NOTE 13. FAIR VALUE

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

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

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

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

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



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



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

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(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. Further discussion regarding the Company's use of derivative instruments and the classification of the assets and liabilities is included in Note 12, Derivatives and Risk Management.

In connection with the sale of assets related to the Company's structural steel fabrication operations, the Company recorded an impairment charge of $13.7 million for the year ended August 31, 2018. The signed definitive asset sale agreement and subsequent post-closing adjustments (Level 2) were the basis for the determination of fair value of these operations. There were no other material non-recurring fair value remeasurements during fiscal 2018.

As a result of the Company's exit of its steel trading and distribution businesses in Australia, the Company prepared an impairment analysis on the asset disposal groups in Australia. As a result of such analysis, the Company recorded impairment charges of $2.1 million, $4.2 million and $15.8 million in fiscal years 2018, 2017 and 2016, respectively, primarily related to accumulated foreign currency translation losses. Indicators of value from other recent sales of similar businesses within the segment (Level 3) were the basis for the determination of fair value of this component. This loss was recorded within results from discontinued operations for the years ended August 31, 2018, 2017, and 2016. See Note 3, Changes in Business, for additional discussion of the Company's exit of the International Marketing and Distribution segment.

There were no other material non-recurring fair value remeasurements during fiscal years ended August 31, 2018 and 2017.

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

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



		August 31, 2018				August 31, 2017
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
2027 Notes ⁽¹⁾	Level 2	$	300,000	$	281,655	$	300,000	$	314,286
2026 Notes ⁽¹⁾	Level 2	350,000		339,238		—		—
2023 Notes ⁽¹⁾	Level 2	330,000		326,090		330,000		340,052
2022 Term Loan ⁽²⁾	Level 2	142,500		142,500		150,000		150,000

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

(2) The term loan contains variable interest rates and its carrying value approximates fair value.