NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Commercial Metals Company ("CMC") and its subsidiaries (collectively, the "Company," "we," "our" or "us") manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses and metal recycling facilities in the United States ("U.S.") and Poland.
The Company has two reportable segments: North America and Europe.
North America
The North America segment is a vertically integrated network of recycling facilities, steel mills and fabrication operations located in the U.S. The recycling facilities process ferrous and nonferrous scrap metals (collectively known as "raw materials") for use by manufacturers of new metal products. The steel mills manufacture finished long steel products including reinforcing bar ("rebar"), merchant bar, light structural and other special sections as well as semi-finished billets for rerolling and forging applications (collectively known as "steel products"). The fabrication operations primarily manufacture fabricated rebar and steel fence posts (collectively known as "downstream products"). The strategy in North America is to optimize the Company's vertically integrated value chain to maximize profitability by obtaining the lowest possible input costs and highest possible selling prices. The Company operates the recycling facilities to provide low-cost scrap to the steel mills and the fabrication operations to optimize the steel mill volumes. The North America segment's products are sold primarily to steel mills and foundries, construction, fabrication and other manufacturing industries.
Europe
The Europe segment is a vertically integrated network of recycling facilities, an EAF mini mill and fabrication operations located in Poland. The steel products manufactured by this segment include rebar, merchant bar and wire rod as well as semi-finished billets. In addition, the downstream products manufactured by this segment's fabrication operations include fabricated rebar, fabricated mesh, assembled rebar cages and other fabricated rebar by-products. The Europe segment's products are sold primarily to fabricators, manufacturers, distributors and construction companies.
Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned and majority owned subsidiaries and certain variable interest entities ("VIEs") for which the Company is the primary beneficiary. Intercompany account balances and transactions have been eliminated.
Use of Estimates
The preparation of the Company's consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of net sales and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, income taxes, carrying value of inventory, acquisitions, goodwill, long-lived assets and contingencies. Actual results could differ significantly from these estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit and short-term, highly-liquid investments with original maturities of three months or less at the date of purchase.
Revenue Recognition and Allowance for Doubtful Accounts
Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration received or expected to be received in exchange for those goods or services. The Company's performance obligations arise from (i) sales of raw materials, steel products and downstream products and (ii) installation services performed by its fabrication operations. The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and freight are included in net sales, and the related costs are included in cost of goods sold. Net sales are presented net of taxes. Revenue related to raw materials and steel products in the North America and Europe segments and downstream products in the Europe segment is recognized at a point in time concurrent with the transfer of control, which usually occurs, depending on shipping terms, upon shipment or customer receipt. Revenue related to steel fence posts and other downstream products in the North America segment not discussed below is recognized equal to billing under an available practical expedient.
Each fabricated rebar contract sold by the North America segment represents a single performance obligation and revenue is recognized over time. For contracts where the Company provides fabricated rebar and installation services, revenue is recognized over time using an input measure of progress based on contract costs incurred to date compared to total estimated contract costs ("input measure"). This input measure provides a reasonable depiction of the Company’s progress towards satisfaction of the performance obligation as there is a direct relationship between costs incurred by the Company and the transfer of the fabricated rebar and installation services. Revenue from fabricated rebar contracts where the Company does not provide installation services is recognized over time using an output measure of progress based on tons shipped compared to total estimated tons ("output measure"). This output measure provides a reasonable depiction of the transfer of contract value to the customer, as there is a direct relationship between the units shipped by the Company and the transfer of the fabricated rebar. If total estimated costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to estimates related to net contract revenues, costs to complete or total planned quantity is recorded in the period in which such revisions are identified.
The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing and a liability when revenue is recognized subsequent to invoicing. Payment terms and conditions vary by contract type, although the Company generally requires customers to pay 30 days after the Company satisfies the performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts do not include a significant financing component.
The Company maintains an allowance for doubtful accounts for the accounts receivable we estimate will not be collected based on market conditions, customers' financial condition and other factors. Historically, these allowances have not been material. The Company reviews and sets credit limits for each customer. The Europe segment uses credit insurance to ensure payment in accordance with the terms of sale. Generally, collateral is not required. Approximately 17% and 13% of total receivables at August 31, 2021 and 2020, respectively, were secured by credit insurance.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the weighted average cost method.
Elements of cost in finished goods inventory in addition to the cost of material include depreciation, amortization, utilities, consumable production inputs, maintenance, production, wages and transportation costs. Additionally, the costs of departments that support production, including materials management and quality control, are allocated to inventory.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Maintenance is expensed as incurred. Leasehold improvements are amortized over the shorter of their estimated useful lives or the lease term. Depreciation and amortization is recorded on a straight-line basis over the following estimated useful lives:
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|
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|
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Buildings
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7
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to
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40
|
years
|
|
Land improvements
|
3
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to
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25
|
years
|
|
Leasehold improvements
|
3
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to
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15
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years
|
|
Equipment
|
3
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to
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25
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years
|
The Company evaluates impairment of its property, plant and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For each asset or group of assets held for use with indicators of impairment, the
Company compares the sum of the estimated future cash flows generated by the asset or group of assets with its associated net carrying value. If the net carrying value of the asset or group of assets exceeds estimated undiscounted future cash flows, the excess of the net carrying value over estimated fair value is charged to impairment loss. Properties held for sale are reported at the lower of their carrying amount or their estimated sales price, less estimated costs to sell.
Leases
The Company's leases are primarily for real property and equipment. The Company determines if an arrangement is a lease at inception of a contract if the terms state the Company has the right to direct the use of, and obtain substantially all the economic benefits from, a specific asset identified in the contract. The right-of-use ("ROU") assets represent the Company's right to use the underlying assets for the lease term, and the lease liabilities represent the obligation to make lease payments arising from the leases. The Company records its ROU assets in other noncurrent assets, its current lease liabilities in accrued expenses and other payables and its noncurrent lease liabilities in other noncurrent liabilities. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments to be made over the lease term. Certain of the Company's lease agreements contain options to extend the lease. The Company evaluates these options on a lease-by-lease basis, and if the Company determines it is reasonably certain to be exercised, the lease term includes the extension. The Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments, and lease expense is recognized on a straight-line basis over the lease term. The incremental borrowing rate is the rate of interest the Company could borrow on a collateralized basis over a similar term with similar payments. The Company does not record leases with an initial term of twelve months or less (“short-term leases”).
Certain of the Company's lease agreements include payments for certain variable costs not determinable upon lease commencement, including mileage, utilities, fuel and inflation adjustments. These variable lease payments are recognized in cost of goods sold and selling, general and administrative expenses, but are not included in the ROU asset or lease liability balances. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants.
Government Assistance
Government assistance, including non-monetary grants, herein collectively referred to as grants, are not recognized until there is reasonable assurance that the Company will comply with the conditions of the grant and the Company will receive the grant.
Generally, government grants fall into two categories: grants related to assets and grants related to income. Grants related to assets are government grants for the purchase, construction or other acquisition of long-lived assets. The Company accounts for grants related to assets as deferred income with the offset to an asset account, such as fixed assets, on the consolidated balance sheets. Non-monetary grants are recognized at fair value. The Company recognizes the deferred income on grants related to depreciable assets in profit or loss on a systematic basis over the useful life of the asset, which, consistent with the Company's fixed assets policy, is straight-line. The period over which grants are recognized depends on the terms of the agreement. Grants related to specific expenses already incurred are recognized in profit or loss in the period in which the grant becomes receivable. Grants related to non-depreciable assets may require the fulfillment of certain obligations. In such cases, these grants are recognized in profit or loss over the periods that bear the cost of meeting the obligations.
Grants related to income are any grants that are not considered grants related to assets, such as grants to compensate for certain expenses. Grants related to income are recognized as a reduction in the related expense in the period that the recognition criteria are met. See Note 9, New Markets Tax Credit Transactions.
Goodwill and Other Intangible Assets
Goodwill is tested for impairment at the reporting unit level annually and whenever events or circumstances indicate that the carrying value may not be recoverable.
To evaluate goodwill for impairment, the Company utilizes a quantitative test that compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is indicated in the amount that the carrying value exceeds the fair value of the reporting unit, not to exceed the goodwill value for the reporting unit. The Company's reporting units represent an operating segment or one level below an operating segment.
The Company estimates the fair value of its reporting units using a weighting of fair values derived from the income and market approaches. Under the income approach, the Company determines the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and
operating margins, taking into account industry and market conditions. The discount rate is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the reporting unit. The market approach estimates fair value based on market multiples of earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. See Note 6, Goodwill and Other Intangible Assets, for additional information on the Company's annual goodwill impairment analysis.
Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment charges are recorded on finite-lived intangible assets when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts.
Contingencies
The Company accrues for claims and litigation, including environmental investigation and remediation costs, when they are both probable and the amount can be reasonably estimated. Environmental costs are based upon estimates regarding the sites for which the Company will be responsible, the scope and cost of work to be performed at each site, the portion of costs that will be shared with other parties and the timing of remediation. Where timing and amounts cannot be reasonably determined, a range is estimated and the lower end of the range is recorded.
Stock-Based Compensation
The Company recognizes stock-based equity and liability awards at fair value. The fair value of each stock-based equity award is estimated at the grant date using the Black-Scholes or Monte Carlo pricing model. Total compensation cost of the stock-based equity award is amortized over the requisite service period using the accelerated method of amortization for grants with graded vesting or the straight-line method for grants with cliff vesting. Stock-based liability awards are measured at fair value at the end of each reporting period and will fluctuate based on the price of CMC common stock and performance relative to the targets.
Income Taxes
CMC and its U.S. subsidiaries file a consolidated federal income tax return. Deferred income taxes are provided for temporary differences between financial statement and income tax bases of assets and liabilities. The principal differences are described in Note 12, Income Tax. Benefits from income tax credits are reflected currently in earnings. The Company records income tax positions based on a more likely than not threshold that the tax positions will be sustained on examination by the taxing authorities having full knowledge of all relevant information. The Company classifies interest and any statutory penalties recognized on a tax position as income tax expense.
Foreign Currencies
The functional currency of the Company's Polish operations is the local currency, the Polish zloty ("PLN"). Translation adjustments are reported as a component of accumulated other comprehensive income or loss. Transaction gains (losses) from transactions denominated in currencies other than the functional currency related to continuing operations were immaterial for 2021, 2020 and 2019.
