Commercial Metals 10Q 2008 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

For the quarterly period ended May 31, 2008

Commission File Number 1-4304

COMMERCIAL METALS COMPANY

(Exact Name of registrant as specified in its charter)


Delaware (State or other Jurisdiction of incorporation of organization)		75-0725338 (I.R.S. Employer Identification Number)

6565 N. MacArthur Blvd.
Irving, Texas 75039

(Address of principal executive offices)
(Zip Code)

(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 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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes o No þ

As of July 7, 2008, there were 114,519,162 shares of the Company’s common stock issued and outstanding excluding 14,541,502 shares held in the Company’s treasury.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS


	PAGE NO.
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited) — May 31, 2008 and August 31, 2007		2 - 3

Condensed Consolidated Statements of Earnings (Unaudited) — Three months and nine months ended May 31, 2008 and 2007		4

Condensed Consolidated Statements of Cash Flows (Unaudited) — Nine months ended May 31, 2008 and 2007		5

Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) — Nine months ended May 31, 2008		6

Notes to Condensed Consolidated Financial Statements (Unaudited)		7 — 16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17 — 25

Item 3. Quantitative and Qualitative Disclosures about Market Risk		26

Item 4. Controls and Procedures		26

PART II — OTHER INFORMATION

Items 1— 6		27 — 28

Signatures		29

Index to Exhibits		30

Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

ASSETS


	May 31,			August 31,
(in thousands)	2008			2007

Current assets:
Cash and cash equivalents	$	68,578		$	419,275
Accounts receivable (less allowance for collection losses of $19,713 and $16,495)		1,389,380			1,082,713
Inventories		1,189,381			874,104
Other		167,278			82,760

Total current assets		2,814,617			2,458,852
Property, plant and equipment:
Land		72,982			54,387
Buildings and improvements		415,513			321,967
Equipment		1,234,330			1,095,672
Construction in process		210,549			118,298

		1,933,374			1,590,324
Less accumulated depreciation and amortization		(924,748	)		(822,971	)

		1,008,626			767,353
Goodwill		41,718			37,843
Other assets		253,715			208,615

	$	4,118,676		$	3,472,663

See notes to unaudited condensed consolidated financial statements.

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

LIABILITIES AND STOCKHOLDERS’ EQUITY


	May 31,			August 31,
(in thousands, except share data)	2008			2007

Current liabilities:
Commercial paper	$	33,000		$	—
Notes payable		32,233			—
Accounts payable-trade		739,254			484,650
Accounts payable-documentary letters of credit		212,056			153,431
Accrued expenses and other payables		538,168			425,410
Deferred income taxes		4,541			4,372
Current maturities of long-term debt		104,855			4,726

Total current liabilities		1,664,107			1,072,589
Deferred income taxes		37,448			31,977
Other long-term liabilities		128,745			109,813
Long-term debt		641,872			706,817

Total liabilities		2,472,172			1,921,196
Minority interests		3,839			2,900
Commitments and contingencies
Stockholders’ equity:
Capital stock:
Preferred stock		—			—
Common stock, par value $0.01 per share: authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 114,392,205 and 118,566,381 shares		1,290			1,290
Additional paid-in capital		369,011			356,983
Accumulated other comprehensive income		150,928			64,452
Retained earnings		1,421,738			1,296,631

		1,942,967			1,719,356
Less treasury stock:
14,668,459 and 10,494,283 shares at cost		(300,302	)		(170,789	)

Total stockholders’ equity		1,642,665			1,548,567

	$	4,118,676		$	3,472,663

See notes to unaudited condensed consolidated financial statements.

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


	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
(in thousands, except share data)	2008			2007			2008			2007

Net sales	$	2,910,730		$	2,244,041		$	7,280,902		$	6,045,074
Costs and expenses:
Cost of goods sold		2,617,232			1,930,831			6,489,009			5,192,250
Selling, general and administrative expenses		190,882			158,635			498,292			427,424
Interest expense		15,827			9,399			42,285			26,003

		2,823,941			2,098,865			7,029,586			5,645,677
Earnings from continuing operations before income taxes and minority interests		86,789			145,176			251,316			399,397
Income taxes		27,980			45,433			84,260			135,498

Earnings from continuing operations before minority interests		58,809			99,743			167,056			263,899
Minority interests		(277	)		(387	)		(540	)		(9,663	)

Net earnings from continuing operations		58,532			99,356			166,516			254,236
Earnings (loss) from discontinued operations before taxes		1,501			166			3,722			(5,953	)
Income taxes (benefit)		549			81			1,815			(2,429	)

Net earnings (loss) from discontinued operations		952			85			1,907			(3,524	)

Net earnings	$	59,484		$	99,441		$	168,423		$	250,712

Basic earnings per share
Earnings from continuing operations	$	0.51		$	0.84		$	1.44		$	2.16
Earnings (loss) from discontinued operations		0.01			0.00			0.02			(0.03	)

Net earnings	$	0.52		$	0.84		$	1.46		$	2.13
Diluted earnings per share
Earnings from continuing operations	$	0.50		$	0.82		$	1.41		$	2.09
Earnings (loss) from discontinued operations		0.01			0.00			0.02			(0.03	)

Net earnings	$	0.51		$	0.82		$	1.43		$	2.06
Cash dividends per share	$	0.12		$	0.09		$	0.33		$	0.24

Average basic shares outstanding		113,607,049			118,623,424			115,438,369			117,773,618

Average diluted shares outstanding		116,090,369			121,956,284			118,163,737			121,600,343

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,			May 31,
(in thousands)	2008			2007

Cash Flows From (Used By) Operating Activities:
Net earnings	$	168,423		$	250,712
Adjustments to reconcile net earnings to cash from (used by) operating activities:
Depreciation and amortization		96,594			75,859
Minority interests		540			9,663
Provision for losses on receivables		4,246			639
Share-based compensation		14,802			7,381
Net loss on sale of assets and other		372			169
Asset impairment		530			1,390
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		(308,168	)		(59,683	)
Accounts receivable sold		47,746			61,711
Inventories		(238,663	)		(149,093	)
Other assets		(109,523	)		(81,977	)
Accounts payable, accrued expenses, other payables and income taxes		272,022			(17,859	)
Deferred income taxes		(13,161	)		(5,179	)
Other long-term liabilities		10,671			28,629

Net Cash Flows From (Used By) Operating Activities		(53,569	)		122,362
Cash Flows From (Used By) Investing Activities:
Purchases of property, plant and equipment		(227,241	)		(121,774	)
Purchase of minority interests in CMC Zawiercie		(169	)		(60,049	)
Sales of property, plant and equipment		1,460			1,264
Acquisitions, net of cash acquired		(30,646	)		(157,994	)

Net Cash Flows Used By Investing Activities		(256,596	)		(338,553	)
Cash Flows From (Used By) Financing Activities:
Increase in documentary letters of credit		58,625			14,716
Short-term borrowings, net change		34,563			132,787
Proceeds from issuance of long term debt		35,138			—
Payments on long-term debt		(1,704	)		(19,025	)
Stock issued under incentive and purchase plans		12,569			13,801
Treasury stock acquired		(151,530	)		(17,744	)
Dividends paid		(38,322	)		(28,481	)
Tax benefits from stock plans		6,674			11,657

Net Cash Flows From (Used By) Financing Activities		(43,987	)		107,711
Effect of Exchange Rate Changes on Cash		3,455			886

Increase (Decrease) in Cash and Cash Equivalents		(350,697	)		(107,594	)
Cash and Cash Equivalents at Beginning of Year		419,275			180,719

Cash and Cash Equivalents at End of Period	$	68,578		$	73,125

See notes to unaudited condensed consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
STOCKHOLDERS’ EQUITY (UNAUDITED)


								Accumulated
	Common Stock				Additional			Other						Treasury Stock
	Number of				Paid-In			Comprehensive			Retained			Number of
(in thousands, except share data)	Shares		Amount		Capital			Income			Earnings			Shares			Amount			Total

Balance, September 1, 2007		129,060,664	$	1,290	$	356,983		$	64,452		$	1,296,631			(10,494,283	)	$	(170,789	)	$	1,548,567
FIN 48 adjustment (Note H)												(4,994	)								(4,994	)
Comprehensive income:
Net earnings for nine months ended May 31, 2008												168,423									168,423
Other comprehensive income (loss):
Foreign currency translation adjustment, net of taxes of $2,415									95,704												95,704
Unrealized loss on derivatives, net of taxes of $2,472									(9,228	)											(9,228	)

Comprehensive income																					254,899
Cash dividends												(38,322	)								(38,322	)
Treasury stock acquired															(5,412,238	)		(151,530	)		(151,530	)
Stock issued under incentive and purchase plans						(6,603	)								1,104,935			19,172			12,569
Restricted stock						(2,996	)								148,250			2,996
Amortization of share-based compensation						14,953									(15,123	)		(151	)		14,802
Tax benefits from stock plans						6,674															6,674

Balance, May 31, 2008		129,060,664	$	1,290	$	369,011		$	150,928		$	1,421,738			(14,668,459	)	$	(300,302	)	$	1,642,665

See notes to unaudited condensed consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL ST`ATEMENTS (UNAUDITED)

NOTE A — QUARTERLY FINANCIAL DATA

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 Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for the year ended August 31, 2007, and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and statements of earnings, cash flows and stockholders’ equity for the periods indicated. These Notes should be read in conjunction with such 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 a full year.

