IRVING, Texas, June 23 /PRNewswire-FirstCall/ -- Commercial Metals
Company (NYSE:CMC) today reported a net loss of $13.1 million or
$0.12 per share on net sales of $1.3 billion for the quarter ended
May 31, 2009. This compares with net earnings of $59.5 million or
$0.51 per diluted share on net sales of $2.9 billion for the third
quarter last year. This year's third quarter included after-tax
LIFO income of $29 million or $0.26 per share compared with expense
of $83 million or $0.71 per diluted share in last year's third
quarter. At quarter end our LIFO reserve totaled $279 million. LIFO
is an inventory costing method that assumes the most recent
inventory purchases or goods manufactured are sold first which in
periods of declining prices results in income that eliminates the
effect of deflation from operating results. Changes in LIFO are not
writedowns, writeoffs or market adjustments. They are changes in
cost components based on an assumption of physical inventory flows.
Net earnings for the nine months ended May 31, 2009 were $13.6
million or $0.12 per diluted share on net sales of $5.3 billion.
For the same period last year, net earnings were $168.4 million or
$1.43 per diluted share on net sales of $7.3 billion. For the nine
months ended May 31, 2009, after-tax LIFO income was $184 million
or $1.62 per diluted share compared with an expense of $118 million
or $1.00 per diluted share last year. In response to price
declines, demand destruction, and a global liquidity and credit
crisis, the Company recorded the following consolidated expenses
during the third quarter and the nine months ended May 31, 2009:
Three Months Ended Nine Months Ended (in millions) 5/31/09 5/31/09
Lower of cost or market inventory adjustments $27.0 $110.4 Charges
relating to contractual noncompliance 8.9 2.4 Bad debt expense 10.2
33.6 Severance costs 2.8 9.3 Impairment charges - 5.1 Selling,
general and administrative expenses in the third quarter included
$10.8 million of pre-tax costs associated with the investment in
the global deployment of SAP software compared to $18.2 million in
last year's third quarter; project to date we have expensed $126.8
million. Other SAP costs of $105.8 million have been capitalized
since inception of the project, of which $5.6 was capitalized in
the current quarter. By August 31, 2009, we estimate that 58% of
the earnings power of CMC will be on SAP. These units have been
identified as having the greatest benefits to realize under an
integrated system. As of August 31, 2009, our deployment of SAP
will be folded into our continuing IT operations and no longer be
tracked as a separate project. General Conditions CMC Chairman,
President and Chief Executive Officer Murray R. McClean said,
"Global metal markets may have tested the bottom during the quarter
and though some recovery has occurred, the markets, overall, remain
fragile. Any volume improvement in the quarter was seasonal and not
reflective of any stimulus effect. Destocking appears to be in its
last stages; however, end-use demand remains weak. Internationally,
Poland remains one of the few countries with a positive GDP; its
weak currency discourages imports; however, the lack of demand in
traditional export markets minimizes any opportunities to leverage
the euro or the U.S. dollar through exports. There are some
encouraging developments in China where pricing and consumption are
on the rise. Lower prices and lower inventory quantities again
triggered LIFO income during the quarter. Our largest commercial
exposures remain unwarranted customer contractual noncompliance
leading to market claims, price renegotiations, and unexpected
inventory positions." Americas Recycling McClean said, "Ferrous
scrap prices are showing signs of stability as this quarter did not
exhibit the tremendous volatility seen since March 2008. Domestic
supply remains constrained, customer destocking appears near
completion and the best markets are overseas as both break bulk and
containerized exports yield better price and volumes. Margin
decreases on both ferrous and nonferrous sales in comparison to
last year's third quarter are two-thirds attributable to volume and
one-third to price. Weak demand is outpaced by even weaker supply
with a suffering domestic manufacturing base. The adjusted
operating loss of $6.7 million pales compared to the $50.4 million
operating profit in the third quarter of last year, but was a
considerable improvement over the $36.2 million operating loss of
the second quarter. Pre-tax LIFO income of $2.0 million during the
quarter compares to $15.2 million of pre-tax LIFO expense in last