Derivative Financial Instruments
The Company recognizes derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. Derivatives that are not designated as hedges are adjusted to fair value through net earnings. Changes in the fair value of derivatives that are designated as hedges are recognized depending on the nature of the hedge. In the case of fair value hedges, changes are recognized as an offset against the change in fair value of the hedged balance sheet item. When the derivative is designated as a cash flow hedge and is highly effective, changes are recognized in other comprehensive income.
When a derivative instrument is sold, terminated, exercised or expires, the gain or loss is recorded in the consolidated statement of earnings for fair value hedges, and the cumulative unrealized gain or loss, which had been recognized in the statement of comprehensive income, is reclassified to the consolidated statement of earnings for cash flow hedges. Additionally, when hedged items are sold or extinguished, or the anticipated transaction being hedged is no longer expected to occur, the Company recognizes the gain or loss on the designated hedged financial instrument.
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. Level 1 represents unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 represents quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly. Level 3 represents valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Recently Adopted Accounting Pronouncements
On September 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), as amended, (“ASU 2016-02”), using the modified retrospective transition approach. ASU 2016-02 requires a lessee to recognize an ROU asset and a lease liability on its balance sheet for all leases with terms longer than twelve months. The Company’s financial statements for periods prior to September 1, 2019 were not modified for the application of this ASU. Upon adoption of ASU 2016-02, the Company recorded the following amounts associated with operating leases in its consolidated balance sheet at September 1, 2019: $113.4 million of ROU assets in other noncurrent assets, $30.9 million of lease liabilities in accrued expenses and other payables and $84.9 million of lease liabilities in other noncurrent liabilities. There was no impact to the opening balance of retained earnings as a result of implementing ASU 2016-02. The Company elected the package of three practical expedients available under the ASU. Additionally, the Company implemented appropriate changes to internal processes and controls to support recognition, subsequent measurement and disclosures.
NOTE 2. CHANGES IN BUSINESS
2019 Acquisition
On November 5, 2018 (the "Acquisition Date"), the Company completed an acquisition (the "Acquisition") of 33 rebar fabrication facilities in the U.S., as well as four EAF mini mills located in Knoxville, Tennessee, Jacksonville, Florida, Sayreville, New Jersey and Rancho Cucamonga, California from Gerdau S.A., hereinafter collectively referred to as the "Acquired Businesses." The total cash purchase price, including working capital adjustments made within the allowable one-year measurement period, was $701.2 million, and was funded through a combination of domestic cash on-hand and a term loan which was repaid during 2020. The purchase price paid was allocated between the acquired mills and fabrication facilities' assets acquired and liabilities assumed at fair value, and the purchase price accounting was finalized on November 5, 2019.
During 2020, the Company recorded a $32.1 million charge due to a working capital adjustment related to the Acquisition. This charge was recorded subsequent to the end of the allowable one-year measurement period in selling, general and administrative expenses on the consolidated statement of earnings in 2020. The related liability was recorded in accrued expenses and other payables in the consolidated balance sheet at August 31, 2020.
The results of operations of the Acquired Businesses were reflected in the Company’s consolidated financial statements from the Acquisition Date. The Acquired Businesses' net sales and earnings before income taxes included in the Company's consolidated statement of earnings and consolidated statement of comprehensive income in 2019 were $1.4 billion and $132.7 million, respectively.
Pro Forma Supplemental Information
Supplemental information on an unaudited pro forma basis is presented below as if the Acquisition occurred on September 1, 2017. The pro forma financial information is presented for comparative purposes only, based on significant estimates and assumptions, which the Company believes to be reasonable, but not necessarily indicative of future results of operations or the results that would have been reported if the Acquisition had been completed on September 1, 2017. These results were not used as part of management's analysis of the financial results and performance of the Company or the Acquired Businesses. These results are adjusted, where possible, for transaction and integration-related costs.
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|
|
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|
|
|
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|
|
(in thousands)
|
|
2019
|
|
|
|
Pro forma net sales (1)
|
|
$
|
6,033,908
|
|
|
|
|
Pro forma net earnings
|
|
162,255
|
|
|
|
__________________________________
(1) The impact of the amortization of unfavorable contract backlog has been removed from the pro forma net sales for the year ended August 31, 2019.
Other Acquisitions
On July 21, 2020, the Company acquired substantially all of the assets of AZZ's Continuous Galvanized Rebar business ("GalvaBar") located in Tulsa, Oklahoma. GalvaBar manufactures galvanized rebar with a zinc alloy coating produced through a proprietary process to provide corrosion protection and post-fabrication formability. This acquisition complements the Company's existing concrete reinforcement capabilities. The operating results of GalvaBar are included in the North America segment.
On February 3, 2020, the Company's subsidiary CMC Poland Sp. z.o.o. ("CMCP") acquired P.P.U. Ecosteel Sp. z.o.o. ("Ecosteel"), a steel mesh producer located in Zawiercie, Poland. This acquisition complements CMCP's existing mesh production and increases sales to other markets in Europe. The operating results of Ecosteel are included in the Europe segment.
The acquisitions of GalvaBar and Ecosteel were not material individually, or in the aggregate, to the Company's financial position or results of operations; therefore pro-forma operating results and other disclosures for the acquisitions are not presented as the results would not be significantly different than reported results.
Facility Closures and Dispositions
In October 2019, the Company closed the melting operations at its Rancho Cucamonga facility, which is part of the North America segment. In August 2020, the Company announced plans to sell its Rancho Cucamonga facility. Additionally, in September 2021, the Company ceased operations at a rebar fabrication facility adjacent to the Rancho Cucamonga facility. Due to these closures, the Company recorded $13.8 million and $9.8 million of expense related to asset impairments, severance, pension curtailment, environmental obligations and vendor agreement terminations in 2021 and 2020, respectively. The dispositions did not meet the criteria for discontinued operations. As of August 31, 2021, the associated assets of the Rancho Cucamonga facility and the rebar fabrication facility, comprised of property, plant and equipment, net, met the criteria for classification as held for sale in the Company's consolidated balance sheet. As such, the Company has classified $24.9 million within assets held for sale in the Company's consolidated balance sheet as of August 31, 2021.
On September 29, 2021, the Company entered into a definitive agreement to sell the assets associated with the facilities. Gross proceeds from the sale will total approximately $300 million. The transaction is subject to customary closing conditions and purchase price adjustments and is expected to close during the second quarter of 2022.
In 2020, the Company idled six facilities in its North America segment and recorded $6.2 million of expense related to severance and ROU and other long-lived asset impairments.
NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) ("AOCI") was comprised of the following:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Foreign Currency Translation
|
|
Unrealized Gain (Loss) on Derivatives
|
|
Defined Benefit Obligation
|
|
Total AOCI
|
|
Balance at September 1, 2018
|
|
$
|
(92,637)
|
|
|
$
|
1,356
|
|
|
$
|
(2,396)
|
|
|
$
|
(93,677)
|
|
|
Other comprehensive loss before reclassifications
|
|
(29,718)
|
|
|
(7)
|
|
|
(3,346)
|
|
|
(33,071)
|
|
|
Reclassification for (gain) loss
|
|
857
|
|
|
(301)
|
|
|
1,666
|
|
|
2,222
|
|
|
Income tax benefit
|
|
—
|
|
|
58
|
|
|
342
|
|
|
400
|
|
|
Net other comprehensive loss
|
|
(28,861)
|
|
|
(250)
|
|
|
(1,338)
|
|
|
(30,449)
|
|
|
Balance at August 31, 2019
|
|
(121,498)
|
|
|
1,106
|
|
|
(3,734)
|
|
|
(124,126)
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
33,559
|
|
|
(14,983)
|
|
|
(952)
|
|
|
17,624
|
|
|
Reclassification for (gain) loss
|
|
6
|
|
|
(375)
|
|
|
—
|
|
|
(369)
|
|
|
Income tax benefit
|
|
—
|
|
|
2,918
|
|
|
189
|
|
|
3,107
|
|
|
Net other comprehensive income (loss)
|
|
33,565
|
|
|
(12,440)
|
|
|
(763)
|
|
|
20,362
|
|
|
Balance at August 31, 2020
|
|
(87,933)
|
|
|
(11,334)
|
|
|
(4,497)
|
|
|
(103,764)
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
(17,747)
|
|
|
42,233
|
|
|
4,522
|
|
|
29,008
|
|
|
Reclassification for gain
|
|
—
|
|
|
(2,826)
|
|
|
—
|
|
|
(2,826)
|
|
|
Income tax expense
|
|
—
|
|
|
(6,292)
|
|
|
(946)
|
|
|
(7,238)
|
|
|
Net other comprehensive income (loss)
|
|
(17,747)
|
|
|
33,115
|
|
|
3,576
|
|
|
18,944
|
|
|
Balance at August 31, 2021
|
|
$
|
(105,680)
|
|
|
$
|
21,781
|
|
|
$
|
(921)
|
|
|
$
|
(84,820)
|
|
The items reclassified out of AOCI were not material for 2021, 2020 and 2019.
NOTE 4. REVENUE RECOGNITION
Revenue from Contracts with Customers
Each fabricated rebar contract sold by the North America segment represents a single performance obligation. Revenue from contracts where the Company provides fabricated rebar and installation services is recognized over time using an input measure and these contracts represented approximately 10% of net sales in the North America segment in 2021 and 12% of net sales in the North America segment in 2020 and 2019. Revenue from contracts where the Company does not provide installation services is recognized over time using an output measure and these contracts represented approximately 9%, 11% and 9% of net sales in the North America segment in 2021, 2020 and 2019, respectively. The remaining net sales in the North America segment were recognized at a point in time concurrent with the transfer of control or as amounts were billed to the customer under an available practical expedient.
The following table provides information about assets and liabilities from contracts with customers:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Contract assets (included in accounts receivable)
|
|
$
|
64,168
|
|
|
$
|
53,275
|
|
|
Contract liabilities (included in accrued expenses and other payables)
|
|
23,948
|
|
|
25,450
|
The entire contract liability as of August 31, 2020 was recognized in 2021.
Remaining Performance Obligations
As of August 31, 2021, a total of $799.3 million has been allocated to remaining performance obligations in the North America segment, related to those contracts where revenue is recognized using an input or output measure. Of this amount, the Company estimates that approximately 70% of the remaining performance obligations will be recognized during 2022. The duration of all other contracts in the North America and Europe segments are typically less than one year.
NOTE 5. INVENTORIES
The majority of the Company's inventories are in the form of semi-finished and finished goods. Under the Company’s business
model, products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined. As such, at August 31, 2021 and 2020, work in process inventories were not material. At August 31, 2021 and 2020, the Company's raw materials inventories were $286.1 million and $123.9 million, respectively.
