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, 2016
filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission ("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 Annual Report on Form 10-K for the fiscal year ended
August 31, 2016
. The results of operations for the
three and six
month periods are not necessarily indicative of the results to be expected for the full year.
Recently Adopted Accounting Pronouncements
In the second quarter of fiscal 2017, the Company adopted Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718), issued by the Financial Accounting Standards Board (the "FASB") requiring that the Company recognize all excess tax benefits and tax deficiencies as an income tax expense or benefit when stock awards vest or are settled. Additionally, the guidance allows for an increase in the threshold for net share settlement up to the maximum statutory rate in employees’ applicable jurisdictions without triggering liability classification. The adoption of this guidance had an immaterial impact on income taxes on the Company’s unaudited condensed consolidated statements of earnings for the
three and six
months ended
February 28, 2017
. Additionally, the Company has elected to continue to estimate forfeitures. As such, this adoption has no cumulative effect on retained earnings. The Company elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively, which had an immaterial impact on both net cash from operating activities and net cash used in financing activities for the
six
months ended
February 28, 2017
. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods presented on the Company’s consolidated statements of cash flows since such cash flows have historically been presented as a financing activity.
In the first quarter of fiscal 2017, the Company adopted ASU 2015-16, Business Combinations (Topic 805), issued by the FASB requiring the acquirer in a business combination to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance was adopted on a prospective basis and did not have an impact on the Company's consolidated financial statements.
In the first quarter of fiscal 2017, the Company adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), issued by the FASB requiring an entity to account for fees paid in a cloud computing arrangement as a license of internal-use software. The guidance was adopted on a prospective basis and did not have an impact on the Company's consolidated financial statements.
In the first quarter of fiscal 2017, the Company adopted ASU 2015-02, Consolidation (Topic 810), issued by the FASB modifying the evaluation of whether limited partnerships and similar legal entities are voting interest entities ("VIEs"). The guidance was adopted on a retrospective basis and did not have an impact on the Company's consolidated financial statements.
In the first quarter of fiscal 2017, the Company adopted ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), issued by the FASB eliminating the concept of extraordinary items. Under this guidance, an entity is no longer allowed to separately disclose extraordinary items, net of tax, in the income statement after income from continuing operations. The guidance was adopted on a prospective basis and did not have an impact on the Company's consolidated financial statements.
In the first quarter of fiscal 2017, the Company adopted ASU 2014-13, Consolidation (Topic 810), issued by the FASB providing a measurement alternative to the existing fair value measurement guidance. When the measurement alternative is elected, the financial assets and liabilities are measured using the more observable of the fair value of the financial assets and the fair value of the financial liabilities. The guidance was adopted on a retrospective basis and did not have an impact on the Company's consolidated financial statements.
In the first quarter of fiscal 2017, the Company adopted ASU 2014-12, Compensation - Stock Compensation (Topic 718), issued by the FASB requiring entities to account for a performance target as a performance condition if the target affects vesting and could be achieved after the requisite service period. The guidance was followed by the Company prior to its adoption and therefore had no impact on the Company's consolidated financial statements upon adoption.
Recently Issued Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 805). The standard simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. This guidance is effective for annual periods or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The standard must be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company plans to early adopt the standard during fiscal 2017. The adoption of this guidance is not expected to have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business. The standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public companies, this standard is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The standard must be applied prospectively on or after the effective date. Early application of the amendments is allowed with certain restrictions. The Company is currently evaluating the effect that this standard will have 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 with early adoption permitted. 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 as well as determining the Company's planned adoption date.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), requiring a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for all leases with terms of twelve months or longer. 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 the Company plans to adopt the standard. The provisions of this guidance are to be applied using a modified retrospective approach, with elective reliefs, 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and has modified the standard thereafter. Under the standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 and will be effective for the Company beginning September 1, 2018, at which point the Company plans to adopt the standard. The standard permits the use of either the retrospective or cumulative effect transition method. The Company currently expects to adopt the standard using the cumulative effect transition method. Upon initial assessment, the Company does not believe the standard will have a material impact on its results of operations or cash flows; however, the Company is in the process of examining contract specific terms within each segment. In addition, the standard includes expanded disclosure requirements, which the Company continues to analyze. As part of the overall evaluation of the standard, the Company is also assessing potential changes to its accounting policies, practices and internal controls over financial reporting to support the standard.
NOTE 2. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"), net of income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, 2017
|
(in thousands)
|
|
Foreign Currency Translation
|
|
Unrealized Gain (Loss) on Derivatives
|
|
Defined Benefit Obligation
|
|
Total AOCI
|
Balance, November 30, 2016
|
|
$
|
(133,786
|
)
|
|
$
|
2,128
|
|
|
$
|
(2,854
|
)
|
|
$
|
(134,512
|
)
|
Other comprehensive income before reclassifications
|
|
9,551
|
|
|
310
|
|
|
—
|
|
|
9,861
|
|
Amounts reclassified from AOCI
|
|
—
|
|
|
(330