year's comparable quarter. The average ferrous scrap sales price
for the third quarter was $146 per short ton, a 63% decline from
last year's third quarter. Nonferrous pricing, on the strength of a
recovery in copper, fared somewhat better with an average sales
price of $1,556 per short ton, a drop of 52%. Shipments of ferrous
scrap totaled 371 thousand tons, a decline of 54% from the third
quarter of last year and a level last seen in the second quarter of
2003. Nonferrous shipments totaled 50 thousand tons, down 36% from
last year's third quarter, but up 32% from the second quarter. We
exported 17% of our ferrous tonnage and 50% of our nonferrous scrap
tonnage during the quarter." Americas Mills McClean said, "There
were mixed trends in the results of our Americas Mills segment for
the third quarter. Metal margins, though still at historically
strong levels, eroded from the second quarter. Tons shipped
increased from the second quarter, but this is more likely seasonal
rather than sustainable demand. Most benchmarks compared to the
third quarter of last year are down. Rebar continues to exhibit
resilience, while merchant products wither. Import competition is
limited. Customers continue to destock, but this is slowing. We
have rolled approximately 15% less than we shipped in every quarter
this year as we reduce inventories to meet lagging demand. The
segment earned adjusted operating profit of $42.1 million compared
to $34.0 million in the comparable quarter last year. The
continuing decline in prices and quantities in inventory led to
pre-tax LIFO income of $16.4 million, compared to $55.3 million of
pre-tax LIFO expense last year. "Our steel mills ran at 58% of
capacity this quarter, up from 55% capacity in the second quarter.
The steel mills adjusted operating profit of $39.2 million was up
18% compared to the prior year third quarter; pre-tax LIFO income
was $17.3 million compared to the prior year third quarter pre-tax
LIFO expense of $44.5 million. Our metal margin at $365 per ton was
14% above the third quarter of last year, but down some 19% from
the second quarter. The price of ferrous scrap consumed at the
mills during the quarter fell 50% compared to last year's third
quarter. Our average selling price of $564 was down $154 per ton,
while the average selling price for finished goods was down $166 to
$583 per ton. Sales volumes declined 37% to 427 thousand tons.
Rebar accounted for 58% of tonnage shipped, a consistent percentage
throughout the year. The price premium of merchant bar over
reinforcing bar averaged $154 per ton, down $103 per ton from the
second quarter. On a quarter-to-quarter basis, tonnage melted for
the third quarter was down 38% to 396 thousand tons, while tonnage
rolled declined 35% to 365 thousand tons. Lower production rates as
well as price decreases in some alloys and natural gas resulted in
an overall decrease of $22.7 million in electrode, alloys, and
energy costs." McClean continued, "Our copper tube mill reported an
adjusted operating profit of $2.9 million compared to $700 thousand
in the third quarter of last year, though it recorded pre-tax LIFO
expense of only $896 thousand compared to pre-tax LIFO expense of
$10.8 million in the prior year third quarter. What strength
remains in construction is in education and healthcare." Americas
Fabrication & Distribution McClean added, "Our Americas
Fabrication & Distribution segment reported adjusted operating
profit of $17.7 million compared to last year's loss of $22.3
million. The current quarter recorded pre-tax LIFO income of $19.0
million, whereas last year's third quarter suffered a pre-tax LIFO
expense of $57.0 million. Consistent with the trend all year,
fabrication, rebar, structural, decking, and construction services
were profitable, but post and joist incurred losses. Profits were
attributable to margin improvements on lower material costs
supplying relatively high-priced backlog shipments. Losses in post
were caused by high-priced raw material in inventory (used rail)
running through production and in joist, fierce competition for
dwindling tons. The composite average fab selling price (excluding
stock and buyouts) was $1,071 per ton, flat with last year's third
quarter, but down $172 per ton from the second quarter of 2009. Our
challenge remains in our domestic steel import and distribution
business which incurred a substantial loss. The decline in spot
pricing coupled with customer liquidity issues has led to
unprecedented and unwarranted contract cancellations, market
claims, price renegotiations and unanticipated inventory positions.