Inventory write-downs were immaterial for 2021, 2020 and 2019.
NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
The following table details the changes in the carrying amount of goodwill by reportable segment:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
North America
|
|
Europe
|
|
Consolidated
|
|
Goodwill, gross
|
|
|
|
|
|
|
|
Balance at September 1, 2019
|
|
$
|
71,941
|
|
|
$
|
2,384
|
|
|
$
|
74,325
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
195
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2020
|
|
71,941
|
|
|
2,579
|
|
|
74,520
|
|
|
|
Acquisitions
|
|
—
|
|
|
1,909
|
|
|
1,909
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
(98)
|
|
|
(98)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2021
|
|
71,941
|
|
|
4,390
|
|
|
76,331
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment
|
|
|
|
|
|
|
|
Balance at September 1, 2019
|
|
(10,036)
|
|
|
(151)
|
|
|
(10,187)
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
(12)
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2020
|
|
(10,036)
|
|
|
(163)
|
|
|
(10,199)
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
5
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2021
|
|
(10,036)
|
|
|
(158)
|
|
|
(10,194)
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, net
|
|
|
|
|
|
|
|
Balance at September 1, 2019
|
|
61,905
|
|
|
2,233
|
|
|
64,138
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
183
|
|
|
183
|
|
|
Balance at August 31, 2020
|
|
61,905
|
|
|
2,416
|
|
|
64,321
|
|
|
|
Acquisitions
|
|
—
|
|
|
1,909
|
|
|
1,909
|
|
|
|
Foreign currency translation
|
|
—
|
|
|
(93)
|
|
|
(93)
|
|
|
Balance at August 31, 2021
|
|
$
|
61,905
|
|
|
$
|
4,232
|
|
|
$
|
66,137
|
|
As of August 31, 2021 and 2020, the excess of the fair value over the carrying value of each reporting unit was substantial. There were no goodwill impairment charges in 2021, 2020 or 2019.
The following intangible assets subject to amortization are included in other noncurrent assets on the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2021
|
|
August 31, 2020
|
|
(in thousands)
|
|
Gross
Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Patents
|
|
$
|
7,203
|
|
|
$
|
3,621
|
|
|
$
|
3,582
|
|
|
$
|
7,203
|
|
|
$
|
2,647
|
|
|
$
|
4,556
|
|
|
Customer base
|
|
6,079
|
|
|
5,629
|
|
|
450
|
|
|
6,111
|
|
|
4,900
|
|
|
1,211
|
|
|
Perpetual lease rights
|
|
4,395
|
|
|
860
|
|
|
3,535
|
|
|
4,766
|
|
|
866
|
|
|
3,900
|
|
|
Non-compete agreements
|
|
3,050
|
|
|
778
|
|
|
2,272
|
|
|
3,050
|
|
|
422
|
|
|
2,628
|
|
|
Brand name
|
|
838
|
|
|
585
|
|
|
253
|
|
|
838
|
|
|
501
|
|
|
337
|
|
|
Other
|
|
101
|
|
|
92
|
|
|
9
|
|
|
101
|
|
|
85
|
|
|
16
|
|
|
Total
|
|
$
|
21,666
|
|
|
$
|
11,565
|
|
|
$
|
10,101
|
|
|
$
|
22,069
|
|
|
$
|
9,421
|
|
|
$
|
12,648
|
|
In connection with the Acquisition, the Company recorded an unfavorable contract backlog liability of $110.2 million. The unfavorable contract backlog liability had a net carrying amount of $6.0 million at August 31, 2020 and was fully amortized at August 31, 2021. Amortization of the unfavorable contract backlog liability was $6.0 million, $29.4 million and $74.8 million for 2021, 2020 and 2019, respectively, and was recorded as an increase to net sales in the Company's consolidated statements of earnings.
Perpetual lease rights are amortized over an estimated useful life of 80 years. All other intangible assets with definitive lives are amortized over estimated useful lives ranging from 5 to 15 years. Excluding goodwill, the Company does not have any other significant intangible assets with indefinite lives. Amortization expense for intangible assets was $2.1 million in 2021 and 2020, and $2.2 million in 2019. Estimated amounts of amortization expense for the next five years are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2022
|
|
$
|
1,928
|
|
|
2023
|
|
1,473
|
|
|
2024
|
|
1,436
|
|
|
2025
|
|
1,078
|
|
|
2026
|
|
153
|
|
NOTE 7. LEASES
The following table presents the components of the total leased assets and lease liabilities and their classification in the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Classification in Consolidated Balance Sheets
|
|
August 31, 2021
|
|
August 31, 2020
|
|
Assets:
|
|
|
|
|
|
|
|
Operating assets
|
|
Other noncurrent assets
|
|
$
|
112,202
|
|
|
$
|
114,905
|
|
|
Finance assets
|
|
Property, plant and equipment, net
|
|
55,308
|
|
|
50,642
|
|
|
Total leased assets
|
|
|
|
$
|
167,510
|
|
|
$
|
165,547
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Operating lease liabilities:
|
|
|
|
|
|
|
|
Current
|
|
Accrued expenses and other payables
|
|
$
|
26,433
|
|
|
$
|
27,604
|
|
|
Long-term
|
|
Other noncurrent liabilities
|
|
93,409
|
|
|
95,810
|
|
|
Total operating lease liabilities
|
|
|
|
119,842
|
|
|
123,414
|
|
|
Finance lease liabilities:
|
|
|
|
|
|
|
|
Current
|
|
Current maturities of long-term debt and short-term borrowings
|
|
16,040
|
|
|
14,373
|
|
|
Long-term
|
|
Long-term debt
|
|
36,104
|
|
|
35,851
|
|
|
Total finance lease liabilities
|
|
|
|
52,144
|
|
|
50,224
|
|
|
Total lease liabilities
|
|
|
|
$
|
171,986
|
|
|
$
|
173,638
|
|
The components of lease cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Operating lease expense
|
|
$
|
32,752
|
|
|
$
|
35,611
|
|
|
Finance lease expense:
|
|
|
|
|
|
Amortization of assets
|
|
13,050
|
|
|
11,445
|
|
|
Interest on lease liabilities
|
|
2,213
|
|
|
1,792
|
|
|
Total finance lease expense
|
|
15,263
|
|
|
13,237
|
|
|
Variable and short-term lease expense
|
|
20,096
|
|
|
17,020
|
|
|
Total lease expense
|
|
$
|
68,111
|
|
|
$
|
65,868
|
|
The weighted average remaining lease term and discount rate for operating and finance leases are presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2021
|
|
August 31, 2020
|
|
Weighted average remaining lease term (years)
|
|
|
|
|
|
Operating leases
|
|
6.2
|
|
6.3
|
|
Finance leases
|
|
3.6
|
|
3.8
|
|
|
|
|
|
|
|
Weighted average discount rate
|
|
|
|
|
|
Operating leases
|
|
4.451
|
%
|
|
4.283
|
%
|
|
Finance leases
|
|
4.079
|
%
|
|
4.270
|
%
|
Cash flow and other information related to leases is included in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
Operating cash outflows from operating leases
|
|
$
|
31,686
|
|
|
$
|
36,063
|
|
|
Operating cash outflows from finance leases
|
|
2,228
|
|
|
1,720
|
|
|
Financing cash outflows from finance leases
|
|
16,016
|
|
|
12,774
|
|
|
|
|
|
|
|
|
ROU assets obtained in exchange for lease obligations:
|
|
|
|
|
|
Operating leases
|
|
$
|
25,888
|
|
|
$
|
43,642
|
|
|
Finance leases
|
|
18,006
|
|
|
26,573
|
|
Future maturities of lease liabilities at August 31, 2021 are presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Operating Leases
|
|
Finance Leases
|
|
2022
|
|
$
|
31,555
|
|
|
$
|
17,853
|
|
|
2023
|
|
26,726
|
|
|
15,632
|
|
|
2024
|
|
21,040
|
|
|
12,859
|
|
|
2025
|
|
16,308
|
|
|
7,256
|
|
|
2026
|
|
12,106
|
|
|
1,854
|
|
|
Thereafter
|
|
30,826
|
|
|
615
|
|
|
Total lease payments
|
|
138,561
|
|
|
56,069
|
|
|
Less imputed interest
|
|
18,719
|
|
|
3,925
|
|
|
Present value of lease liabilities
|
|
$
|
119,842
|
|
|
$
|
52,144
|
|
NOTE 8. CREDIT ARRANGEMENTS
Long-term debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Interest Rate as of August 31, 2021
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
|
2021
|
|
2020
|
|
2031 Notes
|
|
3.875%
|
|
$
|
300,000
|
|
|
$
|
—
|
|
|
2027 Notes
|
|
5.375%
|
|
300,000
|
|
|
300,000
|
|
|
2026 Notes
|
|
5.750%
|
|
—
|
|
|
350,000
|
|
|
2023 Notes
|
|
4.875%
|
|
330,000
|
|
|
330,000
|
|
|
Poland Term Loan
|
|
1.710%
|
|
49,726
|
|
|
40,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
1.050%
|
|
26,560
|
|
|
—
|
|
|
Other
|
|
5.100%
|
|
19,492
|
|
|
21,329
|
|
|
Finance leases
|
|
|
|
52,144
|
|
|
50,224
|
|
|
Total debt
|
|
|
|
1,077,922
|
|
|
1,092,266
|
|
|
Less debt issuance costs
|
|
|
|
8,141
|
|
|
8,581
|
|
|
Total amounts outstanding
|
|
|
|
1,069,781
|
|
|
1,083,685
|
|
|
Less current maturities of long-term debt and short-term borrowings
|
|
|
|
54,366
|
|
|
18,149
|
|
|
Long-term debt
|
|
|
|
$
|
1,015,415
|
|
|
$
|
1,065,536
|
|
In February 2021, the Company issued $300.0 million of 3.875% Senior Notes due February 2031 (the "2031 Notes"). Issuance costs associated with the 2031 Notes were $4.9 million in 2021. Interest on 2031 Notes is payable semiannually.
In May 2018, the Company issued $350.0 million of 5.750% Senior Notes due April 2026 (the "2026 Notes"). In February 2021, the Company accepted for purchase $77.8 million of the outstanding principal amount of the 2026 Notes through a cash
tender offer. Following the expiration of the cash tender offer on February 18, 2021, the Company redeemed the remaining outstanding principal amount of the 2026 Notes. In 2021, the Company recognized a $16.8 million loss on debt extinguishment related to the retirement of the 2026 Notes.