|
)
|
|
(9
|
)
|
|
(339
|
)
|
Net other comprehensive income (loss)
|
|
9,551
|
|
|
(20
|
)
|
|
(9
|
)
|
|
9,522
|
|
Balance, February 28, 2017
|
|
$
|
(124,235
|
)
|
|
$
|
2,108
|
|
|
$
|
(2,863
|
)
|
|
$
|
(124,990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 28, 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 (loss) before reclassifications
|
|
(11,980
|
)
|
|
442
|
|
|
—
|
|
|
(11,538
|
)
|
Amounts reclassified from AOCI
|
|
—
|
|
|
(520
|
)
|
|
(18
|
)
|
|
(538
|
)
|
Net other comprehensive loss
|
|
(11,980
|
)
|
|
(78
|
)
|
|
(18
|
)
|
|
(12,076
|
)
|
Balance, February 28, 2017
|
|
$
|
(124,235
|
)
|
|
$
|
2,108
|
|
|
$
|
(2,863
|
)
|
|
$
|
(124,990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 29, 2016
|
(in thousands)
|
|
Foreign Currency Translation
|
|
Unrealized Gain (Loss) on Derivatives
|
|
Defined Benefit Obligation
|
|
Total AOCI
|
Balance, November 30, 2015
|
|
$
|
(135,076
|
)
|
|
$
|
2,178
|
|
|
$
|
(2,760
|
)
|
|
$
|
(135,658
|
)
|
Other comprehensive income before reclassifications
|
|
4,211
|
|
|
494
|
|
|
—
|
|
|
4,705
|
|
Amounts reclassified from AOCI
|
|
—
|
|
|
(56
|
)
|
|
(2
|
)
|
|
(58
|
)
|
Net other comprehensive income (loss)
|
|
4,211
|
|
|
438
|
|
|
(2
|
)
|
|
4,647
|
|
Balance, February 29, 2016
|
|
$
|
(130,865
|
)
|
|
$
|
2,616
|
|
|
$
|
(2,762
|
)
|
|
$
|
(131,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 29, 2016
|
(in thousands)
|
|
Foreign Currency Translation
|
|
Unrealized Gain (Loss) on Derivatives
|
|
Defined Benefit Obligation
|
|
Total AOCI
|
Balance, August 31, 2015
|
|
$
|
(113,081
|
)
|
|
$
|
2,305
|
|
|
$
|
(2,759
|
)
|
|
$
|
(113,535
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(17,784
|
)
|
|
485
|
|
|
—
|
|
|
(17,299
|
)
|
Amounts reclassified from AOCI
|
|
—
|
|
|
(174
|
)
|
|
(3
|
)
|
|
(177
|
)
|
Net other comprehensive income (loss)
|
|
(17,784
|
)
|
|
311
|
|
|
(3
|
)
|
|
(17,476
|
)
|
Balance, February 29, 2016
|
|
$
|
(130,865
|
)
|
|
$
|
2,616
|
|
|
$
|
(2,762
|
)
|
|
$
|
(131,011
|
)
|
The significant items reclassified out of AOCI and the corresponding line items in the unaudited condensed consolidated statements of earnings to which the items were reclassified were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
Components of AOCI (in thousands)
|
|
Location
|
|
February 28,
2017
|
|
February 29,
2016
|
|
February 28,
2017
|
|
February 29,
2016
|
Unrealized gain (loss) on derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
|
|
Cost of goods sold
|
|
$
|
(33
|
)
|
|
$
|
(59
|
)
|
|
$
|
(125
|
)
|
|
$
|
(110
|
)
|
Foreign exchange
|
|
Net sales
|
|
329
|
|
|
(450
|
)
|
|
244
|
|
|
(393
|
)
|
Foreign exchange
|
|
Cost of goods sold
|
|
(172
|
)
|
|
426
|
|
|
(44
|
)
|
|
418
|
|
Foreign exchange
|
|
SG&A expenses
|
|
138
|
|
|
35
|
|
|
290
|
|
|
70
|
|
Interest rate
|
|
Interest expense
|
|
132
|
|
|
132
|
|
|
266
|
|
|
266
|
|
|
|
|
|
394
|
|
|
84
|
|
|
631
|
|
|
251
|
|
Income tax effect
|
|
Income taxes
|
|
(64
|
)
|
|
(28
|
)
|
|
(111
|
)
|
|
(77
|
)
|
Net of income taxes
|
|
|
|
$
|
330
|
|
|
$
|
56
|
|
|
$
|
520
|
|
|
$
|
174
|
|
Defined benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior services
|
|
SG&A expenses
|
|
$
|
11
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
4
|
|
Income tax effect
|
|
Income taxes
|
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
Net of income taxes
|
|
|
|
$
|
9
|
|
|
$
|
2
|
|
|
$
|
18
|
|
|
$
|
3
|
|
Amounts in parentheses reduce earnings.
NOTE 3. SALES OF ACCOUNTS RECEIVABLE
During the fourth quarter of fiscal 2016, CMC entered into a fifth amended
$200.0 million
U.S. sale of trade accounts receivable program which expires on August 15, 2019. Under the program, CMC contributes, and several 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 CMC. CMCRV sells the trade accounts receivable in their entirety to
two
financial institutions. Under the amended 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 for sales of the trade accounts receivable as true sales, and the trade accounts receivable balances that are sold are removed from the consolidated balance sheets. The cash advances received are reflected as cash provided by operating activities on the Company's consolidated statements of cash flows. Additionally, the U.S. sale of trade accounts receivable program contains certain cross-default provisions whereby a termination event could occur if the Company defaults 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.
At
February 28, 2017
and
August 31, 2016
, under its U.S. sale of trade accounts receivable program, the Company had sold
$262.3 million
and
$215.9 million
of trade accounts receivable, respectively, to the financial institutions. At
February 28, 2017
and
August 31, 2016
, the Company had
no
advance payments outstanding on the sale of its trade accounts receivable.
In addition to the U.S. sale of trade accounts receivable program described above, the Company's international subsidiaries in Poland and 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 (
$54.0 million
as of
February 28, 2017
) 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 provided by operating activities on the Company's unaudited condensed consolidated statements of cash flows. In October 2016, the Company's existing Australian program expired and the Company did not enter into a new program.
At
February 28, 2017
, under its Polish program, the Company had sold
$56.9 million
of trade accounts receivable to the third-party financial institution. At
August 31, 2016
, under its Polish and Australian programs, the Company had sold
$85.7 million
of trade accounts receivable to third-party financial institutions. At
February 28, 2017
and
August 31, 2016
,
$3.2 million
and
$8.3 million
in advance payments had been received, respectively.
During the
six
months ended
February 28, 2017
and
February 29, 2016
, cash proceeds from the U.S. and international sale of trade accounts receivable programs were
$178.8 million
and
$202.1 million
, respectively, and cash payments to the owners of trade accounts receivable were
$183.9 million
and
$190.6 million
, respectively. For a nominal servicing fee, the Company is responsible for servicing the trade accounts receivable for the U.S. and Australian programs. Discounts on U.S. and international sales of trade accounts receivable were
$0.2 million
and
$0.4 million
for the
three and six
months ended
February 28, 2017
, respectively, and
$0.5 million
and
$0.9 million
for the
three and six
months ended
February 29, 2016
, respectively, and are included in selling, general and administrative expenses in the Company's unaudited condensed consolidated statements of earnings.
As of
February 28, 2017
and
August 31, 2016
, the deferred purchase price on the Company's U.S. and international sale of trade accounts receivable programs is 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 February 28, 2017
|
(in thousands)
|
|
Total
|
|
U.S.
|
|
Poland
|
Beginning balance
|
|
$
|
261,521
|
|
|
$
|
215,717
|
|
|
$
|
45,804
|
|
Transfers of accounts receivable
|
|
643,478
|
|
|
561,010
|
|
|
82,468
|
|
Collections
|
|
(592,553
|
)
|
|
(518,008
|
)
|
|
(74,545
|
)
|
Ending balance
|
|
$
|
312,446
|
|
|
$
|
258,719
|
|
|
$
|
53,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 28, 2017
|
(in thousands)
|
|
Total
|
|
U.S.