NOTE B — ACCOUNTING POLICIES

Stock-Based Compensation

See Note 9, Capital Stock, to the Company’s consolidated financial statements for the year ended August 31, 2007 on Form 10-K for a description of the Company’s stock incentive plans.

The Company recognized share-based compensation expense of $5.7 million and $2.0 million ($0.03 and $0.01 per diluted share, respectively) for the three months ended May 31, 2008 and 2007, respectively, and $14.8 million and $7.4 million ($0.08 and $0.04 per diluted share, respectively) for the nine months ended May 31, 2008 and 2007, respectively, as a component of selling, general and administrative expenses. The Black-Scholes pricing model was used to calculate total compensation cost which is amortized on a straight-line basis over the vesting period. At May 31, 2008, the Company had $22.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. This cost is expected to be recognized over the next 35 months. See Note 1, Summary of Significant Accounting Policies, to the Company’s consolidated financial statements for the year ended August 31, 2007 on Form 10-K for a description of the Company’s assumptions used to calculate share-based compensation.

Combined information for shares subject to options and SARs for the nine months ended May 31, 2008 was as follows:


				Weighted
				Average		Price
				Exercise		Range
	Number			Price		Per Share

August 31, 2007
Outstanding		6,480,908		$	14.74	$	2.94 — 34.28
Exercisable		4,333,089			7.65		2.94 — 24.71
Granted		1,059,160			35.38		35.38
Exercised		(856,584	)		6.36		2.94 — 24.57
Forfeited		(65,844	)		29.53		12.31 — 35.38

May 31, 2008
Outstanding		6,617,640			18.99		3.64 — 35.38
Exercisable		3,674,423			8.88		3.64 — 34.28

Share information for options and SARs at May 31, 2008:


Outstanding							Exercisable
			Weighted Avg.		Weighted				Weighted
Range of			Remaining		Average				Average
Exercise	Number		Contractual		Exercise		Number		Exercise
Price	Outstanding		Life (Yrs.)		Price		Exercisable		Price

$ 3.64 — 3.78		749,492		1.7	$	3.64		749,492	$	3.64
4.29 — 5.36		503,203		0.7		4.33		503,203		4.33
7.53 — 7.78		1,518,892		2.7		7.77		1,518,892		7.77
12.31 — 13.58		830,932		4.0		12.34		512,790		12.35
21.81 — 24.71		593,951		5.0		24.52		388,446		24.55
31.75 — 35.38		2,421,170		6.5		34.76		1,600		34.28

$ 3.64 — 35.38		6,617,640		4.2	$	18.99		3,674,423	$	8.88

Of the Company’s previously granted restricted stock awards, 113,479 and 112,833 shares vested during the nine months ended May 31, 2008 and 2007, respectively.

Intangible Assets

The total gross carrying amounts of the Company’s intangible assets that were subject to amortization were $42.7 million and $32.9 million at May 31, 2008 and August 31, 2007, respectively. Aggregate amortization expense was $1.6 million for both the three months ended May 31, 2008 and 2007. Aggregate amortization expense for each of the nine months ended May 31, 2008 and 2007 was $5.2 million and $3.2 million, respectively.

Recent Accounting Pronouncements

In December 2007, The FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (SFAS 141(R)). SFAS 141(R) establishes principles for recognizing and measuring the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquired business and goodwill acquired in a business combination. The Company is required to adopt the provisions of this statement in the first quarter of fiscal 2010. This standard will impact our accounting treatment for future business combinations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB 51” (SFAS 160). SFAS 160 requires minority interests to be reported as equity on the balance sheet, changes the reporting of net earnings to include both the amounts attributable to the affiliate’s parent and the noncontrolling interest and clarifies the accounting for changes in the parent’s interest in an affiliate. The Company is required to adopt the provisions of this statement in the first quarter of fiscal 2010. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). SFAS 161 requires enhanced disclosures about a company’s derivative instruments and hedging activities. The Company is required to adopt the provisions of this statement in the second quarter of fiscal 2009. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE C — ACQUISITIONS

On September 19, 2007, the Company acquired all of the outstanding shares of Valjaonica Cijevi Sisak (VCS) from the Croatian Privatization Fund and Croatian government. VCS’s name has been changed to CMC Sisak d.o.o. (CMC Sisak). CMC Sisak is an electric arc furnace based steel pipe manufacturer located in Sisak, Croatia with annual capacity estimated at 300,000 metric tons. The acquisition will expand the Company’s production capacity into pipe, tubular and other products in the key markets of Central and Eastern Europe.

On September 19, 2007, the Company acquired the operating assets of Economy Steel, Inc. of Las Vegas, Nevada. The acquired assets will operate under the new name of CMC Economy Steel. This operation is a rebar fabricator, placer, construction-related products supplier and steel service center. The acquisition fits the Company’s initiative for growth and expansion into a new geographic market. The acquisition will also support the development and success of the Company’s future mill in Arizona.

On December 31, 2007, the Company acquired a 70% interest in a newly incorporated business, CMC Albedo Metals which acquired an existing metals recycling business in Singapore. On April 16, 2008, the Company acquired the remaining 30% interest in CMC Albedo Metals.

On April 29, 2008, the Company acquired the operating assets of Rebar Services and Supply Company of Fort Worth, Texas. The acquired assets will operate under the new name of CMC Rebar, as part of CMC Americas Fabrication and Distribution Segment. This operation will allow us to expand our presence in the North Texas market.

The purchase price of these acquisitions was approximately $32.9 million ($31 million in cash and $1.9 million in installments payable). The Company also has committed to spend not less than $38 million over five years in capital expenditures for CMC Sisak and increase working capital by approximately $39 million.

The following is a summary of the allocation of the purchase price as of the date of the respective acquisitions, subject to change following management’s final determination of fair value:


(in thousands)

Accounts receivable	$	5,329
Inventories		18,651
Other current assets		7,286
Property, plant and equipment		53,160
Goodwill		8,582
Intangible assets		3,541
Other assets		12,929
Liabilities		(76,554	)

Net assets acquired	$	32,924

The intangible assets acquired include customer base, trade name and non-compete agreements which will be amortized between 4 and 8 years.

NOTE D — SALES OF ACCOUNTS RECEIVABLE

The Company has an accounts receivable securitization program which it utilizes as a cost-effective, short-term financing alternative. Under this program, the Company and several of its subsidiaries periodically sell certain eligible trade accounts receivable to the Company’s wholly-owned consolidated special purpose subsidiary (CMCRV). CMCRV is structured to be a bankruptcy-remote entity and was formed for the sole purpose of buying and selling receivables generated by the Company. The Company, irrevocably and without recourse, transfers all applicable trade accounts receivable to CMCRV. CMCRV, in turn, sells an undivided percentage ownership interest in the pool of receivables to affiliates of two third party financial institutions. On April 30, 2008, the agreement with the financial institution affiliates was extended to April 24, 2009. CMCRV may sell undivided interests of up to $200 million, depending on the Company’s level of financing needs.

At May 31, 2008 and August 31, 2007, accounts receivable of $392 million and $378 million, respectively, had been sold to CMCRV. The Company’s undivided interest in these receivables (representing the Company’s retained interest) was 100%, because the Company had not sold any receivables to the financial institution buyers, at May 31, 2008 and August 31, 2007, respectively. Additionally, the Company did not sell any receivables to the financial institution buyers during the nine months ended May 31, 2008 and 2007, respectively. The sale of receivables provides the Company with added financial flexibility to fund the Company’s ongoing operations. The Company is responsible for servicing the entire pool of receivables, however, no servicing asset or liability is recorded as these receivables are collected in the normal course of business and the collection of receivables related to sales to third party institutional buyers are normally short term in nature.

In addition to the securitization program described above, the Company’s subsidiaries in Australia, Europe, Poland and a domestic subsidiary periodically sell accounts receivable. These arrangements also constitute true sales and, once the accounts are sold, they are no longer available to satisfy the Company’s creditors in the event of bankruptcy. Uncollected accounts receivable that had been sold under all these arrangements and removed from the condensed consolidated balance sheets were $225.3 million and $151.7 million at May 31, 2008 and August 31, 2007, respectively. The average monthly amounts of these outstanding accounts receivable sold were $197.1 million and $81.9 million for the nine months ended May 31, 2008 and 2007, respectively. The Company’s Australian subsidiary entered into an agreement with a financial institution to periodically sell certain trade accounts receivable up to a maximum of 97 million AUD ($93 million). The Australian program contains covenants in which our Australian subsidiary must meet certain coverage and tangible net worth levels. At May 31, 2008, our Australian subsidiary was in compliance with these covenants.

