~the imposition of treble damages if we and ~~control. The Plaintiffs amended their petition~~the other PRPs refuse to clean up the Peak Oil, Sapp Battery and SoGreen/Parramore sites as ordered by the EPA. We are presently participating in ~~February 2017~~PRP organizations at these sites, which are paying for certain site remediation expenses. We do not believe that the EPA will pursue any fines against us if we continue to ~~include violations of TCEQ rules on recycling and storm water permits. The Plaintiffs further amended their petition in April 2017, broadening their allegations. The lawsuit, filed~~participate in the 201st Judicial District Court of Travis County, Texas, alleged improper disposal of solid waste and unauthorized outdoor burning activity at the Company’s recycling facility located in Odessa, Texas. The lawsuit sought a penalty for each day of alleged violation under the Texas Health & Safety Code, the Texas Water Code,PRP groups or ~~the Texas Administrative Code. The parties agreed to a mediated settlement on December 1, 2017 and entered into an Agreed Final Judgment on June 12, 2018. The Agreed Final Judgment is subject~~if we have adequate defenses to the ~~formal approval process~~EPA's imposition of fines against us in these matters.

We believe that adequate provisions have been made in the ~~State~~financial statements for the potential impact of ~~Texas. Under the mediated settlement, the Company will pay $1.1 million, net of insurance recoveries. The Company denies~~ any ~~wrongdoing~~loss in connection with the ~~alleged claims,~~above-described legal proceedings and environmental matters. Management believes that the ~~settlement does not contain an admission of liability from the Company.~~

~~We are subject to laws and regulations relating to protection~~outcome of the ~~environment. It is not possible to quantify with certainty the potential impact of actions relating to environmental matters, particularly remediation~~proceedings mentioned, and other compliance efforts that our subsidiaries may undertake in the future. We believe, however, compliance with current environmental protection laws (before taking into account estimated recoveries from third parties)miscellaneous litigation and proceedings now pending, will not have a material adverse effect ~~upon~~on our business, results of operations ~~cash flows~~ or financial condition.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of the ~~2017~~2018 Form 10-K ~~as updated by our~~and Part II, Item 1A, Risk Factors, of the Quarterly ~~Reports~~Report on Form 10-Q ~~filed since~~for the ~~date of the 2017 Form 10-K.~~period ended February 28, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended May 31, ~~2018.~~2019.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.


~~ITEM 6.~~	~~EXHIBITS~~

ITEM 6. EXHIBITS



~~2.1~~	Stock and Asset Purchase Agreement, dated as of December 29, 2017, by and among Commercial Metals Company, CMC Steel Fabricators, Inc., CMC Steel US, LLC, GNA Financing, Inc., Gerdau Ameristeel US, Inc., Gerdau Ameristeel Sayreville Inc. and Gerdau Ameristeel WC, Inc. (filed as Exhibit 2.1 to Commercial Metals Company’s Current Report on Form 8-K filed January 2, 2018 and incorporated herein by reference).

3.1(a)	Restated Certificate of Incorporation dated March 2, 1989 (filed as Exhibit 3(i) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(b)	Certificate of Amendment of Restated Certificate of Incorporation dated February 1, 1994 (filed as Exhibit 3(i)(a) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(c)	Certificate of Amendment of Restated Certificate of Incorporation dated February 17, 1995 (filed as Exhibit 3(i)(b) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(d)	Certificate of Amendment of Restated Certificate of Incorporation dated January 30, 2004 (filed as Exhibit 3(i)(d) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 and incorporated herein by reference).

3.1(e)	Certificate of Amendment of Restated Certificate of Incorporation dated January 26, 2006 (filed as Exhibit 3(i) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2006 and incorporated herein by reference).

3.1(f)	Certificate of Designation, Preferences and Rights of Series A Preferred Stock (filed as Exhibit 2 to Commercial Metals Company's Form 8-A filed August 3, 1999 and incorporated herein by reference).

3.2	Third Amended and Restated Bylaws (filed as Exhibit 3(ii) to Commercial Metals Company's Annual Report on Form 10-K for the year ended August 31, 2015 and incorporated herein by reference).

~~4.1~~	Third Supplemental Indenture, dated May 1, 2018, by and among Commercial Metals Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Commercial Metals Company’s Current Report on Form 8-K filed May 3, 2018 and incorporated herein by reference).