|
|
Australia*
|
|
Poland
|
Beginning balance
|
|
$
|
289,748
|
|
|
$
|
212,762
|
|
|
$
|
26,662
|
|
|
$
|
50,324
|
|
Transfers of accounts receivable
|
|
1,200,442
|
|
|
1,031,155
|
|
|
16,914
|
|
|
152,373
|
|
Collections
|
|
(1,143,827
|
)
|
|
(985,198
|
)
|
|
(9,659
|
)
|
|
(148,970
|
)
|
Program termination
|
|
(33,917
|
)
|
|
—
|
|
|
(33,917
|
)
|
|
—
|
|
Ending balance
|
|
$
|
312,446
|
|
|
$
|
258,719
|
|
|
$
|
—
|
|
|
$
|
53,727
|
|
_________________
* Includes the sales of trade accounts receivable activities related to discontinued operations and businesses sold. For the
six
months ended
February 28, 2017
, there were
no
transfers of trade accounts receivable, collections of
$3.7 million
and program termination of
$1.6 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 29, 2016
|
(in thousands)
|
|
Total
|
|
U.S.
|
|
Australia**
|
|
Poland
|
Beginning balance
|
|
$
|
228,862
|
|
|
$
|
196,130
|
|
|
$
|
15,286
|
|
|
$
|
17,446
|
|
Transfers of accounts receivable
|
|
537,774
|
|
|
432,900
|
|
|
37,256
|
|
|
67,618
|
|
Collections
|
|
(534,762
|
)
|
|
(435,995
|
)
|
|
(39,159
|
)
|
|
(59,608
|
)
|
Ending balance
|
|
$
|
231,874
|
|
|
$
|
193,035
|
|
|
$
|
13,383
|
|
|
$
|
25,456
|
|
_________________
** Includes the sales of accounts receivable activities related to businesses held for sale (transfers of accounts receivable of
$11.1 million
and collections of
$11.9 million
for the
three
months ended
February 29, 2016
).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 29, 2016
|
(in thousands)
|
|
Total
|
|
U.S.
|
|
Australia***
|
|
Poland
|
Beginning balance
|
|
$
|
339,547
|
|
|
$
|
269,778
|
|
|
$
|
18,038
|
|
|
$
|
51,731
|
|
Transfers of accounts receivable
|
|
1,126,193
|
|
|
919,423
|
|
|
83,330
|
|
|
123,440
|
|
Collections
|
|
(1,233,866
|
)
|
|
(996,166
|
)
|
|
(87,985
|
)
|
|
(149,715
|
)
|
Ending balance
|
|
$
|
231,874
|
|
|
$
|
193,035
|
|
|
$
|
13,383
|
|
|
$
|
25,456
|
|
_________________
*** Includes the sales of trade accounts receivable activities related to discontinued operations and businesses held for sale. For the
six
months ended
February 29, 2016
, transfers of trade accounts receivable were
$23.4 million
and collections were
$36.8 million
.
NOTE 4. INVENTORIES, NET
As of
February 28, 2017
and
August 31, 2016
, inventories were stated at the lower of cost or net realizable value. The Company determines inventory cost for its Americas Recycling, Americas Mills, Americas Fabrication and International Mill segments using the weighted average cost method. The Company determines inventory cost for its International Marketing and Distribution segment using the specific identification method. At
February 28, 2017
,
65%
of the Company's total net inventories were valued using the weighted average cost method and
35%
of the Company's total net inventories were valued using the specification identification method.
The majority of the Company's inventories are in the form of semi-finished and finished goods. The Company’s business model, with the exception of the International Marketing and Distribution segment, is such that products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined. Inventories in the International Marketing and Distribution segment are sold as finished goods. As such, work in process inventories were not material at
February 28, 2017
and
August 31, 2016
. At
February 28, 2017
and
August 31, 2016
,
$113.0 million
and
$77.9 million
, respectively, of the Company's inventories were in the form of raw materials.
Inventory write-downs were
$0.7 million
and
$1.2 million
during the
three and six
months ended
February 28, 2017
, respectively, and were
$5.3 million
and
$7.9 million
during the
three and six
months ended
February 29, 2016
, respectively.
NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS
The following table details the changes in the carrying amount of goodwill by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
International
|
|
|
(in thousands)
|
|
Recycling
|
|
Mills
|
|
Fabrication
|
|
Mill
|
|
Marketing and Distribution
|
|
Consolidated
|
Goodwill, gross
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2016
|
|
$
|
9,751
|
|
|
$
|
4,970
|
|
|
$
|
57,637
|
|
|
$
|
2,432
|
|
|
$
|
1,982
|
|
|
$
|
76,772
|
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
(58
|
)
|
|
(156
|
)
|
Balance at February 28, 2017
|
|
$
|
9,751
|
|
|
$
|
4,970
|
|
|
$
|
57,943
|
|
|
$
|
2,334
|
|
|
$
|
1,924
|
|
|
$
|
76,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment losses
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2016
|
|
$
|
(9,751
|
)
|
|
$
|
—
|
|
|
$
|
(493
|
)
|
|
$
|
(155
|
)
|
|
$
|
—
|
|
|
$
|
(10,399
|
)
|
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
Balance at February 28, 2017
|
|
$
|
(9,751
|
)
|
|
$
|
—
|
|
|
$
|
(493
|
)
|
|
$
|
(148
|
)
|
|
$
|
—
|
|
|
$
|
(10,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2016
|
|
$
|
—
|
|
|
$
|
4,970
|
|
|
$
|
57,144
|
|
|
$
|
2,277
|
|
|
$
|
1,982
|
|
|
$
|
66,373
|
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
(58
|
)
|
|
(149
|
)
|
Balance at February 28, 2017
|
|
$
|
—
|
|
|
$
|
4,970
|
|
|
$
|
57,450
|
|
|
$
|
2,186
|
|
|
$
|
1,924
|
|
|
$
|
66,530
|
|
The total gross carrying amounts of the Company's intangible assets that are subject to amortization were
$19.8 million
and
$18.6 million
at
February 28, 2017
and
August 31, 2016
, respectively, and are included in other noncurrent assets on the Company's unaudited condensed consolidated balance sheets. Intangible amortization expense from continuing operations was
$0.7 million
and
$1.0 million
for the
three and six
months ended
February 28, 2017
, respectively, and
$1.0 million
and
$2.1 million
for the
three and six
months ended
February 29, 2016
, respectively. Excluding goodwill, there are no significant intangible assets with indefinite lives.
NOTE 6. CHANGES IN BUSINESS
Acquisitions
On December 12, 2016, the Company completed the purchase of substantially all of the assets of Continental Concrete Structures, Inc. ("CCS"), a fabricator of post-tensioning cable and related products for commercial and public construction projects with a facility in Alpharetta, Georgia. In addition, CCS provides professional design and value engineering services to the construction industry throughout North America. This acquisition complements the Company’s current rebar fabrication business and continues its strategy of creating value for customers. The operating results of this facility are included in the Americas Fabrication reporting segment.