Discounts (losses) on domestic and international sales of accounts receivable were $2.8 million and $1.5 million for the three months ended May 31, 2008 and 2007, respectively. For the nine months ended May 31, 2008 and 2007, these discounts were $8.3 million and $3.8 million, respectively. These losses primarily represented the costs of funds and were included in selling, general and administrative expenses.

NOTE E — INVENTORIES

Before deduction of last-in, first-out (LIFO) inventory valuation reserves of $422.4 million and $240.5 million at May 31, 2008 and August 31, 2007, respectively, inventories valued under the first-in, first-out method approximated replacement cost. The majority of the

Company’s inventories are in finished goods, with minimal work in process. Approximately $92.9 million and $66.4 million were in raw materials at May 31, 2008 and August 31, 2007, respectively.

NOTE F — DISCONTINUED OPERATIONS

During the fourth quarter of 2007, the Company’s Board approved the plan to offer to sell a division (Division) which is involved with the buying, selling and distribution of nonferrous metals, namely copper, aluminum and stainless steel semifinished products. The Company anticipates the sale will occur in fiscal 2008. The Division is presented as a discontinued operation in the condensed consolidated statements of earnings. During the three and nine months ended May 31, 2008, the Division recorded LIFO income of $0.4 million and $6.3 million, respectively, as compared to LIFO expense of $2.0 million and $8.2 million, respectively, for the three and nine months ended May 31, 2007.

The Division is in the International Fabrication and Distribution segment. Various financial information for the Division is as follows:


	May 31,		August 31,
(in thousands)	2008		2007

Current assets	$	72,919	$	93,385
Noncurrent assets		2,285		1,795
Current liabilities		14,542		34,889
Noncurrent liabilities		586		874


	Three Months Ended				Nine Months Ended
	May 31		May 31		May 31		May 31
(in thousands)	2008		2007		2008		2007


Revenue	$	85,716	$	101,662	$	255,863	$	302,948
Earnings (loss) before taxes		1,501		166		3,722		(5,953	)

NOTE G — CREDIT ARRANGEMENTS

Borrowings outstanding under the Company’s commercial paper program were $33 million at May 31, 2008 and none at August 31, 2007. No borrowings were outstanding under the related revolving credit agreement at May 31, 2008 and August 31, 2007. The Company was in compliance with all covenants at May 31, 2008.

The Company has numerous informal credit facilities available from domestic and international banks. These credit facilities are available to support documentary letters of credit (including those with extended terms), foreign exchange transactions and, in certain instances, short-term working capital loans and are priced at bankers’ acceptance rates or on a cost of funds basis. Amounts outstanding on these facilities relate to accounts payable settled under documentary letters of credit.

Long-term debt was as follows:


	May 31,		August 31,
(in thousands)	2008		2007

6.75% notes due February 2009	$	100,000	$	100,000
5.625% notes due November 2013		200,000		200,000
6.50% notes due July 2017		400,000		400,000
CMCZ term notes due May 2013		34,554		—
Other, including equipment notes		12,173		11,543

		746,727		711,543
Less current maturities		104,855		4,726

	$	641,872	$	706,817

As of May 31, 2008, the Company was in compliance with all debt requirements for these notes. Interest on these notes is payable semiannually.

CMC Zawiercie (CMCZ) has a revolving credit facility with maximum borrowings of 100 million PLN ($46.1 million) bearing interest at the Warsaw Interbank Offered Rate (WIBOR) plus 0.5% and collateralized by CMCZ’s accounts receivable. This facility was extended to June 3, 2009. At May 31, 2008, no amounts were outstanding under this facility. The revolving credit facility contains

certain financial covenants for CMCZ. CMCZ was in compliance with these covenants at May 31, 2008. There are no guarantees by the Company or any of its subsidiaries for any of CMCZ’s debt.

On May 20, 2008, CMCZ signed a five year term note facility agreement of 400 million PLN ($184.3 million) with a group of four banks. At May 31, 2008, the notes had an outstanding balance of 75 million PLN ($34.6 million). The term note is used to finance operating expenses of CMCZ and the development of a rolling mill. The note has scheduled principal and interest payments in fifteen equal quarterly installments beginning in November 2009. Interest is accrued at the Warsaw Interbank Offered Rate (WIBOR) plus 0.79%. The weighted average rate as of May 31, 2008 was 6.99%. The term note contains certain financial covenants for CMCZ. There are no guarantees by the Company or any of its subsidiaries for any of CMCZ’s debt.

CMC Poland, a wholly-owned subsidiary of the Company, owns and operates equipment at the CMCZ mill site. In connection with the equipment purchase, CMC Poland issued equipment notes under a term agreement dated September 2005 with 13.9 million PLN ($6.4 million) outstanding at May 31, 2008. Installment payments under these notes are due through 2010. Interest rates are variable based on the Poland Monetary Policy Council’s rediscount rate, plus any applicable margin. The weighted average rate as of May 31, 2008 was 6.2%. The notes are secured by the shredder equipment.

In September, 2007, CMC Sisak issued current notes to banks with maximum borrowings of 140 million HRK ($30.0 million) due on September 5, 2008. As of May 31, 2008, the notes had an outstanding balance of 136.4 million HRK ($29.3 million). The interest is based on the weighted average value of the reported annual yield in respect to the uniform price for 91 day treasury bills issued by the Ministry of Finance of the Republic of Croatia, currently at 5.59 %. The notes are not collateralized and do not contain any financial covenants. The notes are guaranteed by Commercial Metals International.

Interest of $40.6 million and $27.2 million was paid in the nine months ended May 31, 2008 and 2007, respectively. The Company capitalized interest of $4.4 million and $0.5 million for the nine months ended May 31, 2008 and 2007, respectively.

NOTE H — INCOME TAXES

The Company paid $104.0 million and $145.0 million in income taxes during the nine months ended May 31, 2008 and 2007, respectively.

Reconciliations of the United States statutory rates to the Company’s effective tax rates were as follows:


	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
	2008			2007			2008			2007

Statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State and local taxes		1.2			1.8			1.9			1.8
Extraterritorial Income Exclusion (ETI)		—			(0.1	)		—			(0.1	)
Foreign rate differential		(3.1	)		(4.4	)		(2.4	)		(3.8	)
Domestic production activity deduction		(0.7	)		(0.5	)		(0.9	)		(0.5	)
Other		(0.1	)		(0.5	)		0.2			1.4

Effective rate		32.3	%		31.3	%		33.8	%		33.8	%

On September 1, 2007, the Company adopted FIN 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109,” for accounting for uncertainty in income taxes recognized in our financial statements. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the adoption of FIN 48, the Company recognized an asset of $0.8 million and an increase to reserves of $5.8 million related to uncertain tax positions, including $1.6 million in interest and penalties, which were accounted for as a net reduction of $5.0 million to the September 1, 2007 balance of retained earnings. The current Company policy classifies any interest recognized on an underpayment of income taxes as interest expense and classifies any statutory penalties recognized on a tax position taken as selling, general and administrative expense. If these uncertain tax positions were recognized, the impact on the effective tax rate would not be significant. The Company does not expect the total amounts of unrecognized benefits to significantly increase or decrease within the next 12 months.

The following is a summary of tax years subject to examination:

U.S Federal — 2005 and forward
U.S. States — 2003 and forward
Foreign — 2001 and forward

The Internal Revenue Service (IRS) is examining our federal tax returns for fiscal years 2005 and 2006. We believe our recorded tax liabilities as of May 31, 2008 are sufficient, and we do not anticipate any additional adjustments to be made by the IRS upon the completion of their examination.

NOTE I — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

In calculating earnings per share, there were no adjustments to net earnings to arrive at earnings for the three or nine months ended May 31, 2008 or 2007. The reconciliation of the denominators of the earnings per share calculations is as follows:


	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
	2008		2007		2008		2007


Average shares outstanding for basic earnings per share		113,607,049		118,623,424		115,438,369		117,773,618
Effect of dilutive securities-stock based incentive/purchase plans		2,483,320		3,332,860		2,725,368		3,826,725

Average shares outstanding for diluted earnings per share		116,090,369		121,956,284		118,163,737		121,600,343

Stock Appreciation Rights (SARs) with total share commitments of 2,419,780 were antidilutive at May 31, 2008 based on the average share price for the quarter of $32.04. The Company’s remaining outstanding stock options, restricted stock and SARs with total share commitments of 4,771,932 were dilutive at May 31, 2008. All of the Company’s outstanding stock options, restricted stock and SARs with total share commitments of 6,130,725 at May 31, 2007 were dilutive based on the average share price for the quarter of $31.90. All stock options and SARs expire by 2015.