In July 2017, the Company issued $300.0 million of 5.375% Senior Notes due July 2027 (the "2027 Notes"). Interest on the 2027 Notes is payable semiannually.
In May 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 March 2021, the Company entered into a Fifth Amended and Restated Credit Agreement (as amended, the "Credit Agreement") with a revolving credit facility (the "Revolver") of $400.0 million and a maturity date in March 2026, replacing the Fourth Amended and Restated Credit Agreement with a revolving credit facility of $350.0 million and a maturity date in June 2022. The maximum availability under the Revolver can be increased to $650.0 million with bank approval. The Company's obligations under the Credit Agreement are collateralized by its North America inventory. The Credit Agreement's capacity includes a $50.0 million sub-limit for the issuance of stand-by letters of credit. The Company had no amounts drawn under the Revolver or the previous revolving credit facility at August 31, 2021 or 2020. The availability under the Revolver and the previous revolving credit facility was reduced by outstanding stand-by letters of credit of $3.0 million at August 31, 2021 and 2020.
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. Loans under the Credit Agreement bear interest based on the Eurocurrency rate, a base rate, or the LIBOR rate. At August 31, 2021, the Company's interest coverage ratio was 14.61 to 1.00 and the Company's debt to capitalization ratio was 0.31 to 1.00.
In August 2020, the Company entered into an agreement through its subsidiary, CMCP, which allowed for a delayed draw Term Loan facility (the "Poland Term Loan") in the maximum aggregate principal amount of up to PLN 250.0 million. The proceeds of the Poland Term Loan were used to finance an addition of a third rolling line in Poland, which was completed during 2021. At August 31, 2020, PLN 150.0 million, or $40.7 million, was outstanding. An incremental principal amount of PLN 50.0 million, or $13.7 million, was drawn in March 2021, resulting in a final maximum aggregate principal amount under the facility, PLN 190.5 million, or $49.7 million, outstanding, as of August 31, 2021. CMCP is required to make quarterly interest and principal payments on the Poland Term Loan with interest based on the Warsaw Interbank Offer Rate ("WIBOR") plus a margin. The Poland Term Loan has a maturity date of August 2026.
The Company also has credit facilities in Poland, through its subsidiary, CMCP, available to support working capital, short-term cash needs, letters of credit, financial assurance and other trade finance-related matters. During the third and fourth quarters of 2021, CMCP amended certain terms of its credit facilities in Poland increasing the total credit facilities from PLN 275.0 million, or $74.6 million, at August 31, 2020, to PLN 300.0 million, or $78.3 million as of August 31, 2021. Prior to the amendments, the credit facilities expired in March 2022. The amended credit facilities expire in March 2024 and August 2024 for PLN 250.0 million and PLN 50.0 million, respectively. At August 31, 2021 and 2020, no amounts were outstanding under these facilities. CMCP had no borrowings or repayments under its credit facilities in 2021, and $22.4 million borrowings and $22.4 million repayments under its credit facilities in 2020. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees and/or other financial assurance instruments, which totaled $5.7 million and $0.8 million at August 31, 2021 and 2020, respectively.
At August 31, 2021, the Company was in compliance with all of the covenants contained in its credit arrangements.
The scheduled maturities of the Company's long-term debt, excluding obligations related to finance leases, are included in the table below. See Note 7, Leases, for scheduled maturities of finance leases.
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2022
|
|
$
|
38,327
|
|
|
2023
|
|
345,070
|
|
|
2024
|
|
17,211
|
|
|
2025
|
|
15,062
|
|
|
2026
|
|
1,789
|
|
|
Thereafter
|
|
608,319
|
|
|
Total long-term debt, excluding finance leases
|
|
1,025,778
|
|
|
Less debt issuance costs
|
|
8,141
|
|
|
Total long-term debt outstanding, excluding finance leases
|
|
$
|
1,017,637
|
|
The Company capitalized $2.8 million, $2.5 million and $0.3 million of interest in the cost of property, plant and equipment during 2021, 2020 and 2019, respectively.
Accounts Receivable Facilities
In April 2021, the Company amended certain terms of the U.S. trade accounts receivable facility (the "U.S. Facility"), reducing the maximum facility from $200.0 million as of August 31, 2020, to $150.0 million, and extending the expiration date from November 2021 to March 2023. Under the U.S. Facility, CMC contributes, and certain of its subsidiaries transfer without recourse, certain eligible trade accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly-owned subsidiary of CMC. CMCRV is structured to be a bankruptcy-remote entity formed for the sole purpose of facilitating transfers of trade accounts receivable generated by the Company. CMCRV transfers the trade accounts receivable in their entirety to two financial institutions. Under the U.S. Facility, with the consent of both CMCRV and the program's administrative agent, the amount advanced by the financial institutions can be increased to a maximum of $300.0 million for all trade accounts receivable. The remaining portion of the purchase price of the trade accounts receivable takes the form of subordinated notes from the respective financial institutions. These notes will be satisfied from the ultimate collection of the trade accounts receivable after payment of certain fees and other costs. The U.S. Facility contains certain cross-default provisions whereby a termination event could occur if the Company defaulted under certain of its credit arrangements. The covenants contained in the receivables purchase agreement are consistent with the Credit Agreement. Advances taken under the U.S. Facility incur interest based on LIBOR plus a margin. The Company had no advance payments outstanding under the U.S. Facility at August 31, 2021 and 2020.
In addition to the U.S. Facility, the Company's subsidiary in Poland transfers trade accounts receivable to financial institutions without recourse (the "Poland Facility"). In August 2021, the Company amended certain terms of its Poland Facility, increasing the maximum allowable advance of eligible trade accounts receivable from PLN 198.0 million, or $53.7 million, as of August 31, 2020 to PLN 288.0 million, or $75.2 million, as of August 31, 2021. Advances taken under the Poland Program incur interest based on the WIBOR plus a margin. The Company had PLN 101.7 million, or $26.6 million, advance payments outstanding under the Poland Facility at August 31, 2021 and none at August 31, 2020.
The transfer of receivables under the U.S. and Poland Facilities do not qualify to be accounted for as sales. Therefore, any advances outstanding under these programs are recorded as debt on the Company's consolidated balance sheets.
NOTE 9. NEW MARKETS TAX CREDIT TRANSACTIONS
During 2016 and 2017, the Company entered into three New Markets Tax Credit (“NMTC”) transactions with U.S. Bancorp Community Development Corporation, a Minnesota corporation ("USBCDC"). The NMTC transactions relate to the construction and equipping of the micro mill in Durant, Oklahoma, as well as a rebar spooler and automated T-post shop located on the same site.
The transactions qualified through the New Markets Tax Credit program provided for in the Community Renewal Tax Relief Act of 2000 (the "NMTC Program"), as the micro mill, spooler and T-post shop are located in an eligible zone designated by the Internal Revenue Service ("IRS") and are considered eligible business activities for the NMTC Program. Under the NMTC Program, an investor that makes a capital investment, which, in turn, together with leverage loan sources, is used to make a Qualifying Equity Investment (a "QEI") in an entity that (i) qualifies as a Community Development Entity ("CDE"), (ii) has applied for and been granted an allocation of a portion of the total federal funds available to fund the credits (an "NMTC Allocation") and (iii) uses a minimum specified portion of the QEI to make a Qualified Low Income Community Investment up to the maximum amount of the CDE’s NMTC Allocation will be entitled to claim, over a period of seven years, federal nonrefundable tax credits in an amount equal to 39% of the QEI amount. NMTCs are subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code.
In general, the three NMTC transactions were structured similarly. USBCDC made a capital contribution to an investment fund and Commonwealth Acquisition Holdings, Inc., a wholly-owned subsidiary of the Company (“Commonwealth”), made a loan to the investment fund. The investment fund used the proceeds from the capital contribution and the loan to make a QEI into a CDE, which, in turn, makes loans of the QEIs to the operating subsidiaries of the Company with terms similar to the loans by Commonwealth.
The following table summarizes the key terms and conditions for each of the three NMTC transactions ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project
|
|
USBCDC Capital Contribution
|
|
Commonwealth Loan
|
|
Commonwealth Loan Rate / Maturity
|
|
Investment Fund(s)
|
|
QEI to CDE
|
|
CDE Loan
|
|
|
|
Micro mill
|
|
$17.7
|
|
$35.3
|
|
1.08% / December 24, 2045
|
|
USBCDC Investment Fund 156, LLC
|
|
$51.5
|
|
$50.7
|
|
|
|
Spooler
|
|
6.7
|
|
14.0
|
|
1.39% / July 26, 2042
|
|
Twain Investment Fund 249, LLC
|
|
20.0
|
|
19.4
|
|
|
|
T-post shop
|
|
5.0
|
|
10.4
|
|
1.16% / March 23, 2047
|
|
Twain Investment Fund 219, LLC Twain Investment Fund 222, LLC
|
|
15.0
|
|
14.7
|
|
|
By its capital contributions to the investment funds (exclusive of Twain Investment Fund 222) (collectively, the "Funds"), USBCDC is entitled to substantially all the benefits derived from the NMTCs. These transactions include a put/call provision whereby the Company may be obligated or entitled to repurchase USBCDC’s interest in the Funds at the end of a seven-year period, in the case of the USBCDC Investment Fund 156, LLC and Twain Investment Fund 249, LLC or an eight-year period, in the case of Twain Investment Fund 219, LLC (each of such periods, an "Exercise Period"). The Company believes USBCDC will exercise the put options following the end of the respective Exercise Periods. The value attributed to the put/call is immaterial. The Company is required to follow various regulations and contractual provisions that apply to the NMTC transactions. Non-compliance with applicable requirements could result in unrealized projected tax benefits and, therefore, could require the Company to indemnify USBCDC for any loss or recapture of NMTCs related to the financing until the Company's obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with these transactions.
The Company has determined that the Funds are VIEs, of which the Company is the primary beneficiary and has consolidated them in accordance with ASC Topic 810, Consolidation. USBCDC’s contributions are included in other noncurrent liabilities in the consolidated balance sheets. Direct costs incurred in structuring the transactions were deferred and are recognized as expense over each Exercise Period. Incremental costs to maintain the structures during the compliance periods are recognized as incurred.
