COMMERCIAL METALS CO (Form: 10-Q, Received: 07/08/2011 17:22:43)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2011

Commission File Number 1-4304

COMMERCIAL METALS COMPANY

(Exact name of registrant as specified in its charter)


Delaware		75-0725338

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

6565 N. MacArthur Blvd.
Irving, Texas 75039

(Address of principal executive offices)(Zip Code)

(214) 689-4300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No þ

As of July 1, 2011 there were 115,533,540 shares of the Company’s common stock outstanding.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS


	PAGE NO.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) — May 31, 2011 and August 31, 2010		3
Consolidated Statements of Operations (Unaudited) — Three months and nine months ended May 31, 2011 and 2010		4
Consolidated Statements of Cash Flows (Unaudited) — Nine months ended May 31, 2011 and 2010		5
Consolidated Statements of Stockholders’ Equity (Unaudited) — Nine months ended May 31, 2011 and 2010		6
Notes to Consolidated Financial Statements (Unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3. Quantitative and Qualitative Disclosures About Market Risk		27
Item 4. Controls and Procedures		27
PART II — OTHER INFORMATION
Items 1 — 6		27
Signatures		29
Index to Exhibits		30
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	May 31,			August 31,
(in thousands, except share and per share data)	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	243,562		$	399,313
Accounts receivable (less allowance for collection losses of $25,964 and $29,721)		936,223			824,339
Inventories		889,464			674,680
Other		230,479			276,874

Total current assets		2,299,728			2,175,206
Property, plant and equipment:
Land		94,035			94,426
Buildings and improvements		563,099			540,285
Equipment		1,708,294			1,649,723
Construction in process		44,510			56,124

		2,409,938			2,340,558
Less accumulated depreciation and amortization		(1,204,802	)		(1,108,290	)

		1,205,136			1,232,268
Goodwill		72,603			71,580
Other assets		177,591			227,099

Total assets	$	3,755,058		$	3,706,153


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable-trade	$	519,643		$	504,388
Accounts payable-documentary letters of credit		171,892			226,633
Accrued expenses and other payables		376,812			324,897
Notes payable		8,372			6,453
Commercial paper		—			10,000
Current maturities of long-term debt		38,246			30,588

Total current liabilities		1,114,965			1,102,959
Deferred income taxes		43,688			43,668
Other long-term liabilities		118,378			108,870
Long-term debt		1,165,482			1,197,282

Total liabilities		2,442,513			2,452,779

Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			—
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 115,435,601 and 114,325,349 shares		1,290			1,290
Additional paid-in capital		370,786			373,308
Accumulated other comprehensive income (loss)		80,174			(12,526	)
Retained earnings		1,127,713			1,178,372
Treasury stock 13,625,063 and 14,735,315 shares at cost		(267,638	)		(289,708	)

Stockholders’ equity attributable to CMC		1,312,325			1,250,736
Stockholders’ equity attributable to noncontrolling interests		220			2,638

Total equity		1,312,545			1,253,374

Total liabilities and stockholders’ equity	$	3,755,058		$	3,706,153

See notes to unaudited consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended						Nine Months Ended
	May 31,						May 31,
(in thousands, except share and per share data)	2011			2010			2011			2010
Net sales	$	2,076,564		$	1,765,154		$	5,650,810		$	4,489,855
Costs and expenses:
Cost of goods sold		1,861,125			1,645,250			5,205,197			4,253,574
Selling, general and administrative expenses		145,597			108,509			390,772			389,182
Interest expense		18,254			18,184			54,857			57,871

		2,024,976			1,771,943			5,650,826			4,700,627

Earnings (loss) from continuing operations before income taxes		51,588			(6,789	)		(16	)		(210,772	)
Income taxes (benefit)		14,493			3,952			8,688			(36,101	)

Earnings (loss) from continuing operations		37,095			(10,741	)		(8,704	)		(174,671	)

Earnings (loss) from discontinued operations before taxes		(1,429	)		4,001			(782	)		(62,513	)
Income taxes (benefit)		(554	)		1,723			(303	)		(24,117	)

Earnings (loss) from discontinued operations		(875	)		2,278			(479	)		(38,396	)


Net earnings (loss)	$	36,220		$	(8,463	)	$	(9,183	)	$	(213,067	)
Less net earnings attributable to noncontrolling interests		55			363			163			278

Net earnings (loss) attributable to CMC	$	36,165		$	(8,826	)	$	(9,346	)	$	(213,345	)


Basic earnings (loss) per share attributable to CMC:
Earnings (loss) from continuing operations	$	0.32		$	(0.10	)	$	(0.08	)	$	(1.54	)
Earnings (loss) from discontinued operations		(0.01	)		0.02			—			(0.34	)

Net earnings (loss)	$	0.31		$	(0.08	)	$	(0.08	)	$	(1.88	)

Diluted earnings (loss) per share attributable to CMC:
Earnings (loss) from continuing operations	$	0.32		$	(0.10	)	$	(0.08	)	$	(1.54	)
Earnings (loss) from discontinued operations		(0.01	)		0.02			—			(0.34	)

Net earnings (loss)	$	0.31		$	(0.08	)	$	(0.08	)	$	(1.88	)

Cash dividends per share	$	0.12		$	0.12		$	0.36		$	0.36

Average basic shares outstanding		115,403,374			114,067,149			114,819,792			113,279,301

Average diluted shares outstanding		116,360,755			114,067,149			114,819,792			113,279,301

See notes to unaudited consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended
	May 31,
(in thousands)	2011			2010
Cash flows from (used by) operating activities:
Net loss	$	(9,183	)	$	(213,067	)
Adjustments to reconcile net loss to cash from (used by) operating activities:
Depreciation and amortization		120,810			128,393
Recoveries on receivables, net		(2,922	)		(1,831	)
Share-based compensation		9,240			5,590
Deferred income taxes		1,357			(72,304	)
Tax benefits from stock plans		(2,367	)		(3,204	)
Gain on sale of assets and other		(1,569	)		(529	)
Write-down of inventory		7,593			44,680
Asset impairment		—			32,613
Changes in operating assets and liabilities, net of acquisitions:
Increase in accounts receivable		(141,636	)		(107,275	)
Accounts receivable sold, net		49,890			29,322
Increase in inventories		(202,995	)		(41,880	)
Decrease in other assets		60,100			13,851
Increase in accounts payable, accrued expenses, other payables and income taxes		59,172			209,441
Increase (decrease) in other long-term liabilities		8,444			(6,305	)

Net cash flows from (used by) operating activities		(44,066	)		17,495

Cash flows from (used by) investing activities:
Capital expenditures		(51,539	)		(109,464	)
Proceeds from the sale of property, plant and equipment and other		52,253			5,287
Proceeds from the sale of equity method investments		4,224			—
Acquisitions, net of cash acquired		—			(2,448	)
Increase in deposit for letters of credit		(3,258	)		(27,238	)

Net cash flows from (used by) investing activities		1,680			(133,863	)

Cash flows from (used by) financing activities:
Decrease in documentary letters of credit		(54,741	)		(32,884	)
Short-term borrowings, net change		(8,253	)		61,317
Repayments on long-term debt		(23,473	)		(19,914	)
Proceeds from issuance of long-term debt		1,463			22,437
Stock issued under incentive and purchase plans		10,062			10,355
Cash dividends		(41,313	)		(40,773	)
Purchase of noncontrolling interests		(3,980	)		—
Tax benefits from stock plans		2,367			3,204

Net cash flows from (used by) financing activities		(117,868	)		3,742

Effect of exchange rate changes on cash		4,503			(3,347	)

Decrease in cash and cash equivalents		(155,751	)		(115,973	)
Cash and cash equivalents at beginning of year		399,313			405,603

Cash and cash equivalents at end of period	$	243,562		$	289,630

See notes to unaudited consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


	CMC Stockholders’ Equity
								Accumulated
	Common Stock				Additional			Other						Treasury Stock
	Number of				Paid-In			Comprehensive			Retained			Number of						Noncontrolling
(in thousands, except share data)	Shares		Amount		Capital			Income (Loss)			Earnings			Shares			Amount			Interests		Total
Balance, September 1, 2009		129,060,664	$	1,290	$	380,737		$	34,257		$	1,438,205			(16,487,231	)	$	(324,796	)	$	2,371	$	1,532,064
Comprehensive income (loss):
Net earnings (loss) for the nine months ended May 31, 2010												(213,345	)								278		(213,067	)
Other comprehensive income (loss):
Foreign currency translation adjustment									(69,857	)											31		(69,826	)
Unrealized gain on derivatives, net of taxes ($97)									7														7
Defined benefit obligation, net of taxes ($267)									(508	)													(508	)

Comprehensive loss																							(283,394	)
Cash dividends												(40,773	)										(40,773	)
Issuance of stock under incentive and purchase plans, net						(23,979	)								1,717,832			34,334					10,355
Share-based compensation						5,590																	5,590
Tax benefits from stock plans						3,204																	3,204

Balance, May 31, 2010		129,060,664	$	1,290	$	365,552		$	(36,101	)	$	1,184,087			(14,769,399	)	$	(290,462	)	$	2,680	$	1,227,046


	CMC Stockholders’ Equity
								Accumulated
	Common Stock				Additional			Other						Treasury Stock
	Number of				Paid-In			Comprehensive			Retained			Number of						Noncontrolling
(in thousands, except share data)	Shares		Amount		Capital			Income (Loss)			Earnings			Shares			Amount			Interests			Total
Balance, September 1, 2010		129,060,664	$	1,290	$	373,308		$	(12,526	)	$	1,178,372			(14,735,315	)	$	(289,708	)	$	2,638		$	1,253,374
Comprehensive income (loss):
Net earnings (loss) for the nine months ended May 31, 2011												(9,346	)								163			(9,183	)
Other comprehensive income (loss):
Foreign currency translation adjustment									92,807															92,807
Unrealized loss on derivatives, net of taxes ($57)									(107	)														(107	)

Comprehensive income																								83,517
Cash dividends												(41,313	)											(41,313	)
Issuance of stock under incentive and purchase plans, net						(12,008	)								1,110,252			22,070						10,062
Share-based compensation						8,518																		8,518
Purchase of noncontrolling interest						(1,399	)														(2,581	)		(3,980	)
Tax benefits from stock plans						2,367																		2,367

Balance, May 31, 2011		129,060,664	$	1,290	$	370,786		$	80,174		$	1,127,713			(13,625,063	)	$	(267,638	)	$	220		$	1,312,545

See notes to unaudited consolidated financial statements.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 — QUARTERLY FINANCIAL DATA

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States on a basis consistent with that used in Commercial Metals Company’s (the “Company” or “CMC”) Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended August 31, 2010, and include all normal recurring adjustments necessary to present fairly the consolidated balance sheets and statements of operations, cash flows and stockholders’ equity for the periods indicated. These notes should be read in conjunction with such Form 10-K. The results of operations for the three and nine month periods are not necessarily indicative of the results to be expected for a full year.

NOTE 2 — ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

In the first quarter of 2011, the Company adopted accounting guidance related to the accounting for transfers of financial assets. The guidance clarifies the determination of a transferor’s continuing involvement in a transferred financial asset and limits the circumstances in which a financial asset should be removed from the balance sheet when the transferor has not transferred the entire original financial asset. See Note 3, Sales of Accounts Receivable, for additional details.

NOTE 3 — SALES OF ACCOUNTS RECEIVABLE

On April 5, 2011, the Company entered into a two year sale of accounts receivable 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 will sell the trade accounts receivable in their entirety to a third party financial institution. The third party financial institution will advance up to a maximum of $100 million for all receivables and the remaining portion due to the Company will be deferred until the ultimate collection of the underlying receivables. The facility can be increased to a maximum of $200 million with consent of the financial institution. The Company will account for sales to the financial institution as true sales and the receivables will be removed from the consolidated balance sheet and the proceeds from the sale will be 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 one of its credit arrangements. As of May 31, 2011, no receivables had been sold to the third party financial institution.

The Company’s previous accounts receivable securitization agreement of $100 million expired on January 31, 2011. As of August 31, 2010, no receivables had been sold under the expired program.

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 satisfy the Company’s creditors in the event of bankruptcy. Uncollected accounts receivable sold under these arrangements and removed from the consolidated balance sheets were $153.8 million and $103.9 million at May 31, 2011 and August 31, 2010, respectively. The Australian program contains financial covenants in which the subsidiary must meet certain coverage and tangible net worth levels, as defined. At May 31, 2011, the Australian subsidiary was in compliance with these covenants.

During the nine months ended May 31, 2011 and 2010, proceeds from the sales of receivables were $892.6 million and $604.3 million, respectively, and cash payments to the owners of receivables were $842.7 million and $575.0 million, respectively. The Company is responsible for servicing the receivables for a nominal servicing fee. Discounts on domestic and international sales of accounts receivable were $3.6 million and $2.8 million for the nine months ended May 31, 2011 and 2010, respectively. These discounts primarily represented the costs of funds and were included in selling, general and administrative expenses.

NOTE 4 — INVENTORIES

Inventories are stated at the lower of cost or market. Inventory cost for most domestic inventories is determined by the last-in, first-out method (“LIFO”). LIFO inventory reserves were $297.7 million and $230.3 million at May 31, 2011 and August 31, 2010,

respectively. Inventory cost for international inventories and the remaining domestic inventories are determined by the first-in, first-out method (“FIFO”). The majority of the Company’s inventories are in the form of finished goods, with minimal work in process. At May 31, 2011 and August 31, 2010, $114.4 million and $59.1 million, respectively, were in raw materials.

NOTE 5 — GOODWILL AND OTHER INTANGIBLE ASSETS

The Company tests for impairment of goodwill by estimating the fair value of each reporting unit compared to its carrying value. The Company’s reporting units are based on its internal reporting structure and represent an operating segment or a reporting level below an operating segment. Additionally, the reporting units are aggregated based upon similar economic characteristics, nature of products and services, nature of production processes, type of customers and distribution methods. The Company has determined its operating units that have a significant amount of goodwill to be in the Americas Recycling and Americas Fabrication segments. The Company uses a discounted cash flow model to calculate the fair value of its reporting units. The model includes a number of significant assumptions and estimates regarding future cash flows including discount rates, volumes, prices, capital expenditures and the impact of current market conditions. These estimates could be materially impacted by adverse changes in market conditions. The Company performs the goodwill impairment test in the fourth quarter each fiscal year and when changes in circumstances indicate an impairment event may have occurred. There were no triggering events during the third quarter of 2011.

The total gross carrying amounts of the Company’s intangible assets that were subject to amortization were $70.1 million and $73.9 million at May 31, 2011 and August 31, 2010, respectively, and are included in other noncurrent assets. Aggregate amortization expense for intangible assets for the three months ended May 31, 2011 and 2010 was $2.4 million and $2.7 million, respectively. Aggregate amortization expense for intangible assets for the nine months ended May 31, 2011 and 2010 was $7.4 million and $11.3 million, respectively.

NOTE 6 — SEVERANCE

During the three and nine months ended May 31, 2011, the Company recorded severance costs of $1.3 million and $2.6 million, respectively. During the three and nine months ended May 31, 2010, the Company recorded severance costs of $1.9 million and $18.5 million, respectively. These severance costs relate to involuntary employee terminations initiated as part of the Company’s focus on operating expense management and reductions in headcount. Additionally, during the second quarter of 2010, the Company incurred severance costs associated with exiting the joist and deck business.