~~4.2~~	~~Form of 5.750% Senior Note due 2026 (filed as Exhibit 4.2 to Commercial Metals Company’s Current Report on Form 8-K filed May 3, 2018 and incorporated herein by reference).~~

~~10.1~~	Purchase Agreement, dated April 19, 2018, between Commercial Metals Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the initial purchasers named therein (filed as Exhibit 10.1 to Commercial Metals Company’s Current Report on Form 8-K filed April 20, 2018 and incorporated herein by reference).

~~10.2~~	Registration Rights Agreement, dated May 3, 2018, by and among Commercial Metals Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC (filed as Exhibit 10.1 to Commercial Metals Company’s Current Report on Form 8-K filed May 3, 2018 and incorporated herein by reference).

31.1	Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 to the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2	Certification of Mary A. Lindsey, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1	Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2	Certification of Mary A. Lindsey, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101	The following financial information from Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended May 31, ~~2018,~~2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings (Unaudited), (ii) the Condensed Consolidated Statements of Comprehensive Income (Unaudited), (iii) the Condensed Consolidated Balance Sheets (Unaudited), (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited), (v) the Condensed Consolidated Statements of Stockholders' Equity (Unaudited) and (vi) the Notes to Condensed Consolidated Financial Statements (Unaudited) (submitted electronically herewith).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	COMMERCIAL METALS COMPANY

June 27, ~~2018~~2019	/s/ Mary A. Lindsey
	Mary A. Lindsey
	Senior Vice President and Chief Financial Officer
	(Duly authorized officer and principal financial officer of the registrant)



(in thousands)	August 31, 2017*
Assets:
Accounts receivable	$	38,279
Inventories	10,676
Other current assets	77
Assets of businesses held for sale & discontinued operations	$	49,032

Liabilities:
Accounts payable-trade	$	13,108
Accrued expenses and other payables	16,785
Liabilities of businesses held for sale & discontinued operations	$	29,893



(in thousands)	Weighted Average Interest Rate as of May 31, 2018	May 31, 2018		August 31, 2017
2027 Notes	5.375%	$	300,000	$	300,000
2026 Notes	5.750%	350,000		—
2023 Notes	4.875%	330,000		330,000
2022 Term Loan	3.103%	144,375		150,000
Other, including equipment notes		46,763		52,077
Total debt		1,171,138		832,077
Less debt issuance costs		12,161		7,315
Total amounts outstanding		1,158,977		824,762
Less current maturities		19,874		19,182
Long-term debt		$	1,139,103	$	805,580



Derivative Assets	May 31, 2018		August 31, 2017
Commodity — not designated for hedge accounting	$	901	$	767
Foreign exchange — designated for hedge accounting	—		81
Foreign exchange — not designated for hedge accounting	1,573		1,286
Derivative assets (other current assets)*	$	2,474	$	2,134



Average price (per short ton)
Total sales	$	632	$	540	$	587	$	522
Cost of ferrous scrap utilized	329		266		293		239
Metal margin	303		274		294		283



	Three Months Ended					Nine Months Ended
(in thousands, except per share amounts)	5/31/2018			5/31/2017		5/31/2018			5/31/2017

Earnings from continuing operations	$	42,325		$	31,567	$	83,977		$	60,245

Acquisition and integration related costs	4,975			—		14,600			—
Mill operational start-up costs	6,456			—		18,016			—
CMC Steel Oklahoma incentives	(3,000		)	—		(3,000		)	—
Asset impairments	—			—		12,136			—
Loss (gain) on debt extinguishment	—			—		—			—
Severance	—			—		—			—
Total adjustments (pre-tax)	$	8,431		$	—	$	41,752		$	—

Related tax effects on adjustments	$	(1,771	)	$	—	$	(10,946	)	$	—
TCJA impact	—			—		10,600			—
International reorganization	—			—		(9,200		)	—
Total tax impact	$	(1,771	)	$	—	$	(9,546	)	$	—

Adjusted earnings from continuing operations	$	48,985		$	31,567	$	116,183		$	60,245

Adjusted earnings from continuing operations per diluted share	$	0.41		$	0.27	$	0.98		$	0.51