On January 9, 2017, the Company completed the purchase of substantially all of the assets of Associated Steel Workers, Limited ("ASW"), a steel fabrication facility in Kapolei, Hawaii. This acquisition continues the vertical integration model of the Company by extending our geographic reach, establishing a fabrication operation in Hawaii and expanding our presence in the Hawaiian market. The operating results of this facility are included in the Americas Fabrication reporting segment.
On March 6, 2017, the Company completed the purchase of certain assets from OmniSource Corporation, a wholly owned subsidiary of Steel Dynamics, Inc., consisting of seven recycling facilities located in the southeast United States (the "Recycling Assets"), which are in close proximity to CMC’s minimill in Cayce, South Carolina. These facilities are expected to provide synergies with our other operations in the region. The operating results of these facilities will be included in the Americas Recycling reporting segment.
The acquisitions of CCS, ASW and the Recycling Assets are not material, individually or in the aggregate, to the Company's financial position or results of operations; therefore, pro forma operating results for the acquisitions are not presented since the results would not be significantly different than reported results.
Discontinued Operations
During the first quarter of fiscal 2015, the Company decided to exit and sell its steel distribution business in Australia and determined that the decision to exit this business met the definition of a discontinued operation. As a result, this business has been presented as a discontinued operation for all periods presented. The Australian steel distribution business was previously included in the International Marketing and Distribution reporting segment.
Financial information for discontinued operations was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(in thousands)
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Net sales
|
|
$
|
1
|
|
|
$
|
9,953
|
|
|
$
|
(22
|
)
|
|
$
|
21,507
|
|
Earnings (loss) from discontinued operations before income taxes (benefit)
|
|
726
|
|
|
(446
|
)
|
|
(191
|
)
|
|
(1,018
|
)
|
NOTE 7. CREDIT ARRANGEMENTS
The Company has a fourth amended and restated credit agreement (the "Credit Agreement") for a revolving credit facility of
$350.0 million
with a maturity date of
June 26, 2019
. The maximum availability under the Credit Agreement can be increased to
$500.0 million
with bank approval. The Company's obligation under its Credit Agreement is collateralized by its U.S. inventory. The Credit Agreement's capacity includes
$50.0 million
for the issuance of stand-by letters of credit and was reduced by outstanding stand-by letters of credit which totaled
$3.0 million
at both
February 28, 2017
and
August 31, 2016
. The Company had
no
amounts drawn under the Credit Agreement at
February 28, 2017
and
August 31, 2016
.
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, as each is 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, as each is defined in the Credit Agreement) that does not exceed
0.60
to 1.00. In addition, beginning on the date three months prior to each maturity date of the Company's 2017 Notes and 2018 Notes, as defined below, and each day thereafter that the 2017 Notes and the 2018 Notes are outstanding, the Company will be required to maintain liquidity of at least
$150.0 million
in excess of each of the outstanding aggregate principal amounts of the 2017 Notes and 2018 Notes. Loans under the Credit Agreement bear interest based on the Eurocurrency rate, a base rate, or the London Interbank Offered Rate ("LIBOR").
At
February 28, 2017
, the Company's interest coverage ratio was
5.65
to 1.00, and the Company's debt to capitalization ratio was
0.44
to 1.00.
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.
In August 2008, the Company issued
$500.0 million
of
7.35%
senior unsecured notes due in
August 2018
(the "2018 Notes"). During the third quarter of fiscal 2010, the Company entered into hedging transactions which reduced the Company's effective interest rate on these notes to
6.40%
per annum. Interest on these notes is payable semiannually. In February 2016, the Company accepted for purchase approximately
$100.2 million
of the outstanding principal amount of its 2018 Notes through a cash tender offer. The Company recognized expenses of approximately
$6.0 million
related to the early extinguishment of this debt, which are included in loss on debt extinguishment in the unaudited condensed consolidated statements of earnings for the
three and six
months ended
February 29, 2016
.
In July 2007, the Company issued
$400.0 million
of
6.50%
senior unsecured notes due in
July 2017
(the "2017 Notes"). During the third quarter of fiscal 2011, the Company entered into hedging transactions which reduced the Company's effective interest rate on these notes to
5.74%
per annum. Interest on these notes is payable semiannually. In February 2016, the Company accepted for purchase
$100.0 million
of the outstanding principal amount of its 2017 Notes though a cash tender offer. The Company recognized expenses of approximately
$5.4 million
related to the early extinguishment of this debt, which are included in loss on
debt extinguishment in the unaudited condensed consolidated statements of earnings for the
three and six
months ended
February 29, 2016
.
During fiscal 2012, the Company terminated its existing interest rate swap transactions and received cash proceeds of approximately
$52.7 million
, net of customary finance charges. The resulting gain was deferred and is being amortized as a reduction to interest expense over the remaining term of the respective debt tranches. At
February 28, 2017
and
August 31, 2016
, the unamortized amounts were
$7.8 million
and
$11.6 million
, respectively. Amortization of the deferred gain for each of the
three and six
months ended
February 28, 2017
and
February 29, 2016
was
$1.9 million
and
$3.8 million
, respectively.
At
February 28, 2017
, the Company was in compliance with all covenants contained in its debt agreements.
Long-term debt, including the deferred gain from the termination of the interest rate swaps, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Weighted Average
Interest Rate as of February 28, 2017
|
|
February 28, 2017
|
|
August 31, 2016
|
2023 Notes
|
|
4.875%
|
|
$
|
330,000
|
|
|
$
|
330,000
|
|
2018 Notes
|
|
6.40%
|
|
406,562
|
|
|
408,874
|
|
2017 Notes
|
|
5.74%
|
|
301,115
|
|
|
302,601
|
|
Other, including equipment notes
|
|
|
|
30,356
|
|
|
34,166
|
|
Total debt
|
|
|
|
1,068,033
|
|
|
1,075,641
|
|
Less debt issuance costs
|
|
|
|
3,696
|
|
|
4,224
|
|
Total amounts outstanding
|
|
|
|
1,064,337
|
|
|
1,071,417
|
|
Less current maturities
|
|
|
|
312,200
|
|
|
313,469
|
|
Long-term debt
|
|
|
|
$
|
752,137
|
|
|
$
|
757,948
|
|
The Company 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 both
February 28, 2017
and
August 31, 2016
, CMC Poland Sp. z.o.o. ("CMCP") had uncommitted credit facilities with several banks of PLN
175 million
(
$43.0 million
) and PLN
175 million
(
$44.8 million
), respectively. The uncommitted credit facilities as of
February 28, 2017
have expiration dates ranging from March 2017 to November 2017, which CMCP intends to renew upon expiration. At
February 28, 2017
and
August 31, 2016
, no amounts were outstanding under these facilities. During the
six months ended February 28, 2017
and
February 29, 2016
, CMCP had
no
borrowings and
no
repayments under its uncommitted credit facilities.