The Company has determined that Twain Investment Fund 222 is a VIE, of which the Company is not the primary beneficiary and has therefore treated the QEI of $2.1 million as debt. The obligation represents the Company's maximum exposure to loss and is included in long-term debt in the consolidated balance sheets.
NOTE 10. DERIVATIVES
The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. 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 price volatility in these commodities, (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies and (iii) energy derivatives to mitigate the risk related to price volatility of electricity and natural gas.
The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At August 31, 2021, the notional values of the Company's foreign currency and commodity contract commitments were $389.5 million and $213.4 million, respectively. At August 31, 2020, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $138.5 million and $195.8 million, respectively.
The following table provides information regarding the Company's commodity contract commitments as of August 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
|
|
Long/Short
|
|
Total
|
|
Aluminum
|
|
Long
|
|
1,900
|
|
|
MT
|
|
|
|
|
|
|
|
|
|
Copper
|
|
Long
|
|
578
|
|
|
MT
|
|
Copper
|
|
Short
|
|
8,244
|
|
|
MT
|
|
Electricity
|
|
Long
|
|
1,867,000
|
|
|
MW(h)
|
__________________________________
MT = Metric Ton
MW(h) = Megawatt hour
The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. Certain foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges.
Commodity derivatives not designated as hedging instruments resulted in a loss, before income taxes, of $18.0 million and $6.0 million in 2021 and 2020, respectively, and a gain, before income taxes, of $1.7 million in 2019, recorded in cost of goods sold within the consolidated statements of earnings. Commodity derivatives accounted for as cash flow hedging instruments resulted in a net gain of $35.4 million and a net loss of $12.1 million recognized in the consolidated statements of comprehensive income in 2021 and 2020, respectively. As these derivatives were new in 2020 and did not begin to settle until 2021, there were no amounts recognized in the consolidated statements of comprehensive income in 2019. See Note 11, Fair Value, for the fair value of the Company's derivative instruments recorded in the consolidated balance sheets.
NOTE 11. FAIR VALUE
The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, for definitions of the three levels within the hierarchy.
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)
|
|
August 31, 2021
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investment deposit accounts (1)
|
|
$
|
441,297
|
|
|
$
|
441,297
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Commodity derivative assets (2)
|
|
27,323
|
|
|
910
|
|
|
—
|
|
|
26,413
|
|
|
Foreign exchange derivative assets (2)
|
|
2,537
|
|
|
—
|
|
|
2,537
|
|
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Commodity derivative liabilities (2)
|
|
1,352
|
|
|
1,352
|
|
|
—
|
|
|
—
|
|
|
Foreign exchange derivative liabilities (2)
|
|
1,880
|
|
|
—
|
|
|
1,880
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
(in thousands)
|
|
August 31, 2020
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investment deposit accounts (1)
|
|
$
|
449,824
|
|
|
$
|
449,824
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Commodity derivative assets (2)
|
|
202
|
|
|
202
|
|
|
—
|
|
|
—
|
|
|
Foreign exchange derivative assets (2)
|
|
1,484
|
|
|
—
|
|
|
1,484
|
|
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Commodity derivative liabilities (2)
|
|
19,000
|
|
|
3,993
|
|
|
—
|
|
|
15,007
|
|
|
Foreign exchange derivative liabilities (2)
|
|
459
|
|
|
—
|
|
|
459
|
|
|
—
|
|
_________________
(1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The investment portfolio mix can change each period based on the Company's assessment of investment options.
(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or the New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Derivatives classified as Level 3 are described below. Further discussion regarding the Company's use of derivative instruments is included in Note 10, Derivatives.
The fair value estimate of the Level 3 commodity derivative is based on an internally developed discounted cash flow model primarily utilizing unobservable inputs in which there is little or no market data. The Company forecasts future energy rates using a range of historical prices ("floating rate"). The following table summarizes the floating rate during 2021 and 2020, which is the only significant unobservable input used in the Company's discounted cash flow model:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Rate (PLN)
|
|
Year Ended August 31,
|
|
Low
|
|
High
|
|
Average
|
|
2020
|
|
151.66
|
|
|
243.88
|
|
|
200.70
|
|
|
2021
|
|
240.09
|
|
|
374.92
|
|
|
286.06
|
|
Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivative recognized in the consolidated statements of comprehensive income. The fluctuation in energy rates over time may cause volatility in the fair value estimate and is the primary reason for the unrealized gains and losses in other comprehensive income ("OCI") in 2021 and 2020.
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Level 3 Commodity Derivative
|
|
Balance at September 1, 2019
|
|
$
|
—
|
|
|
New commodity contract
|
|
1,083
|
|
|
|
|
|
|
Unrealized holding loss(1)
|
|
(16,090)
|
|
|
Reclassification for loss included in net earnings(2)
|
|
—
|
|
|
Balance at August 31, 2020
|
|
(15,007)
|
|
|
|
|
|
|
Unrealized holding gain(1)
|
|
43,798
|
|
|
Reclassification for gain included in net earnings(2)
|
|
(2,378)
|
|
|
Balance at August 31, 2021
|
|
$
|
26,413
|
|
_______________________________
(1) Unrealized holding gains/(losses) are included in OCI in the consolidated statements of comprehensive income.
(2) (Gains)/losses included in net earnings are recorded in cost of goods sold in the consolidated statements of earnings.
There were no material non-recurring fair value remeasurements in 2021 or 2020.
The carrying values of the Company's short-term items, including 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 consolidated balance sheets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2021
|
|
August 31, 2020
|
|
(in thousands)
|
|
Fair Value Hierarchy
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
2031 Notes (1)
|
|
Level 2
|
|
$
|
300,000
|
|
|
$
|
306,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2027 Notes (1)
|
|
Level 2
|
|
300,000
|
|
|
316,839
|
|
|
300,000
|
|
|
319,377
|
|
|
2023 Notes (1)
|
|
Level 2
|
|
330,000
|
|
|
348,071
|
|
|
330,000
|
|
|
345,335
|
|
|
Poland Term Loan (2)
|
|
Level 2
|
|
49,726
|
|
|
49,726
|
|
|
40,713
|
|
|
40,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings (2)
|
|
Level 2
|
|
26,560
|
|
|
26,560
|
|
|
—
|
|
|
—
|
|
|
2026 Notes (1)
|
|
Level 2
|
|
—
|
|
|
—
|
|
|
350,000
|
|
|
367,374
|
|
__________________________________
(1) The fair value of the Notes were determined based on indicated market values.
(2) The Poland Term Loan and short-term borrowings contain variable interest rates and carrying value approximates fair value.
NOTE 12. INCOME TAX
The components of earnings from continuing operations before income taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
United States
|
|
$
|
413,616
|
|
|
$
|
334,170
|
|
|
$
|
194,986
|
|
|
Foreign
|
|
120,402
|
|
|
36,608
|
|
|
73,474
|
|
|
Total
|
|
$
|
534,018
|
|
|
$
|
370,778
|
|
|
$
|
268,460
|
|
The income taxes (benefit) included in the consolidated statements of earnings were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Current:
|
|
|
|
|
|
|
|
United States
|
|
$
|
113,696
|
|
|
$
|
26,901
|
|
|
$
|
621
|
|
|
Foreign
|
|
25,642
|
|
|
7,588
|
|
|
14,006
|
|
|
State and local
|
|
19,458
|
|
|
7,133
|
|
|
2,892
|
|
|
Current taxes
|
|
158,796
|
|
|
41,622
|
|
|
17,519
|
|
|
Deferred:
|
|
|
|
|
|
|
|
United States
|
|
(10,563)
|
|
|
45,771
|
|
|
46,922
|
|
|
Foreign
|
|
(2,512)
|
|
|
(43)
|
|
|
490
|
|
|
State and local
|
|
(24,568)
|
|
|
5,832
|
|
|
4,908
|
|
|
Deferred taxes
|
|
(37,643)
|
|
|
51,560
|
|
|
52,320
|
|
|
Total income taxes on income
|
|
121,153
|
|
|
93,182
|
|
|
69,839
|
|
|
Income taxes on discontinued operations
|
|
—
|
|
|
706
|
|
|
158
|
|
|
Income taxes on continuing operations
|
|
$
|
121,153
|
|
|
$
|
92,476
|
|
|
$
|
69,681
|
|
A reconciliation of the federal statutory rate to the Company's effective income tax rate from continuing operations, including material items impacting the effective income tax rate, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Income tax expense at statutory rate
|
|
$
|
112,144
|
|
$
|
77,863
|
|
$
|
56,377
|
|
Change in valuation allowance
|
|
37,092
|
|
968
|
|
36,167
|
|
Foreign tax impairment on valuation of subsidiaries (1)
|
|
(29,866)
|
|
5,084
|
|
(29,697)
|
|
Global intangible low-taxed income (2)
|
|
17,263
|
|
1,252
|
|
1,541
|
|
Nontaxable foreign interest (1)
|
|
(14,617)
|
|
8
|
|
(9,799)
|
|
State and local taxes (3)
|
|
(3,838)
|
|
9,895
|
|
6,085
|
|
TCJA - Toll charge and related foreign tax credits
|
|
—
|
|
—
|
|
7,410
|
|
Other
|
|
2,975
|
|
(2,594)
|
|
1,597
|
|
Income tax expense on continuing operations
|
|
$
|
121,153
|
|
$
|
92,476
|
|
$
|
69,681
|
|
Effective income tax rate from continuing operations
|
|
22.7
|
%
|
|
24.9
|
%
|
|
26.0
|
%
|
__________________________________
(1) Fully offset by a valuation allowance.
(2) 2021 includes the tax effect of a gain recognized in connection with a global tax restructuring.
(3) State and local taxes in 2021 includes a $19.9 million benefit related to the release of certain state valuation allowances.
The Company plans to repatriate the current and future earnings from the Europe segment and recorded an immaterial amount of tax expense related to such future distributions. The Company considers all undistributed earnings of its non-U.S. subsidiaries prior to August 31, 2019 to be indefinitely reinvested and has not recorded deferred tax liabilities on such earnings.