We have taken aggressive action to compel customer compliance, have
increased bad debt expense and taken lower of cost or market
adjustments on inventory positions." International Mills According
to McClean, "Weak international steel markets, metal margin
compression, mill start-up costs and lower of cost or market
inventory adjustments caused by rapidly falling sales prices
resulted in an adjusted operating loss of $17.7 million for this
segment compared to a $30.7 million profit in the third quarter of
last year. On a more positive sequential note, the loss was less
than the $24.3 million incurred in the second quarter of 2009, this
in spite of local currencies (zloty and kuna) strengthening against
both the U.S. dollar and euro during the third quarter. CMC Poland
had an adjusted operating loss of $9.2 million in the main
attributable to compressed metal margins as the volumes were fairly
constant with last year. Encouragingly, the losses were reducing
each month of the quarter as shipments increased; absent billets,
export markets were not viable. Shipments totaled 328 thousand tons
(69 thousand tons of billets) compared to 339 thousand tons (82
thousand tons of billets) in the prior year third quarter. Tons
melted were 324 thousand tons compared to 428 thousand tons last
year, and tons rolled were 253 thousand tons compared to 284
thousand tons in the prior year third quarter. Average selling
prices decreased 31% to PLN 1,172 per ton compared to PLN 1,708.
The cost of scrap entering production decreased 33%. The average
metal margin decreased 192 PLN from 669 PLN to 477 PLN, a level
insufficient for profitability. We successfully rolled 14 thousand
tons of material on our newly commissioned wire rod block; during
the fourth quarter, we will continue to trial different sizes and
grades incurring additional start-up costs. "Our adjusted operating
loss in Croatia for the third quarter was $8.5 million, lower than
the second quarter, and including inventory lower of cost or market
adjustments," said McClean. "Though not yet evident in the results,
the mill has some positive developments. It set a new record for
tons shipped this quarter. Our yields have steadily improved during
the year; we have successfully completed castings of all major
sizes of billets from phase one of our updated melt shop. The
installation of the renovated furnace is underway and should be
completed late in calendar 2009. During the quarter, we melted 13
thousand tons, rolled 21 thousand tons, and shipped 22 thousand
tons." International Fabrication and Distribution McClean
continued, "The downturn in steel markets is most pronounced in
Western Europe and is now in full effect in Australia. Only China
and some of its near neighbors appear to be showing signs of
recovery. The segment suffered from inventory lower of cost or
market adjustments and accruals on contract losses and other
charges totalling over pre-tax $20 million. Its adjusted operating
loss of $10.1 million was in stark contrast to last year's third
quarter profit of $40.3 million. The results of our discontinued
operations are reflected in these results which included pre-tax
LIFO income of $7.8 million. The segment was not without some
positive news - our raw materials import business remained
profitable, and we opened a fabrication facility in Zyrardow,
Poland, located west of Warsaw." Financial Condition McClean said,
"We continue to emphasize balance sheet strength, liquidity,
quality of assets, and debt covenant compliance. At May 31, 2009,
our current ratio was 2.5, we had $1.2 billion of net working
capital including $441 million of cash and short-term investments.