NOTE 7 — DISCONTINUED OPERATIONS AND DISPOSITIONS

On February 26, 2010, the Company’s Board of Directors approved a plan to exit the joist and deck business through the sale of those facilities. The Company determined that the decision to exit this business met the definition of a discontinued operation. As a result, this business has been presented as a discontinued operation for all periods. The Company recorded $26.8 million to impair plant, property and equipment, $4.5 million to write-off intangible assets, and $7.4 million of inventory valuation adjustments during the second quarter of 2010. During the nine months ended May 31, 2010, the Company recorded severance costs of $9.2 million in connection with exiting the business. The joist and deck business was in the Americas Fabrication segment.

During the fourth quarter of 2010, the Company completed the sale of the majority of the deck assets and during the first quarter of 2011, the Company completed the sale of the majority of the joist assets resulting in a gain of $1.9 million.

Various financial information for discontinued operations is as follows:


	May 31,		August 31,
(in thousands)	2011		2010
Current assets	$	508	$	10,850
Noncurrent assets		12,125		27,045
Current liabilities		8,283		14,723
Noncurrent liabilities		—		22


	Three Months Ended					Nine Months Ended
	May 31,					May 31,
	2011			2010		2011			2010
Revenue		251			37,398		1,370			110,809
Earnings (loss) before taxes		(1,429	)		4,001		(782	)		(62,513	)

During the first quarter of 2011, CMC Construction Services, a subsidiary of the Company included in the Americas Fabrication segment, completed the sale of heavy forming and shoring equipment for approximately $35 million. The Company recorded a loss on sale of approximately $0.5 million in connection with this transaction.

NOTE 8 — CREDIT ARRANGEMENTS

The Company’s revolving credit facility of $400 million has a maturity date of November 24, 2012 and includes certain covenants. The Company is required to maintain a minimum interest coverage ratio of not less than 2.50 to 1.00 for the twelve month cumulative period ended May 31, 2011 and for each fiscal quarter on a rolling twelve month cumulative period thereafter. At May 31, 2011, the Company’s interest coverage ratio was 3.37 to 1.00. The agreement also requires the Company to maintain a debt to capitalization ratio covenant not greater than 0.60 to 1.00. At May 31, 2011, the Company’s debt to capitalization ratio was 0.50 to 1.00. The agreement provides for interest based on LIBOR, Eurodollar or Bank of America’s prime rate. The facility fee is 60 basis points per annum and no compensating balances are required.

It is the Company’s policy to maintain contractual bank credit lines equal to 100% of the amount of the commercial paper program. There were no amounts outstanding at May 31, 2011 and $10 million outstanding at August 31, 2010 under the commercial paper program. There were no amounts outstanding on the revolving credit facility at May 31, 2011 and August 31, 2010. The availability under the revolving credit agreement is reduced by any outstanding amount under the commercial paper program. At May 31, 2011, $400 million was available under the revolving credit agreement.

The Company has numerous uncommitted credit facilities available from domestic and international banks. No commitment fees or compensating balances are required under these credit facilities. These credit facilities are used, in general, to support import letters of credit, foreign exchange transactions and short term advances which are priced at market rates.

Long-term debt, including the net effect of interest rate swap revaluation adjustments, is as follows:


	May 31,		August 31,
(in thousands)	2011		2010
5.625% notes due November 2013 (weighted average rate of 3.5% at May 31, 2011)	$	205,966	$	208,253
6.50% notes due July 2017 (weighted average rate of 4.8% at May 31, 2011)		399,724		400,000
7.35% notes due August 2018 (weighted average rate of 5.4% at May 31, 2011)		511,645		524,185
CMCZ term note due May 2013		58,226		69,716
CMCS financing agreement		21,574		19,006
Other, including equipment notes		6,593		6,710

		1,203,728		1,227,870
Less current maturities		38,246		30,588

	$	1,165,482	$	1,197,282

Interest on the notes, except for the CMC Zawiercie (“CMCZ”) note, is payable semiannually.

Effective May 20, 2011, the Company entered into an interest rate swap transaction on its 6.50% notes due July 2017 (“2017 Notes”). On March 23, 2010, the Company entered into two interest rate swap transactions on its 5.625% notes due November 2013 (“2013 Notes”) and 7.35% notes due August 2018 (“2018 Notes”). The swap transactions were designated as fair value hedges at inception and convert all fixed rate interest to floating rate interest on the Company’s 2013 Notes, $300 million on the 2017 Notes and $300 million on the 2018 Notes and have termination dates of November 15, 2013, July 15, 2017 and August 15, 2018, respectively. The swap transactions costs are based on the floating LIBOR plus 303 basis points with respect to the 2013 Notes, LIBOR plus 374 basis points with respect to the 2017 Notes and LIBOR plus 367 basis points with respect to the 2018 Notes.

CMCZ has a five year term note of PLN 160 million ($58.2 million) with a group of four banks. The term note is used to finance operating expenses of CMCZ and the development of a rolling mill. The note has scheduled principal and interest payments in fifteen equal quarterly installments which began in November 2009 with the final installment in May 2013. The weighted average interest rate at May 31, 2011 was 6.5%. The term note contains four financial covenants for CMCZ. At May 31, 2011, CMCZ was not in compliance with one of the financial covenants which resulted in a guarantee by Commercial Metals Company continuing to be effective. As a result of the guarantee, the financial covenant requirements became void; however, all other terms of the loan remain in effect, including the payment schedule. The guarantee will cease to be effective when CMCZ is in compliance with the financial covenant for two consecutive quarters.

CMC Sisak (“CMCS”) has a five year financing agreement of EUR 15.0 million ($21.6 million). The loan is intended to be used for capital expenditures and other uses. The note has scheduled principal and interest payments in seven semiannual installments beginning in July 2011 and ending in July 2014. The weighted average interest rate at May 31, 2011 was 5.0%.

Interest of $0.7 million and $4.2 million was capitalized in the cost of property, plant and equipment constructed for the nine months ended May 31, 2011 and 2010, respectively. Interest of $32.6 million and $40.5 million was paid for the nine months ended May 31, 2011 and 2010, respectively.

NOTE 9 — DERIVATIVES AND RISK MANAGEMENT

The Company’s worldwide operations and product lines expose it to risks from fluctuations in metals commodity prices, foreign currency exchange rates, natural gas prices and interest rates. One objective of the Company’s risk management program is to mitigate these risks using derivative instruments. The Company enters into metal commodity futures and forward contracts to mitigate the risk of unanticipated declines in gross margin due to the volatility of the commodities’ prices, enters into foreign currency forward contracts which match the expected settlements for purchases and sales denominated in foreign currencies and enters into natural gas forward contracts to mitigate the risk of unanticipated changes in operating cost due to the volatility of natural gas prices. When sales commitments to customers include a fixed price freight component, the Company occasionally enters into freight forward contracts to minimize the effect of the volatility of ocean freight rates. The Company enters into interest rate swap contracts to maintain a portion of the Company’s debt obligations at variable interest rates. These interest rate swap contracts, under which the Company has agreed to pay variable rates of interest and receive fixed rates of interest, are designated as fair value hedges of fixed rate debt.

The following tables provide certain information regarding the foreign exchange and commodity financial instruments discussed above.

Gross foreign currency exchange contract commitments as of May 31, 2011 (in thousands):


Functional Currency			Contract Currency
Type	Amount		Type	Amount
AUD		82	EUR		59
AUD		56	GBP		36
AUD		77	NZD		100
AUD		87,652	USD		90,955
EUR		3,718	HRK*		27,428
EUR		1,320	USD		1,898
GBP		13,680	USD		22,250
PLN		420,633	EUR		105,437
PLN		96,208	USD		32,752
PLN		413	SEK**		926
SGD		11,830	USD		9,585
USD		52,334	EUR		36,600
USD		39,465	GBP		23,930
USD		1,057	JPY		85,048
USD		21,000	CNY***		133,959


*		Croatian kuna

**		Swedish krona

***		Chinese yuan

Commodity contract commitments as of May 31, 2011:


Commodity	Long/Short	Total
Aluminum	Long	3,175	MT
Aluminum	Short	75	MT
Copper	Long	1,176	MT
Copper	Short	6,418	MT
Zinc	Long	7	MT


•		MT = Metric Ton

The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. These hedges resulted in substantially no ineffectiveness in the statements of operations, and there were no components excluded from the assessment of hedge effectiveness for the three months and nine months ended May 31, 2011 and 2010. Certain of the foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges.

The following tables summarize activities related to the Company’s derivative instruments and hedged (underlying) items recognized within the statements of operations (in thousands):


		Three Months Ended						Nine Months Ended
		May 31,						May 31,
Derivatives Not Designated as Hedging Instruments	Location	2011			2010			2011			2010
Commodity	Cost of goods sold	$	4,296		$	1,226		$	(11,744	)	$	(3,522	)
Foreign exchange	Net sales		39			(870	)		35			(910	)
Foreign exchange	Cost of goods sold		305			(487	)		1,174			(872	)
Foreign exchange	SG&A expenses		(3,984	)		(1,274	)		(4,823	)		(1,237	)

Gain (loss) before taxes		$	656		$	(1,405	)	$	(15,358	)	$	(6,541	)

The Company’s fair value hedges are designated for accounting purposes with gains and losses on the hedged (underlying) items offsetting the gain or loss on the related derivative transaction. Hedged (underlying) items relate to firm commitments on commercial sales and purchases, capital expenditures and fixed rate debt obligations. As of May 31, 2011, fair value hedge accounting for interest rate swap contracts increased the carrying value of debt instruments by $17.3 million.


		Three Months Ended					Nine Months Ended
		May 31,					May 31,
Derivatives Designated as Fair Value Hedging Instruments	Location	2011			2010		2011			2010
Foreign exchange	SG&A expenses	$	(5,382	)	$	6,556	$	(14,157	)	$	515
Interest rate	Interest expense		11,091			4,483		17,331			4,483

Gain before taxes		$	5,709		$	11,039	$	3,174		$	4,998


		Three Months Ended						Nine Months Ended
Hedged (Underlying)		May 31,						May 31,
Items Designated as Fair Value Hedging Instruments	Location	2011			2010			2011			2010
Foreign exchange	Net sales	$	77		$	(36	)	$	126		$	(30	)
Foreign exchange	SG&A expenses		5,299			(6,517	)		14,031			(482	)
Interest rate	Interest expense		(11,090	)		(4,483	)		(17,331	)		(4,483	)

Loss before taxes		$	(5,714	)	$	(11,036	)	$	(3,174	)	$	(4,995	)

The Company recognizes the impact of actual and estimated net periodic settlements of current interest on our active interest rate swaps as adjustments to interest expense. The following table summarizes the impact of actual and estimated periodic settlements of active swap agreements on the results of operations:


	Three Months Ended				Nine Months Ended
	May 31,				May 31,
Hedge Accounting for Interest Rate Swaps	2011		2010		2011		2010
Reductions to interest expense from periodic estimated and actual settlements of active swap agreements*	$	3,931	$	2,109	$	10,723	$	2,109


*		Amounts represent the net of the Company’s periodic variable-rate interest obligations and the swap counterparty’s fixed-rate interest obligations. The Company’s variable-rate obligations are based on a spread from the six-month LIBOR in arrears.


	Three Months Ended						Nine Months Ended
Effective Portion of Derivatives Designated as Cash Flow	May 31,						May 31,
Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss)	2011			2010			2011		2010
Commodity	$	(266	)	$	(36	)	$	126	$	18
Foreign exchange		125			(110	)		296		155

Gain (loss), net of taxes	$	(141	)	$	(146	)	$	422	$	173


Effective Portion of Derivatives Designated as Cash Flow		Three Months Ended					Nine Months Ended
Hedging Instruments Reclassified from Accumulated		May 31,					May 31,
Other Comprehensive Income (Loss)	Location	2011		2010			2011		2010
Commodity	Cost of goods sold	$	133	$	7		$	103	$	(8	)
Foreign exchange	SG&A expenses		16		(53	)		82		(170	)
Interest rate	Interest expense		115		115			344		344

Gain, net of taxes		$	264	$	69		$	529	$	166

The Company’s derivative instruments were recorded at their respective fair values as follows on the consolidated balance sheets (in thousands):


Derivative Assets	May 31, 2011		August 31, 2010
Commodity — designated	$	68	$	80
Commodity — not designated		1,967		911
Foreign exchange — designated		529		435
Foreign exchange — not designated		1,120		1,188
Interest rate — designated		18,500		12,173
Long-term interest rate — designated		5,164		20,265

Derivative assets (other current assets and other assets)*	$	27,348	$	35,052


Derivative Liabilities	May 31, 2011		August 31, 2010
Commodity — designated	$	40	$	95
Commodity — not designated		2,353		2,817
Foreign exchange — designated		2,311		1,749
Foreign exchange — not designated		3,250		1,097
Long-term interest rate — designated		6,331		—

Derivative liabilities (accrued expenses, other payables and long-term liabilities)*	$	14,285	$	5,758


*		Derivative assets and liabilities do not include the hedged (underlying) items designated as fair value hedges.

As of May 31, 2011, all of the Company’s derivative instruments designated to hedge exposure to the variability in future cash flows of the forecasted transactions will mature within twelve months.

All of the instruments are highly liquid, and none are entered into for trading purposes.

NOTE 10 — FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to 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.

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
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	May 31,		Identical Assets		Observable Inputs		Unobservable Inputs
(in thousands)	2011		(Level 1)		(Level 2)		(Level 3)
Money market investments	$	205,425	$	205,425	$	—	$	—
Derivative assets		27,348		1,967		25,381		—
Nonqualified benefit plan assets *		55,444		55,444		—		—
Derivative liabilities		14,285		2,353		11,932		—
Nonqualified benefit plan liabilities *		87,859		—		87,859		—

	August 31,
	2010
Money market investments	$	352,881	$	352,881	$	—	$	—
Derivative assets		35,052		911		34,141		—
Nonqualified benefit plan assets *		43,681		43,681		—		—
Derivative liabilities		5,758		2,817		2,941		—
Nonqualified benefit plan liabilities *		86,043		—		86,043		—


*		The Company provides a nonqualified benefit restoration plan to certain eligible executives equal to amounts that would have been available under tax qualified ERISA plans but for limitations of ERISA, tax laws and regulations. Though under no obligation to fund this plan, the Company has segregated assets in a trust. The plan assets and liabilities consist of securities included in various mutual funds.

The Company’s long-term debt is predominantly publicly held. The fair value was approximately $1.25 billion at May 31, 2011 and $1.29 billion at August 31, 2010. Fair value was determined by indicated market values.

NOTE 11 — INCOME TAXES

The Company had net refunds of $72.9 million and $0.7 million in income taxes during the nine months ended May 31, 2011 and 2010, respectively.