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

On November 5, 2007, the Company’s board of directors authorized the purchase of an additional 5,000,000 shares of the Company’s common stock. During the nine months ended May 31, 2008, the Company purchased 5,412,238 shares of the Company’s common stock, at an average purchase price of $28.00 per share, and had authorization to purchase 812,547 shares at May 31, 2008.

NOTE J — DERIVATIVES AND RISK MANAGEMENT

The Company’s worldwide operations and product lines expose it to risks from fluctuations in foreign currency exchange rates and metals commodity prices. The objective of the Company’s risk management program is to mitigate these risks using futures or forward contracts (derivative instruments). The Company enters into metal commodity forward contracts to mitigate the risk of unanticipated changes in gross margin due to the volatility of the commodities’ prices, and enters into foreign currency forward contracts, which match the expected settlements for purchases and sales denominated in foreign currencies. Also, when its sales commitments to customers include a fixed price freight component, the Company occasionally enters into freight forward contracts to minimize the effect of the volatility of ocean freight rates. Forward contracts on natural gas may also be entered into to reduce the price volatility of gas used in production. The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. These hedges resulted in an immaterial amount of ineffectiveness in the statements of earnings and there were no components excluded from the assessment of hedge effectiveness for the three or nine months ended May 31, 2008 and 2007. Certain of the foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges.

The following table shows the impact on the condensed consolidated statements of earnings of the changes in fair value of these economic hedges:


	Three Months Ended					Nine Months Ended
	May 31,			May 31,		May 31,			May 31,
	2008			2007		2008			2007
(in thousands)	Earnings (Expense)					Earnings (Expense)

Net sales (foreign currency instruments)	$	(759	)	$	177	$	(1,186	)	$	46
Cost of goods sold (commodity instruments)		10,760			2,997		5,057			(727	)

The Company’s derivative instruments were recorded as follows on the condensed consolidated balance sheets:


	May 31,		August 31,
(in thousands)	2008		2007

Derivative assets (other current assets)	$	16,429	$	7,484
Derivative liabilities (other payables)		19,588		4,878

The following table summarizes activities in other comprehensive income (losses) related to derivatives classified as cash flow hedges held by the Company during the nine months ended May 31, 2008 (in thousands):


Change in market value (net of taxes)	$	(8,521	)
Gain reclassified into net earnings, net		(707	)

Other comprehensive loss — unrealized loss on derivatives	$	(9,228	)

During the twelve months following May 31, 2008, $1.2 million in losses related to commodity hedges and capital expenditures are anticipated to be reclassified into net earnings as the related transactions mature and the assets are placed into service, respectively. Also, an additional $0.2 million in gains will be reclassified as interest expense related to an interest rate lock.

All of the instruments are highly liquid, and none are entered into for trading purposes.

NOTE K — CONTINGENCIES

See Note 11, Commitments and Contingencies, to the consolidated financial statements for the year ended August 31, 2007 on Form 10-K relating to environmental and other matters. There have been no significant changes to the matters noted therein. In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. Management believes that adequate provision has been made in the condensed consolidated financial statements for the potential impact of these issues, and that the outcomes will not significantly impact the results of operations or the financial position of the Company, although they may have a material impact on earnings for a particular quarter.

GuaranteesThe Company has entered into guarantee agreements with certain banks in connection with credit facilities granted by the banks to various suppliers of the Company. The fair value of the guarantees are negligible. All of the guarantees listed in the table below reflect the Company’s exposure as of May 31, 2008 and are required to be completed within 2 years.


		Maximum	Maximum
Origination	Guarantee	Credit	Company
Date	With	Facility	Exposure

May 2006	Bank	$15 million	$0.4 million
February 2007	Bank	80 million	6.7 million

NOTE L — BUSINESS SEGMENTS

The Company’s reportable segments are based on strategic business areas, which offer different products and services. These segments have different lines of management responsibility as each business requires different marketing strategies and management expertise.

Prior to September 1, 2007, the Company structured the business into the following five reportable segments: domestic mills, CMCZ, domestic fabrication, recycling and marketing and distribution. However, during the first quarter of 2008, the Company implemented a new organization structure. As a result, the Company now structures the business into the following five segments: Americas Recycling, Americas Mills, Americas Fabrication and Distribution, International Mills and International Fabrication and Distribution.

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


	Three Months Ended May 31, 2008
	Americas							International							Eliminations/
					Fabrication &					Fabrication &					Discontinued
(in thousands)	Recycling		Mills		Distribution			Mills		Distribution		Corporate			Operations			Consolidated

Net sales — unaffiliated customers	$	507,881	$	387,197	$	749,007		$	269,664	$	1,078,072	$	4,625		$	(85,716	)	$	2,910,730
Intersegment sales		120,736		132,355		2,862			71,810		12,325		—			(340,088	)		—

Net sales		628,617		519,552		751,869			341,474		1,090,397		4,625			(425,804	)		2,910,730

Adjusted operating profit (loss)		50,371		34,044		(22,291	)		30,656		40,342		(30,792	)		4,684			107,014


	Three Months Ended May 31, 2007
	Americas							International							Eliminations/
					Fabrication &					Fabrication &					Discontinued
(in thousands)	Recycling		Mills		Distribution			Mills		Distribution		Corporate			Operations			Consolidated

Net sales — unaffiliated customers	$	437,292	$	327,583	$	649,412		$	219,782	$	707,119	$	4,515		$	(101,662	)	$	2,244,041
Intersegment sales		83,391		106,583		1,059			9,381		7,658		—			(208,072	)		—

Net sales		520,683		434,166		650,471			229,163		714,777		4,515			(309,734	)		2,244,041

Adjusted operating profit (loss)		30,896		66,968		23,338			38,791		21,744		(25,689	)		384			156,432


	Nine Months Ended May 31, 2008
	Americas							International							Eliminations/
					Fabrication &					Fabrication &					Discontinued
(in thousands)	Recycling		Mills		Distribution			Mills		Distribution		Corporate			Operations			Consolidated

Net sales — unaffiliated customers	$	1,277,251	$	994,772	$	2,021,253		$	669,921	$	2,569,027	$	4,541		$	(255,863	)	$	7,280,902
Intersegment sales		254,761		395,380		8,806			85,617		31,295		—			(775,859	)		—

Net sales		1,532,012		1,390,152		2,030,059			755,538		2,600,322		4,541			(1,031,722	)		7,280,902

Adjusted operating profit (loss)		92,882		158,520		507			39,730		88,609		(76,433	)		1,821			305,636

Goodwill — May 31, 2008		7,467		—		29,830			—		4,421		—			—			41,718
Total Assets — May 31, 2008		416,995		605,456		1,188,925			617,775		1,040,205		249,320			—			4,118,676


	Nine Months Ended May 31, 2007
	Americas							International							Eliminations/
					Fabrication &					Fabrication &					Discontinued
(in thousands)	Recycling		Mills		Distribution			Mills		Distribution		Corporate			Operations			Consolidated

Net sales — unaffiliated customers	$	1,117,469	$	834,746	$	1,862,545		$	563,457	$	1,958,469	$	11,336		$	(302,948	)	$	6,045,074
Intersegment sales		213,267		297,058		2,625			23,076		29,236		—			(565,262	)		—

Net sales		1,330,736		1,131,804		1,865,170			586,533		1,987,705		11,336			(868,210	)		6,045,074

Adjusted operating profit (loss)		79,279		195,366		63,893			90,663		49,416		(51,115	)		(3,545	)		423,957

Goodwill — May 31, 2007		7,267		—		28,309			—		1,909		—			—			37,485
Total Assets — May 31, 2007		342,024		555,811		1,124,892			313,955		779,086		148,432			—			3,264,200

The following table provides a reconciliation of consolidated adjusted operating profit to net earnings:


	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
(in thousands)	2008		2007		2008		2007

Net earnings	$	59,484	$	99,441	$	168,423	$	250,712
Minority interests		277		387		540		9,663
Income taxes		28,529		45,514		86,075		133,069
Interest expense		15,909		9,631		42,278		26,711
Discounts on sales of accounts receivable		2,815		1,459		8,320		3,802

Adjusted operating profit	$	107,014	$	156,432	$	305,636	$	423,957
Adjusted operating profit (loss) from discontinued operations		1,786		522		4,615		(4,982	)

Adjusted operating profit from continuing operations	$	105,228	$	155,910	$	301,021	$	428,939

The following presents external net sales by major product and geographic area for the Company:


	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
(in thousands)	2008		2007		2008		2007

Major product information:
Steel products	$	1,780,301	$	1,415,485	$	4,542,625	$	3,834,497
Industrial materials		409,239		183,890		904,186		562,945
Nonferrous scrap		286,856		306,206		728,637		803,280
Ferrous scrap		239,140		135,553		573,643		326,547
Nonferrous products		71,190		112,624		218,678		267,848
Construction materials		85,758		70,677		232,930		193,838
Other		38,246		19,606		80,203		56,119

Net sales*	$	2,910,730	$	2,244,041	$	7,280,902	$	6,045,074


	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
(in thousands)	2008		2007		2008		2007

Geographic area:
United States	$	1,594,965	$	1,341,572	$	4,144,725	$	3,549,305
Europe		682,390		480,423		1,658,419		1,283,241
Asia		297,199		233,267		686,772		664,067
Australia/New Zealand		161,175		130,473		434,074		351,078
Other		175,001		58,306		356,912		197,383

Net sales*	$	2,910,730	$	2,244,041	$	7,280,902	$	6,045,074


*		Excludes a division classified as discontinued operations. See Note F.

