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FAIR VALUE | 6 Months Ended
--- | ---
Feb. 28, 2025
Fair Value Disclosures [Abstract] |
Fair value | NOTE 9. 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 within Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2024 Form 10-K. Further discussion regarding the Company's use of derivative instruments is included in Note 8, Derivatives. 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 table summarizes 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 |  | Level 1 |  | Level 2 |  | Level 3
As of February 28, 2025: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Investment deposit accounts(1) |  | $ | 630,800 |  |  | $ | 630,800 |  |  | $ | — |  |  | $ | — |
Commodity derivative assets |  | 57,223 |  |  | 1,865 |  |  | — |  |  | 55,358 |
Foreign exchange derivative assets |  | 3,707 |  |  | — |  |  | 3,707 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |
Commodity derivative liabilities |  | 4,056 |  |  | 4,056 |  |  | — |  |  | — |
Foreign exchange derivative liabilities |  | 1,250 |  |  | — |  |  | 1,250 |  |  | — |
As of August 31, 2024: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Investment deposit accounts(1) |  | $ | 718,110 |  |  | $ | 718,110 |  |  | $ | — |  |  | $ | — |
Commodity derivative assets |  | 40,225 |  |  | 2,196 |  |  | — |  |  | 38,029 |
Foreign exchange derivative assets |  | 419 |  |  | — |  |  | 419 |  |  | — |
Liabilities: |  |  |  |  |  |  |  |
Commodity derivative liabilities |  | 3,602 |  |  | 3,602 |  |  | — |  |  | — |
Foreign exchange derivative liabilities |  | 1,885 |  |  | — |  |  | 1,885 |  |  | — |
__________________________________ (1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The fair value estimate of the Level 3 commodity derivatives is based on internally developed discounted cash flow models primarily utilizing unobservable inputs for 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 February 28, 2025 and August 31, 2024, which are applied uniformly across each of our Level 3 commodity derivatives:
|  | Floating rate (PLN)
|  | Low |  | High |  | Average
February 28, 2025 |  | 324 |  |  | 563 |  |  | 441 |
August 31, 2024 |  | 324 |  |  | 510 |  |  | 405 |
Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the condensed consolidated statements of comprehensive income (loss). 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 unrealize d gains and losses in OCI in the three and six months ended February 28, 2025 and February 29, 2024.
(in thousands) |  | Three Months Ended February 28, 2025
Balance, December 1, 2024 |  | $ | 33,303 |
Unrealized holding gain before reclassification(1) |  | 25,482 |
Reclassification for gain included in net earnings(2) |  | (3,427) |
Balance, February 28, 2025 |  | $ | 55,358 |
(in thousands) |  | Six Months Ended February 28, 2025
Balance, September 1, 2024 |  | $ | 38,029 |
Unrealized holding gain before reclassification(1) |  | 23,791 |
Reclassification for gain included in net loss(2) |  | (6,462) |
Balance, February 28, 2025 |  | $ | 55,358 |
(in thousands) |  | Three Months Ended February 29, 2024
Balance, December 1, 2023 |  | $ | 144,357 |
Unrealized holding loss before reclassification(1) |  | (56,481) |
Reclassification for gain included in net earnings(2) |  | (1,559) |
Balance, February 29, 2024 |  | $ | 86,317 |
(in thousands) |  | Six Months Ended February 29, 2024
Balance, September 1, 2023 |  | $ | 194,425 |
Unrealized holding loss before reclassification(1) |  | (103,758) |
Reclassification for gain included in net earnings(2) |  | (4,350) |
Balance, February 29, 2024 |  | $ | 86,317 |
__________________________________ (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 condensed consolidated statements of comprehensive income (loss). (2) Realized gains included in net earnings (loss) are recorded in cost of goods sold in the condensed consolidated statements of earnings (loss). There were no material non-recurring fair value remeasurements during the three or six months ended February 28, 2025 or February 29, 2024. 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 $957.2 million, respectively, at February 28, 2025, and $1.0 billion and $962.8 million, respectively, at August 31, 2024. 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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