Reconciliations of the United States federal income tax expense (benefit) from continuing operations were as follows:


	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2011			2010			2011			2010
Tax expense (benefit) at statutory rate of 35%	$	18,056		$	(2,377	)	$	(6	)	$	(73,770	)
State and local taxes		213			(1,130	)		82			(6,589	)
Foreign rate differential		(6,479	)		3,321			225			9,590
Increase in valuation allowance due to foreign losses without benefit (predominately Croatia)		1,466			2,474			7,427			31,097
Domestic production activity deduction		(1,187	)		—			(693	)		—
U.S. provision to return adjustment		254			1,849			488			1,849
Sale of foreign investment		—			—			1,280			—
Other		2,170			(185	)		(115	)		1,722

Total tax expense (benefit) from continuing operations	$	14,493		$	3,952		$	8,688		$	(36,101	)


Effective tax rate from continuing operations		28.1	%		(58.2	)%		(54,300.0	)%		17.1	%

The Company’s effective tax rate from discontinued operations for the three and nine months ended May 31, 2011 was 38.8% and for the three and nine months ended May 31, 2010 was 43.1% and 38.6%, respectively.

The reserve for unrecognized tax benefits relating to the accounting for uncertainty in income taxes was $20.4 million, exclusive of interest and penalties, as of May 31, 2011 and August 31, 2010.

The Company policy classifies interest recognized on an underpayment of income taxes and any statutory penalties recognized on a tax position as tax expense and the balances at the end of a reporting period are recorded as part of the current or non-current reserve for uncertain income tax positions. For the three and nine months ended May 31, 2011, before any tax benefits, the Company recorded immaterial amounts of accrued interest and penalties on unrecognized tax benefits.

During the next twelve months, it is reasonably possible that the statute of limitations may lapse pertaining to positions taken by the Company in prior year tax returns or that income tax audits in various taxing jurisdictions could be finalized. As a result, the total amount of unrecognized tax benefits may decrease, which would reduce the provision for taxes on earnings by an immaterial amount.

The following is a summary of tax years subject to examination:

U.S. Federal — 2006 and forward
U.S. States — 2006 and forward
Foreign — 2004 and forward

The federal tax returns for fiscal years 2006 to 2008 are under examination by the Internal Revenue Service. However, we believe our recorded tax liabilities as of May 31, 2011 sufficiently reflect the anticipated outcome of these examinations.

NOTE 12 — SHARE-BASED COMPENSATION

The Company recognized share-based compensation expense of $3.2 million for the three months ended May 31, 2011 and $9.2 million and $5.6 million for the nine months ended May 31, 2011 and 2010, respectively, as a component of selling, general and administrative expenses. The Company recognized no share-based compensation expense during the third quarter of 2010 due to a forfeiture adjustment of $2.3 million which offset expense for the quarter. At May 31, 2011, the Company had $23.8 million of total unrecognized pre-tax compensation cost related to non-vested share-based compensation arrangements, of which, $16.4 million related to share-based awards granted during the second quarter of 2011. This cost is expected to be recognized over the next 36 months.

Combined information for shares subject to options and stock appreciation rights (“SARs”) for the nine months ended May 31, 2011 were as follows:


				Weighted
				Average		Price
				Exercise		Range
	Number			Price		Per Share
September 1, 2010
Outstanding		3,922,016		$	23.67	$	7.53 - 35.38
Exercisable		3,503,681			23.38		7.53 - 35.38
Granted		112,000			16.83		16.83
Exercised		(854,023	)		8.03		7.53 - 13.58
Forfeited		(93,564	)		31.96		12.31 - 35.38

May 31, 2011
Outstanding		3,086,429		$	27.50	$	11.00 - 35.38
Exercisable		2,917,429			28.17		11.00 - 35.38

Share information for options and SARs at May 31, 2011:


Outstanding
				Weighted				Exercisable
				Average		Weighted				Weighted
Range of				Remaining		Average				Average
Exercise		Number		Contractual		Exercise		Number		Exercise
Price		Outstanding		Life (Yrs.)		Price		Outstanding		Price
$	11.00 - 14.05		714,215		2.4	$	12.40		658,215	$	12.26
	16.83 - 24.71		544,208		2.7		22.93		432,208		24.51
	31.75 - 35.38		1,828,006		3.0		34.76		1,827,006		34.76

$	11.00 - 35.38		3,086,429		2.8	$	27.50		2,917,429	$	28.17

Of the Company’s previously granted restricted stock awards, 27,727 and 50,154 shares vested during the nine months ended May 31, 2011 and May 31, 2010, respectively.

During the second quarter of 2011, the Compensation Committee (the “Committee”) of the Board of Directors approved a grant to employees of approximately 670,000 restricted stock units. These awards vest over a three-year period in increments of one-third per year. The Committee also approved a grant of performance stock units. The performance awards will vest upon the achievement of certain target levels of the performance goals and objectives of the Company over the performance period of approximately three years. The actual number of performance awards granted will be based on the level of achievement. Upon achievement of any of the performance goals, the awards will be paid out 50% in shares of common stock of the Company and 50% in cash. The Company has accounted for the cash component of the performance award as a liability award and the value is adjusted to fair market value each period. All equity awards are valued at the fair market value at the date of grant. Prior to vesting, the restricted stock unit and the performance stock unit recipients do not receive an amount equivalent to any dividend declared on the Company’s common stock.

NOTE 13 — STOCKHOLDERS’ EQUITY AND EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO CMC

In calculating earnings (loss) per share, there were no adjustments to net earnings (loss) to arrive at earnings (loss) for any years presented. The reconciliation of the denominators of the earnings (loss) per share calculations was as follows:


	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2011		2010		2011		2010
Shares outstanding for basic earnings (loss) per share		115,403,374		114,067,149		114,819,792		113,279,301
Effect of dilutive shares:
Stock-based incentive/purchase plans		957,381		—		—		—

Shares outstanding for diluted earnings (loss) per share		116,360,755		114,067,149		114,819,792		113,279,301

For the three months ended May 31, 2011, SARs with total share commitments of 2.4 million were antidilutive because the exercise price was above the average market price for the quarter and therefore excluded from the calculation of diluted earnings per share. For the nine months ended May 31, 2011 and the three and nine months ended May 31, 2010, no stock options, restricted stock or SARs were included in the calculation of dilutive shares because the Company reported a loss from continuing operations. All stock options and SARs expire by 2018.

The Company’s restricted stock is included in the number of shares of common stock issued and outstanding, but omitted from the basic earnings (loss) per share calculation until the shares vest.

The Company purchased no shares during the first nine months of 2011 and had remaining authorization to purchase 8,259,647 shares of its common stock at May 31, 2011.

NOTE 14 — COMMITMENTS AND CONTINGENCIES

See Note 12, Commitments and Contingencies, to the consolidated financial statements in the Annual Report on Form 10-K for the year ended August 31, 2010 relating to environmental and other matters. There have been no significant changes to the matters noted therein. In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. Management believes that adequate provisions have been made in the consolidated financial statements for the potential impact of these contingencies, and that the outcomes will not significantly impact the results of operations, the financial position or the cash flows of the Company.

NOTE 15 — BUSINESS SEGMENTS

The Company’s reportable segments are based on strategic business areas, which offer different products and services. These segments have different lines of management responsibility as each business requires different marketing strategies and management expertise.

Effective September 1, 2010, the Company’s scrap metal processing facilities which directly support the domestic mills are included as part of the Americas Mills segment. Prior to September 1, 2010, these facilities were included as part of the Americas Recycling segment. All prior period financial information has been recast to the current segment reporting structure.

The Company structures the business into the following five segments: Americas Recycling, Americas Mills, Americas Fabrication, International Mills and International Marketing and Distribution. The Americas Recycling segment consists of the scrap metal processing and sales operations primarily in Texas, Florida and the southern United States. The Americas Mills segment includes the Company’s domestic steel mills, including the scrap processing facilities which directly support these mills, and the copper tube minimill. The copper tube minimill is aggregated with the Company’s steel mills because it has similar economic characteristics. The Americas Fabrication segment consists of the Company’s rebar fabrication operations, fence post manufacturing plants, construction-related and other products facilities. The International Mills segment includes the minimills in Poland and Croatia, recycling operations in Poland and fabrication operations in Europe, which have been presented as a separate segment because the economic characteristics of their markets and the regulatory environment in which they operate are different from that of the Company’s domestic mills and rebar fabrication operations. International Marketing and Distribution includes international operations for the sales, distribution and processing of steel products, ferrous and nonferrous metals and other industrial products. Additionally, the

International Marketing and Distribution segment includes the Company’s two U.S. based trading and distribution divisions, CMC Cometals and CMC Cometals Steel (previously CMC Dallas Trading). The international distribution operations consist only of physical transactions and not positions taken for speculation. Corporate contains expenses of the Company’s corporate headquarters and interest expense relating to its long-term public debt and commercial paper program.

The financial information presented for the Americas Fabrication segment excludes its joist and deck fabrication operations. This operation has been classified as discontinued operations in the consolidated statements of operations. See Note 7, Discontinued Operations and Dispositions, for more detailed information.

The Company uses adjusted operating profit (loss) to measure segment performance. Intersegment sales are generally priced at prevailing market prices. Certain corporate administrative expenses are allocated to segments based upon the nature of the expense. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The following is a summary of certain financial information from continuing operations by reportable segment:


	Three Months Ended May 31, 2011
								International
										Marketing
	Americas									and
(in thousands)	Recycling		Mills		Fabrication			Mills		Distribution		Corporate			Eliminations			Consolidated
Net sales-unaffiliated customers	$	443,898	$	341,972	$	323,997		$	332,019	$	633,706	$	972		$	—		$	2,076,564
Intersegment sales		35,878		204,043		4,453			12,145		12,721		—			(269,240	)		—
Net sales		479,776		546,015		328,450			344,164		646,427		972			(269,240	)		2,076,564
Adjusted operating profit (loss)		13,194		71,050		(14,737	)		15,456		16,978		(28,503	)		(2,089	)		71,349


	Three Months Ended May 31, 2010
								International
											Marketing
	Americas										and
(in thousands)	Recycling		Mills		Fabrication			Mills			Distribution		Corporate			Eliminations			Consolidated
Net sales-unaffiliated customers	$	369,089	$	248,417	$	322,797		$	190,898		$	635,520	$	(1,567	)	$	—		$	1,765,154
Intersegment sales		28,982		183,781		3,292			24,792			5,573		327			(246,747	)		—
Net sales		398,071		432,198		326,089			215,690			641,093		(1,240	)		(246,747	)		1,765,154
Adjusted operating profit (loss)		14,240		14,544		(24,452	)		(10,885	)		30,941		(11,390	)		(482	)		12,516


	Nine Months Ended May 31, 2011
								International
										Marketing
	Americas									and
(in thousands)	Recycling		Mills		Fabrication			Mills		Distribution		Corporate			Eliminations			Consolidated
Net sales-unaffiliated customers	$	1,203,046	$	926,213	$	856,350		$	767,676	$	1,884,886	$	12,639		$	—		$	5,650,810
Intersegment sales		103,087		533,120		11,823			30,639		30,122		—			(708,791	)		—
Net sales		1,306,133		1,459,333		868,173			798,315		1,915,008		12,639			(708,791	)		5,650,810
Adjusted operating profit (loss)		32,251		116,138		(86,311	)		412		53,588		(55,574	)		(2,018	)		58,486
Goodwill		7,267		295		57,144			3,238		4,659		—			—			72,603
Total assets		304,693		649,190		619,116			873,937		795,324		1,165,569			(652,771	)		3,755,058


	Nine Months Ended May 31, 2010
									International
												Marketing
	Americas											and
(in thousands)	Recycling		Mills			Fabrication			Mills			Distribution		Corporate			Eliminations			Consolidated
Net sales-unaffiliated customers	$	873,250	$	621,869		$	813,782		$	450,142		$	1,726,496	$	4,316		$	—		$	4,489,855
Intersegment sales		80,958		451,687			7,068			82,078			16,894		327			(639,012	)		—
Net sales		954,208		1,073,556			820,850			532,220			1,743,390		4,643			(639,012	)		4,489,855
Adjusted operating profit (loss)		6,196		(3,335	)		(90,685	)		(84,373	)		62,158		(50,554	)		10,479			(150,114	)
Goodwill		6,961		601			57,144			2,460			3,887		—			—			71,053
Total assets		260,147		624,587			708,625			675,290			670,163		967,570			(341,882	)		3,564,500

The following table provides a reconciliation of earnings (loss) from continuing operations to adjusted operating profit (loss):


	Three Months Ended						Nine Months Ended
	May 31,						May 31,
(in thousands)	2011			2010			2011			2010
Earnings (loss) from continuing operations	$	37,095		$	(10,741	)	$	(8,704	)	$	(174,671	)
Income taxes (benefit)		14,493			3,952			8,688			(36,101	)
Interest expense		18,254			18,184			54,857			57,871
Discounts on sales of accounts receivable		1,507			1,121			3,645			2,787

Adjusted operating profit (loss) from continuing operations	$	71,349		$	12,516		$	58,486		$	(150,114	)
Adjusted operating profit (loss) from discontinued operations		(1,429	)		4,002			(779	)		(62,506	)

Adjusted operating profit (loss)	$	69,920		$	16,518		$	57,707		$	(212,620	)

The following represents the Company’s external net sales from continuing operations by major product and geographic area:


	Three Months Ended				Nine Months Ended
	May 31,				May 31,
(in thousands)	2011		2010		2011		2010
Major product information:
Steel products	$	1,150,654	$	998,538	$	3,169,240	$	2,614,756
Industrial materials		319,724		244,941		811,632		599,626
Non-ferrous scrap		251,229		195,563		725,700		506,435
Ferrous scrap		215,610		190,514		556,997		407,266
Construction materials		58,475		64,546		160,938		166,863
Non-ferrous products		54,396		52,817		145,376		132,557
Other		26,476		18,235		80,927		62,352

Net sales	$	2,076,564	$	1,765,154	$	5,650,810	$	4,489,855


Geographic area:
United States	$	1,158,841	$	936,410	$	3,119,925	$	2,284,434
Europe		406,061		371,839		1,185,644		905,467
Asia		304,388		268,189		781,383		746,013
Australia/New Zealand		124,953		133,261		387,870		395,402
Other		82,321		55,455		175,988		158,539

Net sales	$	2,076,564	$	1,765,154	$	5,650,810	$	4,489,855

NOTE 16 — RELATED PARTY TRANSACTIONS

One of the Company’s international subsidiaries had a marketing and distribution agreement with a key supplier of which the Company owns an 11% interest. This marketing and distribution agreement expired on December 31, 2010. The Company owned a 50% interest in two joint ventures related to this agreement. During the second quarter of 2011, the Company sold the interest in one joint venture for approximately $1.7 million resulting in a minimal gain. On June 1, 2011, the Company sold the interest in the remaining joint venture for approximately $6.6 million resulting in a minimal gain. The following presents related party transactions:


	Nine Months Ended
	May 31,
(in thousands)	2011		2010
Sales	$	133,860	$	202,475
Purchases		149,415		251,434


	May 31,		August 31,
(in thousands)	2011		2010
Accounts receivable	$	112	$	10,611
Accounts payable		104		22,603

NOTE 17 — SUBSEQUENT EVENTS

On June 3, 2011, the Company completed the purchase of G.A.M. Steel Pty. Ltd., based in Melbourne, Australia (“G.A.M.”) for approximately $48 million, subject to final purchase price adjustment. G.A.M. is a leading distributor and processor of steel long products and plate, servicing the structural fabrication, rural and manufacturing segments in the state of Victoria. The acquisition of G.A.M. will complement the Company’s existing national long products distribution investments in Australia.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K filed with the SEC for the year ended August 31, 2010.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are not different from the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K filed with the SEC for the year ended August 31, 2010 and are, therefore, not presented herein.