NOTE M — RELATED PARTY TRANSACTIONS

One of the Company’s international subsidiaries has an agreement for steel purchases with a key supplier of which the Company owns an 11% interest. Net sales to this related party were $278.7 million and $222.5 million for the nine months ended May 31, 2008 and 2007, respectively. The total amounts of purchases from this supplier were $300.2 million and $273.1 million for the nine months ended May 31, 2008 and 2007, respectively. Accounts receivable from the affiliated company were $51.5 million and $50.2 million at May 31, 2008 and 2007 respectively. Accounts payable to the affiliated company were $46.8 million and $31.4 million at May 31, 2008 and 2007, respectively.

NOTE N — SUBSEQUENT EVENTS

On June 5, 2008, the Company’s subsidiary, CMC Poland, completed the acquisition of substantially all the outstanding shares of PHP NIKE S.A. (“PHP Nike”). PHP Nike is a leading producer of welded steel meshes, cold rolled wire rod and cold rolled rebar in Poland with annual production capacity of 90,000 metric tons. On July 1, 2008, the Company completed the acquisition of substantially all of the operating assets of ABC Coating Companies and affiliates (“ABC Coating”). ABC Coating is involved in rebar fabrication and epoxy coated reinforcing bar servicing the Southwest, Midwest and Southeast U.S. with an annual capacity of 150,000 short tons. The total purchase price of these acquisitions was approximately $112 million.

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

This Management’s Discussion and Analysis should be read in conjunction with our Form 10-K for the year ended August 31, 2007.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are consistent with the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the year ended August 31, 2007 and are, therefore, not presented herein.

CONSOLIDATED RESULTS OF OPERATIONS


	Three Months Ended							Nine Months Ended
	May 31,		May 31,		%			May 31,		May 31,		%
(in millions)	2008		2007		Change			2008		2007		Change

Net sales*	$	2,910.7	$	2,244.0		29.7	%	$	7,280.9	$	6,045.1		20.4	%
Net earnings		59.5		99.4		(40.1	)%		168.4		250.7		(32.8	)%
EBITDA		136.6		181.4		(24.7	)%		393.4		486.4		(19.1	)%


*		Excludes a division classified as discontinued operations.

In the table above, we have included a financial statement measure that was not derived in accordance with GAAP. We use EBITDA (earnings before interest expense, income taxes, depreciation and amortization) as a non-GAAP performance measure. In calculating EBITDA, we exclude our largest recurring non-cash charge, depreciation and amortization. EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. Tax regulations in international operations add additional complexity. Also, we exclude interest cost in our calculation of EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use EBITDA as one guideline to assess our unleveraged performance return on our investments. EBITDA is also the target benchmark for our long-term cash incentive performance plan for management. Reconciliations to net earnings are provided below:


	Three Months Ended							Nine Months Ended
	May 31,		May 31,		%			May 31,		May 31,			%
(in millions)	2008		2007		Change			2008		2007			Change

Net earnings	$	59.5	$	99.4		(40.1	)%	$	168.4	$	250.7			(32.8	)%
Interest expense		15.9		9.6		65.6	%		42.3		26.7			58.4	%
Income taxes		28.5		45.5		(37.4	)%		86.1		133.1			(35.3	)%
Depreciation and amortization		32.7		26.9		21.6	%		96.6		75.9			27.3	%

EBITDA	$	136.6	$	181.4		(24.7	)%	$	393.4	$	486.4			(19.1	)%
EBITDA (loss) from discontinued operations		1.9		0.6		216.7	%		4.8		(4.8	)		200.0	%

EBITDA from continuing operations	$	134.7	$	180.8		(25.5	)%	$	388.6	$	491.2			(20.9	)%

Our EBITDA does not include interest expense, income taxes and depreciation and amortization. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and our ability to generate revenues. Because we use capital assets, depreciation and amortization are also necessary elements of our costs. Also, the payment of income taxes is a necessary element of our operations. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is appropriate to consider both net earnings determined under GAAP, as well as EBITDA, to evaluate our performance. We also separately analyze any significant fluctuations in interest expense, depreciation and amortization and income taxes.

OverviewCaused mainly by record LIFO expense, reported net earnings and EBITDA decreased by 40% to $59.5 million and 25% to $136.6 million, respectively, for the three months ended May 31, 2008 as compared to the same period last year. For the nine months ended May 31, 2008, net earnings decreased by 33% to $168.4 million and EBITDA decreased by 19% to $393.4 million as compared to the same period last year.

The following financial events were significant during our third quarter of 2008:

	•		We reported our highest net sales ever for the third quarter.

	•		We recorded record pre-tax LIFO expense of $127.2 million ($0.71 per diluted share) as compared with expense of $31.0 million ($0.16 per diluted share) in last year’s third quarter.

	•		We experienced favorable foreign exchange rates during the third quarter of 2008 as compared to 2007 which resulted in an increase in net sales of approximately 4%.

	•		Net sales of the Americas Recycling segment increased 21% and adjusted operating income increased 63% including LIFO expense of $15.2 million recorded during the third quarter of 2008 as compared to expense of $10.3 million during the third quarter of 2007. This segment’s results were driven by higher scrap prices, primarily ferrous scrap.

	•		Net sales of the Americas Mills segment increased 20% but adjusted operating income decreased 49% primarily caused by LIFO expense of $55.3 million during the third quarter of 2008 as compared to expense of $15.8 million during the third quarter of 2007.

	•		Our Americas Fabrication and Distribution segment’s results were impacted by escalating steel prices and a margin compression due to fixed price contracts which resulted in an adjusted operating loss of $22.3 million including LIFO expense of $57.0 million and job loss reserves of $18 million.

	•		Our International Mills segment reported adjusted operating income of $30.7 million in the third quarter of 2008 as compared to $38.8 million in prior year. Our Polish mill experienced improved pricing beginning in the second quarter and continuing through the third quarter. Our mill in Croatia continued to be saddled with start-up costs.

	•		Our International Fabrication and Distribution segment set an all-time record for adjusted operating profit of $40.3 million, an 86% increase from the prior quarter, driven by strong pricing internationally.

	•		Expense of $18.2 million and capital expenditures of $8.7 million were recorded during the third quarter of 2008 as compared to expense of $13.7 million and capital expenditures of $3.8 million recorded during the third quarter of 2007 related to the global implementation of SAP.

	•		Treasury shares purchased by the Company during fiscal 2008 increased diluted earnings per share $0.02 for the third quarter of 2008.

SEGMENT OPERATING DATA

See Note L — Business Segments, to the condensed consolidated financial statements.

We use adjusted operating profit (loss) to compare and evaluate the financial performance of our segments. Adjusted operating profit is the sum of our earnings before income taxes and financing costs. The following tables show our net sales and adjusted operating profit (loss) by business segment:


	Three Months Ended									Nine Months Ended
	May 31,			May 31,			%			May 31,			May 31,			%
(in thousands)	2008			2007			Change			2008			2007			Change

NET SALES:
Americas Recycling	$	628,617		$	520,683			20.7	%	$	1,532,012		$	1,330,736			15.1	%
Americas Mills		519,552			434,166			19.7	%		1,390,152			1,131,804			22.8	%
Americas Fabrication and Distribution		751,869			650,471			15.6	%		2,030,059			1,865,170			8.8	%
International Mills*		341,474			229,163			49.0	%		755,538			586,533			28.8	%
International Fabrication and Distribution		1,090,397			714,777			52.6	%		2,600,322			1,987,705			30.8	%
Corporate and Eliminations		(335,463	)		(203,557	)		(64.8	)%		(771,318	)		(553,926	)		(39.2	)%
Discontinued Operations		(85,716	)		(101,662	)		15.7	%		(255,863	)		(302,948	)		15.5	%

	$	2,910,730		$	2,244,041			29.7	%	$	7,280,902		$	6,045,074			20.4	%


	Three Months Ended									Nine Months Ended
	May 31,			May 31,			%			May 31,			May 31,			%
(in thousands)	2008			2007			Change			2008			2007			Change

ADJUSTED OPERATING PROFIT (LOSS):
Americas Recycling	$	50,371		$	30,896			63.0	%	$	92,882		$	79,279			17.2	%
Americas Mills		34,044			66,968			(49.2	)%		158,520			195,366			(18.9	)%
Americas Fabrication and Distribution		(22,291	)		23,338			(195.5	)%		507			63,893			(99.2	)%
International Mills*		30,656			38,791			(21.0	)%		39,730			90,663			(56.2	)%
International Fabrication and Distribution		40,342			21,744			85.5	%		88,609			49,416			79.3	%
Corporate and Eliminations		(26,108	)		(25,305	)		(3.2	)%		(74,612	)		(54,660	)		(36.5	)%
Discontinued Operations		1,786			522			242.1	%		4,615			(4,982	)		192.6	%


*		Dollars include impact of minority interests.