The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Deferred tax assets:
|
|
|
|
|
|
Net operating losses and credits
|
|
$
|
291,145
|
|
|
$
|
283,416
|
|
|
Deferred compensation and employee benefits
|
|
64,693
|
|
|
32,293
|
|
|
ROU operating lease liabilities
|
|
28,915
|
|
|
29,619
|
|
|
Reserves and other accrued expenses
|
|
13,846
|
|
|
30,371
|
|
|
Other
|
|
3,817
|
|
|
3,315
|
|
|
Total deferred tax assets
|
|
402,416
|
|
|
379,014
|
|
|
Valuation allowance for deferred tax assets
|
|
(278,099)
|
|
|
(281,849)
|
|
|
Deferred tax assets, net
|
|
124,317
|
|
|
97,165
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
Property, plant and equipment
|
|
(180,925)
|
|
|
(185,595)
|
|
|
ROU operating lease assets
|
|
(26,950)
|
|
|
(28,201)
|
|
|
Other
|
|
(8,940)
|
|
|
(2,420)
|
|
|
Total deferred tax liabilities
|
|
(216,815)
|
|
|
(216,216)
|
|
|
Net deferred tax liabilities
|
|
$
|
(92,498)
|
|
|
$
|
(119,051)
|
|
Net operating losses giving rise to deferred tax assets consist of $428.3 million of state net operating losses and $961.6 million of foreign net operating losses that expire in varying amounts beginning in 2022 (with certain amounts having indefinite carryforward periods). These assets will be reduced as income tax expense is recognized in future periods.
The Company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. The Company's valuation allowances primarily relate to net operating loss and credit carryforwards in certain state and foreign jurisdictions for which utilization is uncertain. During fiscal 2021, the Company recorded a net $3.8 million decrease in valuation allowances. As of August 31, 2021, management determined that there is sufficient positive evidence to release $19.9 million of valuation allowances for certain state jurisdictions where deferred tax assets are now more likely than not to be realized. No change was made with respect to the realizability of foreign deferred tax assets, causing the Company to increase such valuation allowances by $17.1 million during fiscal 2021.
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Balance at September 1,
|
|
$
|
8,652
|
|
|
$
|
8,652
|
|
|
$
|
3,121
|
|
|
|
|
|
|
|
|
|
|
Change for tax positions of prior years
|
|
—
|
|
|
—
|
|
|
5,531
|
|
|
Reductions due to lapse of statute of limitations
|
|
(3,121)
|
|
|
—
|
|
|
—
|
|
|
Balance at August 31, (1)
|
|
$
|
5,531
|
|
|
$
|
8,652
|
|
|
$
|
8,652
|
|
__________________________________
(1)The full balance of unrecognized income tax benefits in each year, if recognized, would have impacted the Company’s effective income tax rate at the end of each respective year.
At August 31, 2021 and 2020, accrued interest and penalties related to uncertain tax positions was not material.
The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of all fiscal years that are open to examination.
U.S. Federal — 2018 and forward
U.S. States — 2017 and forward
Foreign — 2014 and forward
NOTE 13. STOCK-BASED COMPENSATION PLANS
The Company's stock-based compensation plans provide for the issuance of incentive and nonqualified stock options, restricted stock awards and performance-based awards. The Compensation Committee of CMC's Board of Directors (the "Compensation Committee") approves all awards that are granted under the Company's stock-based compensation plans. Stock-based compensation expense for 2021, 2020 and 2019 of $43.7 million, $31.9 million and $25.1 million, respectively, was primarily included in selling, general and administrative expenses on the Company's consolidated statements of earnings. As of August 31, 2021, total unrecognized compensation cost related to unvested stock-based compensation arrangements was $13.7 million, which is expected to be recognized over a weighted average period of three years.
The following table summarizes the total awards granted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Awards/Units
|
|
Performance
Awards
|
|
2021 grants
|
|
|
|
847,872
|
|
|
406,098
|
|
|
2020 grants
|
|
|
|
997,454
|
|
|
536,022
|
|
|
2019 grants
|
|
|
|
889,238
|
|
|
483,984
|
|
As of August 31, 2021, the Company had 5,264,516 shares of common stock available for future grants.
Restricted Stock Units
Restricted stock units issued under the Company's stock-based compensation plans may not be sold, transferred, pledged or assigned until service-based restrictions lapse. The restricted stock units generally vest and are converted to shares of the Company's common stock in three equal installments on each of the first three anniversaries of the date of grant,. Generally, upon termination of employment, restricted stock units that have not vested are forfeited. Other than awards granted to certain executives, which continue to vest following qualifying retirement, a pro-rata portion of the unvested restricted stock awarded will vest and become payable upon death, disability or qualifying retirement.
The estimated fair value of the restricted stock units is based on the closing price of the Company's common stock on the date of grant, discounted for the expected dividend yield through the vesting period. Compensation cost related to the restricted stock units is recognized ratably over the service period and is included in equity on the Company's consolidated balance sheets.
Performance Stock Units
Performance stock units issued under the Company's stock-based compensation plans may not be sold, transferred, pledged or assigned until service-based restrictions lapse and any performance objectives have been attained as established by the Compensation Committee. Recipients of these awards generally must be actively employed by and providing services to the Company on the last day of the performance period in order to receive an award payout. Other than awards granted to certain executives, which continue to vest following qualifying retirement, a pro-rata portion of the performance stock units will vest and become payable at the end of the performance period upon death, disability or qualifying retirement.
Compensation cost for performance stock units is accrued based on the probable outcome of specified performance conditions, net of estimated forfeitures. The Company accrues compensation cost if it is probable that the performance conditions will be met. The Company reassesses the probability of meeting the specified performance conditions at the end of each reporting period and adjusts compensation cost, as necessary, based on the probability of achieving the performance conditions. If the performance conditions are not met at the end of the performance period, the Company reverses the related compensation cost.
Performance targets established by the Compensation Committee for performance stock units awarded in 2021, 2020 and 2019 were weighted 75% based on the Company's cumulative EBITDA targets and positive return on invested capital for the fiscal year in which the awards were granted and the succeeding two fiscal years, as approved by CMC's Board of Directors in the respective year's business plan, and 25% based on a three year relative total stockholder return metric. Performance stock units awarded will be settled in shares of the Company's common stock. Award payouts range from a threshold of 50% to a maximum of 200% for each portion of the target awards. The performance stock units awarded in 2021 and 2020 associated with the cumulative EBITDA targets have been classified as liability awards since the final EBITDA target will not be set until the third year of the performance period. Consequently, these awards were included in accrued expenses and other payables on the Company's consolidated balance sheets. The fair value of these performance stock units is remeasured each reporting period and is recognized ratably over the service period. The performance stock units associated with the total stockholder return
metric were valued at fair value on the date of grant using the Monte Carlo pricing model and were included in equity on the Company's consolidated balance sheets.
Information for restricted stock units and performance stock units is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Weighted Average
Fair Value
|
|
Outstanding as of September 1, 2018
|
|
1,800,718
|
|
|
$
|
16.82
|
|
|
Granted
|
|
1,505,449
|
|
|
17.75
|
|
|
Vested
|
|
(992,167)
|
|
|
20.09
|
|
|
Forfeited
|
|
(34,432)
|
|
|
17.90
|
|
|
Outstanding as of August 31, 2019
|
|
2,279,568
|
|
|
15.99
|
|
|
Granted
|
|
1,529,212
|
|
|
18.32
|
|
|
Vested
|
|
(1,417,552)
|
|
|
18.80
|
|
|
Forfeited
|
|
(145,591)
|
|
|
21.35
|
|
|
Outstanding as of August 31, 2020
|
|
2,245,637
|
|
|
18.79
|
|
|
Granted
|
|
1,519,153
|
|
|
20.49
|
|
|
Vested
|
|
(1,451,846)
|
|
|
17.62
|
|
|
Forfeited
|
|
(122,149)
|
|
|
20.19
|
|
|
Outstanding as of August 31, 2021
|
|
2,190,795
|
|
|
$
|
20.67
|
|
The total fair value of shares vested during 2021, 2020 and 2019 was $25.6 million, $26.7 million and $19.9 million, respectively.
The Company granted 323,880 and 425,915 equivalent shares of restricted stock units and performance stock units accounted for as liability awards during 2021 and 2020, respectively. As of August 31, 2021, the Company had 711,148 equivalent shares of awards outstanding and expects 675,590 equivalent shares to vest.
Stock Purchase Plan
Almost all U.S. resident employees may participate in the Company's employee stock purchase plan. Each eligible employee may purchase up to 500 shares annually. The Board of Directors established a 15% purchase discount based on market prices on specified dates for 2021, 2020 and 2019. Yearly activity of the stock purchase plan was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
|
|
2021
|
|
2020
|
|
2019
|
|
Shares subscribed
|
|
347,510
|
|
|
347,870
|
|
|
446,950
|
|
|
Price per share
|
|
$
|
17.14
|
|
|
$
|
18.80
|
|
|
$
|
13.80
|
|
|
Shares purchased
|
|
292,690
|
|
|
365,990
|
|
|
226,860
|
|
|
Price per share
|
|
$
|
18.80
|
|
|
$
|
13.80
|
|
|
$
|
17.84
|
|
|
Shares available for future issuance
|
|
1,950,664
|
|
|
|
|
|
NOTE 14. EMPLOYEES' RETIREMENT PLANS
Substantially all employees in the U.S. are covered by a defined contribution 401(k) retirement plan. The tax qualified defined contribution plan is maintained, and contributions are made, in accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Company also provides certain eligible executives benefits pursuant to its Benefit Restoration Plan ("BRP") equal to amounts that would have been available under the tax qualified ERISA plan, but were subject to the limitations of ERISA, tax laws and regulations. Company expenses for these plans, a portion of which are discretionary, are recorded in both cost of goods sold and selling, general and administrative expenses, and totaled $47.0 million, $37.3 million and $32.9 million for 2021, 2020 and 2019, respectively.
The deferred compensation liability under the BRP was $51.2 million and $47.0 million at August 31, 2021 and 2020, respectively, with $45.4 million and $40.6 million, respectively, included in other long-term liabilities on the Company's consolidated balance sheets. At August 31, 2021 and 2020, $5.8 million and $6.4 million, respectively, of the deferred
compensation liability related to the BRP was included in accrued expenses and other payables on the Company's consolidated balance sheets. Though under no obligation to fund the BRP, the Company has segregated assets in a trust with a value of $69.4 million and $60.8 million at August 31, 2021 and 2020, respectively, and such assets were included in other noncurrent assets on the Company's consolidated balance sheets. The net holding gain on these segregated assets was $10.1 million, $6.0 million and $3.3 million for 2021, 2020 and 2019, respectively, and was included in net sales in the Company's consolidated statements of earnings.