CONSOLIDATED RESULTS OF OPERATIONS


	Three Months Ended								Nine Months Ended						Increase
	May 31,					Increase			May 31,						(Decrease)
(in millions)	2011		2010			%			2011			2010			%
Net sales*	$	2,076.6	$	1,765.2			18	%	$	5,650.8		$	4,489.9			26	%
Earnings (loss) from continuing operations		37.1		(10.7	)		447	%		(8.7	)		(174.7	)		(95	%)
Adjusted EBITDA		107.5		55.3			94	%		174.7			(54.7	)		419	%


*		Excludes divisions classified as discontinued operations.

In the table above, we have included a financial statement measure that was not derived in accordance with accounting principles generally accepted in the United States (“GAAP”). We use adjusted EBITDA (earnings before interest expense, income taxes, depreciation, amortization and non-cash impairment charges) as a non-GAAP performance measure. In calculating adjusted EBITDA, we exclude our largest recurring non-cash charge, depreciation and amortization as well as impairment charges. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. Tax regulations in international operations add additional complexity. Also, we exclude interest cost in our calculation of adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our long-term cash incentive performance plan for management and part of a debt compliance test for our revolving credit agreement. Reconciliations from net earnings (loss) from continuing operations to adjusted EDITDA are provided below:


	Three Months Ended						Increase			Nine Months Ended						Increase
	May 31,						(Decrease)			May 31,						(Decrease)
(in millions)	2011			2010			%			2011			2010			%
Earnings (loss) from continuing operations	$	37.1		$	(10.7	)		447	%	$	(8.7	)	$	(174.7	)		(95	%)
Less net earnings attributable to noncontrolling interests		(0.1	)		(0.4	)		(75	%)		(0.2	)		(0.3	)		(33	%)
Interest expense		18.3			18.2			1	%		54.9			57.9			(5	%)
Income taxes (benefit)		14.5			4.0			263	%		8.7			(36.1	)		124	%
Depreciation, amortization and impairment charges		39.2			40.2			(2	%)		120.8			125.5			(4	%)

Adjusted EBITDA from continuing operations	$	109.0		$	51.3			112	%	$	175.5		$	(27.7	)		734	%
Adjusted EBITDA from discontinued operations		(1.5	)		4.0			(138	%)		(0.8	)		(27.0	)		(97	%)

Adjusted EBITDA	$	107.5		$	55.3			94	%	$	174.7		$	(54.7	)		419	%

Our adjusted EBITDA does not include interest expense, income taxes, depreciation, amortization and impairment charges. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and our ability to generate revenues. Because we use capital assets, depreciation and amortization are also necessary elements of our costs. Impairment charges, when necessary, accelerate the write-off of fixed assets that would otherwise have been accomplished by periodic depreciation charges. Also, the payment of income taxes is a necessary element of our operations. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is appropriate to consider both net earnings (loss) determined under GAAP, as well as adjusted EBITDA, to evaluate our performance. Also, we separately analyze any significant fluctuations in interest expense, depreciation, amortization, impairment charges and income taxes.

The following events and performances had a significant impact during our third quarter of 2011 as compared to the same period of 2010 or are expected to be significant for our future operations:

•

Net sales of the Americas Recycling segment increased 21% driven by higher sales prices, and adjusted operating profit was comparable to the prior year’s third quarter.

•

Net sales of the Americas Mills segment increased 26% and adjusted operating profit increased $56.5 million from the prior year’s third quarter primarily from increased demand supported by higher finished goods pricing and better margins.

•

Our Americas Fabrication segment continues to experience unfavorable market conditions due to weak market demand for fabricated steel. However, this segment did show improvement over the third quarter of 2010 as our adjusted operating loss decreased $9.7 million from improved margins as prices stabilized.

•

Our International Mills segment showed a 60% increase in net sales and a $26.3 million increase in adjusted operating results compared to the third quarter of 2010 primarily from continued strong results from our Polish mill and decreased losses from our mill in Croatia.

•

Our International Marketing and Distribution segment remained profitable for the eighth straight quarter and recorded an adjusted operating profit of $17.0 million in the third quarter of 2011.

•

We recorded consolidated pre-tax LIFO expense of $6.0 million for the third quarter of 2011 compared to pre-tax LIFO expense of $34.4 million for the third quarter of 2010.

SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are calculated before income taxes. Financial results for our reportable segments are consistent with the basis and manner in which we internally disaggregate financial information for making operating decisions. See Note 15, Business Segments, to the consolidated financial statements.

We use adjusted operating profit (loss) to compare and evaluate the financial performance of our segments. Adjusted operating profit (loss) is the sum of our profit (loss) before income taxes and financing costs. The following tables show net sales and adjusted operating profit (loss) by business segment:


	Three Months Ended						Nine Months Ended
	May 31,						May 31,
(in thousands)	2011			2010			2011			2010
Net sales:
Americas Recycling	$	479,776		$	398,071		$	1,306,133		$	954,208
Americas Mills		546,015			432,198			1,459,333			1,073,556
Americas Fabrication		328,450			326,089			868,173			820,850
International Mills		344,164			215,690			798,315			532,220
International Marketing and Distribution		646,427			641,093			1,915,008			1,743,390
Corporate		972			(1,240	)		12,639			4,643
Eliminations		(269,240	)		(246,747	)		(708,791	)		(639,012	)

	$	2,076,564		$	1,765,154		$	5,650,810		$	4,489,855

Adjusted operating profit (loss):
Americas Recycling	$	13,194		$	14,240		$	32,251		$	6,196
Americas Mills		71,050			14,544			116,138			(3,335	)
Americas Fabrication		(14,737	)		(24,452	)		(86,311	)		(90,685	)
International Mills		15,456			(10,885	)		412			(84,373	)
International Marketing and Distribution		16,978			30,941			53,588			62,158
Corporate		(28,503	)		(11,390	)		(55,574	)		(50,554	)
Eliminations		(2,089	)		(482	)		(2,018	)		10,479
Discontinued Operations		(1,429	)		4,002			(779	)		(62,506	)

LIFO Impact on Adjusted Operating Profit (Loss) LIFO is an inventory costing method that assumes the most recent inventory purchases or goods manufactured are sold first. This results in current sales prices offset against current inventory costs. In periods of rising prices it has the effect of eliminating inflationary profits from operations. In periods of declining prices it has the effect of eliminating deflationary losses from operations. In either case the goal is to reflect economic profit. The table below reflects LIFO

income or (expense) representing decreases or (increases) in the LIFO inventory reserve. International Mills is not included in this table as it uses FIFO valuation exclusively for its inventory:


	Three Months Ended						Nine Months Ended
	May 31,						May 31,
(in thousands)	2011			2010			2011			2010
Americas Recycling	$	(2,630	)	$	(4,587	)	$	(11,744	)	$	(11,291	)
Americas Mills		3,928			(24,027	)		(47,867	)		(40,915	)
Americas Fabrication		(3,436	)		(22,168	)		(4,920	)		(16,521	)
International Marketing and Distribution		(3,892	)		7,913			(3,315	)		33,816
Discontinued Operations		44			8,464			491			10,326

Consolidated pre-tax LIFO expense	$	(5,986	)	$	(34,405	)	$	(67,355	)	$	(24,585	)

Americas Recycling During the third quarter of 2011, this segment reported an increase in net sales of 21% driven primarily from higher average selling prices. Adjusted operating profit was $13.2 million during the third quarter of 2011 as compared to $14.2 million in the same period in the prior year. The decrease in adjusted operating profit was due to higher operating costs offset by an increase in margins and a decrease in LIFO expense of $2.0 million as compared to the third quarter of 2010. Ferrous scrap pricing was stable during the quarter but higher than last year’s quarter on consistent domestic mill demand. Ferrous volumes were slightly lower than the prior year’s quarter as flooding in the Midwest constrained flow. Nonferrous margins increased on both price and volume improvements. Export demand fell due to instability in the Middle East, and we exported 6% of our ferrous scrap tonnage and 36% of our nonferrous scrap tonnage during the quarter.

The following table reflects our Americas Recycling segment’s average selling prices per ton and tons shipped (in thousands):


	Three Months Ended										Nine Months Ended
	May 31,				Increase(Decrease)						May 31,				Increase
	2011		2010		Amount			%			2011		2010		Amount		%
Average ferrous sales price	$	354	$	304	$	50			16	%	$	331	$	262	$	69		26	%
Average nonferrous sales price	$	3,413	$	2,891	$	522			18	%	$	3,252	$	2,636	$	616		23	%
Ferrous tons shipped		557		562		(5	)		(1	%)		1,561		1,411		150		11	%
Nonferrous tons shipped		67		61		6			10	%		194		173		21		12	%

Americas Mills We include our five domestic steel mills, including the scrap locations, which directly support the steel mills, and our copper tube minimill in our Americas Mills segment.

Within the segment, adjusted operating profit for our five domestic steel mills was $67.6 million for the third quarter of 2011 compared to an adjusted operating profit of $12.8 million from the prior year’s third quarter. The improvement in adjusted operating profit was driven by margin expansion as selling prices outpaced scrap price increases. Additionally, the results were positively impacted by LIFO income of $6.1 million recorded during the third quarter of 2011 as compared to LIFO expense of $21.7 million recorded in the prior year’s third quarter. Shipment volumes were the highest of any quarter in the last three fiscal years, driven by seasonal demand and continued strength in certain regional markets. Our mills ran at 73% of capacity in the third quarter of 2011, consistent with utilization levels in the third quarter of 2010. Higher electrical and alloy rates resulted in an overall increase of $3.5 million in electrode, alloys and energy costs for the third quarter in 2011 as compared to the same period in the prior year. Shipments included 116 thousand tons of billets in the third quarter of 2011 as compared to 69 thousand tons of billets in the third quarter of the prior year.

The table below reflects steel and ferrous scrap prices per ton:


	Three Months Ended									Nine Months Ended
	May 31,				Increase					May 31,				Increase
	2011		2010		Amount		%			2011		2010		Amount		%
Average mill selling price (finished goods)*	$	736	$	622	$	114		18	%	$	685	$	581	$	104		18	%
Average mill selling price (total sales)*		705		608		97		16	%		658		550		108		20	%
Average cost of ferrous scrap consumed		385		328		57		17	%		357		293		64		22	%
Average FIFO metal margin		320		280		40		14	%		301		257		44		17	%
Average ferrous scrap purchase price		342		302		40		13	%		321		258		63		24	%


*		Prior year domestic selling prices revised to eliminate net freight costs.

The table below reflects our domestic steel mills’ operating statistics (short tons in thousands):


	Three Months Ended										Nine Months Ended
	May 31,				Increase(Decrease)						May 31,				Increase
	2011		2010		Amount			%			2011		2010		Amount		%
Tons melted		617		579		38			7	%		1,804		1,544		260		17	%
Tons rolled		511		523		(12	)		(2	%)		1,531		1,277		254		20	%
Tons shipped		637		588		49			8	%		1,815		1,607		208		13	%

Our copper tube minimill’s adjusted operating profit for the third quarter of 2011 increased $1.8 million to $3.5 million compared to the third quarter of 2010 primarily due to margin expansion as the average selling price exceeded the increase in scrap prices. LIFO expense of $2.2 million recorded in the third quarter of 2011 was consistent with the prior year’s third quarter.

The table below reflects our copper tube minimill’s operating statistics:


	Three Months Ended										Nine Months Ended
	May 31,				Decrease						May 31,				Decrease
(pounds in millions)	2011		2010		Amount			%			2011		2010		Amount			%
Pounds shipped		11.1		12.0		(0.9	)		(8	%)		31.4		31.6		(0.2	)		(1	%)
Pounds produced		10.2		11.4		(1.2	)		(11	%)		28.4		30.4		(2.0	)		(7	%)

Americas Fabrication During the third quarter of 2011, this segment’s operating results showed an improvement of $9.7 million over the prior year’s third quarter and recorded an adjusted operating loss of $14.7 million. Margins recovered modestly during the third quarter of 2011 as mill prices to the downstream fabricating units stabilized, allowing for the release of prior contract loss accruals. Backlogs continued to grow both in tonnage and pricing. The overall market remains weak for fabricated steel with credit availability, state and federal funding capacity and unemployment trends affecting the launch of new projects. Results were positively impacted by a decrease in LIFO expense of $18.8 million in the third quarter of 2011 as compared to 2010. The composite average fabrication selling price was $839 per ton, 9% higher than last year’s third quarter price.

The tables below show our average fabrication selling prices per short ton and total fabrication plant shipments:


	Three Months Ended									Nine Months Ended
	May 31,				Increase					May 31,				Increase
Average selling price*	2011		2010		Amount		%			2011		2010		Amount		%
Rebar	$	798	$	716	$	82		11	%	$	752	$	715	$	37		5	%
Structural		1,926		1,884		42		2	%		1,894		1,859		35		2	%
Post		944		870		74		9	%		918		870		48		6	%


*		Excludes stock and buyout sales.


	Three Months Ended										Nine Months Ended
	May 31,				Decrease						May 31,				Increase
Tons shipped (in thousands)	2011		2010		Amount			%			2011		2010		Amount		%
Rebar		217		230		(13	)		(6	%)		607		591		16		3	%
Structural		16		16		—			—			43		39		4		10	%
Post		31		35		(4	)		(11	%)		77		77		—		—

International Mills CMC Zawiercie (“CMCZ”) had an adjusted operating profit of $22.6 million in the third quarter of 2011 as compared to an adjusted operating profit of $1.1 million in the third quarter of last year. The improvement in adjusted operating profit over the prior year’s third quarter was driven by higher prices and volumes and the achievement of pre-recession metal margins from stronger than anticipated growth in the Polish economy. Prices were also positively impacted from a better product mix from our new rolling mills. Shipments included 70 thousand tons of billets in the third quarter of 2011 as compared to 69 thousand tons of billets in the third quarter of the prior year.

The table below reflects CMCZ’s operating statistics (in thousands) and average prices per short ton:


	Three Months Ended												Nine Months Ended
	May 31,						Increase						May 31,						Increase
	2011			2010			Amount			%			2011			2010			Amount			%
Tons melted		431			394			37			9	%		1,151			1,086			65			6	%
Tons rolled		356			295			61			21	%		948			797			151			19	%
Tons shipped		425			363			62			17	%		1,095			1,000			95			10	%
Average mill selling price (total sales)	1,913		PLN	1,477		PLN	436		PLN		30	%	1,786		PLN	1,304		PLN	482		PLN		37	%
Average ferrous scrap production cost	1,157		PLN	996		PLN	161		PLN		16	%	1,097		PLN	860		PLN	237		PLN		28	%
Average metal margin	756		PLN	481		PLN	275		PLN		57	%	689		PLN	444		PLN	245		PLN		55	%
Average ferrous scrap purchase price	949		PLN	861		PLN	88		PLN		10	%	908		PLN	716		PLN	192		PLN		27	%
Average mill selling price (total sales)	$	687		$	493		$	194			39	%	$	623		$	448		$	175			39	%
Average ferrous scrap production cost	$	416		$	332		$	84			25	%	$	381		$	297		$	84			28	%
Average metal margin	$	271		$	161		$	110			68	%	$	242		$	151		$	91			60	%
Average ferrous scrap purchase price	$	341		$	285		$	56			20	%	$	315		$	250		$	65			26	%


PLN		— Polish zlotys

CMC Sisak (“CMCS”) reported an adjusted operating loss of $7.2 million for the third quarter of 2011 as compared to an adjusted operating loss of $12.0 million in the third quarter of 2010. The improvement in operating results over the prior year’s third quarter was driven by higher prices and shipments. Additionally, our technical teams continue to make progress in process improvements and cost reductions, but the market for line pipe remains challenging. CMCS melted 36 thousand tons, rolled 18 thousand tons and sold 27 thousand tons during the third quarter as compared to 18 thousand tons melted, 14 thousand tons rolled and 16 thousand tons sold during the prior year’s third quarter.