We have increased our allowance for doubtful accounts to $43
million. Our inventories are conservatively valued on LIFO; at May
31, 2009, the reserve was $279 million. Subsequent to quarter end,
we closed on the renegotiation of our domestic accounts receivable
securitization agreement. We had not used more than $100 million of
its capacity in past years; therefore, to save facility fees, we
renewed it for $100 million and extended the maturity until
December 2009. We have substantially all our $400 million revolver
available in the form of either commercial paper or bank borrowings
(only $27.9 million of letters of credit outstanding against it at
May 31, 2009). At May 31, 2009, goodwill and intangibles totaled
$145.9 million, representing only 4% of total assets. Our debt
maturity profile is excellent with no substantial long-term debt
payments due until 2013. We have two debt covenant tests associated
with our publicly held debt - a debt/capital ratio test and an
EBITDA to interest coverage test. The maximum debt / capital is
60%; at May 31, 2009, CMC was 44%. We are required to keep a
twelve-month rolling average EBITDA to interest coverage of 2.5
times; for the twelve months ended May 31, 2009, we had coverage of
4.8 times. "The effective tax rate for the quarter and nine month
period varies significantly from the statutory rate due to lower
tax rate jurisdictions (predominantly international) incurring
losses, profits earned in states with income taxes, and the effect
of permanent differences having a greater effect at lower levels of
pre-tax income." Outlook for Fourth Quarter McClean continued, "We
believe for the balance of calendar 2009, market conditions in the
U.S. will remain difficult. There is very little evidence of
stimulus dollars impacting demand. It is likely in 2010 that the
stimulus package will impact infrastructure spending and, thus,
demand for steel long products such as rebar. We are seeing some
small signs of a pick up in demand. However, this is more a
function of seasonality and restocking of certain steel products
than a general recovery in demand. We believe destocking of rebar
and merchant products is almost over. It is likely that steel
prices will stabilize and recover modestly in coming months. Rebar
imports are likely to remain modest as U.S. domestic prices remain
lower than international prices. "In Europe, we anticipate market
conditions to be even more difficult than in the U.S. The only
bright spot is Poland where we anticipate better demand for rebar,
merchant products and billets. This is partly due to increased
infrastructure spending utilizing mainly EU funds. We are more
optimistic about Asia, in general, led by China. China, after a
slow start, is on target to achieve 7-8% GDP in 2009. The various
stimulus packages and other initiatives introduced by the Chinese
government to stimulate demand through domestic consumption and
infrastructure spending have taken hold. Both long and flat steel
products prices in China are likely to firm further. Other markets
in Asia, in particular Southeast Asia, are likely to continue to
improve." McClean concluded, "At CMC, our people, whether in the
U.S. or in international markets, continue to perform superbly
under difficult market conditions. We believe CMC will weather the
crisis better than most due to our strong balance sheet, vertical
integration, geographic dispersion and long products focus. We
believe prices will stabilize at or near current levels negating
the need for further significant inventory valuation adjustments.
We estimate that our domestic mills may operate around 65% of
capacity in the fourth quarter. Ferrous scrap prices and volumes
should increase based on improving export markets and a small pick
up in domestic demand. Our fabrication backlogs are likely, in the
short term, to reduce further with additional margin pressure due
to fewer jobs being awarded. Our industrial products business
should remain profitable. Internationally, we are likely to see
modest improvements in Poland, as well as in our operations in Asia
and Australia. Overall, we anticipate fourth quarter results to be
similar to the third quarter." Conference Call CMC invites you to
listen to a live broadcast of its third quarter 2009 conference
call today, Tuesday, June 23, 2009, at 11:00 a.m. ET. The call will
be hosted by Murray McClean, Chairman, President and CEO and Bill
Larson, Senior Vice President and CFO, and can be accessed via our
website at http://www.cmc.com/ or at http://www.streetevents.com/.
In the event you are unable to listen to the live broadcast, the
call will be archived and available for replay within two hours of
the webcast. Financial and statistical information presented in the
broadcast can be found on CMC's website under "Investor Relations."
Commercial Metals Company and subsidiaries manufacture, recycle and
market steel and metal products, related materials and services
through a network including steel minimills, steel fabrication and
processing plants, construction-related product warehouses, a
copper tube mill, metal recycling facilities and marketing and
distribution offices in the United States and in strategic
international markets. The news release contains forward-looking
statements regarding the outlook for the Company's financial
results including net earnings, product pricing and demand,
production rates, stimulus spending, inventory and backlog levels,
GDP growth and general market conditions. These forward-looking
statements generally can be identified by phrases such as the
company or its management "expect," "anticipates," "believe,"
"ought," "should," "likely," "appears," "projected," "forecast,"
"outlook," "will" or other words or phrases of similar impact.