In 2019, the Company acquired a partially funded defined benefit pension plan, from Gerdau S.A., (the "Plan") as part of the Acquisition. Upon closing of the Acquisition, the excess of projected Plan benefit obligations over the Plan assets was recognized as a liability and previously existing deferred actuarial gains and losses and unrecognized service costs or benefits were eliminated. Pension benefits associated with the Plan are generally based on each participant’s years of service, compensation and age at retirement or termination. The Plan was closed to new participants prior to the Acquisition.
As a result of the closure of the Rancho Cucamonga facility, the Company recorded pension curtailment loss and special termination benefits of $3.2 million in 2020 and no such expense in 2021. For further details, refer to Note 2, Changes in Business.
The following tables include a reconciliation of the beginning and ending balances of pension benefit obligation and the fair value of Plan assets and the related amounts recognized in the Company’s consolidated balance sheets as of August 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Benefit obligation at beginning of year
|
|
$
|
36,130
|
|
|
$
|
31,661
|
|
|
|
|
|
|
|
|
Service cost
|
|
—
|
|
|
335
|
|
|
Interest cost
|
|
724
|
|
|
892
|
|
|
Curtailment loss
|
|
—
|
|
|
1,314
|
|
|
Special termination benefits
|
|
—
|
|
|
1,918
|
|
|
Actuarial (gain) loss
|
|
(1,557)
|
|
|
1,280
|
|
|
Benefits paid
|
|
(1,610)
|
|
|
(1,270)
|
|
|
Benefit obligation at end of year
|
|
$
|
33,687
|
|
|
$
|
36,130
|
|
|
|
|
|
|
|
|
Fair value of Plan assets at beginning of year
|
|
$
|
29,201
|
|
|
$
|
23,435
|
|
|
|
|
|
|
|
|
Actual return on Plan assets
|
|
4,042
|
|
|
2,248
|
|
|
Administrative expenses
|
|
(52)
|
|
|
(496)
|
|
|
Employer contributions
|
|
2,545
|
|
|
5,284
|
|
|
Benefits paid
|
|
(1,610)
|
|
|
(1,270)
|
|
|
Fair value of Plan assets at end of year
|
|
34,126
|
|
|
29,201
|
|
|
Funded status at end of year (net asset (liability) recognized in the consolidated balance sheets as of August 31,)
|
|
$
|
439
|
|
|
$
|
(6,929)
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive income as of August 31,
|
|
|
|
|
|
Net actuarial (gain) loss
|
|
$
|
(1,110)
|
|
|
$
|
3,234
|
|
|
|
|
|
|
|
Weighted average assumptions used to determine benefit obligations as of August 31, 2021 and 2020 are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Effective discount rate for benefit obligations
|
|
2.9
|
%
|
|
2.8
|
%
|
|
Expected long-term rate of return on Plan assets
|
|
4.8
|
%
|
|
5.0
|
%
|
|
|
|
|
|
|
The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels.
The service cost component of net periodic benefit cost is recorded in cost of goods sold within the consolidated statements of
earnings and other components of net periodic benefit costs are recorded in selling, general and administrative expenses within the consolidated statements of earnings. Components of net periodic benefit cost and other supplemental information are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Service cost
|
|
$
|
—
|
|
|
$
|
335
|
|
|
$
|
354
|
|
|
Expected administrative expenses
|
|
290
|
|
|
450
|
|
|
250
|
|
|
Interest cost
|
|
724
|
|
|
892
|
|
|
926
|
|
|
Expected return on Plan assets
|
|
(1,493)
|
|
|
(1,334)
|
|
|
(1,008)
|
|
|
Special termination benefits
|
|
—
|
|
|
1,918
|
|
|
—
|
|
|
Settlements, curtailments and other
|
|
—
|
|
|
1,314
|
|
|
—
|
|
|
Total net periodic benefit (gain) cost
|
|
$
|
(479)
|
|
|
$
|
3,575
|
|
|
$
|
522
|
|
|
|
|
|
|
|
|
|
|
Other changes in Plan assets and benefit obligations recognized in other comprehensive income
|
|
|
|
|
|
|
|
Net actuarial (gain) loss arising during measurement period
|
|
$
|
(4,344)
|
|
|
$
|
3,642
|
|
|
$
|
2,823
|
|
|
Amortization of net actuarial gain
|
|
—
|
|
|
(3,232)
|
|
|
—
|
|
|
Total recognized in other comprehensive income
|
|
$
|
(4,344)
|
|
|
$
|
410
|
|
|
$
|
2,823
|
|
|
|
|
|
|
|
|
|
Weighted average assumptions used to determine net periodic benefit cost for 2021, 2020 and 2019 are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020(1)
|
|
2019
|
|
Effective rate for interest on benefit obligations
|
|
2.1
|
%
|
|
2.8
|
%
|
|
4.3
|
%
|
|
Effective rate for service cost
|
|
N/A
|
|
3.3
|
%
|
|
4.7
|
%
|
|
Expected long-term rate of return
|
|
5.0
|
%
|
|
6.0
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
__________________________________
(1)Certain weighted average assumptions used to determine net periodic benefit cost for 2020 were remeasured at an interim date. This remeasurement resulted in an effective rate for interest on benefit obligations of 2.9% and an effective rate for service cost of 3.5%.
The Company determines the discount rate used to measure liabilities as of the August 31 measurement date for the Plan, which is also the date used for the related annual measurement assumptions. The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year. The Company sets its rate to reflect the yield of a portfolio of high quality corporate bonds that would produce cash flows sufficient in timing and amount to settle projected future benefits.
The expected return assumption is based on the strategic asset allocation of the Plan and long-term capital market return expectations.
The Company measures service cost and interest cost separately using the full yield curve approach applied to each corresponding obligation. Service costs are determined based on duration-specific spot rates applied to the service cost cash flows. The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments. The full yield curve approach does not affect the measurement of the total benefit obligations.
The Company does not expect to make any contributions in 2022. Future contributions will depend on market conditions, interest rates and other factors.
Plan Assets
Plan assets consist primarily of public equity, corporate and government bonds. The principal investment objectives are to maximize total return without assuming undue risk exposure. Each asset class has broadly diversified characteristics. Asset and benefit obligation forecasting studies are conducted periodically, generally every two to three years, or when significant changes have occurred in market conditions, benefits, participant demographics or funded status.
The Plan's weighted average asset targets and actual allocations as a percentage of Plan assets, including the notional exposure of future contracts by asset categories, are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Assets
|
|
|
|
Target Percent
|
|
2021
|
|
2020
|
|
Fixed income securities
|
|
60%
|
—
|
65%
|
|
64.1%
|
|
48.1%
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
15.0
|
—
|
20.0
|
|
18.5
|
|
26.9
|
|
International
|
|
5.0
|
—
|
10.0
|
|
9.1
|
|
13.1
|
|
Mutual funds
|
|
5.0
|
—
|
10.0
|
|
6.5
|
|
10.1
|
|
Cash and other
|
|
—
|
—
|
5.0
|
|
1.8
|
|
1.8
|
|
Total
|
|
|
|
|
|
100.0%
|
|
100.0%
|
Investment Valuation
Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date.
Investments in securities traded on a national securities exchange are valued at the last reported sales price on the final business day of the year.
Fixed income securities are valued at the yields currently available on comparable securities of issues with similar credit ratings.
Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined based on average cost. Interest income is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date.
Non-interest bearing cash is valued at cost, which approximates fair value.
Fair Value Measurements
The following table sets forth the Plan assets by asset class as of August 31, 2021 and 2020. All securities are traded on a national securities exchange and therefore are Level 1 assets in the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at Measurement Date
|
|
|
|
(in thousands)
|
|
August 31, 2021
|
|
August 31, 2020
|
|
|
|
|
|
|
|
Fixed income securities
|
|
$
|
21,890
|
|
|
$
|
14,084
|
|
|
|
|
|
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
6,317
|
|
|
7,849
|
|
|
|
|
|
|
|
|
International
|
|
3,094
|
|
|
3,816
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
2,230
|
|
|
2,937
|
|
|
|
|
|
|
|
|
Total equity securities
|
|
11,641
|
|
|
14,602
|
|
|
|
|
|
|
|
|
Cash and other
|
|
595
|
|
|
515
|
|
|
|
|
|
|
|
|
Fair value of Plan assets
|
|
$
|
34,126
|
|
|
$
|
29,201
|
|
|
|
|
|
|
|
Future Pension Benefit Payments
The following table provides the estimated pension benefit payments that are payable from the Plan to participants in future years:
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2022
|
|
$
|
1,723
|
|
|
2023
|
|
1,736
|
|
|
2024
|
|
1,746
|
|
|
2025
|
|
1,733
|
|
|
2026
|
|
1,717
|
|
|
2027 through 2031
|
|
8,581
|
|
NOTE 15. CAPITAL STOCK
Treasury Stock
During the first quarter of 2015, the Board of Directors authorized a share repurchase program under which the Company may repurchase up to $100.0 million of the Company's outstanding common stock. The share repurchase program does not require the Company to acquire any dollar amount or number of shares of common stock and may be modified, suspended, extended or terminated at any time without prior notice. During 2021, 2020 and 2019, the Company did not purchase any shares of common stock. The Company had remaining authorization to purchase $27.6 million of common stock at August 31, 2021.
On October 13, 2021, the Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $350.0 million of the Company's outstanding common stock. This new program replaces the previously existing program, which has been terminated by the Board of Directors in connection with the approval of the new program.
Preferred Stock
The Company has 2,000,000 shares of preferred stock, par value of $1.00 per share, authorized. The Company may issue preferred stock in series, and the shares of each series may have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. There are no shares of preferred stock outstanding.
NOTE 16. EARNINGS PER SHARE
The calculations of basic and diluted earnings per share from continuing operations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
|
|
2021
|
|
2020
|
|
2019
|
|
Earnings from continuing operations
|
|
$
|
412,865
|
|
|
$
|
278,302
|
|
|
$
|
198,779
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
Shares outstanding for basic earnings per share
|
|
120,338,357
|
|
|
118,921,854
|
|
|
117,834,558
|
|
|
Basic earnings per share from continuing operations
|
|
$
|
3.43
|
|
|
$
|
2.34
|
|
|
$
|
1.69
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
Shares outstanding for basic earnings per share
|
|
120,338,357
|
|
|
118,921,854
|
|
|
117,834,558
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
Stock-based incentive/purchase plans
|
|
1,645,140
|
|
|
1,387,767
|
|
|
1,290,070
|
|
|
Shares outstanding for diluted earnings per share
|
|
121,983,497
|
|
|
120,309,621
|
|
|
119,124,628
|
|
|
Diluted earnings per share from continuing operations
|
|
$
|
3.38
|
|
|
$
|
2.31
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares not included in the table above were immaterial for all periods presented. Shares of the Company's restricted stock are 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.