Our fabrication operations in Poland and Germany recorded an adjusted operating profit of $0.8 million during the third quarter of 2011 compared to an adjusted operating loss of $1.7 million in the third quarter of 2010. These results are included in the overall results of CMCZ discussed above.

International Marketing and Distribution This segment reported its eighth consecutive profitable quarter and net sales remained consistent with the prior year’s third quarter. Adjusted operating profit declined $14.0 million to $17.0 million in the third quarter of 2011. The decline in adjusted operating profit was impacted by an increase in LIFO expense of $11.8 million in the third quarter of 2011 as compared to the third quarter of 2010. The raw materials marketing operations led this segment in profitability. During the quarter, the domestic steel import business continued its turnaround with another strong performance. The Australian operations were marginally profitable given the weakened state of the economy and recent weather devastations in Australia.

Corporate Our corporate expenses increased $17.1 million and $5.0 million for the three and nine months ended May 31, 2011 compared to the same periods from the prior year primarily due to higher information technology costs, legal costs and employee incentive plans.

Consolidated Data The LIFO method of inventory valuation decreased our net earnings from continuing operations by approximately $4 million for the third quarter of 2011 and increased our net loss by approximately $28 million for the third quarter of 2010. The LIFO method of inventory valuation increased our net loss from continuing operations by approximately $44 million and $23 million for the nine months ended May 31, 2011 and 2010, respectively. Our overall selling, general and administrative (“SG&A”) expenses increased by $37.1 million for the three months ended May 31, 2011 as compared to the same period last year primarily due to higher information technology costs and employee incentive plans. SG&A expenses for the nine months ended May 31, 2011 were consistent with the same period in the prior year.

Our interest expense remained consistent for the three months ended May 31, 2011 as compared to the same period from the prior year but decreased $3.0 million for the nine months ended May 31, 2011 as compared to the same period from the prior year. The decrease primarily relates to the favorable impact of interest rate swap transactions of $8.6 million for the nine months ended May 31, 2011, offset by less capitalized interest as a result of completed capital projects during 2010.

Our effective tax rate from continuing operations for the three months ended May 31, 2011 and 2010 was 28.1% and (58.2%), respectively. Our effective tax rate varies from our statutory rate primarily related to losses in Croatia not being tax benefitted as we might not be able to utilize these losses in the allowed carryforward period. Additionally, the effective tax rate for the nine months ended May 31, 2011 is significantly impacted by the effect of permanent differences having a greater impact at near break-even pre-tax results.

Discontinued Operations Our joist and deck division classified as a discontinued operation reported an adjusted operating loss of $1.4 million for the third quarter of 2011 as compared to an adjusted operating profit of $4.0 million in the third quarter of 2010. The results for the third quarter of 2011 include carrying costs of the remaining owned properties. As of the second quarter of 2011, all locations had either been sold or ceased operations. The results for the third quarter of 2010 include LIFO income of $8.5 million offset by closing costs of the facilities.

OUTLOOK

Our fourth quarter is normally a seasonally slower period, and we expect a similar trend in the fourth quarter of 2011. We expect the fourth quarter of 2011 to be profitable, but due to seasonality it will not be as strong as the third quarter of 2011. We remain focused on improving our operational efficiency.

LIQUIDITY AND CAPITAL RESOURCES

See Note 8 — Credit Arrangements, to the consolidated financial statements.

We believe we have adequate access to several sources of contractually committed borrowings and other available credit facilities, however, we could be adversely affected if our banks, the potential buyers of our commercial paper or other of the traditional sources supplying our short term borrowing requirements refuse to honor their contractual commitments, cease lending or declare bankruptcy. While we believe the lending institutions participating in our credit arrangements are financially capable, recent events in the global credit markets, including the failure, takeover or rescue by various government entities of major financial institutions, have created uncertainty of credit availability to an extent not experienced in recent decades.

The table below reflects our sources, facilities and availability of liquidity and capital resources as of May 31, 2011 (dollars in thousands):


	Total Facility		Availability
Cash and cash equivalents	$	243,562	$	N/A
Commercial paper program*		400,000		400,000
Domestic accounts receivable sales facility		100,000		100,000
International accounts receivable sales facilities		226,602		72,776
Bank credit facilities — uncommitted		881,493		487,290
Notes due from 2013 to 2018		1,100,000		**
CMCZ term note		58,226		—
CMCS term facility		21,574		—
Trade financing arrangements		**	As required
Equipment notes		6,593		**


*		The commercial paper program is supported by our $400 million unsecured revolving credit agreement. The availability under the revolving credit agreement is reduced by commercial paper outstanding. The availability under the revolving credit agreement may be limited by the debt to capitalization ratio covenant. As of May 31, 2011, there was no amount outstanding under the commercial paper program.

**		We believe we have access to additional financing and refinancing, if needed.

We utilize uncommitted credit facilities to meet short-term working capital needs. Our uncommitted credit facilities primarily support import letters of credit (including accounts payable settled under bankers’ acceptances), foreign exchange transactions and short-term advances.

Our 5.625% $200 million notes due November 2013, 6.50% $400 million notes due July 2017 and our 7.35% $500 million notes due August 2018 require interest only payments until maturity. Our CMCZ note requires quarterly interest and principal payments and our CMCS facility requires quarterly interest and principal payments beginning in July 2011. We expect cash from operations to be sufficient to meet all interest and principal payments due within the next twelve months, and we believe we will be able to get additional financing or refinance these notes when they mature.

Certain of our financing agreements include various financial covenants. The revolving credit facility required us to maintain a minimum interest coverage ratio (adjusted EBITDA to interest expense) of not less than 2.50 to 1.00 for the twelve month cumulative

period ended May 31, 2011 and for each fiscal quarter on a rolling twelve month cumulative period thereafter. At May 31, 2011, our interest coverage ratio was 3.37 to 1.00. The debt to capitalization ratio covenant under the agreement requires us to maintain a ratio not greater than 0.60 to 1.00. At May 31, 2011, our debt to capitalization ratio was 0.50 to 1.00. The revolving credit facility is used as an alternative source of liquidity. Our public debt does not contain these covenants.

The CMCZ term note contains certain financial covenants. The agreement requires a debt to equity ratio of not greater than 0.80 to 1.00, a tangible net worth to exceed PLN 600 million and a debt to EBITDA ratio not greater than 3.50 to 1.00. At May 31, 2011, CMCZ was in compliance with these covenants with a debt to equity ratio at 0.71 to 1.00, tangible net worth of PLN 718 million and a debt to EBITDA ratio at 2.43 to 1.00. Additionally, the agreement requires an interest coverage ratio of not less than 1.20 to 1.00. At May 31, 2011, CMCZ was not in compliance with this covenant which resulted in a guarantee by the Company continuing to be effective. As a result of the guarantee, the financial covenant requirements became void; however, all other terms of the loan remain in effect, including the payment schedule. The guarantee will cease to be effective when CMCZ is in compliance with this financial covenant for two consecutive quarters.

We regularly maintain a substantial amount of accounts receivable. We actively monitor our accounts receivable and record allowances as soon as we believe accounts are uncollectible based on current market conditions and customers’ financial condition. Continued pressure on the liquidity of our customers could result in additional reserves as we make our assessments in the future. We use credit insurance both in the U.S. and internationally to mitigate the risk of customer insolvency. We estimate the amount of credit insured receivables (and those covered by export letters of credit) was approximately 66% of total receivables at May 31, 2011.

For added flexibility, we may sell certain accounts receivable both in the U.S. and internationally. See Note 3, Sales of Accounts Receivable, to the consolidated financial statements. Our domestic sale of receivables program contains certain cross-default provisions whereby a termination event could occur should we default under another credit arrangement, and contains covenants that conform to the same requirements contained in our revolving credit agreement. Compliance with these covenants is discussed above.

Cash Flows Our cash flows from operating activities primarily result from sales of steel and related products, and to a lesser extent, sales of nonferrous metal products. We also sell and rent construction-related products and accessories. We have a diverse and generally stable customer base. We use futures or forward contracts as needed to mitigate the risks from fluctuations in foreign currency exchange rates and nonferrous metals commodity prices.

During the nine months ended May 31, 2011, we used $44.1 million of net cash flows from operating activities as compared to generating $17.5 million in the first nine months of 2010. We generated less cash in fiscal 2011 than the same period in 2010 from fluctuations in working capital offset by a reduction in net loss. Significant fluctuations in working capital were as follows:

•

Accounts receivable — accounts receivable increased for the first nine months of 2011 as sales and prices continued to improve as compared to the same period in the prior year;

•

Inventory — more cash was used in the first nine months of 2011 as improved demand resulted in increased volume and higher prices in our inventory balance as compared to the same period in 2010;

•

Accounts payable — less cash was generated in the first nine months of 2011 as current liabilities have been relatively consistent during 2011 as compared to the first nine months of 2010. Balances were significantly reduced at the end of 2009 due to low volume from the global recession resulting in large increases in accounts payable during 2010.

During the nine months ended May 31, 2011, we generated $1.7 million of net cash flows from investing activities as compared to using $133.9 million during the same period in the prior year. We invested $51.5 million in property, plant and equipment during 2011, a decrease of $57.9 million over 2010. Additionally, we had proceeds from the sale of property, plant and equipment and other assets of $52.3 million, an increase of $47.0 million over 2010, primarily related to the sale of certain assets of our joist business and forms from our heavy forms rental business.

We expect our total capital budget for fiscal 2011 to be approximately $115 million. We continually assess our capital spending and reevaluate our requirements based on current and expected results.

During the nine months ended May 31, 2011, we used $117.9 million of net cash flows from financing activities as compared to generating $3.7 million during the nine months ended May 31, 2010. The increase in cash used was primarily due to decreased net

borrowings on short-term debt of $69.6 million and decreased documentary letters of credit of $21.9 million in the first nine months of 2011. Our cash dividends have remained consistent at approximately $41 million for both periods.

Our contractual obligations for the next twelve months of approximately $965 million are typically expenditures with normal revenue producing activities. We believe our cash flows from operating activities and debt facilities are adequate to fund our ongoing operations and planned capital expenditures.

CONTRACTUAL OBLIGATIONS

The following table represents our contractual obligations as of May 31, 2011 (dollars in thousands):


	Payments Due By Period*
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Contractual obligations:
Long-term debt(1)	$	1,203,728	$	38,246	$	43,999	$	210,074	$	911,409
Notes payable		8,372		8,372		—		—		—
Interest(2)		336,078		57,415		105,213		92,294		81,156
Operating leases(3)		147,800		40,514		57,533		34,044		15,709
Purchase obligations(4)		965,178		820,066		86,186		55,084		3,842

Total contractual cash obligations	$	2,661,156	$	964,613	$	292,931	$	391,496	$	1,012,116


*		We have not discounted the cash obligations in this table.

(1)		Total amounts are included in the May 31, 2011 consolidated balance sheet. See Note 8, Credit Arrangements, to the consolidated financial statements.

(2)		Interest payments related to our short-term debt are not included in the table as they do not represent a significant obligation as of May 31, 2011. Also, amounts include the effect of our interest rate swaps based on the LIBOR forward rate at May 31, 2011.

(3)		Includes minimum lease payment obligations for non-cancelable equipment and real estate leases in effect as of May 31, 2011.

(4)		Approximately 73% of these purchase obligations are for inventory items to be sold in the ordinary course of business. Purchase obligations include all enforceable, legally binding agreements to purchase goods or services that specify all significant terms, regardless of the duration of the agreement. Agreements with variable terms are excluded because we are unable to estimate the minimum amounts. Another significant obligation relates to capital expenditures.

Other Commercial Commitments We maintain stand-by letters of credit to provide support for certain transactions that our insurance providers and suppliers request. At May 31, 2011, we had committed $30.9 million under these arrangements, of which $30.2 million is cash collateralized. All of the commitments expire within one year.

CONTINGENCIES

See Note 14 — Commitments and Contingencies, to the consolidated financial statements.

In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings and government investigations, including environmental matters. We may incur settlements, fines, penalties or judgments because of some of these matters. While we are unable to estimate the ultimate dollar amount of exposure or loss in connection with these matters, we make accruals as warranted. Inherent uncertainties exist in these estimates primarily due to evolving remediation technology, changing regulations, possible third-party contributions and the uncertainties involved in litigation. We believe that we have adequately provided in our consolidated financial statements for the potential impact of these contingencies. We also believe that the outcomes will not significantly affect the long-term results of operations, our financial position or our cash flows.

We are subject to federal, state and local pollution control laws and regulations in all locations where we have operating facilities. We anticipate that compliance with these laws and regulations will involve continuing capital expenditures and operating costs.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, with respect to our financial condition, results of operations, cash flows and business, and our expectations or beliefs concerning future events, including net earnings (loss), operating profit (loss), economic conditions, credit availability, product pricing and demand, currency valuation, production rates, energy expense, interest rates, inventory levels, margins, acquisitions, construction and operation of new facilities and general market conditions. These forward-looking statements can generally be identified by phrases such as we or our management “expects,” “anticipates,” “believes,” “estimates,” “intends,” “plans to,” “ought,” “could,” “will,” “should,” “likely,” “appears,” “projects,” “forecasts,” “outlook” or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. Variances will occur and some could be materially different from our current opinion. Developments that could impact our expectations include the following:

•

absence of global economic recovery or possible recession relapse;

•

solvency of financial institutions and their ability or willingness to lend;

•

success or failure of governmental efforts to stimulate the economy, including restoring credit availability and confidence in a recovery;

•

continued debt problems within the eurozone and other foreign zones;

•

customer non-compliance with contracts;

•

construction activity, including residential, commercial and industrial;

•

decisions by governments affecting the level of steel imports, including tariffs and duties;

•

litigation claims and settlements;

•

difficulties or delays in the execution of construction contracts resulting in cost overruns or contract disputes;

•

metals pricing over which we exert little influence;

•

increased capacity and product availability from competing steel minimills and other steel suppliers, including import quantities and pricing;

•

execution of cost minimization strategies;

•

ability to retain key executives;

•

court decisions and regulatory rulings;

•

industry consolidation or changes in production capacity or utilization;

•

global factors, including political and military uncertainties and acts of nature;

•

currency fluctuations;

•

interest rate changes;

•

availability and pricing of raw materials, including scrap metal and energy;

•

insurance and supply prices;

•

passage of new, or interpretation of existing, environmental laws and regulations;

•

severe weather, especially in Poland; and

•

the pace of overall economic activity, particularly in China.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required hereunder for the Company is not materially different from the information set forth in Item 7a. Quantitative and Qualitative Disclosures about Market Risk included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2010, filed with the SEC and is, therefore, not presented herein.