There is inherent risk and uncertainty in any forward-looking
statements. Variances will occur and some could be materially
different from management's current opinion. Developments that
could impact the Company's expectations include construction
activity, difficulties or delays in the execution of construction
contracts resulting in cost overruns or contract disputes, metals
pricing over which the Company exerts little influence, interest
rate changes, increased capacity and product availability from
competing steel minimills and other steel suppliers including
import quantities and pricing, court decisions, industry
consolidation or changes in production capacity or utilization,
global factors including political and military uncertainties,
credit availability, currency fluctuations, energy and supply
prices and decisions by governments impacting the level of steel
imports, stimulus spending, and pace of overall economic activity,
particularly China. Three months ended Nine months Ended (Short
Tons in Thousands) 5/31/09 5/31/08 5/31/09 5/31/08 Domestic Steel
Mill Rebar Shipments 249 300 712 851 Domestic Steel Mill Structural
and Other Shipments 178 373 538 1,046 CMCZ Shipments 328 339 860
1,010 Total Mill Tons Shipped 755 1,012 2,110 2,907 Average FOB
Mill Domestic Selling Price (Total Sales) $564 $718 $673 $643
Average Cost Domestic Mill Ferrous Scrap Utilized $199 $399 $251
$316 Domestic Mill Metal Margin $365 $319 $422 $327 Average
Domestic Mill Ferrous Scrap Purchase Price $152 $382 $193 $301
Average FOB Mill CMCZ Selling Price (Total Sales) $351 $771 $494
$644 Average Cost CMCZ Ferrous Scrap Utilized $206 $467 $266 $374
CMCZ Mill Metal Margin $145 $304 $228 $270 Average CMCZ Ferrous
Scrap Purchase Price $165 $395 $210 $334 Fab Plant Rebar Shipments
236 278 766 766 Fab Plant Structural, Post, Joist and Deck
Shipments 91 174 334 490 Total Fabrication Tons Shipped 327 452
1,100 1,256 Average Fab Selling Price (Excluding Stock & Buyout
Sales) $1,071 $1,065 $1,201 $1,035 Domestic Scrap Metal Tons
Processed and Shipped 424 900 1,463 2,520 BUSINESS SEGMENTS (in
thousands) Three months ended Nine months ended 5/31/09 5/31/08
5/31/09 5/31/08 Net Sales Americas Recycling $152,439 $628,617
$551,680 $1,532,012 Americas Mills 276,827 519,552 945,601
1,390,152 Americas Fab and Distribution 484,414 751,869 2,086,689
2,030,059 International Mills 147,782 341,474 508,519 755,538
International Fab and] Distribution 474,823 1,090,397 1,993,165
2,600,322 Corporate 13,274 4,625 (15,484) 4,541 Eliminations and
Discontinued Operations (208,979) (425,804) (738,590)(1,031,722)
Total Net Sales $1,340,580 $2,910,730 $5,331,580 $7,280,902
Adjusted Operating Profit (Loss): Americas Recycling $(6,712)
$50,371 $(70,843) $92,882 Americas Mills 42,066 34,044 233,851
158,520 Americas Fab and Distribution 17,714 (22,291) 101,314 507
International Mills (17,687) 30,656 (58,746) 39,730 International
Fab and Distribution (10,126) 40,342 (7,079) 88,609 Corporate and
Eliminations (5,647) (26,108) (64,000) (74,612) COMMERCIAL METALS
COMPANY Condensed Consolidated Statements of Operations (Unaudited)
(in thousands except share data) Three months ended Nine months
ended 5/31/09 5/31/08 5/31/09 5/31/08 Net Sales $1,340,580
$2,910,730 $5,331,580 $7,280,902 Costs and Expenses: Cost of goods
sold 1,147,844 2,617,232 4,709,215 6,489,009 Selling, general and
administrative expenses 169,974 190,882 496,368 498,292 Interest