The Company capitalized
$2.1 million
and
$3.7 million
of interest in the cost of property, plant and equipment during the
three and six
months ended
February 28, 2017
, respectively, and
$0.5 million
and
$1.0 million
for the
three and six
months ended
February 29, 2016
, respectively. Cash paid for interest during the
three and six
months ended
February 28, 2017
was
$24.7 million
and
$33.1 million
, respectively, and
$31.9 million
and
$40.9 million
during the
three and six
months ended
February 29, 2016
, respectively.
NOTE 8. NEW MARKETS TAX CREDIT TRANSACTIONS
In the second quarter of fiscal 2016, the Company entered into a financing transaction with U.S. Bancorp Community Development Corporation, a Minnesota corporation ("USBCDC"), related to the development, construction and equipping of a steel micro-mill in Durant, Oklahoma. To effect the transaction, USBCDC made a capital contribution to USBCDC Investment Fund 156, LLC, a Missouri limited liability company (the "Investment Fund"). Additionally, Commonwealth Acquisitions Holdings, Inc., a wholly owned subsidiary of CMC ("Commonwealth"), made a loan to the Investment Fund. The transaction qualified under the New Markets Tax Credit Program (the "NMTC Program") provided for in the Community Renewal Tax Relief Act of 2000 (the "Act"). The NMTC Program is intended to induce capital investment in qualified low-income communities. The Act permits taxpayers to claim credits against federal income taxes for up to 39% of qualified investments in certain community development entities (“CDEs”). CDEs are privately managed entities that are certified to make qualified low-income community investments to qualified projects.
Commonwealth loaned
$35.3 million
to the Investment Fund at an interest rate of approximately
1.08%
per year and with a maturity date of December 24, 2045 (the "Commonwealth Loan"). The Investment Fund also received capital contributions from USBCDC in the aggregate amount of
$17.7 million
(the "USBCDC Equity"). The Investment Fund used
$51.5 million
of the proceeds received from the Commonwealth Loan and the USBCDC Equity to make qualified equity investments ("QEIs") into certain CDEs, which, in turn, used
$50.7 million
of the QEIs to make loans to CMC Steel Oklahoma, LLC, a wholly owned subsidiary of CMC, with terms similar to the Commonwealth Loan and as partial financing for the construction, development and equipping of a new steel micro-mill in Durant, Oklahoma. The proceeds of the loans from the CDEs were recorded as restricted cash and included in other current assets in the accompanying unaudited condensed consolidated balance sheet. During the three and
six months ended February 28, 2017
, the Company spent
$4.5 million
and
$21.0 million
, respectively, for qualified construction, development, and equipping activities for the micro-mill. The balance remaining in restricted cash was
$0.7 million
and
$21.7 million
at
February 28, 2017
and
August 31, 2016
, respectively.
By virtue of its capital contribution to the Investment Fund, USBCDC is entitled to substantially all of the benefits derived from the new markets tax credits ("NMTCs"). This transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase USBCDC's interest in the Investment Fund. The Company believes USBCDC will exercise the put option in December 2022 at the end of the recapture period. The value attributed to the put/call is de minimis. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC Program. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, could require the Company to indemnify USBCDC for any loss or recapture of NMTCs related to the financing until such time as the Company's obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with this arrangement.
The Company has determined that the Investment Fund is a VIE, of which the Company is the primary beneficiary and has consolidated it in accordance with the accounting standard for consolidation. USBCDC's contribution is included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet. Direct costs incurred in structuring the financing arrangement are deferred and will be recognized as expense over the seven year recapture period. Incremental costs to maintain the structure during the compliance period are recognized as incurred.
NOTE 9. 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, (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies and (iii) natural gas forward contracts to mitigate the risk of unanticipated changes in operating cost due to the volatility of natural gas prices.
At
February 28, 2017
, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were
$256.4 million
and
$36.3 million
, respectively. At
February 29, 2016
, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were
$296.5 million
and
$30.1 million
, respectively.
The following table provides information regarding the Company's commodity contract commitments as of
February 28, 2017
:
|
|
|
|
|
|
|
|
Commodity
|
|
Long/Short
|
|
Total
|
Aluminum
|
|
Long
|
|
2,630
|
|
MT
|
Aluminum
|
|
Short
|
|
325
|
|
MT
|
Copper
|
|
Long
|
|
419
|
|
MT
|
Copper
|
|
Short
|
|
4,808
|
|
MT
|
Zinc
|
|
Long
|
|
15
|
|
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 six
months ended
February 28, 2017
and
February 29, 2016
. 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
Derivatives Not Designated as Hedging Instruments (in thousands)
|
|
Location
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Commodity
|
|
Cost of goods sold
|
|
$
|
(146
|
)
|
|
$
|
(224
|
)
|
|
$
|
(4,775
|
)
|
|
$
|
1,948
|
|
Foreign exchange
|
|
Net sales
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
Foreign exchange
|
|
Cost of goods sold
|
|
(25
|
)
|
|
31
|
|
|
(33
|
)
|
|
81
|
|
Foreign exchange
|
|
SG&A expenses
|
|
(678
|
)
|
|
10,495
|
|
|
3,371
|
|
|
15,714
|
|
Gain (loss) before income taxes
|
|
|
|
$
|
(849
|
)
|
|
$
|
10,298
|
|
|
$
|
(1,437
|
)
|
|
$
|
17,739
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Fair Value Hedging Instruments (in thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Foreign exchange
|
|
Net sales
|
|
$
|
66
|
|
|
$
|
(61
|
)
|
|
$
|
44
|
|
|
$
|
83
|
|
Foreign exchange
|
|
Cost of goods sold
|
|
(1,693
|
)
|
|
183
|
|
|
(607
|
)
|
|
(811
|
)
|
Gain (loss) before income taxes
|
|
|
|
$
|
(1,627
|
)
|
|
$
|
122
|
|
|
$
|
(563
|
)
|
|
$
|
(728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged Items Designated as Fair Value Hedging Instruments (in thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Foreign exchange
|
|
Net sales
|
|
$
|
(66
|
)
|
|
$
|
62
|
|
|
$
|
(44
|
)
|
|
$
|
(83
|
)
|
Foreign exchange
|
|
Cost of goods sold
|
|
1,693
|
|
|
(183
|
)
|
|
607
|
|
|
811
|
|
Gain (loss) before income taxes
|
|
|
|
$
|
1,627
|
|
|
$
|
(121
|
)
|
|
$
|