LIFO Impact on Adjusted Operating ProfitLIFO is an inventory costing method that assumes the most recent inventory purchases or goods manufactured are sold first. This results in current sales prices offset against current inventory costs. In periods of rising prices it has the effect of eliminating inflationary profits from net income. In periods of declining prices it has the effect of eliminating deflationary losses from net income. In either case the goal is to reflect economic profit. The table below reflects LIFO income or (expense) representing decreases or (increases) in the LIFO inventory reserve. International Mills is not included in this table as it uses FIFO valuation exclusively for its inventory:


	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
(in thousands)	2008			2007			2008			2007

Americas Recycling	$	(15,187	)	$	(10,276	)	$	(21,988	)	$	(9,699	)
Americas Mills		(55,327	)		(15,805	)		(69,657	)		(27,459	)
Americas Fabrication and Distribution		(57,023	)		(2,911	)		(96,490	)		(14,603	)
International Fabrication and Distribution*		385			(1,963	)		6,291			(8,240	)

Consolidated increase (decrease) to adjusted profit before tax	$	(127,152	)	$	(30,955	)	$	(181,844	)	$	(60,001	)


*		LIFO income (expense) includes a division classified as discontinued operations.

Americas RecyclingAdjusted operating profit for the third quarter of 2008 was an all-time record, strong enough to overcome LIFO expense of $15.2 million compared to $10.3 million of expense in last year’s third quarter. This quarter was driven by increased ferrous scrap prices including a $123 per short ton spike in April. Spurred by these increases, our ferrous scrap operations accounted for three-fourths of the segment’s profitability. The average ferrous scrap sales price increased 57% and shipments increased 3% as compared to last year’s third quarter. Although lower than ferrous scrap, the average sales price of nonferrous scrap increased 6% but shipments decreased 12% due to continued weak residential markets and lower manufacturing output. We exported 35% of our nonferrous scrap during the quarter.

The following table reflects our Americas Recycling segment’s average selling prices per ton and tons shipped (in thousands):


	Three Months Ended				Increase						Nine Months Ended				Increase
	May 31,		May 31,		(Decrease)						May 31,		May 31,		(Decrease)
	2008		2007		Amount			%			2008		2007		Amount			%

Ferrous scrap sales price	$	398	$	254	$	144			57	%	$	310	$	221	$	89			40	%
Nonferrous scrap sales price	$	3,270	$	3,090	$	180			6	%	$	2,989	$	2,906	$	83			3	%
Ferrous scrap tons shipped		811		791		20			3	%		2,271		2,140		131			6	%
Nonferrous scrap tons shipped		78		89		(11	)		(12	)%		226		258		(32	)		(12	)%
Total volume processed and shipped		900		887		13			1	%		2,520		2,418		102			4	%

Americas MillsWe include our four domestic steel and our copper tube minimills in our Americas Mills segment. For the three and nine months ended May 31, 2008, net sales increased 20% and 23%, respectively and adjusted operating profit decreased 49% and 19%, respectively, resulting from a significant increase in LIFO expense due to spiking ferrous scrap prices. For the three and nine months ended May 31, 2008, this segment recorded LIFO expense of $55.3 million and $69.7 million, respectively, as compared to expense of $15.8 million and $27.5 million, respectively, in the prior year.

The table below reflects steel and ferrous scrap prices per ton:


	Three Months Ended				Increase					Nine Months Ended				Increase
	May 31,		May 31,		(Decrease)					May 31,		May 31,		(Decrease)
	2008		2007		Amount		%			2008		2007		Amount		%

Average mill selling price (finished goods)	$	749	$	601	$	148		25	%	$	677	$	577	$	100		17	%
Average mill selling price (total sales)		718		575		143		25	%		643		558		85		15	%
Average ferrous scrap production cost		399		267		132		49	%		316		231		85		37	%
Average metal margin		319		308		11		4	%		327		327		—		—
Average ferrous scrap purchase price		382		239		143		60	%		301		209		92		44	%

The table below reflects our domestic steel minimills’ operating statistics (short tons in thousands):


	Three Months Ended				Increase					Nine Months Ended				Increase
	May 31,		May 31,		(Decrease)					May 31,		May 31,		(Decrease)
	2008		2007		Amount		%			2008		2007		Amount			%

Tons melted		634		596		38		6	%		1,778		1,659		119			7	%
Tons rolled		564		534		30		6	%		1,555		1,580		(25	)		(2	)%
Tons shipped		673		613		60		10	%		1,897		1,702		195			11	%

Our domestic steel mills adjusted operating profit decreased 48% due to LIFO expense of $44.5 million this quarter as compared to $11.1 million in last year’s third quarter. Metal margins were 4% higher as weighted average sales prices barely stayed ahead of rapidly increasing ferrous scrap prices. The price of ferrous scrap consumed rose 49% compared to last year. The increase in ferrous scrap prices drove the average selling price up $143 per ton while the average selling price for finished goods was up $148 per ton. Margins were negatively impacted by a 92% increase in alloys and a 33% increase in energy costs during the third quarter of 2008 as compared to 2007. Combined, these two costs accounted for an increase of approximately $15.7 million. Sales volumes increased 10% to 673 thousand tons, an all-time record, while tonnage rolled increased 6% to 564 thousand tons. We have invested $47 million of the expected $165 million total cost of our micro mill project in Arizona.

The table below reflects our copper tube minimill’s prices per pound and operating statistics:


	Three Months Ended				Increase						Nine Months Ended				Increase
	May 31,		May 31,		(Decrease)						May 31,		May 31,		(Decrease)
	2008		2007		Amount			%			2008		2007		Amount		%

Pounds shipped (in millions)		13.3		16.7		(3.4	)		(20	)%		39.5		38.6		0.90		2	%
Pounds produced (in millions)		12.7		14.9		(2.2	)		(15	)%		37.1		35.4		1.70		5	%
Average copper selling price	$	4.71	$	3.89	$	0.82			21	%	$	4.28	$	3.85	$	0.43		11	%
Average copper scrap production cost	$	2.97	$	2.81	$	0.16			6	%	$	3.08	$	2.96	$	0.12		4	%
Average copper metal margin	$	1.74	$	1.08	$	0.66			61	%	$	1.20	$	0.89	$	0.31		35	%
Average copper scrap purchase price	$	3.59	$	3.02	$	0.57			19	%	$	3.33	$	2.99	$	0.34		11	%

Our copper tube minimill experienced continued strength from commercial markets while residential markets remained weak. Adjusted operating profit for the three and nine months ended May 31, 2008 decreased 77% to $700 thousand and 2% to $8.4 million, respectively. The decrease in adjusted operating income for the quarter was due to a $6.1 million increase in LIFO expense quarter over quarter. Pounds shipped decreased 20% to 13.3 million including sales of steel pipe, a new product line. The average copper selling price increased 82 cents to $4.71 per pound and the metal margin increased 66 cents to $1.74 per pound overcoming copper scrap price increases of 57 cents to $3.59 per pound.

Americas Fabrication and DistributionDuring the third quarter of 2008, this segment reported adjusted operating loss of $22.3 million as compared to adjusted operating income of $23.3 million in the prior year which resulted from rapidly increasing prices which caused massive LIFO charges and margin compression on fixed price contracts. LIFO expense was $57.0 million for the third quarter of 2008 as compared to $2.9 million in the prior year’s third quarter. We also recorded job loss reserves of $18 million during the quarter on our fixed price contracts. The composite average selling price increased 7%, however, the overall job mix represented by the backlog at the beginning of the quarter did not have sufficient time to rollover to higher prices to match the increase in steel finished goods. These negative results were offset by an $8.6 million litigation settlement we received during the third quarter of 2008 related to costs incurred on a large structural fabrication job in an operating unit we sold several years ago. Driven by pipe, tubular goods and merchant products, our domestic operation had excellent sales volumes and profits during the third quarter of 2008.