expense 18,464 15,827 62,310 42,285 1,336,282 2,823,941 5,267,893
7,029,586 Earnings from Continuing Operations Before Income Taxes
and Minority Interests 4,298 86,789 63,687 251,316 Income Taxes
15,341 27,980 53,115 84,260 Earnings (Loss) from Continuing
Operations Before Minority Interests (11,043) 58,809 10,572 167,056
Minority Interests (Benefit) (370) 277 (487) 540 Net Earnings
(Loss) from Continuing Operations (10,673) 58,532 11,059 166,516
Earnings (Loss) from Discontinued Operations Before Taxes (4,165)
1,501 4,024 3,722 Income Taxes (Benefit) (1,761) 549 1,461 1,815
Net Earnings (Loss) from Discontinued Operations (2,404) 952 2,563
1,907 Net Earnings (Loss) $(13,077) $59,484 $13,622 $168,423 Basic
earnings per share Earnings (Loss) from Continuing Operations
$(0.10) $0.51 $0.10 $1.44 Earnings (Loss) from Discontinued
Operations $(0.02) $0.01 $0.02 $0.02 Net Earnings (Loss) $(0.12)
$0.52 $0.12 $1.46 Diluted earnings per share Earnings (Loss) from
Continuing Operations $(0.10) $0.50 $0.10 $1.41 Earnings (Loss)
from Discontinued Operations $(0.02) $0.01 $0.02 $0.02 Net Earnings
(Loss) $(0.12) $0.51 $0.12 $1.43 Cash dividends per share $0.12
$0.12 $0.36 $0.33 Average basic shares outstanding 112,191,349
113,607,049 112,398,000 115,438,369 Average diluted shares
outstanding 112,191,349 116,090,369 113,855,406 118,163,737
COMMERCIAL METALS COMPANY Condensed Consolidated Balance Sheets
(Unaudited) (in thousands) May 31, August 31, 2009 2008 Assets:
Current Assets: Cash and cash equivalents $441,389 $219,026
Accounts receivable, net 710,330 1,369,453 Inventories 745,949
1,400,332 Other 181,329 228,632 Total Current Assets 2,078,997
3,217,443 Net Property, Plant and Equipment 1,269,161 1,154,322
Goodwill 73,700 84,837 Other Assets 260,103 289,769 $3,681,961
$4,746,371 Liabilities and Stockholders' Equity: Current
Liabilities: Accounts payable - trade $301,459 $838,777 Accounts
payable - documentary letters of credit 190,001 192,492 Accrued
expenses and other payables 321,648 563,424 Income taxes payable
and deferred income taxes - 156 Notes payable 2,105 31,305 Current
maturities of long-term debt 23,647 106,327 Total Current
Liabilities 838,860 1,732,481 Deferred Income Taxes 50,473 50,160
Other Long-Term Liabilities 111,407 124,171 Long-Term Debt
1,184,599 1,197,533 Total Liabilities 2,185,339 3,104,345 Minority
Interests 2,434 3,643 Stockholders' Equity 1,494,188 1,638,383
$3,681,961 $4,746,371 COMMERCIAL METALS COMPANY Condensed
Consolidated Statements of Cash Flows (Unaudited) (in thousands)
Nine months ended 5/31/09 5/31/08 Cash Flows From (Used by)
Operating Activities: Net earnings $13,622 $168,423 Adjustments to
reconcile net earnings to cash from (used by) operating activities:
Depreciation and amortization 116,045 96,594 Minority interests
(benefit) (487) 540 Provision for losses on receivables 33,615
4,246 Share-based compensation 12,369 14,802 Net loss on sale of
assets and other 388 372 Writedown of inventory 110,411 - Asset
impairment 5,051 530 Changes in Operating Assets and Liabilities,
Net of Acquisitions: Accounts receivable 677,602 (308,168) Accounts
receivable sold, net (107,978) 47,746 Inventories 473,423 (238,663)
Other assets 64,683 (109,523) Accounts payable, accrued expenses,
other payables and income taxes (716,579) 272,022 Deferred income
taxes (4,099) (13,161) Other long-term liabilities (9,242) 10,671