Additionally, see Note 9 — Derivatives and Risk Management, to the consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods, including controls and disclosures designed to ensure that this information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and they have concluded that as of that date, our disclosure controls and procedures were effective.

No change to our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Reference is made to the information incorporated by reference from Item 3. Legal Proceedings in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended August 31, 2010.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended August 31, 2010.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. (RESERVED)

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K:

	10.1		Fourth Amendment, dated April 7, 2011, to Employment Agreement by and between Murray R. McClean and Commercial Metals Company (filed as Exhibit 10.1 to Commercial Metals Company’s Form 8-K filed April 11, 2011 and incorporated herein by reference).

	10.2		First Amendment, dated April 8, 2011, to Employment Agreement by and between Joseph Alvarado and Commercial Metals Company (filed as Exhibit 10.2 to Commercial Metals Company’s Form 8-K filed April 11, 2011 and incorporated herein by reference).

	10.3		Employment Agreement, dated May 3, 2011, by and between Barbara R. Smith and Commercial Metals Company (filed herewith).

	10.4		Retirement and Transition Agreement, dated May 6, 2011, by and between William B. Larson and Commercial Metals Company (filed herewith).

	10.5		Amended and Restated Employment Agreement, dated May 23, 2011, by and between Murray R. McClean and Commercial Metals Company (filed herewith).

	10.6		Second Amendment, dated May 26, 2011, to Employment Agreement by and between Joseph Alvarado and Commercial Metals Company (filed herewith).

	31.1		Certification of Murray R. McClean, Chairman of the Board and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 to the Sarbanes-Oxley Act of 2002 (filed herewith).

	31.2		Certification of Barbara R. Smith, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

	32.1		Certification of Murray R. McClean, Chairman of the Board and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

	32.2		Certification of Barbara R. Smith, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

	101*		Financial statements from the quarterly report on Form 10-Q of Commercial Metals Company for the quarter ended May 31, 2011, filed on July 8, 2011, formatted in XBRL: (i) the Consolidated Balance Sheets (Unaudited), (ii) the Consolidated Statements of Operations (Unaudited), (iii) the Consolidated Statements of Cash Flows (Unaudited), (iv) the Consolidated Statements of Stockholders’ Equity (Unaudited) and (v) the Notes to Consolidated Financial Statements tagged as blocks of text (submitted electronically herewith).


*		In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	COMMERCIAL METALS COMPANY
July 8, 2011	/s/ Barbara R. Smith
	Barbara R. Smith
	Senior Vice President & Chief Financial Officer

July 8, 2011	/s/ Leon K. Rusch
	Leon K. Rusch
	Vice President & Controller

INDEX TO EXHIBITS


Exhibit No.		Description of Exhibit

10.1		Fourth Amendment, dated April 7, 2011, to Employment Agreement by and between Murray R. McClean and Commercial Metals Company (filed as Exhibit 10.1 to Commercial Metals Company’s Form 8-K filed April 11, 2011 and incorporated herein by reference).

10.2		First Amendment, dated April 8, 2011, to Employment Agreement by and between Joseph Alvarado and Commercial Metals Company (filed as Exhibit 10.2 to Commercial Metals Company’s Form 8-K filed April 11, 2011 and incorporated herein by reference).

10.3		Employment Agreement, dated May 3, 2011, by and between Barbara R. Smith and Commercial Metals Company (filed herewith).

10.4		Retirement and Transition Agreement, dated May 6, 2011, by and between William B. Larson and Commercial Metals Company (filed herewith).

10.5		Amended and Restated Employment Agreement, dated May 23, 2011, by and between Murray R. McClean and Commercial Metals Company (filed herewith).

10.6		Second Amendment, dated May 26, 2011, to Employment Agreement by and between Joseph Alvarado and Commercial Metals Company (filed herewith).

31.1		Certification of Murray R. McClean, Chairman of the Board and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 to the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification of Barbara R. Smith, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1		Certification of Murray R. McClean, Chairman of the Board and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2		Certification of Barbara R. Smith, Senior Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101*		Financial statements from the quarterly report on Form 10-Q of Commercial Metals Company for the quarter ended May 31, 2011, filed on July 8, 2011, formatted in XBRL:
		(i) the Consolidated Balance Sheets (Unaudited), (ii) the Consolidated Statements of Operations (Unaudited), (iii) the Consolidated Statements of Cash Flows (Unaudited), (iv) the Consolidated Statements of Stockholders’ Equity (Unaudited) and (v) the Notes to Consolidated Financial Statements tagged as blocks of text (submitted electronically herewith).


*		In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Exhibit 10.3

TERMS AND CONDITIONS OF EMPLOYMENT

These Terms and Conditions of Employment and Separation (the “Agreement”) are entered into this 3 ^rd day of May, 2011 by and between COMMERCIAL METALS COMPANY, a Delaware corporation (the “Employer” or the “Company”) and Babarba R. Smith (the “Executive”). The Employer and Executive are collectively referred to as the “Parties,” and individually as a “Party.”

R E C I T A L S:

WHEREAS, Company desires to employee Executive and Executive desires to be employed by Company.

WHEREAS, as a condition to eligibility for employment, and to protect the good will and confidential business information of the Company, the Executive and the Company desire to enter into this Agreement on the terms stated herein.

WHEREAS, Executive desires to be employed by Employer in this position pursuant to all of the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows:

1. PURPOSE . The purpose of this Agreement is to formalize the terms and conditions of Executive’s employment with Employer as Senior Vice President and Chief Financial Officer. This Agreement may only be amended by a writing signed by both Parties.

2. DEFINITIONS . For the purposes of this Agreement, the following words and terms shall have the following meanings:

a. “AFFILIATE” or “AFFILIATES” shall mean any corporation, partnership, joint venture, association, unincorporated organization or any other legal entity that, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Employer.

b. “CAUSE” shall mean (i) Executive’s commission of theft, embezzlement, fraud, financial impropriety, any other act of dishonesty relating to his employment with the Company, or any willful violation of Company policies (including the Company’s ethics policies) or lawful directives of the Company, or any law, rules, or regulations applicable to the Company, including, but not limited to, those established by the Securities and Exchange Commission, or any self-regulatory organization having jurisdiction or authority over Executive or the Company or any willful failure by Executive to inform the Company of any violation of any law, rule or regulation by the Company or one of its direct or indirect subsidiaries, provided, however, that Cause shall not include any act or omission of Executive that the Executive reasonably believes, based on the advice of legal counsel for the Company, is not a violation of any such policies, directives, law, rules or regulations; (ii) Executive’s willful commission of any acts that would support the finding of a felony or any lesser crime having as its predicate element fraud, dishonesty, misappropriation, or moral turpitude; (iii) Executive’s failure to perform his duties and obligations under this Agreement (other than during any period of disability) which failure to perform is not remedied within thirty (30) days after written notice thereof to the

Executive by the Chief Executive Officer of the Company; or (iv) Executive’s commission of an act or acts in the performance of his duties under this Agreement amounting to gross negligence or willful misconduct, including, but not limited to, any breach of Section 9 of this Agreement.

c. CONFIDENTIAL INFORMATION. During the course of his employment, Executive will receive Confidential Information of the Company. Confidential Information means information (1) disclosed to or known by Executive as a consequence of or through his employment with Employer or Affiliate; and (2) which relates to any aspect of Employer’s or Affiliate’s business, research, or development. “Confidential Information” includes, but is not limited to, Employer’s and Affiliate’s trade secrets, proprietary information, business plans, marketing plans, financial information, employee performance, compensation and benefit information, cost and pricing information, identity and information pertaining to customers, suppliers and vendors, and their purchasing history with Employer, any business or technical information, design, process, procedure, formula, improvement, or any portion or phase thereof, that is owned by or has, at the time of termination, been used by the Employer, any information related to the development of products and production processes, any information concerning proposed new products and production processes, any information concerning marketing processes, market feasibility studies, cost data, profit plans, capital plans and proposed or existing marketing techniques or plans, financial information, including, without limitation, information set forth in internal records, files and ledgers, or incorporated in profit and loss statements, fiscal reports, business plans or other financial or business reports, and information provided to Employer or Affiliate by a third party under restrictions against disclosure or use by Employer or others.

d. “CONFLICT OF INTEREST” means any situation in which the Executive has two or more duties or interests that are mutually incompatible and may tend to conflict with the proper and impartial discharge of the Executive’s duties, responsibilities or obligations to Employer, including but not limited to those described in Employer’s Code of Conduct (the “Code”) that Executive has either not disclosed to Employer or has disclosed and not been granted a waiver by the Audit Committee of the Board of Directors of Employer under the provisions of such Code.

e. “GOOD REASON” shall mean the occurrence, without Executive’s written consent, of any of the following events (i) a breach of any material provision of this Agreement by Employer; or (ii) a significant reduction in the authorities, duties, responsibilities, compensation, and/or title of the Executive as set forth in this Agreement.

Executive shall give Employer written notice within the guidelines of Section 409A of the Internal Revenue Code of 1986, as amended (the “IRC”) of an intent to terminate this Agreement for “Good Reason” as defined in this Agreement, and (except as set forth above) provide Employer with thirty (30) business days after receipt of such written notice from Executive to remedy the alleged Good Reason.

3. DURATION . This Agreement shall, unless terminated as hereinafter provided, continue through August 31, 2013. Unless Executive or Employer gives written notice of his or its intent not to renew this Agreement no later than thirty (30) days prior to its expiration, this Agreement shall automatically continue in effect for successive additional one (1) year terms subject to all other terms and conditions contained herein.

4. AGE 65 MANDATORY RETIREMENT . Executive understands and agrees that he is employed in a bona fide executive and high policy-making position, and that the position of Senior Vice President and Chief Financial Officer is subject to a mandatory retirement age of sixty five (65), and hereby agrees to same.

5. DUTIES AND RESPONSIBILITIES . Upon execution of this Agreement, Executive shall diligently render his services to Employer as Senior Vice President and Chief Financial Officer in accordance with Employer’s directives, and shall use his best efforts and good faith in accomplishing such directives. Executive shall report to the President of the Company. Executive agrees to devote his full-time efforts, abilities, and attention (defined to mean not normally less than forty (40) hours/week) to the business of Employer, and shall not engage in any activities which will interfere with such efforts.

6. COMPENSATION AND BENEFITS . In return for the services to be provided by Executive pursuant to this Agreement, Employer agrees to pay Executive as follows:

a. SALARY. Executive shall receive an annual base salary of not less than $475,000.00 during the term of this Agreement. This salary may be increased at the sole discretion of Employer, and may not be decreased without Executive’s written consent. Notwithstanding the foregoing, the Executive may voluntarily decrease his salary at any time.

b. CASH AND EQUITY INCENTIVE . Executive shall be eligible to receive a bonus (the “Bonus”) for each fiscal year of Employer ending August 31 during the term of this Agreement pursuant to Employer’s 2006 Cash Incentive Plan, Employer’s discretionary incentive plan, and shall be eligible to participate in the 2006 Long Term Equity Plan as well as any other short or long-term incentive plans as may be applicable to executives of similar level in the Company. The amount of any annual or long-term bonus or equity awards shall be determined by, and in the sole discretion of, Employer’s Board of Directors. The Bonus, if any, shall be paid in a lump sum, as soon as practicable following the end of the Employer’s fiscal year to which the Bonus relates, but in no event later than November 1 following the end of such fiscal year.

c. PAYMENT AND REIMBURSEMENT OF EXPENSES. Employer shall pay or reimburse the Executive for all reasonable travel and other expenses incurred by Executive in performing his obligations under this Agreement in accordance with the policies and procedures of Employer.

d. INSURANCE, FRINGE BENEFITS AND PERQUISITES. Executive shall be entitled to participate in or receive insurance and any other benefits under any plan or arrangement generally made available to the employees or executive officers of Employer, including short and long-term plans for grants of equity, short and long-term bonus and incentive plans, health and welfare benefit plans, life insurance coverage, disability insurance, and hospital, surgical, medical, and dental benefits for Executive and his qualified dependents, (to the extent Executive elects to participate in such coverage where optional), and fringe benefit plans or arrangements, all subject to and on a basis consistent with the terms, conditions, and overall administration by Employer of such plans and arrangements.

e. VACATION. In accordance with the policies of Employer, Executive shall be entitled to the number of paid vacation days in each employment year determined by Employer from time to time for its employees generally, but not fewer than twenty (20) business

days in any employment year (prorated based on start date of employment in any year in which Executive is employed hereunder for less than the entire year in accordance with the number of days in such year during which Executive is so employed).

f. EXECUTIVE EMPLOYEE CONTINUITY AGREEMENT. Executive and Employer are party to a separate agreement known as The Executive Employee Continuity Agreement (the “EECA”). The EECA remains in effect and is not superseded by this Agreement. Except as to restrictive covenants, to the extent that there are conflicts between this Agreement and the EECA, terms of the EECA shall control. As to restrictive covenants, terms of this Agreement shall control over any conflict in terms.

7. TERMINATION . Executive’s employment with Employer is “at-will”, meaning that either Party may terminate this Agreement and the employment relationship at any time, with or without Cause, or Good Reason. Any termination of Executive’s employment pursuant to this Agreement will also serve as termination of any and all offices, positions and directorships held by Executive with the Company and any of its subsidiaries and affiliates. Executive’s employment will terminate upon his death, or if he is unable to perform the functions of his position with reasonable accommodation for four (4) consecutive months, or for a total of six (6) months during any twelve (12) month period. Employer may terminate Executive’s employment at any time without notice for Cause (in accordance with the provisions of Paragraph 2(b) herein), or, following fourteen (14) days written notice to Executive, without Cause.

a. Executive may terminate his employment upon ninety (90) days written notice to Employer. In the event Executive terminates his employment in this manner, he shall remain in Employer’s employ subject to all terms and conditions of this Agreement for the entire ninety (90) day period, performing such duties to which Executive may be directed by the Company.

b. Executive may terminate this Agreement for Good Reason in accordance with the provisions of Paragraph 2(e) herein.