Our domestic fabrication plants’ shipments and average selling prices per ton were as follows:


	Three Months Ended					Increase					Nine Months Ended					Increase
	May 31,		May 31,			(Decrease)					May 31,		May 31,			(Decrease)
	2008		2007			Amount		%			2008		2007			Amount		%

Average selling price*

Rebar	$	919	$	834		$	85		10	%	$	881	$	815		$	66		8	%
Joist		1,307		1,199			108		9	%		1,304		1,166			138		12	%
Structural		2,843		2,348			495		21	%		2,589		2,389			200		8	%
Post		807		716			91		13	%		766		713			53		7	%
Deck		1,295		N/A	**		N/A		N/A			1,274		N/A	**		N/A		N/A


*		Excluding stock and buyout sales.

**		Average sales price not presented as deck operation represents less than one quarter of activity.


	Three Months Ended				Increase						Nine Months Ended				Increase
	May 31,		May 31,		(Decrease)						May 31,		May 31,		(Decrease)
	2008		2007		Amount			%			2008		2007		Amount			%

Tons shipped (in thousands)

Rebar		278		244		34			14	%		766		775		(9	)		(1	)%
Joist		59		83		(24	)		(29	)%		187		235		(48	)		(20	)%
Structural		23		22		1			5	%		60		62		(2	)		(3	)%
Post		32		34		(2	)		(6	)%		77		81		(4	)		(5	)%
Deck		60		12		48			400	%		166		12		154			1,283	%

International MillsNet sales for the three months ended May 31, 2008 increased 49% which were impacted by favorable foreign exchange rates and resulted in an increase in net sales of approximately 16%. Adjusted operating profit for the three months ended May 31, 2008 decreased 21% mainly due to continued start-up costs at our mill in Croatia (CMC Sisak) which was acquired in the first quarter of 2008. During the third quarter of 2008, adjusted operating profit at our mill in Poland decreased 6% from last year’s all-time record quarter. The second quarter’s increasingly favorable pricing environment carried through this quarter due to strong markets in the Middle East, North Africa, Russia, and Germany which buoyed prices and discouraged imports into Poland. Average mill selling price increased 3% and the average ferrous scrap production cost increased 8% resulting in a decrease in the average metal margin of 5% to 669 PLN.

CMC Sisak reported an adjusted operating loss of $5.6 million during the third quarter of 2008 due to start-up costs and regaining customer acceptance. We rolled 22 thousand tons and sold 19 thousand tons during the quarter which increased over the second quarter of 2008.

The following table reflects operating statistics and average prices per short ton of our Polish minimill operations:


	Three Months Ended						Increase						Nine Months Ended						Increase
	May 31,			May 31,			(Decrease)						May 31,			May 31,			(Decrease)
	2008			2007			Amount			%			2008			2007			Amount			%

Tons melted (thousands)		428			392			36			9	%		1,107			1,128			(21	)		(2	)%
Tons rolled (thousands)		284			302			(18	)		(6	)%		834			890			(56	)		(6	)%
Tons shipped (thousands)		339			376			(37	)		(10	)%		1,010			1,057			(47	)		(4	)%
Average mill selling price (total sales)		1,708	PLN		1,663	PLN		45	PLN		3	%		1,533	PLN		1,562	PLN		(29	) PLN		(2	)%
Average ferrous scrap production cost		1,039	PLN		960	PLN		79	PLN		8	%		908	PLN		871	PLN		37	PLN		4	%
Average metal margin		669	PLN		703	PLN		(34	) PLN		(5	)%		625	PLN		691	PLN		(66	) PLN		(10	)%
Average ferrous scrap purchase price		878	PLN		848	PLN		30	PLN		4	%		812	PLN		776	PLN		36	PLN		5	%
Average mill selling price (total sales)	$	771		$	582		$	189			32	%	$	644		$	530		$	114			22	%
Average ferrous scrap production cost	$	467		$	336		$	131			39	%	$	374		$	294		$	80			27	%
Average metal margin	$	304		$	246		$	58			24	%	$	270		$	236		$	34			14	%
Average ferrous scrap purchase price	$	395		$	297		$	98			33	%	$	334		$	262		$	72			27	%

International Fabrication and DistributionNet sales for the three months ended May 31, 2008 increased 53% which were impacted by favorable foreign exchange rates and resulted in an increase in net sales of approximately 5%. Adjusted operating income increased 86% to $40.3 million, this segment’s all-time record for any quarter, driven by strong pricing in the Middle East, North Africa, and Central Europe, and with the German economy growing at its fastest rate in a decade. Our Australian operations performed well as the domestic economy remains strong and commodity prices remain high. Our raw materials division set another quarterly record for sales and operating profit. With China reducing export tonnages, prices in Southeast Asia have risen and profits in inter-Asian trade remain positive.

Corporate and EliminationsCorporate expenses for the three and nine months ended May 31, 2008 increased $0.8 million and $20.0 million, respectively, primarily due to costs incurred for our investment in the global installment of SAP. The incremental cost for SAP for the three and nine months ended May 31, 2008 was $4.5 million and $18.8 million. The increase in total assets is primarily due to the capitalization of $68 million of software development costs since the SAP project’s inception.

Discontinued OperationsThe change in our division classified as a discontinued operation primarily resulted from LIFO income of $0.4 million recorded during the third quarter of 2008 as compared to expense of $1.9 million during the third quarter of 2007. For the nine months ended May 31, 2008, the division recorded LIFO income of $6.3 million compared to expense of $8.2 million for the comparable period in the prior year.

CONSOLIDATED DATA

On a consolidated basis, for the quarter ended May 31, 2008, the LIFO method of inventory valuation decreased our earnings on a pre-tax basis by $127.2 million or 71 cents per diluted share as compared to a decrease of $30.9 million or 16 cents per diluted share for the same period last year. For the nine months ended May 31, 2008 and 2007, LIFO decreased our net earnings on a pre-tax basis by $181.8 million or $1.00 per diluted share and $60.0 million or 32 cents per diluted share, respectively.

Our overall selling, general and administrative (SG&A) expenses increased by $32.2 million and $70.9 million for the three and nine months ended May 31, 2008, respectively, because of salary and other compensation related costs due to growth and expenses related to the implementation of SAP.

During the three and nine months ended May 31, 2008, our interest expense increased by $6.4 million and $16.3 million, respectively, as compared to 2007, primarily due to higher average debt balances outstanding from our $400 million debt issuance in July 2007.

Our overall effective tax rate for the three and nine months ended May 31, 2008 was 32.3% and 33.8%, respectively as compared to 31.3% and 33.8% for the same periods in 2007.

CONTINGENCIES

See Note K — Contingencies, to the condensed consolidated financial statements.

In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings, governmental investigations including environmental matters, and contract disputes. We may incur settlements, fines, penalties or judgments and otherwise become subject to liability because of some of these matters. While we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with these matters, we make accruals as amounts become probable and estimable. The amounts we accrue could vary substantially from amounts we pay due to several factors including the following: evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process and the uncertainties involved in litigation. Accordingly, we cannot always estimate a meaningful range of possible exposure. We believe that we have adequately provided in our financial statements for the estimable potential impact of these contingencies. We also believe that the outcomes will not significantly affect the long-term results of operations, our financial position or cash flows. However, they may have a material impact on earnings for a particular quarter.

We are subject to federal, state and local pollution control laws and regulations in all locations where we have operating facilities. We anticipate that compliance with these laws and regulations will involve continuing capital expenditures and operating costs.

OUTLOOK

Consistent with our third quarter of fiscal 2008, four of our five segments should have a strong fourth quarter. Our fifth segment, Americas Fabrication and Distribution, is likely to suffer further margin compression due to increasing steel prices. Global demand for scrap, raw materials and steel products should remain at robust levels. China’s significant cutback on steel exports in 2008 has impacted supply and global steel prices. There may be further reductions in Chinese steel exports following the earthquake and, in particular, if China imposes additional export taxes on commercial steel products. Global infrastructure and construction should remain extremely strong in regions such as the Middle East and North Africa. As a result, steel prices, in particular rebar, are likely to remain at record levels. Steel inventory levels in most international markets are low which should further support rising steel prices. Nonresidential construction in the U.S. should remain steady. U.S. ferrous scrap prices, in particular obsolete grades, may increase due to the growing price differential with prime grades as well as higher international scrap prices. Regardless of ferrous scrap price increases, rebar prices in the U.S. are likely to trend higher due to both the significant reduction in rebar imports as well as much higher international rebar prices. U.S. mills are likely to continue to export steel products while international steel prices remain significantly higher. Our global mixture of businesses should benefit from the strength in international markets impacting raw materials, scrap and steel products.

LIQUIDITY AND CAPITAL RESOURCES

See Note G — Credit Arrangements, to the condensed consolidated financial statements.