Net Cash Flows From (Used By) Operating Activities 668,824 (53,569)
Cash Flows From (Used by) Investing Activities: Capital
expenditures (290,318) (227,241) Purchase of minority interests in
CMC Zawiercie (6) (169) Proceeds from the sale of property, plant
and equipment & other 2,292 1,460 Acquisitions, net of cash
acquired (900) (30,646) Net Cash Flows Used By Investing Activities
(288,932) (256,596) Cash Flows From (Used by) Financing Activities:
Increase (decrease) in documentary letters of credit (2,491) 58,625
Short-term borrowings, net change (25,611) 34,563 Repayments on
long-term debt (102,804) (1,704) Proceeds from issuance of long
term debt 36,365 35,138 Stock issued under incentive and purchase
plans 1,095 12,569 Treasury stock acquired (18,514) (151,530) Cash
dividends (40,636) (38,322) Tax benefits from stock plans 1,472
6,674 Net Cash Flows Used By Financing Activities (151,124)
(43,987) Effect of Exchange Rate Changes on Cash (6,405) 3,455
Increase (Decrease) in Cash and Cash Equivalents 222,363 (350,697)
Cash and Cash Equivalents at Beginning of Year 219,026 419,275 Cash
and Cash Equivalents at End of Period $441,389 $68,578 COMMERCIAL
METALS COMPANY Non-GAAP Financial Measures (Unaudited) (dollars in
thousands) This press release uses financial statement measures not
derived in accordance with generally accepted accounting principles
(GAAP). Reconciliations to the most comparable GAAP measures are
provided below. EBITDA: Earnings before interest expense, income
taxes, depreciation and amortization. EBITDA is a non-GAAP
liquidity measure. It excludes Commercial Metals Company's largest
recurring non-cash charge, depreciation and amortization. As a
measure of cash flow before interest expense, it is one guideline
used to assess the Company's ability to pay its current debt
obligations as they mature and a tool to calculate possible future
levels of leverage capacity. EBITDA to interest is a covenant test
in certain of the Company's note agreements. Three Months Nine
Months Ended Ended 5/31/09 5/31/09 Net earnings (loss) $(13,077)
$13,622 Interest expense 18,482 62,874 Income taxes 13,580 54,576
Depreciation and amortization 37,470 116,045 EBITDA $56,455
$247,117 EBITDA to interest coverage for the quarter ended for the
nine months ended May 31, 2009: May 31, 2009: $56,455 / 18,482 =
3.1 $247,117 / 62,874 = 3.9 Total Capitalization: Total
capitalization is the sum of long-term debt, deferred income taxes,
and stockholders' equity. The ratio of debt to total capitalization
is a measure of current debt leverage. The following reconciles
total capitalization at May 31, 2009 to the nearest GAAP measure,
stockholders' equity: Stockholders' equity $1,494,188 Long-term
debt 1,184,599 Deferred income taxes 50,473 Total capitalization
$2,729,260 Other Financial Information Long-term debt to cap ratio
as of May 31, 2009: Debt divided by capitalization $1,184,599 /
2,729,260 = 43.4% Total debt to cap plus short-term debt plus notes
payable ratio as of May 31, 2009: (1,184,599 + 23,647 + 2,105 ) /
(2,729,260 + 23,647 + 2,105) = 43.9% Current ratio as of May 31,
2009: Current assets divided by current liabilities $2,078,997
/838,860 = 2.5 DATASOURCE: Commercial Metals Company CONTACT:
Debbie Okle, Director, Public Relations of Commercial Metals
Company, +1-214-689-4354 Web Site: http://www.cmc.com/
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