NOTE 3. SALES OF ACCOUNTS RECEIVABLE

During the fourth quarter of fiscal 2014, the Company entered into a third amended $200.0 million U.S. sale of accounts receivable program which expires on August 15, 2017. Under the program, CMC contributes, and several of its subsidiaries sell without recourse, certain eligible accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly owned subsidiary of CMC. CMCRV is structured to be a bankruptcy-remote entity and was formed for the sole purpose of buying and selling accounts receivable generated by the Company. CMCRV sells the accounts receivable in their entirety to three financial institutions. Under the amended U.S. sales of 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 accounts receivable sold. The remaining portion of the purchase price of the accounts receivable takes the form of subordinated notes from the respective financial institutions. These notes will be satisfied from the ultimate collection of the accounts receivable after payment of certain fees and other costs. The Company accounts for sales of the accounts receivable as true sales, and the accounts receivable balances that are sold are removed from the condensed consolidated balance sheets. The cash advances received are reflected as cash provided by operating activities on the Company's condensed consolidated statements of cash flows. Additionally, the U.S. sale of 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 the credit facility described in Note 7, Credit Arrangements.

At February 29, 2016 and August 31, 2015, under its U.S. sale of accounts receivable program, the Company had sold $197.2 million and $274.3 million of accounts receivable, respectively, to the financial institutions. At February 29, 2016 and August 31, 2015, the Company had no advance payments outstanding on the sale of its accounts receivable.

In addition to the U.S. sale of accounts receivable program described above, the Company's international subsidiaries in Europe and Australia sell accounts receivable to financial institutions without recourse. These arrangements constitute true sales, and once the accounts receivable are sold, they are no longer available to the Company's creditors in the event of bankruptcy. In the third quarter of fiscal 2015, the Company phased out its existing European program and entered into a two year renewable accounts receivable sales program with a different financial institution. The new agreement increased the facility limit from PLN 200.0 million to PLN 220.0 million. The European program allows the Company's European subsidiaries to obtain an advance of up to 90% of eligible accounts receivable sold under the terms of the arrangement. During the first quarter of fiscal 2014, the Company phased out its existing Australian program and entered into a one year renewable accounts receivable sales program with a different financial institution. During the first quarter of fiscal 2015, the Company entered into a first amendment to its Australian program, which extended the maturity date to October 2016. Under the new Australian program, accounts receivable balances are sold to a special purpose vehicle, which in turn sells 100% of the eligible accounts receivable of Commercial Metals Pty. Ltd., CMC Steel Distribution Pty. Ltd. and G.A.M. Steel Pty. Ltd. to the financial institution. During the fourth quarter of fiscal 2015, the Company entered into a second amendment to its Australian program, which reduced the facility limit from A$75.0 million to A$40.0 million. The financial institution will fund up to the facility limit for all accounts receivable sold, and the remaining portion of the purchase price of the accounts receivable is in the form of a subordinated note from the financial institution. This note will be satisfied from the ultimate collection of the accounts receivable after payment of certain fees and other costs. The Company accounts for sales of the accounts receivable as true sales, and the accounts receivable balances that are sold are removed from the condensed consolidated balance sheets. The cash advances received are reflected as cash provided by operating activities on the Company's condensed consolidated statements of cash flows.

At February 29, 2016 and August 31, 2015, under its European and Australian programs, the Company had sold $78.4 million and $97.9 million of accounts receivable, respectively, to third-party financial institutions and received advance payments of $39.2 million and $27.7 million, respectively.

During the six months ended February 29, 2016 and February 28, 2015, cash proceeds from the U.S. and international sale of accounts receivable programs were $202.1 million and $277.8 million, respectively, and cash payments to the owners of accounts receivable were $190.6 million and $328.1 million, respectively. For a nominal servicing fee, the Company is responsible for servicing the accounts receivable for the U.S. and Australian programs. Discounts on U.S. and international sales of accounts receivable were $0.5 million and $0.9 million for the three and six months ended February 29, 2016, respectively, and $0.4 million and $0.9 million for the three and six months ended February 28, 2015, respectively, and are included in selling, general and administrative expenses in the Company's condensed consolidated statements of earnings.

As of February 29, 2016, the deferred purchase price on the Company's U.S., European and Commercial Metals Pty. Ltd. sale of accounts receivable programs was included in accounts receivable on the Company's condensed consolidated balance sheets. As of August 31, 2015, the deferred purchase price on the Company's U.S., European, Commercial Metals Pty. Ltd. and CMC Steel Distribution Pty. Ltd. sale of accounts receivable programs was included in accounts receivable on the Company's condensed consolidated balance sheets. As of February 29, 2016 and August 31, 2015, the deferred purchase price on the G.A.M. Steel Pty. Ltd. sale of accounts receivable programs was included in assets of businesses held for sale on the Company's condensed consolidated balance sheets.

The following tables summarize the activity of the deferred purchase price receivables for the U.S. and international sale of accounts receivable programs:



	Three Months Ended February 29, 2016
(in thousands)	Total			U.S.			Australia*			Europe
Beginning balance	$	228,862		$	196,130		$	15,286		$	17,446
Transfers of accounts receivable	537,774			432,900			37,256			67,618
Collections	(534,762		)	(435,995		)	(39,159		)	(59,608		)
Ending balance	$	231,874		$	193,035		$	13,383		$	25,456

_______________________________________

* Includes the sales of accounts receivable activities related to businesses held for sale (transfers of accounts receivable of $11.1 million and collections of $11.9 million for the three months ended February 29, 2016).



	Six Months Ended February 29, 2016
(in thousands)	Total			U.S.			Australia*			Europe
Beginning balance	$	339,547		$	269,778		$	18,038		$	51,731
Transfers of accounts receivable	1,126,193			919,423			83,330			123,440
Collections	(1,233,866		)	(996,166		)	(87,985		)	(149,715		)
Ending balance	$	231,874		$	193,035		$	13,383		$	25,456

_______________________________________

* Includes the sales of accounts receivable activities related to discontinued operations and businesses held for sale (transfers of accounts receivable of $23.4 million, and collections of $36.8 million for the six months ended February 29, 2016).



	Three Months Ended February 28, 2015
(in thousands)	Total			U.S.			Australia**			Europe
Beginning balance	$	471,840		$	408,320		$	22,376		$	41,144
Transfers of accounts receivable	888,064			753,219			63,335			71,510
Collections	(973,457		)	(834,530		)	(64,031		)	(74,896		)
Ending balance	$	386,447		$	327,009		$	21,680		$	37,758

	Six Months Ended February 28, 2015
(in thousands)	Total			U.S.			Australia**			Europe
Beginning balance	$	385,169		$	329,797		$	34,071		$	21,301
Transfers of accounts receivable	2,016,308			1,702,382			154,064			159,862
Collections	(2,015,030		)	(1,705,170		)	(166,455		)	(143,405		)
Ending balance	$	386,447		$	327,009		$	21,680		$	37,758

_______________________________________

** Includes the sales of accounts receivable activities related to businesses held for sale (transfers of accounts receivable of $41.6 million and $102.1 million and collections of $52.9 million and $116.5 million for the three and six months ended February 28, 2015, respectively).