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FAIR VALUE | 12 Months Ended
--- | ---
Aug. 31, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE | 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 Company presents the fair value of its derivative contracts on a net-by-counterparty basis when a legal right to offset exists under an enforceable netting agreement. 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) |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
As of August 31, 2024: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Investment deposit accounts(1) |  | $ | 718,110 |  |  | $ | 718,110 |  |  | $ | — |  |  | $ | — |
Commodity derivative assets(2) |  | 40,225 |  |  | 2,196 |  |  | — |  |  | 38,029 |
Foreign exchange derivative assets(2) |  | 419 |  |  | — |  |  | 419 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |
Commodity derivative liabilities(2) |  | 3,602 |  |  | 3,602 |  |  | — |  |  | — |
Foreign exchange derivative liabilities(2) |  | 1,885 |  |  | — |  |  | 1,885 |  |  | — |
As of August 31, 2023: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Investment deposit accounts(1) |  | $ | 508,227 |  |  | $ | 508,227 |  |  | $ | — |  |  | $ | — |
Commodity derivative assets(2) |  | 195,689 |  |  | 1,264 |  |  | — |  |  | 194,425 |
Foreign exchange derivative assets(2) |  | 1,898 |  |  | — |  |  | 1,898 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |
Commodity derivative liabilities(2) |  | 4,068 |  |  | 4,068 |  |  | — |  |  | — |
Foreign exchange derivative liabilities(2) |  | 2,566 |  |  | — |  |  | 2,566 |  |  | — |
__________________________________ (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. As of August 31, 2022, the Company had one Level 3 commodity derivative. The Company entered into its second and third Level 3 commodity derivatives in September 2022 and January 2023, respectively, with the same counterparty as the first Level 3 commodity derivative. Both the second and third Level 3 commodity derivatives will begin to settle in January 2025. The fair value estimate of the Level 3 commodity derivatives are based on internally developed discounted cash flow models 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 (the "floating rate"), which is the only significant unobservable input used in the Company's discounted cash flow models. Significantly higher or lower floating rates could have resulted in a material difference in the fair value measurement. The following table summarizes the range of floating rates used to measure the fair value of the Level 3 commodity derivatives at August 31, 2024 and 2023, which are applied uniformly across each of our Level 3 commodity derivatives:
|  | Floating Rate (PLN)
|  | Low |  | High |  | Average
August 31, 2024 |  | 324 |  |  | 510 |  |  | 405 |
August 31, 2023 |  | 480 |  |  | 855 |  |  | 630 |
Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the consolidated statements of comprehensive income. Amounts presented are before income taxes. 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 OCI in 2024, 2023 and 2022.
(in thousands) |  | Level 3 Commodity Derivatives
Balance, September 1, 2021 |  | $ | 26,413 |
Unrealized holding gain before reclassification(1) |  | 138,760 |
Reclassification for gain included in net earnings(2) |  | (21,673) |
Balance at August 31, 2022 |  | 143,500 |
Unrealized holding gain before reclassification(1) |  | 62,706 |
Reclassification for gain included in net earnings(2) |  | (11,781) |
Balance at August 31, 2023 |  | 194,425 |
Unrealized holding loss before reclassification(1) |  | (148,533) |
Reclassification for gain included in net earnings(2) |  | (7,863) |
Balance at August 31, 2024 |  | $ | 38,029 |
__________________________________ (1) Unrealized holding gain (loss), net of foreign currency translation, less amounts reclassified are included in net unrealized holding gain (loss) on derivatives in the consolidated statements of comprehensive income. (2) Gains included in net earnings are recorded in cost of goods sold in the consolidated statements of earnings. During the fourth quarter of 2024, the Company committed to a plan to sell a rebar fabrication facility within the North America Steel Group segment and determined that the disposal group met the criteria to be classified as held for sale. Accordingly, the Company classified $17.5 million of assets and $4.1 million of liabilities as held for sale within the Company's consolidated balance sheet as of August 31, 2024. The liabilities held for sale are recorded within accrued expenses and other payables. Upon concluding that the disposal group met the held for sale criteria, the Company recorded an impairment charge of $6.6 million to record the disposal group at the lower of its carrying value or fair value less costs to sell. The Company determined the fair value of the disposal group using a Level 2 input, based on a quoted price in an inactive market. There were no other material non-recurring fair value remeasurements in 2024 or 2023. The carrying values of the Company's short-term items, including documentary letters of credit and notes payable, approximate fair value. The carrying value and fair value of the Company's long-term debt, including current maturities, excluding other borrowings and finance leases, was $1.0 billion and $962.8 million, respectively, at August 31, 2024, and $1.0 billion and $900.9 million, respectively, at August 31, 2023. The Company estimates these fair values based on Level 2 of the fair value hierarchy using indicated market values. The Company's other borrowings contain variable interest rates, and as a result, their carrying values approximate fair values.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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