NOTE 5. SALES OF ACCOUNTS RECEIVABLE

As an additional source of liquidity, the Company sells certain trade accounts receivable both in the U.S. and Poland. The Company has a $200.0 million U.S. sale of trade accounts receivable program which expires on August 31, 2020. Under the program, the Company contributes, and certain of its subsidiaries sell without recourse, certain eligible trade accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly-owned subsidiary of the Company. CMCRV is structured to be a bankruptcy-remote entity formed for the sole purpose of buying and selling trade accounts receivable generated by the Company. CMCRV sells the trade accounts receivable in their entirety to two financial institutions. Under the U.S. sale of trade accounts receivable program, with the consent of both CMCRV and the program's administrative agent, the amount advanced by the financial institutions can be increased to a maximum of $300.0 million for all trade accounts receivable sold. The remaining portion of the purchase price of the trade accounts receivable takes the form of subordinated notes from the respective financial institutions. These notes will be satisfied from the ultimate collection of the trade accounts receivable after payment of certain fees and other costs. The U.S. sale of trade accounts receivable program contains certain cross-default provisions whereby a termination event could occur if the Company defaulted under certain of its credit arrangements. The covenants contained in the receivables purchase agreement are consistent with those contained in the Credit Agreement (as defined in Note 10, Credit Arrangements). For the year ended August 31, 2018, and all comparative periods presented, the Company accounted for sales of the trade accounts receivable as true sales, and the trade accounts receivable balances that were sold were removed from the consolidated balance sheets. The cash advances received are reflected as cash provided by operating activities on the Company's consolidated statements of cash flows. On September 1, 2018, the Company amended certain terms of both the U.S. and Poland programs, disqualifying the sale of such receivables from being accounted for as true sales. As a result of the amendments, any future advances under the programs will be recorded as financing activities.

At August 31, 2018 and 2017, under its U.S. sale of accounts receivable program, the Company sold $273.5 million and $226.9 million of trade accounts receivable, respectively, to the financial institutions. At August 31, 2018, the Company had no advance payments outstanding on the sale of its U.S. trade accounts receivable. At August 31, 2017, the Company had $90.0 million in advance payments outstanding on the sale of its U.S. trade accounts receivable.

In addition to the U.S. sale of trade accounts receivable program described above, the Company's international subsidiaries in Poland sell, and previously in Australia have sold, trade accounts receivable to financial institutions without recourse. These arrangements constituted true sales, and once the trade accounts receivable were sold, they were no longer available to the Company's creditors in the event of bankruptcy and were removed from the consolidated balance sheets. The Poland program has a facility limit of 220.0 million Polish zloty ($59.5 million as of August 31, 2018) and allows the Company's Polish subsidiaries to obtain an advance of up to 90% of eligible trade accounts receivable sold under the terms of the arrangement. Under the Polish and former Australian programs, the cash advances received were reflected as cash provided by operating activities on the Company's consolidated statements of cash flows. During the first quarter of fiscal 2017, the Company's existing Australian program expired, and the Company did not enter into a new program.

At August 31, 2018 and August 31, 2017, under its Poland program, the Company sold $107.6 million and $79.5 million of trade accounts receivable, respectively, to the third-party financial institution. At August 31, 2018, the Company had $12.1 million of advance payments outstanding on the sale of its Poland trade accounts receivable. At August 31, 2017, there were no advance payments outstanding under the Poland program.

For the years ended August 31, 2018, 2017 and 2016, cash proceeds from the U.S. and international sale of trade accounts receivable programs were $249.8 million, $375.4 million and $400.8 million, respectively, and cash payments to the owners of trade accounts receivable were $327.7 million, $293.6 million and $420.3 million, respectively. For a nominal servicing fee, the Company is responsible for servicing the trade accounts receivable for the U.S. program. Discounts on U.S. and international sales of trade accounts receivable were $1.1 million, $0.9 million and $1.7 million for the years ended August 31, 2018, 2017 and 2016, respectively, and are included in selling, general and administrative expenses in the Company's consolidated statements of earnings.

For the years ended August 31, 2018, 2017 and 2016, the deferred purchase price on the Company's U.S. and international sale of trade accounts receivable programs was included in accounts receivable on the Company's consolidated balance sheets. The following table summarizes the activity of the deferred purchase price receivables for the U.S. and international sale of trade accounts receivable programs.



(in thousands)	Total			U.S.*			Poland			Australia**
Balance at September 1, 2015	$	339,547		$	269,778		$	51,731		$	18,038
Transfers of trade accounts receivable	2,389,297			1,933,477			280,227			175,593
Collections	(2,439,096		)	(1,990,493		)	(281,634		)	(166,969		)
Balance at August 31, 2016	$	289,748		$	212,762		$	50,324		$	26,662
Transfers of trade accounts receivable	2,646,513			2,251,118			378,481			16,914
Collections	(2,596,836		)	(2,237,872		)	(349,305		)	(9,659		)
Exit from Programs	(124,302		)	(90,385		)	—			(33,917		)
Balance at August 31, 2017	$	215,123		$	135,623		$	79,500		$	—
Transfers of trade accounts receivable	2,932,379			2,396,780			535,599			—
Collections	(2,779,981		)	(2,260,321		)	(519,660		)	—
Balance at August 31, 2018	$	367,521		$	272,082		$	95,439		$	—

_________________________

* Includes the sale of trade accounts receivable activities related to discontinued operations. See Note 3, Changes in Business, for further discussion. For the years ended August 31, 2017 and 2016, transfers of trade accounts receivable were $354.5 million and $369.1 million, respectively, and collections were $325.7 million and $396.8 million, respectively. Redemptions of trade accounts receivable associated with the exit from the program were $83.7 million for the year ended August 31, 2017.

**Includes the sale of trade accounts receivable activities related to the Company's former Australian steel distribution business. See Note 3, Changes in Business, for further discussion. For the year ended August 31, 2017, there were no transfers of trade accounts receivable, collections were $3.7 million and redemptions of trade accounts receivable associated with the exit from the program were $1.6 million. For the year ended August 31, 2016, transfers of accounts receivable were $45.8 million, and collections were $61.7 million.