Our sources, facilities and availability of liquidity and capital resources as of May 31, 2008 (dollars in thousands):


	Total
Source	Facility		Availability

Commercial paper program*	$	400,000	$	339,425
Domestic accounts receivable securitization		200,000		200,000
International accounts receivable sales facilities		364,195		138,875
Bank credit facilities — uncommitted		1,123,333		375,282
Notes due from 2008 to 2017		734,554		**
Trade financing arrangements		**	As required
CMCZ revolving credit facility		46,072		46,072
CMC Sisak notes		30,043		768
CMCZ & CMC Poland equipment notes		10,627		—


*		The commercial paper program is supported by our $400 million unsecured revolving credit agreement. The availability under the revolving credit agreement is reduced by $27.6 million of stand-by letters of credit issued as of May 31, 2008.

**		With our investment grade credit ratings and current industry conditions we believe we have access to cost-effective public markets for potential refinancing or the issuance of additional long-term debt.

Certain of our financing agreements, both domestically and at CMCZ, include various covenants, of which we were in compliance at May 31, 2008. There are no guarantees by the Company or any of its subsidiaries for any of CMCZ’s debt. The CMC Sisak notes are guaranteed by Commercial Metals International.

Off-Balance Sheet ArrangementsFor added flexibility, we may secure financing through securitization and sales of certain accounts receivable both in the U.S. and internationally. See Note D — Sales of Accounts Receivable, to the condensed consolidated financial statements. We may continually sell accounts receivable on an ongoing basis to replace those receivables that have been collected from our customers. Our domestic securitization program contains certain cross-default provisions whereby a termination event could occur should we default under another credit arrangement, and contains covenants that conform to the same requirements contained in our revolving credit agreement.

Cash FlowsOur cash flows from operating activities primarily result from sales of steel and related products, and to a lesser extent, sales of nonferrous metal products. We have a diverse and generally stable customer base.

During the first nine months of 2008, we used $54 million of net cash flows from operating activities as compared to generating $122 million in the first nine months of 2007. This change is primarily the result of a decrease in net earnings adjusted for non-cash items of $60 million and an increase in cash used for working capital of $116 million. The increase in cash used for working capital mainly relates to the following:

	•		Increased accounts receivable — increased sales as compared to the same period last year.

	•		Increased inventories — increased inventory on hand and higher inventory costs.

	•		Increased accounts payable and accrued expenses — timing of payments and increased expenses as compared to the same period last year.

We invested $227 million in property, plant and equipment during the first nine months of 2008. We expect our current approved total capital spending for fiscal year 2008 to be significantly below our budgeted amount of $494 million as certain projects have been delayed. We continuously assess our capital spending and reevaluate our requirements based upon current and expected results.

During the nine months ended May 31, 2008, we purchased 5.4 million shares of our common stock as part of our stock repurchase program at an average price of $28.00 per share for a total of $152 million. Our contractual obligations for the next twelve months of $1.8 billion are typically expenditures with normal revenue processing activities. We believe our cash flows from operating activities and debt facilities are adequate to fund our ongoing operations and planned capital expenditures.

CONTRACTUAL OBLIGATIONS

The following table represents our contractual obligations as of May 31, 2008:


	Payments Due By Period*
			Less than						More than
(in thousands)	Total		1 Year		1-3 Years		3-5 Years		5 Years

Contractual Obligations:
Long-term debt(1)	$	746,727	$	104,855	$	41,819	$	16	$	600,037
Commercial paper		33,000		33,000		—		—		—
Notes payable		32,233		32,233		—		—		—
Interest(2)		308,228		44,923		76,384		74,508		112,413
Operating leases(3)		142,086		36,986		55,846		27,978		21,276
Purchase obligations(4)		1,941,403		1,597,392		302,663		24,026		17,322

Total contractual cash obligations	$	3,203,677	$	1,849,389	$	476,712	$	126,528	$	751,048


*		We have not discounted the cash obligations in this table.

(1)		Total amounts are included in the May 31, 2008 condensed consolidated balance sheet. See Note G, Credit Arrangements, to the condensed consolidated financial statements.

(2)		Interest payments related to our short-term debt are not included in the table as they do not represent a significant obligation as of May 31, 2008.


(3)		Includes minimum lease payment obligations for non-cancelable equipment and real-estate leases in effect as of May 31, 2008.

(4)		About 72% of these purchase obligations are for inventory items to be sold in the ordinary course of business. Purchase obligations include all enforceable, legally binding agreements to purchase goods or services that specify all significant terms, regardless of the duration of the agreement. Agreements with variable terms are excluded because we are unable to estimate the minimum amounts.

Other Commercial CommitmentsWe maintain stand-by letters of credit to provide support for certain transactions that our insurance providers and suppliers request. At May 31, 2008, we had committed $30.1 million under these arrangements. All of the commitments expire within one year.

See Note K — Contingencies, to the condensed consolidated financial statements regarding our guarantees.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements regarding the outlook for our financial results including net earnings, product pricing and demand, currency valuation, production rates, inventory levels, new capital investments, software implementation costs, and general market conditions. These forward-looking statements generally can be identified by phrases such as we “expect,” “anticipate” “believe,” “ought,” “should,” “likely,” “appear,”, “project,” “forecast,” or other similar words or phrases of similar impact. There is inherent risk and uncertainty in any forward-looking statements. Variances will occur and some could be materially different from our current opinion. Developments that could impact our expectations include the following:

•		interest rate changes,

•		construction activity,

•		metals pricing over which we exert little influence,

•		increased capacity and product availability from competing steel minimills and other steel suppliers including import quantities and pricing,

•		court decisions,

•		industry consolidation or changes in production capacity or utilization,

•		global factors including political and military uncertainties,

•		credit availability,

•		currency fluctuations,

•		energy prices,

•		cost of construction,

•		successful implementation of new technology,

•		successful integration of acquisitions,

•		decisions by governments impacting the level of steel imports, and

•		pace of overall economic activity, particularly China.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required hereunder for the Company is consistent with the information set forth in Item 7a. Quantitative and Qualitative Disclosures about Market Risk included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2007, filed with the Securities Exchange Commission and is, therefore, not presented herein.

Also, see Note J — Derivatives and Risk Management, to the condensed consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods, including controls and disclosures designed to ensure that this information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, 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, and they have concluded that as of that date, our disclosure controls and procedures were effective.

During the second quarter of 2008, we initiated the eventual Company-wide rollout of SAP. The Company implemented SAP at its corporate headquarters, all payroll functions in the United States and at one of its domestic steel mills. During the third quarter of 2008, the Company implemented SAP at our steel mill in Poland. The implementation resulted in modifications to internal controls over the related accounting and operating processes at these locations and for these functions. We evaluated the control environment as affected by the implementation and believe our controls remained effective. We intend to implement SAP globally to most business segments within the next two years. Other than the changes mentioned above, no other changes to our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over our financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable.

ITEM 1A. RISK FACTORS

Not Applicable.

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

Issuer Purchases of Equity Securities


						Total
						Number of		Maximum
						Shares		Number of
						Purchased		Shares that
						As Part of		May Yet Be
	Total					Publicly		Purchased
	Number of			Average		Announced		Under the
	Shares			Price Paid		Plans or		Plans or
	Purchased			Per Share		Programs		Programs
As of February 29, 2008									812,547	(1)
March 1 — March 31, 2008		0			0		0		812,547
April 1 — April 30, 2008		0			0		0		812,547
May 1 — May 31, 2008		912	(2)	$	33.89		0		812,547
As of May 31, 2008		912	(2)	$	33.89		0		812,547	(1)


(1)		Shares available to be purchased under the Company’s Share Repurchase Program publicly announced November 5, 2007.

(2)		Shares tendered to the Company by employee stock option holders in payment of the option purchase price due upon exercise.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K.


10.1		Facility Agreement among CMC Zawiercie S.A., ABN AMRO Bank (Polska) S.A., HSBC Bank plc, ING Bank Slaski S.A., and BRE Bank S.A. dated May 20, 2008.

31.1		Certification of Murray R. McClean, 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 William B. Larson, 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 Murray R. McClean, 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 (filed herewith).

32.2		Certification of William B. Larson, 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 (filed herewith).

SIGNATURES

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
	/s/ William B. Larson
July 10, 2008	William B. Larson
	Senior Vice President & Chief Financial Officer


	/s/ Leon K. Rusch
July 10, 2008	Leon K. Rusch
	Controller

INDEX TO EXHIBITS


10.1		Facility Agreement among CMC Zawiercie S.A., ABN AMRO Bank (Polska) S.A., HSBC Bank plc, ING Bank Slaski S.A., and BRE Bank S.A. dated May 20, 2008.

31.1		Certification of Murray R. McClean, 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 William B. Larson, 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 Murray R. McClean, 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 (filed herewith).

32.2		Certification of William B. Larson, 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 (filed herewith).

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Avg

Commercial Metals (CMC) 10-Q2008 Q3 Quarterly report

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