8. SEVERANCE . Except in the event of a Qualified Termination within twenty-four (24) months [need to double check against EECA] following a Change in Control, as both are defined in the Executive Employment Continuity Agreement, and which are governed exclusively by the EECA, Executive shall be entitled to the following compensation, in addition to any accrued but unpaid salary, in the event that this Agreement and his employment are terminated under the following conditions, which are the exclusive compensation and remedies for termination of this Agreement and the employment relationship:

a. TERMINATION RESULTING FROM DEATH OR DISABILITY. Subject to the provisions of Section 8(d) below, in the event Executive’s employment is terminated as a result of his death or disability, Executive or his estate shall be entitled to (i) such life insurance or disability benefits as Executive may be entitled to pursuant to any life or disability insurance then maintained by the Employer for the benefit of its employees and executive officers and; (ii) a pro-rata share of the Bonus in an amount as determined by Employer’s Board of Directors in their sole discretion, payable no later than November 30 following the end of Employer’s fiscal year during which such termination occurs; (iii) pursuant to the terms and conditions of the Employer’s 2006 Employee Cash Incentive Plan, payment, at such time as all other participants in that plan receive payment, of any cash incentive attributable

to periods during which Executive was employed; (iv) to the extent permitted by the terms and conditions of Employer’s 2006 Long-Term Equity Incentive Plan or other applicable equity incentive plan(s) and to the extent authorized by the terms of each of Executive’s outstanding award or grant agreements entered into pursuant to such plan(s), immediate vesting of all stock appreciation rights, restricted stock, and/or stock options previously awarded Executive; and (v) to the extent permitted by the terms and conditions of the Profit Sharing and 401(k) Plan and Benefit Restoration Plan maintained by the Employer, crediting of any Employer contribution to the Executive’s account attributable to the plan year during which termination occurs and accelerated full vesting of any previously unvested Employer contributions to the Executive’s account in such plans. Except as otherwise provided by this Section 8(a) or Section 8(d) below, any amount payable pursuant to this Section 8(a) shall be paid on the 60 ^th day following Executive’s termination due to Executive’s death or disability.

b. TERMINATION WITHOUT CAUSE BY EMPLOYER, NON-RENEWAL BY EMPLOYER, OR FOR GOOD REASON BY EXECUTIVE. Except in the event of a Constructive Termination related to a Change of Control (as both terms are defined in the Executive Employment Continuity Agreement between the parties), in the event Executive’s employment is terminated without Cause by the Employer, or for Good Reason by the Executive, or the Employer elects not to renew the Agreement pursuant to Paragraph 3 either at the end of the initial term or any successive one-year extension, subject to Executive’s execution of a general release agreement in favor of Employer releasing all pending or potential claims, Executive shall be entitled to: (i) an amount equal to two times the Executive’s then-current annual base salary and (ii) the benefits described above in Paragraph 8(a)(v). If Executive elects not to renew this Agreement, except for Good Reason, then he shall be entitled only to any accrued but unpaid salary through the date of such termination. Except as otherwise provided by Section 8(d) below, any amount payable pursuant to this Section 8(b) shall be paid on the 60 ^th day following Executive’s termination.

c. TERMINATION FOR CAUSE. In the event Executive’s employment is terminated for Cause by Employer or without Good Reason by Executive, the Executive shall only be entitled to accrued but unpaid salary through the date of his termination and will not be entitled to any additional compensation or benefits except as expressly required by applicable law concerning compensation and benefits upon termination of employment.

d. DELAY OF SEVERANCE PAYMENTS. To the extent that any post-termination payments to which Executive becomes entitled under this Agreement constitute deferred compensation subject to Section 409A of the Internal Revenue Code (IRC), and Executive is deemed at the time of such termination to be a “specified employee” under said Section 409A, then such payment will not be made or commence until the earliest of (i) the expiration of the six months period measured from the date of Executive’s “separation from service” and (ii) the date of Executive’s death following such “separation from service”. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or installments) in the absence of this Paragraph 8(d) will be paid to Executive or Executive’s beneficiary in one lump sum.

9. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY . Employer and Executive acknowledge and agree that while Executive is employed pursuant to this Agreement, he will be provided access to Confidential Information of Employer and its Affiliates, will be provided with specialized training on how to perform his duties, and will be

provided contact with Employer’s and Affiliates’ customers and potential customers throughout the world. Executive further recognizes and agrees that (a) Employer and its Affiliates have devoted a considerable amount of time, effort, and expense to develop its Confidential Information, training, and business goodwill, all of which are valuable assets to the Employer; (b) that Executive will have broad responsibilities regarding the management and operation of Employer’s and Affiliates’ world-wide operations, as well as its marketing and finances, its existing and future business plans, customers and technology; and (c) disclosure or use of Employer’s or Affiliates’ Confidential Information and additional information described herein to which Executive will have access, would cause irreparable harm to the Employer. Therefore, in consideration of all of the foregoing, Employer and Executive agree as follows:

a. NON-COMPETITION DURING AND AFTER EMPLOYMENT. As stated in Paragraph 2(c) herein, Executive will receive Confidential Information by virtue of his employment in an executive capacity with the Company. Accordingly, Executive agrees that during his employment for the Company and for a period of eighteen (18) months after termination of his employment for any reason, he will not compete with Employer or Affiliates in any location in the world in which Employer or Affiliates have operations as of the date of Executive’s termination, by engaging in the conception, design, development, production, marketing, selling, sourcing or servicing of any product or providing of any service that is substantially similar to the products or services that Employer or any of its Affiliates provided during Executive’s employment or planned to provide during Executive’s employment and of which Executive had knowledge, responsibility or authority, and that he will not work for, assist, or become affiliated or connected with, as an owner, partner, consultant, or in any other capacity, either directly or indirectly, any individual or business which offers or performs services, or offers or provides products substantially similar to the services and products provided by Employer or Affiliates during Executive’s employment, or that were planned to be provided during Executive’s employment and of which Executive had knowledge, responsibility or authority. Additionally, during this period, Executive will not accept employment with or provide services in any capacity to any individual, business entity, investor, or investment fund that is actively involved in or assessing an acquisition of a controlling interest in the Company or purchase of substantially all assets of the Company. The restrictive covenants set forth in this Agreement are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company.

b. CONFLICTS OF INTEREST. Executive agrees that for the duration of Executive’s employment, he will not engage, either directly or indirectly, in any Conflict of Interest, and that Executive will promptly inform the General Counsel as to each offer received by Executive to engage in any such activity. Executive further agrees to disclose to Employer any other facts of which Executive becomes aware which might involve or give rise to a Conflict of Interest or potential Conflict of Interest.

c. NON-SOLICITATION OF CUSTOMERS AND EMPLOYEES. Executive further agrees that for a period of two (2) years after the termination of his employment for any reason he will not either directly or indirectly, on his own behalf or on behalf of others (i) solicit or accept any business from any customer or supplier or prospective customer or supplier with whom Executive personally dealt or solicited or had contact with at any time during Executive’s employment, (ii), solicit, recruit or otherwise attempt to hire, or personally cause to hire any of the then current employees or consultants of Employer or any of its Affiliates, or who were former employees or consultants of Employer or any of its Affiliates

during the preceding twelve months, to work or perform services for Executive or for any other entity, firm, corporation, or individual; or (iii) solicit or attempt to influence any of Employer’s or any of its Affiliates’ then current customers or clients to purchase any products or services substantially similar to the products or services provided by Employer or Affiliates during Executive’s employment (or that were planned to be provided during Executive’s employment) from any business that offers or performs services or products substantially similar to the services or products provided by Employer or Affiliates.

d. NON-DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION.

(i) Executive further agrees that during the term of his employment and thereafter he will not, except as Employer may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon, publish, or otherwise disclose to any third party any Confidential Information or proprietary information of Employer or Affiliates, or authorize anyone else to do these things at any time either during or subsequent to his employment with Employer. If Executive becomes legally compelled by deposition, subpoena or other court or governmental action to disclose any Confidential Information, then the Executive shall give Employer prompt notice to that effect, and will cooperate with Employer if Employer seeks to obtain a protective order concerning the Confidential Information. Executive will disclose only such Confidential Information as his counsel shall advise is legally required.

(ii) Executive agrees to deliver to Employer, at any time Employer may request, all documents, memoranda, notes, plans, records, reports, and other documentation, models, components, devices, or computer software, whether embodied in electronic format on a computer hard drive, disk or in other form (and all copies of all of the foregoing), relating to the businesses, operations or affairs of Employer or any Affiliates and any other Confidential Information that Executive may then possess or have under his control.

(iii) This section shall continue in full force and effect after termination of Executive’s employment and after the termination of this Agreement for any reason, including expiration of this Agreement. Executive’s obligations under this section of this Agreement with respect to any specific Confidential Information and proprietary information shall cease when that specific portion of Confidential Information and proprietary information becomes publicly known, in its entirety and without combining portions of such information obtained separately and without breach by Executive of his obligations under this Agreement. It is understood that such Confidential Information and proprietary information of Employer and Affiliates includes matters that Executive conceives or develops during his employment, as well as matters Executive learns from other employees of Employer or Affiliates.

e. SURVIVAL OF RESTRICTIVE COVENANTS. All restrictive covenants herein shall survive termination of this Agreement and Executive’s employment, regardless of reason, including expiration of the Agreement by passage of time and non-renewal.

10. REMEDIES . Executive acknowledges that the restrictions contained in Paragraph 9, in view of the nature of the Employer and its Affiliates’ global business and Executive’s global position with the Employer, are reasonable and necessary to protect the Employer and Affiliates’ legitimate business interests, including its Confidential Information, training and business goodwill, and that any violation of this Agreement would result in irreparable injury to the Employer. In the event of a breach by the Executive of any provision of

Paragraph 9, the Employer shall be entitled, in addition to any other remedies that may be available, to a temporary restraining order and injunctive relief restraining the Executive from the commission of any breach without the necessity of proving irreparable harm or posting of a bond, and to recover the Employer’s attorneys’ fees, costs and expenses related to the breach and any such action to enforce the provisions of Paragraph 9. The existence of any claim or cause of action by Executive against the Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of the restrictive covenants contained in Paragraph 9.

11. REFORMATION . The Executive and the Employer agree that all of the covenants contained in Paragraph 9 shall survive the termination of Executive’s employment and/or termination or expiration of this Agreement, and agree further that in the event any of the covenants contained in Paragraph 9 shall be held by any court to be effective in any particular area or jurisdiction only if said covenant is modified to limit in its duration or scope, then the court shall have such authority to so reform the covenant and the Parties shall consider such covenant(s) and/or other provisions of Paragraph 9 to be amended and modified with respect to that particular area or jurisdiction so as to comply with the order of any such court and, as to all other jurisdictions, the covenants contained herein shall remain in full force and effect as originally written. Should any court hold that these covenants are void or otherwise unenforceable in any particular area or jurisdiction, then the Employer may consider such covenant(s) and/or provisions of Paragraph 9 to be amended and modified so as to eliminate therefrom the particular area or jurisdiction as to which such covenants are so held void or otherwise unenforceable and, as to all other areas and jurisdictions covered hereunder, the covenants contained herein shall remain in full force and effect as originally written.

12. TOLLING . If the Executive violates any of the restrictions contained in this agreement, the restrictive period will be continued and enlarged for such length of time as the Employee is in violation of the restrictive covenant.

13. NOTICE TO FUTURE EMPLOYERS . If Executive, in the future, seeks or is offered employment, or any other position or capacity with another company or entity, the Executive agrees to inform each new employer or entity, before accepting employment, of the existence of the restrictions in Paragraph 9. Further, before taking any employment position with any company or entity during the 18-month period described in Paragraph 9, the Executive agrees to give prior written notice to the Employer, including the name of such company or entity and confirming in that notice that he has provided a copy of Paragraph 9 to such new employer or entity.

14. INVENTIONS .

a. Executive acknowledges that during this Agreement, Executive may be involved in (1) the conception or making of improvements, discoveries, or inventions (whether or not patentable and whether or not reduced to practice), (2) the production of original works of authorship (whether or not registrable under copyright or similar statutes) or (3) the development of trade secrets relating to Employer’s or any of its Affiliates’ business. Executive acknowledges that all original works of authorship which are made by Executive (solely or jointly with others) within the scope of his or her employment, and which are protectable by copyright, are “works made for hire,” pursuant to the United States Copyright Act (17 U.S.C., Section 101) and are consequently owned by the Employer or any of its Affiliates. Executive

further acknowledges that all improvements, discoveries, inventions, trade secrets or other form of intellectual property is the exclusive property of Employer or any of its Affiliates.

b. Executive hereby waives any rights he/she may have in or to such intellectual property, and Executive hereby assigns to Employer or any of its Affiliates all right, title and interest in and to such intellectual property. At Employer’s or any of its Affiliates’ request and at no expense to Executive, Executive shall execute and deliver all such papers, including any assignment documents, and shall provide such cooperation as may be necessary or desirable, or as Employer or any of its Affiliates may reasonably request, to enable Employer or any of its Affiliates to secure and exercise its rights to such intellectual property.

15. RETURN OF PROPERTY . All lists, records, designs, patents, plans, manuals, memoranda and other property delivered to the Executive by or on behalf of Employer or any of its Affiliates or by any of their clients or customers, and all records and emails compiled by the Executive that pertain to the business of the Employer or any of its Affiliates (whether or not confidential) shall be and remain the property of the Employer and be subject at all times to its discretion and control. Likewise, all correspondence and emails with clients, customers or representatives, reports, research, records, charts, advertising materials, and any data collected by the Executive, or by or on behalf of the Employer or any of its Affiliates or its representatives (whether or not confidential) shall be delivered promptly to the Employer without request by it upon termination of Executive’s employment.

16. ASSIGNMENT . This Agreement may be assigned by Employer, but cannot be assigned by Executive.

17. BINDING AGREEMENT . Executive understands that his obligations under this Agreement are binding upon Executive’s heirs, successors, personal representatives, and legal representatives.

18. EXECUTIVE’S REPRESENTATIONS . Executive represents that his acceptance of employment with Employer (a) will not result in a breach of any of Executive’s obligations and agreements with any current or former employer, partnership or other person and (b) would not otherwise result in any liability to Employer or any of its Affiliates. In addition, Executive represents to Employer that he is not a party or subject to (i) any restrictive covenants, including without limitation, relating to competition, solicitation or confidentiality (other than general obligations to maintain confidentiality) that precludes or would materially interfere with his employment with Employer as contemplated by, and as of the date of, this Agreement, and/or (ii) any agreement with any other employer, partnership or other person that in any way materially compromises, limits or restricts Executive’s ability to perform his duties for Employer as contemplated by, and as of the date of, this Agreement.

19. NOTICES . All notices pursuant to this Agreement shall be in writing and sent certified mail, return receipt requested, addressed as follows:


Executive:		Employer:

		Commercial Metals Company
		Attention: General Counsel
		6565 North MacArthur Blvd.,
		Suite 800
		Irving, Texas 75039
		Fax: 214-689-4326

20. WAIVER . No waiver by either Party to this Agreement of any right to enforce any term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such right in the future or of any other right or remedy available under this Agreement.

21. SEVERABILITY . Subject to the provisions of Paragraph 11 herein, if any provision of this Agreement is determined to be void, invalid, unenforceable, or against public policy, such provisions shall be deemed severable from the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full force and effect. Furthermore, any breach by Employer of any provision of this Agreement shall not excuse Executive’s compliance with the requirements of Paragraph 11.

22. ENTIRE AGREEMENT AND UNDERSTANDING . The terms and provisions contained herein shall constitute the entire agreement between the Parties with respect to Executive’s employment with Employer during the time period covered by this Agreement. The Parties represent and warrant that they have read and understood each and every provision of this Agreement, and that they are free to obtain advice from legal counsel of choice, if necessary and desired, in order to interpret any and all provisions of this Agreement, and that both Parties have voluntarily entered into this Agreement.

23. EFFECTIVE DATE . It is understood that this Agreement shall be effective as of May 2, 2011 and that the terms of this Agreement shall remain in full force and effect both during Executive’s employment and where applicable thereafter.

24. GOVERNING LAW; RESOLUTION OF DISPUTES; WAIVER OF JURY TRIAL . This Agreement shall, at the choice of the Employer, be construed according to the laws of the State of Texas. All disputes relating to the interpretation and enforcement of the provisions of this Agreement shall, be resolved and determined exclusively by the federal or state courts in Dallas County, Texas. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, AND EXECUTIVE’S EMPLOYMENT AND COMPENSATION, OR TERMINATION THEREFROM.