563
|
|
|
$
|
728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands)
|
|
Three Months Ended
|
|
Six Months Ended
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Commodity
|
|
$
|
118
|
|
|
$
|
253
|
|
|
$
|
217
|
|
|
$
|
(224
|
)
|
Foreign exchange
|
|
192
|
|
|
241
|
|
|
225
|
|
|
709
|
|
Gain, net of income taxes
|
|
$
|
310
|
|
|
$
|
494
|
|
|
$
|
442
|
|
|
$
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Reclassified from Accumulated Other Comprehensive Income (Loss) (in thousands)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Commodity
|
|
Cost of goods sold
|
|
$
|
(33
|
)
|
|
$
|
(59
|
)
|
|
$
|
(125
|
)
|
|
$
|
(110
|
)
|
Foreign exchange
|
|
Net sales
|
|
329
|
|
|
(450
|
)
|
|
244
|
|
|
(393
|
)
|
Foreign exchange
|
|
Cost of goods sold
|
|
(172
|
)
|
|
426
|
|
|
(44
|
)
|
|
418
|
|
Foreign exchange
|
|
SG&A expenses
|
|
138
|
|
|
35
|
|
|
290
|
|
|
70
|
|
Interest rate
|
|
Interest expense
|
|
132
|
|
|
132
|
|
|
266
|
|
|
266
|
|
Gain before income taxes
|
|
|
|
394
|
|
|
84
|
|
|
631
|
|
|
251
|
|
Income taxes
|
|
Income taxes
|
|
(64
|
)
|
|
(28
|
)
|
|
(111
|
)
|
|
(77
|
)
|
Gain, net of income taxes
|
|
|
|
$
|
330
|
|
|
$
|
56
|
|
|
$
|
520
|
|
|
$
|
174
|
|
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
February 28, 2017
and
August 31, 2016
. The fair value of the Company's derivative instruments on the unaudited condensed consolidated balance sheets was as follows:
|
|
|
|
|
|
|
|
|
|
Derivative Assets (in thousands)
|
|
February 28, 2017
|
|
August 31, 2016
|
Commodity — designated for hedge accounting
|
|
$
|
170
|
|
|
$
|
4
|
|
Commodity — not designated for hedge accounting
|
|
277
|
|
|
584
|
|
Foreign exchange — designated for hedge accounting
|
|
631
|
|
|
1,398
|
|
Foreign exchange — not designated for hedge accounting
|
|
1,169
|
|
|
750
|
|
Derivative assets (other current assets)*
|
|
$
|
2,247
|
|
|
$
|
2,736
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities (in thousands)
|
|
February 28, 2017
|
|
August 31, 2016
|
Commodity — designated for hedge accounting
|
|
$
|
—
|
|
|
$
|
5
|
|
Commodity — not designated for hedge accounting
|
|
595
|
|
|
117
|
|
Foreign exchange — designated for hedge accounting
|
|
718
|
|
|
902
|
|
Foreign exchange — not designated for hedge accounting
|
|
777
|
|
|
1,161
|
|
Derivative liabilities (accrued expenses and other payables)*
|
|
$
|
2,090
|
|
|
$
|
2,185
|
|
_________________
* Derivative assets and liabilities do not include the hedged items designated as fair value hedges.
As of
February 28, 2017
, substantially all 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.
NOTE 10. 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
|
(in thousands)
|
|
February 28, 2017
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
|
Money market investments
(1)
|
|
$
|
290,329
|
|
|
$
|
290,329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative assets
(2)
|
|
447
|
|
|
277
|
|
|
170
|
|
|
—
|
|
Foreign exchange derivative assets
(2)
|
|
1,800
|
|
|
—
|
|
|
1,800
|
|
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Commodity derivative liabilities
(2)
|
|
595
|
|
|
595
|
|
|
—
|
|
|
—
|
|
Foreign exchange derivative liabilities
(2)
|
|
1,495
|
|
|
—
|
|
|
1,495
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
(in thousands)
|
|
August 31, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
|
Money market investments
(1)
|
|
$
|
278,759
|
|
|
$
|
278,759
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity derivative assets
(2)
|
|
588
|
|
|
584
|
|
|
4
|
|
|
—
|
|
Foreign exchange derivative assets
(2)
|
|
2,148
|
|
|
—
|
|
|
2,148
|
|
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Commodity derivative liabilities
(2)
|
|
122
|
|
|
117
|
|
|
5
|
|
|
—
|
|
Foreign exchange derivative liabilities
(2)
|
|
2,063
|
|
|
—
|
|
|
2,063
|
|
|
—
|
|
_________________
(1) Money market investments are short-term in nature, and the value is determined by broker quoted prices in active markets. 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 9, Derivatives and Risk Management.
There were no material non-recurring fair value remeasurements during the
three and six
months ended
February 28, 2017
and
February 29, 2016
, respectively.
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.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2017
|
|
August 31, 2016
|
(in thousands)
|
|
Fair Value Hierarchy
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
2023 Notes
(1)
|
|
Level 2
|
|
$
|
330,000
|
|
|
$
|
335,775
|
|
|
$
|
330,000
|
|
|
$
|
332,010
|
|
2018 Notes
(1)
|
|
Level 2
|
|
406,562
|
|
|
430,304
|
|
|
408,874
|
|
|
432,303
|
|
2017 Notes
(1)
|
|
Level 2
|
|
301,115
|
|
|
305,250
|
|
|
302,601
|
|
|
311,250
|
|
_________________
(1) The fair value of the notes is determined based on indicated market values.
NOTE 11. INCOME TAX
The Company's effective income tax rate from continuing operations for the
three and six
months ended
February 28, 2017
was
25.2%
and
25.6%
, respectively, compared with
16.0%
and
27.5%
for the
three and six
months ended
February 29, 2016
, respectively. 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 the Company's effective tax rate, including the mix and amount of global earnings, the impact of loss companies for which no tax benefit is available due to valuation allowances, audit related adjustments, and the impact of permanent tax adjustments.
For the
three and six
months ended
February 28, 2017
and
February 29, 2016
, the tax rate was lower than the statutory income tax rate of 35%. 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%
,
|
|
|
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 Benefits Restoration Plan, and
|
|
|
iv.
|
losses from operations in certain jurisdictions in which the Company maintains a valuation allowance, thus providing no benefit for such losses.
|
In addition, the Company recorded a benefit as a result of a favorable adjustment related to its IRS exam in the second quarter of fiscal 2016, further impacting the rate in fiscal 2016.
The Company’s tax expense related to discontinued operations is not material with respect to the
three and six
months ended
February 28, 2017
and
February 29, 2016
.
The Company made net payments of
$11.8 million
and
$23.5 million
for income taxes during the
six
months ended
February 28, 2017
and
February 29, 2016
, respectively.
As of
February 28, 2017
and
August 31, 2016
, the reserve for unrecognized income tax benefits related to the accounting for uncertainty in income taxes was
$9.5 million
, exclusive of interest and penalties.
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 six
months ended
February 28, 2017
, the Company recorded immaterial amounts of accrued interest and penalties on unrecognized income tax benefits.