NOTE 17. COMMITMENTS AND CONTINGENCIES
In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. At August 31, 2021 and 2020, the Company had $0.5 million and $0.7 million, respectively, accrued for cleanup and remediation costs at certain sites in response to statues enforced by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). Total accrued environmental liabilities, including CERCLA sites, were $7.1 million and $3.4 million as of August 31, 2021 and 2020, respectively, of which $2.3 million and $2.7 million were classified as other long-term liabilities as of August 31, 2021 and 2020, respectively. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, amounts accrued could vary significantly from amounts paid.
NOTE 18. ACCRUED EXPENSES AND OTHER PAYABLES
Significant accrued expenses and other payables were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
Salaries and incentive compensation
|
|
$
|
166,332
|
|
|
$
|
164,442
|
|
|
Taxes other than income taxes
|
|
57,548
|
|
|
43,362
|
|
|
Worker's compensation and general liability insurance
|
|
38,618
|
|
|
39,375
|
|
NOTE 19. OPERATING 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 ("CODM") to manage the business, make decisions about resources to be allocated to the segments and to assess performance. The Company's CODM is identified as the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer.
The Company structures its business into the following two operating and reportable segments: North America and Europe. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's BRP and short-term investments, expenses of the Company's corporate headquarters, interest expense related to its long-term debt and intercompany eliminations. Certain corporate administrative expenses are allocated to the segments based upon the nature of the expense. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales and the accounting policies of the segments.
The CODM uses adjusted EBITDA from continuing operations ("adjusted EBITDA") to evaluate segment performance and allocate resources. Adjusted EBITDA is the sum of the Company's earnings from continuing operations before interest expense, income taxes, depreciation and amortization expense and impairment expense.
The following table summarizes certain financial information from continuing operations by reportable segment and Corporate and Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
North America
|
|
Europe
|
|
Corporate and Other
|
|
Continuing Operations
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,670,976
|
|
|
$
|
1,049,059
|
|
|
$
|
9,725
|
|
|
$
|
6,729,760
|
|
|
Adjusted EBITDA
|
|
746,594
|
|
|
148,258
|
|
|
(140,568)
|
|
|
754,284
|
|
|
Interest expense(1)
|
|
25,131
|
|
|
476
|
|
|
26,297
|
|
|
51,904
|
|
|
Capital expenditures
|
|
134,932
|
|
|
44,002
|
|
|
5,231
|
|
|
184,165
|
|
|
Depreciation and amortization
|
|
132,192
|
|
|
27,516
|
|
|
7,905
|
|
|
167,613
|
|
|
Asset impairments
|
|
6,360
|
|
|
424
|
|
|
—
|
|
|
6,784
|
|
|
Total assets
|
|
3,221,465
|
|
|
729,766
|
|
|
687,440
|
|
|
4,638,671
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,769,933
|
|
|
$
|
699,140
|
|
|
$
|
7,413
|
|
|
$
|
5,476,486
|
|
|
Adjusted EBITDA
|
|
661,176
|
|
|
62,007
|
|
|
(146,575)
|
|
|
576,608
|
|
|
Interest expense(1)
|
|
48,413
|
|
|
982
|
|
|
12,442
|
|
|
61,837
|
|
|
Capital expenditures
|
|
127,982
|
|
|
48,895
|
|
|
10,741
|
|
|
187,618
|
|
|
Depreciation and amortization
|
|
132,492
|
|
|
25,674
|
|
|
7,583
|
|
|
165,749
|
|
|
Asset impairments
|
|
7,606
|
|
|
5
|
|
|
—
|
|
|
7,611
|
|
|
Total assets(2)
|
|
2,862,805
|
|
|
532,850
|
|
|
686,073
|
|
|
4,081,728
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,001,116
|
|
|
$
|
817,048
|
|
|
$
|
10,838
|
|
|
$
|
5,829,002
|
|
|
Adjusted EBITDA
|
|
456,296
|
|
|
100,102
|
|
|
(132,313)
|
|
|
424,085
|
|
|
Interest expense(1)
|
|
46,939
|
|
|
2,493
|
|
|
21,941
|
|
|
71,373
|
|
|
Capital expenditures
|
|
89,119
|
|
|
40,337
|
|
|
9,380
|
|
|
138,836
|
|
|
Depreciation and amortization
|
|
125,718
|
|
|
25,993
|
|
|
6,941
|
|
|
158,652
|
|
|
Asset impairments
|
|
369
|
|
|
15
|
|
|
—
|
|
|
384
|
|
|
Total assets(2)
|
|
2,991,996
|
|
|
464,177
|
|
|
302,598
|
|
|
3,758,771
|
|
__________________________________
(1) Includes intercompany interest expense in the segments, which is eliminated within Corporate and Other.
(2) Total assets listed in Corporate and Other at 2020 and 2019 includes assets from discontinued operations.
The following table presents a reconciliation of earnings from continuing operations to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Earnings from continuing operations
|
|
$
|
412,865
|
|
|
$
|
278,302
|
|
|
$
|
198,779
|
|
|
Interest expense
|
|
51,904
|
|
|
61,837
|
|
|
71,373
|
|
|
Income taxes
|
|
121,153
|
|
|
92,476
|
|
|
69,681
|
|
|
Depreciation and amortization
|
|
167,613
|
|
|
165,749
|
|
|
158,652
|
|
|
Amortization of acquired unfavorable contract backlog
|
|
(6,035)
|
|
|
(29,367)
|
|
|
(74,784)
|
|
|
Asset impairments
|
|
6,784
|
|
|
7,611
|
|
|
384
|
|
|
Adjusted EBITDA
|
|
$
|
754,284
|
|
|
$
|
576,608
|
|
|
$
|
424,085
|
|
The following tables present net sales by reportable segment and Corporate and Other disaggregated by major product:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31, 2021
|
|
(in thousands)
|
|
North America
|
|
Europe
|
|
Corporate and Other
|
|
Total
|
|
Major product:
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
1,162,997
|
|
|
$
|
19,841
|
|
|
$
|
—
|
|
|
$
|
1,182,838
|
|
|
Steel products
|
|
2,289,975
|
|
|
808,662
|
|
|
—
|
|
|
3,098,637
|
|
|
Downstream products
|
|
1,814,192
|
|
|
192,175
|
|
|
—
|
|
|
2,006,367
|
|
|
Other
|
|
403,812
|
|
|
26,567
|
|
|
11,539
|
|
|
441,918
|
|
|
Net sales-unaffiliated customers
|
|
5,670,976
|
|
|
1,047,245
|
|
|
11,539
|
|
|
6,729,760
|
|
|
Intersegment net sales, eliminated on consolidation
|
|
—
|
|
|
1,814
|
|
|
(1,814)
|
|
|
—
|
|
|
Net sales
|
|
$
|
5,670,976
|
|
|
$
|
1,049,059
|
|
|
$
|
9,725
|
|
|
$
|
6,729,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31, 2020
|
|
(in thousands)
|
|
North America
|
|
Europe
|
|
Corporate and Other
|
|
Total
|
|
Major product:
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
718,513
|
|
|
$
|
9,692
|
|
|
$
|
—
|
|
|
$
|
728,205
|
|
|
Steel products
|
|
1,738,556
|
|
|
547,047
|
|
|
—
|
|
|
2,285,603
|
|
|
Downstream products
|
|
1,943,126
|
|
|
119,232
|
|
|
—
|
|
|
2,062,358
|
|
|
Other
|
|
369,738
|
|
|
21,660
|
|
|
8,922
|
|
|
400,320
|
|
|
Net sales-unaffiliated customers
|
|
4,769,933
|
|
|
697,631
|
|
|
8,922
|
|
|
5,476,486
|
|
|
Intersegment net sales, eliminated on consolidation
|
|
—
|
|
|
1,509
|
|
|
(1,509)
|
|
|
—
|
|
|
Net sales
|
|
$
|
4,769,933
|
|
|
$
|
699,140
|
|
|
$
|
7,413
|
|
|
$
|
5,476,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended August 31, 2019
|
|
(in thousands)
|
|
North America
|
|
Europe
|
|
Corporate and Other
|
|
Total
|
|
Major product:
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
953,858
|
|
|
$
|
12,359
|
|
|
$
|
—
|
|
|
$
|
966,217
|
|
|
Steel products
|
|
1,763,017
|
|
|
646,974
|
|
|
—
|
|
|
2,409,991
|
|
|
Downstream products
|
|
1,936,994
|
|
|
133,823
|
|
|
—
|
|
|
2,070,817
|
|
|
Other
|
|
347,247
|
|
|
22,567
|
|
|
12,163
|
|
|
381,977
|
|
|
Net sales-unaffiliated customers
|
|
5,001,116
|
|
|
815,723
|
|
|
12,163
|
|
|
5,829,002
|
|
|
Intersegment net sales, eliminated on consolidation
|
|
—
|
|
|
1,325
|
|
|
(1,325)
|
|
|
—
|
|
|
Net sales
|
|
$
|
5,001,116
|
|
|
$
|
817,048
|
|
|
$
|
10,838
|
|
|
$
|
5,829,002
|
|
The following table presents net sales by geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
Geographic area:
|
|
|
|
|
|
|
|
United States
|
|
$
|
5,295,447
|
|
|
$
|
4,562,351
|
|
|
$
|
4,771,164
|
|
|
Poland
|
|
793,075
|
|
|
549,983
|
|
|
510,610
|
|
|
China
|
|
156,101
|
|
|
76,909
|
|
|
74,638
|
|
|
Other
|
|
485,137
|
|
|
287,243
|
|
|
472,590
|
|
|
Net sales
|
|
$
|
6,729,760
|
|
|
$
|
5,476,486
|
|
|
$
|
5,829,002
|
|
The following table presents long-lived assets, net of accumulated depreciation and amortization, by geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
(in thousands)
|
|
2021
|
|
2020
|
|
2019
|
|
United States
|
|
$
|
1,473,745
|
|
|
$
|
1,483,127
|
|
|
$
|
1,426,131
|
|
|
Poland
|
|
225,582
|
|
|
225,166
|
|
|
173,045
|
|
|
Other
|
|
23
|
|
|
51
|
|
|
42
|
|
|
Total long-lived assets
|
|
$
|
1,699,350
|
|
|
$
|
1,708,344
|
|
|
$
|
1,599,218
|
|