Sales Of Accounts Receivable

12 Months Ended

Aug. 31, 2012

Transfers and Servicing [Abstract]

Sales Of accounts receivable

NOTE 4. SALES OF ACCOUNTS RECEIVABLE

The Company has a sale of accounts receivable program which expires on December 26, 2014. Under the program, the Company periodically contributes, and several of its subsidiaries periodically sell without recourse, certain eligible trade accounts receivable to the Company’s wholly-owned consolidated special purpose subsidiary, CMC Receivables, Inc. (“CMCRV”). CMCRV is structured to be a bankruptcy-remote entity and was formed for the sole purpose of buying and selling receivables generated by the Company. Depending on the Company’s level of financing needs, CMCRV sells the trade accounts receivable in their entirety to two third party financial institutions. The third party financial institutions advance up to a maximum of $200 million for all receivables and the remaining portion due to the Company is deferred until the ultimate collection of the underlying receivables. The Company accounts for sales to the financial institutions as true sales and the cash advances for receivables are removed from the consolidated balance sheets and reflected as cash provided by operating activities. Additionally, the receivables 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 the credit facility described in Note 10, Credit Arrangements.

At August 31, 2012 and August 31, 2011, the Company sold $406.9 million and $557.0 million of receivables, respectively, to the third party financial institutions, and received $10.0 million and $50.0 million, respectively, as advance payments. The remaining amounts of $396.9 million and $507.0 million, respectively, are the deferred purchase prices, and are included as trade receivables on the Company's consolidated balance sheets.

In addition to the domestic sale of accounts receivable program described above, the Company’s international subsidiaries in Europe and Australia periodically sell accounts receivable without recourse. These arrangements constitute true sales, and once the accounts are sold, they are no longer available to the Company’s creditors in the event of bankruptcy. Uncollected accounts receivable sold under these arrangements and removed from the consolidated balance sheets were $95.1 million and $132.2 million as of August 31, 2012 and August 31, 2011, respectively. The Australian program contains financial covenants in which the subsidiary must meet certain coverage and tangible net worth levels, as defined. At August 31, 2012, the Australian subsidiary was not in compliance with these covenants. The Company provided a guarantee of the Australian subsidiary’s performance resulting in the financial covenants being waived at August 31, 2012. The guarantee will cease to be effective when the Australian subsidiary is in compliance with the financial covenants for two consecutive quarters.

During 2012 and 2011, proceeds from the domestic and international sales of receivables were $1.9 billion and $1.3 billion, respectively, and cash payments to the owners of receivables were $1.9 billion and $1.2 billion, respectively. The Company is responsible for servicing the receivables for a nominal servicing fee. Discounts on domestic and international sales of accounts receivable were $6.4 million, $5.1 million and $4.0 million for the years ended August 31, 2012 and 2011 and 2010, respectively. These discounts primarily represented the costs of funds and are included in selling, general and administrative expenses in the Company's consolidated statement of operations.