During the twelve months ending
February 28
, 2018, 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 may decrease by approximately
$9.5 million
, which would reduce the provision for income taxes by
$9.5 million
.
The Company files income tax returns in the United States and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, CMC and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of tax years subject to examination:
U.S. Federal — 2012 and forward, with the exception of the R&D credit matter discussed below
U.S. States — 2009 and forward
Foreign — 2009 and forward
During the fiscal year ended August 31, 2016, the Company completed an IRS exam 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 years 2009 through 2015. Management believes the Company's recorded income tax liabilities as of
February 28, 2017
sufficiently reflect the anticipated outcome of these examinations.
NOTE 12. STOCK-BASED COMPENSATION PLANS
The Company's stock-based compensation plans are described, and informational disclosures provided, in Note 16, Stock-Based Compensation Plans, to the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2016
. During the
six
months ended
February 28, 2017
and
February 29, 2016
, restricted stock units and performance stock units accounted for under the equity method totaling
0.9 million
and
1.6 million
, respectively, were granted at a weighted-average fair value of
$16.04
and
$15.83
, respectively.
Additionally, during the
six
months ended
February 28, 2017
and
February 29, 2016
, the Company granted
0.9 million
and
0.5 million
equivalent shares, respectively, of performance stock units and restricted stock units accounted for under the liability method. During the first quarter of fiscal
2017
, certain restricted stock units and performance stock units that were previously accounted for under the equity method were modified to allow optionality related to the net share settlement feature, which resulted in accounting for these awards under the liability method. The fair value of liability awards is remeasured each reporting period and is recognized ratably over the service period. The Company incurred expenses of
$0.8 million
and
$4.7 million
as a result of the modification and the impact of the increased stock value on liability-treated awards during the
three and six
months ended
February 28, 2017
, respectively, compared to immaterial mark-to-market adjustments for the
three and six
months ended
February 29, 2016
. As of
February 28, 2017
, the Company had
2.2 million
equivalent shares accounted for under the liability method outstanding. The Company expects
2.1 million
equivalent shares to vest.
In general, the restricted stock units granted during fiscal
2017
vest ratably over a period of three years. However, certain restricted stock units granted during fiscal
2017
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
2017
will vest after a period of three years.
Total stock-based compensation expense, including fair value remeasurements, for the
three and six
months ended
February 28, 2017
of
$8.0 million
and
$16.2 million
, respectively, and
$6.8 million
and
$13.1 million
for the
three and six
months ended
February 29, 2016
, respectively, was included in selling, general and administrative expenses on the Company's unaudited condensed consolidated statements of earnings.
NOTE 13. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE ATTRIBUTABLE TO CMC
The calculations of basic and diluted earnings per share from continuing operations for the
three and six
months ended
February 28, 2017
and
February 29, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(in thousands, except share data)
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Earnings from continuing operations attributable to CMC
|
|
$
|
29,639
|
|
|
$
|
10,849
|
|
|
$
|
36,813
|
|
|
$
|
36,482
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
Shares outstanding for basic earnings per share
|
|
115,736,369
|
|
|
115,429,550
|
|
|
115,415,662
|
|
|
115,725,896
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to CMC
|
|
$
|
0.25
|
|
|
$
|
0.09
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
Shares outstanding for basic earnings per share
|
|
115,736,369
|
|
|
115,429,550
|
|
|
115,415,662
|
|
|
115,725,896
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Stock-based incentive/purchase plans
|
|
1,383,839
|
|
|
1,078,041
|
|
|
1,592,296
|
|
|
1,276,926
|
|
Shares outstanding for diluted earnings per share
|
|
117,120,208
|
|
|
116,507,591
|
|
|
117,007,958
|
|
|
117,002,822
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to CMC
|
|
$
|
0.25
|
|
|
$
|
0.09
|
|
|
$
|
0.31
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares not included above
|
|
—
|
|
|
714,342
|
|
|
—
|
|
|
714,342
|
|
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 CMC common stock. CMC did not purchase any shares of CMC common stock during the
three and six
months ended
February 28, 2017
. During the
three and six
months ended
February 29, 2016
, CMC purchased
1.9 million
and
2.3 million
shares of CMC common stock, respectively, at an average purchase price of
$13.43
and
$13.57
per share, respectively. CMC had remaining authorization to purchase
$27.6 million
of common stock at
February 28, 2017
.
NOTE 14. COMMITMENTS AND CONTINGENCIES
Purchase Obligations
The Company regularly enters into future purchase commitments for materials, supplies, services and fixed assets related to ongoing operations. Approximately
75%
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. Another significant obligation relates to capital expenditures. We do not expect potential payments under these provisions to materially affect results of operations or financial condition based upon reasonably likely outcomes derived by reference to experience and current business plans.
|
|
|
|
|
|
Twelve Months Ending February 28,
|
|
(in thousands)
|
2018
|
|
$
|
749,005
|
|
2019
|
|
105,952
|
|
2020
|
|
55,720
|
|
2021
|
|
39,586
|
|
2022
|
|
3,935
|
|
Thereafter
|
|
6,989
|
|
Total
|
|
$
|
961,187
|
|
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 19, Commitments and Contingencies, to the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2016
.
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 at several sites, none 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
February 28, 2017
and
August 31, 2016
, the Company had accrued
$0.7 million
for 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. Total environmental liabilities, including with respect to CERCLA sites, were
$3.2 million
and
$3.3 million
as of
February 28, 2017
and
August 31, 2016
, respectively, of which
$2.1 million
was classified as other long-term liabilities as of both
February 28, 2017
and
August 31, 2016
. 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 15. BUSINESS SEGMENTS
The Company's operating segments engage in business activities from which they may earn revenues and incur expenses and 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
five
reporting segments: Americas Recycling, Americas Mills, Americas Fabrication, International Mill and International Marketing and Distribution. See Note 1, Nature of Operations, of the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2016
, for more information about the reporting segments, including the types of products and services from which each reporting segment derives its net sales. Corporate contains net earnings on 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.
The financial information presented for the International Marketing and Distribution segment excludes the operations of the Australian steel distribution business. This operation has been classified as discontinued operations in the consolidated statements of earnings. See Note 6, Changes in Business, to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, for more information.
The Company uses adjusted operating profit (loss) from continuing operations to compare and evaluate the financial performance of its segments. Adjusted operating profit (loss) is the sum of the Company's earnings from continuing operations before income taxes, interest expense and discounts on sales of accounts receivable. 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 Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2016
.
The following is a summary of certain financial information from continuing operations by reportable segment:
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, 2017
|
|
|
Americas
|
|
International
|
|
|
|
|
|
|
(in thousands)
|
|
Recycling
|
|
Mills
|
|
Fabrication
|
|
Mill
|
|
Marketing and Distribution
|
|
Corporate
|
|
Eliminations
|
|
Continuing Operations
|
Net sales-unaffiliated customers
|
|
$
|
188,502
|
|
|
$
|
220,607
|
|
|
$
|
301,382
|
|
|
$
|
134,125
|
|
|
$
|
301,163
|
|
|
$
|
3,842
|
|
|
$
|
—
|
|
|
$
|
1,149,621
|
|
Intersegment sales
|
|
34,826
|
|
|
155,986
|
|
|
2,444
|
|
|
180
|
|
|
1,132
|
|
|
—
|
|
|
(194,568
|
)
|
|
—
|
|
Net sales
|
|
223,328
|
|
|
376,593
|
|
|
303,826
|
|
|
134,305
|
|
|
302,295
|
|
|
3,842
|
|
|
(194,568
|
)
|
|
1,149,621
|
|
Adjusted operating profit (loss) from continuing operations
|
|
7,766
|
|
|
51,319
|
|
|
506
|
|
|
9,430
|
|
|
6,143
|
|
|
(22,317
|
)
|
|
(576
|
)
|
|
52,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 28, 2017
|
|
|
Americas
|
|
International
|
|
|
|
|
|
|
(in thousands)
|
|
Recycling
|
|
Mills
|
|
Fabrication
|
|
Mill
|
|
Marketing and Distribution
|
|
Corporate
|
|
Eliminations
|
|
Continuing Operations
|
Net sales-unaffiliated customers
|
|
$
|
342,864
|
|
|
$
|
423,938
|
|
|
$
|
636,659
|
|
|
$
|
268,315
|
|
|
$
|
547,316
|
|
|
$
|
5,592
|
|
|
$
|
—
|
|
|
$
|
2,224,684
|
|
Intersegment sales
|
|
57,172
|
|
|
299,820
|
|
|
5,567
|
|
|
391
|
|
|
3,139
|
|
|
—
|
|
|
(366,089
|
)
|
|
—
|
|
Net sales
|
|
400,036
|
|
|
723,758
|
|
|
642,226
|
|
|
268,706
|
|
|
550,455
|
|
|
5,592
|
|
|
(366,089
|
)
|
|
2,224,684
|
|
Adjusted operating profit (loss) from continuing operations
|
|
2,668
|
|
|
88,268
|
|
|
7,217
|
|
|
19,403
|
|
|
5,177
|
|
|
(46,330
|
)
|
|
(780
|
)
|
|
75,623
|
|
Total assets as of February 28, 2017*
|
|
214,630
|
|
|
865,428
|
|
|
657,917
|
|
|
389,184
|
|
|
591,769
|
|
|
935,452
|
|
|
(523,506
|
)
|
|
3,130,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 29, 2016
|
|
|
Americas
|
|
International
|
|
|
|
|
|
|
(in thousands)
|
|
Recycling
|
|
Mills
|
|
Fabrication
|
|
Mill
|
|
Marketing and Distribution
|
|
Corporate
|
|
Eliminations
|
|
Continuing Operations
|
Net sales-unaffiliated customers
|
|
$
|
119,641
|
|
|
$
|
189,549
|
|
|
$
|
333,961
|
|
|
$
|
107,458
|
|
|
$
|
271,955
|
|
|
$
|
(2,867
|
)
|
|
$
|
—
|
|
|
$
|
1,019,697
|
|
Intersegment sales
|
|
28,705
|
|
|
146,880
|
|
|
2,183
|
|
|
—
|
|
|
4,921
|
|
|
—
|
|
|
(182,689
|
)
|
|
—
|
|
Net sales
|
|
148,346
|
|
|
336,429
|
|
|
336,144
|
|
|
107,458
|
|
|
276,876
|
|
|
(2,867
|
)
|
|
(182,689
|
)
|
|
1,019,697
|
|
Adjusted operating profit (loss) from continuing operations
|
|
(7,645
|
)
|
|
50,699
|
|
|
14,825
|
|
|
1,951
|
|
|
(2,293
|
)
|
|
(28,801
|
)
|
|
1,232
|
|
|
29,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended February 29, 2016
|
|
|
Americas
|
|
International
|
|
|
|
|
|
|
|
|
Recycling
|
|
Mills
|
|
Fabrication
|
|
Mill
|
|
Marketing and Distribution
|
|
Corporate
|
|
Eliminations
|
|
Continuing Operations
|
Net sales-unaffiliated customers
|
|
$
|
274,477
|
|
|
$
|
407,190
|
|
|
$
|
713,442
|
|
|
$
|
227,906
|
|
|
$
|
552,017
|
|
|
$
|
(476
|
)
|
|
$
|
—
|
|
|
$
|
2,174,556
|
|
Intersegment sales
|
|
53,076
|
|
|
313,771
|
|
|
5,016
|
|
|
—
|
|
|
7,896
|
|
|
—
|
|
|
(379,759
|
)
|
|
—
|
|
Net sales
|
|
327,553
|
|
|
720,961
|
|
|
718,458
|
|
|
227,906
|
|
|
559,913
|
|
|
(476
|
)
|
|
(379,759
|
)
|
|
2,174,556
|
|
Adjusted operating profit (loss) from continuing operations
|
|
(14,193
|
)
|
|
109,763
|
|
|
36,170
|
|
|
4,722
|
|
|
(4,462
|
)
|
|
(46,873
|
)
|
|
902
|
|
|
86,029
|
|
Total assets as of August 31, 2016*
|
|
188,873
|
|
|
798,481
|
|
|
659,165
|
|
|
372,492
|
|
|
564,068
|
|
|
1,034,053
|
|
|
(493,050
|
)
|
|
3,124,082
|
|
_________________
* Excludes total assets from discontinued operations of
$1.0 million
at
February 28, 2017
and
$6.8 million
at
August 31, 2016
.
Reconciliations of earnings from continuing operations to adjusted operating profit from continuing operations are provided below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(in thousands)
|
|
February 28, 2017
|
|
February 29, 2016
|
|
February 28, 2017
|
|
February 29, 2016
|
Earnings from continuing operations
|
|
$
|
29,639
|
|
|
$
|
10,849
|
|
|
$
|
36,813
|
|
|
$
|
36,482
|
|
Income taxes
|
|
9,990
|
|
|
2,064
|
|
|
12,643
|
|
|
13,836
|
|
Interest expense
|
|
12,442
|
|
|
16,625
|
|
|
25,740
|
|
|
34,929
|
|
Discounts on sales of accounts receivable
|
|
200
|
|
|
430
|
|
|
427
|
|
|
782
|
|
Adjusted operating profit from continuing operations
|
|
$
|
52,271
|
|
|
$
|
29,968
|
|
|
$
|
75,623
|
|
|
$
|
86,029
|
|