[Signature Page to Follow]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.


EXECUTIVE	EMPLOYER
	COMMERCIAL METALS COMPANY
By: /s/ Babarba R. Smith

	By:	/s/ Joseph Alvarado Name: Joseph Alvarado
		Title: President and Chief Operating Officer

Exhibit 10.4

RETIREMENT AND TRANSITION AGREEMENT

This Retirement and Transition Agreement (“Agreement”) is entered into by and between Commercial Metals Company a Delaware corporation with principal offices at 6565 N. MacArthur Blvd, Irving, Texas 75039 (the “Company”) and William B. Larson (“Executive”).

WHEREAS, the Company has employed Executive for several years, most recently as SVP and Chief Financial Officer, and Executive has faithfully performed his responsibilities as an executive of the Company; and

WHEREAS, Executive has decided to resign his position as SVP and Chief Financial Officer effective June 1, 2011 and retire from employment with the Company effective December 31, 2011; and

WHEREAS, the parties now desire to enter into this Agreement to set forth the terms and conditions relating to the resignation by Executive of his employment;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below, the Parties agree as follows:

1. Executive has informed the Company of his intent to resign his position as SVP and Chief Financial Officer and all other officer and director positions effective as of June 1, 2011 (“Transition Date”), and to assume the title as of June 1, 2011 of CFO Emeritus, and to further resign as an employee effective at the close of business on December 31, 2011, or such earlier date as the Executive and Company may mutually agree upon (the earlier of which shall be the “Effective Date”), and the Company hereby agrees to accept all such resignations as of the dates listed herein. The Company shall continue to employ Executive until the Effective Date. All salary, benefits, car allowance, terms and conditions of Executive’s employment will remain unchanged until the Effective Date. Executive agrees that his services through the Effective Date will be subject to the same standards of conduct and performance applicable to all officers and managers of the Company.

2. In consideration for Executive’s agreement to remain available to the Company for assistance in preparing the quarterly and annual financial statements for the current fiscal year, and other assistance as may be requested until the Effective Date, and for Executive’s release and waiver of claims, the Company shall pay Executive the gross amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000). This lump sum consideration will be paid on or before December 31, 2011. The lump sum payment will be reduced by payroll tax withholding required by federal law.

3. As additional consideration, except as otherwise provided below, on the Effective Date the Executive shall receive the following:

(a) On or before the first regular payday following the Effective Date, the Company will pay Executive for 20 days of accrued, unused vacation pay;

(b) Payment of the annual bonus for the current fiscal year, calculated in accordance with the current bonus plan criteria, including the pre-established formula and the potential exercise of discretion by the compensation committee;

(c) Health benefits and other perquisites the same as Executive presently receives through Effective Date plus Company-paid COBRA coverage from the Effective Date and continuing for eighteen (18) months. For one year following the end date of COBRA coverage, the Company shall provide reimbursement of premiums for plan coverage similar to that provided by the Company up to $2,500 per month or, if unable to obtain coverage under an insured plan, then reimbursement of actual claims. In no event shall such reimbursements exceed $30,000, subject to a gross-up at Executive’s then-current tax rate, the actual cost of such expenses;

(d) Notwithstanding the provision in Section 4 of Executive’s Award Agreement, dated May 19, 2009, mandating forfeiture of unvested units as of Executive’s termination, in the event the Company achieves all vesting criteria and the stock awards vest en mass, the Company will pay Executive the equivalent value of 25,000 shares, based on the closing price on the vesting date, which sum shall be payable to Executive no more than 60 days after the vesting date;

(e) Accelerated vesting of all 30,000 PSUs granted on June 3, 2010. The Company agrees to vest these units on or before the Effective Date. Further, if needed to avoid adverse consequences to Executive pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), Executive agrees that Company shall deposit such shares into Executive’s CUSIP at the transfer agent with a legend restricting resale of such shares for the period of time needed to comply with Section 409A;

(f) Accelerated vesting of all 40,000 time-vested units granted on June 3, 2010. The Company agrees to vest these units on or before the Effective Date. Further, if needed to avoid adverse consequences to Executive pursuant to Section 409A, Executive agrees that Company shall deposit such shares into Executive’s CUSIP at the transfer agent with a legend restricting resale of such shares for the period of time needed to comply with Section 409A;

(g) Prorated vesting through December 31, 2011 of 15,780 time-vested units granted on January 18, 2011. The Company agrees to vest these units on or before the Effective Date. Further, if needed to avoid adverse consequences to Executive pursuant to Section 409A, Executive agrees that Company shall deposit such shares into Executive’s CUSIP at the transfer agent with a legend restricting resale of such shares for the period of time needed to comply with Section 409A;

(h) Notwithstanding the provision of Executive’s Award Agreement, dated January 18, 2011, mandating forfeiture of unvested units as of Executive’s termination, in the event that the Company achieves all of vesting criteria and the stock awards vest en mass, the Company will pay Executive the equivalent value of the prorated portion of the 23,670 PSUs , as per the calculation listed in the award agreement, (to be determined as if Executive had remained employed with the Company through December 31, 2011). The Company agrees to use the

closing stock price on the vesting date to value the prorated award and to issue any amounts payable no later than sixty (60) days following the vesting date;

(i) A lump sum severance payment of $840,000, representing current base salary multiplied by 2, payable on the Effective Date;

(j) In the event Executive departs with the consent of the Company, is relieved of his transition obligations by the Company, is discharged without cause by the Company or asked to resign by the Company before December 31, 2011, Executive will be paid the cash equivalent for contributions and accruals for 2011 for Executive under the Company 401(k) Plan, Benefits Restoration Plan, the Long Term Incentive Plan (LTIP) and any other plans or programs in which Executive participates as of the date of this Agreement as if Executive were employed on December 31, 2011;

(k) Payment of all vested benefits, including benefits under the LTIP, Company 401(k) Plan, and Benefits Restoration Plan, provided such amounts shall be paid on the dates permitted or designated under each such plan; and

(1) Any additional LTIP payments for which Executive is eligible will be prorated through his Effective Date, in the standard practice for retirement from the Company.

4. To the extent any benefits provided by the Company under Paragraph 3 are taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), shall be provided as separate monthly in-kind payments of those benefits. To the extent any such benefits are subject to and not otherwise exempt from Section 409A, the provision of such in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in another calendar year, and the rights to such in-kind benefits shall not be subject to liquidation or exchange for another benefit. With respect to reimbursement of expenses, the amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. The Company shall make all reimbursements and payments no later than the last day of the calendar year following the calendar year in which the expenses were incurred, and the Company’s gross-up of any taxes shall be made no later than the end of the calendar year next following the calendar year in which the Executive remits the related taxes to the Internal Revenue Service.

5. Executive agrees that he is retiring and resigning from the Company of his own free will, and that the terms of his various restrictive covenants, as set forth in Paragraph 5 below, as well as those contained Paragraph 9 of his Terms and Conditions of Stock Award, Employment and Separation (the “Employment Agreement”) dated June 1, 2010, are valid and enforceable. The Company shall have the right to discontinue all amounts payable under this Agreement and to obtain injunctive relief should Executive breach any of the restrictive covenants referenced in Paragraph 5 herein or Paragraph 9 of the Employment Agreement. Notwithstanding the foregoing, the Company and Executive agree that Executive may, with the prior approval of the Board of Directors, accept and begin new employment and/or service on boards of directors between the Transition Date and the Effective Date, provided Executive complies with his obligations under this Agreement and such employment and/or service does not violate the provisions of Paragraph 9 of the Employment Agreement. The Parties further agree that in the

event (i) Executive commences new employment prior to December 31, 2011, if such employment follows his departure with the consent of the Board, (ii) Executive is relieved of his transition obligations by the Company, or (iii) Executive’s employment is terminated without cause by the Company or as a result of a request for his resignation, then December 31, 2011 will be the service date for calculations contained in Section 3 of this Agreement.

6. In consideration of the mutual promises and covenants contained in this Agreement and after adequate opportunity to consult with legal counsel:

(a) Except as provided for in subpart (e) below or as otherwise prohibited by law, Executive for himself and each of his respective heirs, representatives, agents, successors, and assigns, irrevocably and unconditionally releases and forever discharges the Company and its respective current and former officers, directors, shareholders, employees, representatives, heirs, attorneys, and agents, as well as its respective predecessors, parent companies, subsidiaries, affiliates, divisions, successors, and assigns and its respective current and former officers, directors, shareholders, employees, representatives, attorneys, and agents (collectively the “Released Parties”), from any and all causes of action, claims, actions, rights, judgments, obligations, damages, demands, accountings, or liabilities of whatever kind or character, which Executive may have against them, or any of them, by reason of or arising out of, touching upon, or concerning Executive’s employment with the Company or his retirement from the Company. Executive acknowledges that this release of claims specifically includes, but is not limited to, any and all claims for fraud; breach of contract; breach of the implied covenant of good faith and fair dealing; inducement of breach; interference with contractual rights; wrongful or unlawful discharge or demotion; violation of public policy; invasion of privacy; intentional or negligent infliction of emotional distress; intentional or negligent misrepresentation; conspiracy; failure to pay wages, benefits, vacation pay, expenses, severance pay, attorneys’ fees, or other compensation of any sort; defamation; unlawful effort to prevent employment; discrimination on the basis of race, color, sex, sexual orientation, national origin, ancestry, religion, age, disability, medical condition, or marital status; any claim under Title VII of the Civil Rights Act of 1964 (Title VII, as amended), 42 U.S.C. § 2000, et seq., the Civil Rights Act of 1991, the Age Discrimination in Employment Act (“ADEA’’), 29 U.S.C. § 621, et seq., the Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 626(f), the Equal Pay Act, the Family and Medical Leave Act (“FMLA”), the Fair Labor Standards Act (“FLSA”), the Americans with Disabilities Act (“ADA”), the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Occupational Safety and Health Act (“OSHA”) or any other health and/or safety laws, statutes, or regulations, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Internal Revenue Code of 1986, as amended; and any and all other foreign, federal, state, or local laws, common law, or case law, including but not limited to all statutes, regulations, common law, and other laws in place in Delaware or Texas; and

(b) Executive agrees never to file a lawsuit or adversarial proceeding of any kind with any court or arbitrator against the Company or any Released Parties, asserting any claims that are released in this Agreement. Executive represents and agrees that, prior to signing this Agreement, he has not filed or pursued any complaints, charges, or lawsuits of any kind with any court, governmental or administrative agency, or arbitrator against the Company, or any other person or entity released under Paragraph 5(a) above, asserting any claims whatsoever. Executive understands and acknowledges that, in the event he files an administrative charge or

commences any proceeding in violation of this Agreement, he waives and is estopped from receiving any monetary award or other legal or equitable relief in such proceeding; and

(c) Executive represents and warrants that he has not assigned or subrogated any of his rights, claims, and/or causes of action, including any claims referenced in this Agreement, or authorized any other person or entity to assert such claim or claims on his behalf, and he agrees to indemnify and hold harmless the Company against any assignment of said rights, claims, and/or causes of action; and

(d) If Executive should breach any of his obligations under this Agreement, the Company shall have no further obligation to make the unvested payments described in this Agreement; and

(e) Nothing in this Agreement shall affect or apply to Executive’s rights and benefits in and to:

(i) the following stock option grants to Executive: July 2005- 24,400 ($12.31 strike price); May 2006- 15,500 ($24.57 strike price); June 2007-36,710 ($34.28 strike price); and May 2008-27,000 ($35.38 strike price); and

(ii) indemnification, advancement of costs and expenses including attorneys fees or other expense reimbursement to which Executive is or may otherwise be entitled as a result of his employment by the Company, service as an officer of the Company or as an officer or director of any affiliate of the Company, all of which benefits shall survive Executive’s separation from employment ·including, but not limited to, any and all rights and benefits to which Executive is entitled under applicable law, the Company’s or as applicable, any affiliate’s Charter or Certificate of Incorporation as amended, By-Laws, and any applicable director and officer or similar insurance coverage; and

(iii) the Commercial Metals Company’s Profit Sharing and 401(k) Plan, the Commercial Metals Companies 2005 Benefit Restoration Plan and the Commercial Metals Companies Benefit Restoration Plan established September 1, 1995. Executive will retain all rights and benefits in accordance with applicable plan documents. Executive understands and acknowledges that, consistent with the terms of the Plans referenced above, he will be eligible for and entitled to all future payments or distributions to which Executive is or may be entitled to receive as a result of his participation in these plans for plan years or performance periods ending after the Effective Date. Executive’s active participation in all such plans and programs will cease on the Effective Date, however, consistent with the terms of the Plans referenced above all benefits or compensation under such plans and programs that Executive has earned or in the future may be credited to Executive’s account or to which Executive will become entitled to receive under such plans and programs by virtue of his service through the Effective Date will be payable pursuant to the terms of such plans; and

(iv) payment of accrued, unpaid salary and reimbursement of eligible business expenses through the Effective Date; and

(v) enforce this Agreement.

7. Executive shall have up to twenty-one (21) days from the date of his receipt of this Agreement to consider its terms and conditions. If Executive does not sign and return this Agreement within twenty-one (21) days, the Company’s offer to enter into this Agreement shall be withdrawn and the Agreement shall be null and void. This Agreement shall not become effective until the eighth (8th) day following Executive’s signing of the Agreement. Executive may revoke this Agreement by delivering written notice of revocation before the end of the seventh (7th) day following his signing of this Agreement (the “Revocation Period”) to: Mr. James Alleman, Senior Vice President of Human Resources. Upon expiration of the seven (7) day period Executive’s resignation shall be irrevocable. If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next business day thereafter. In the event that Executive revokes this Agreement prior to the eighth (8th) day after signing it, this Agreement and the promises contained herein (including, but not limited to the obligation of the Company to provide the payments, benefits and other things of value set forth in this Agreement ) shall automatically be null and void.

8. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.

9. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect and such invalid or unenforceable provision shall be reformulated by such court to preserve the intent of the parties hereto.

10. All of the terms and provisions contained in this Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives, successors, and assigns.

11. This Agreement may be executed in counterparts, each of which shall be deemed an original.

12. This Agreement shall not in any way be construed as an admission that the Company, Executive, or any other individual or entity has any liability to or acted wrongfully in any way with respect to Executive, the Company, or any other person.

13. The Company represents that it has the authority to enter into this Agreement and has obtained all necessary corporate approvals necessary to do so. Executive represents and warrants that he has been advised in writing to consult with an attorney before signing this Agreement; that he has had an opportunity to be represented by independent legal counsel of his own choosing throughout all of the negotiations preceding the execution of this Agreement; that he has executed this Agreement after the opportunity for consultation with his independent legal counsel; that he is of sound mind and body, competent to enter into this Agreement, and is fully capable of understanding the terms and conditions of this Agreement; that he has carefully read this Agreement in its entirety; that he has had reasonable opportunity to have the provisions of

the Agreement explained to him. by his own counsel; that he fully understands the terms and significance of all provisions of this Agreement; that he voluntarily assents to all the terms and conditions contained in this Agreement; and that he is signing the Agreement of his own force and will, without any coercion or duress.

14. With the exception of the continuing enforceability of restrictive covenants in the Employment Agreement and except as otherwise specifically provided herein, this Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof, contains all the covenants, promises, representations, warranties, and agreements between the parties with respect to Executive’s resignation from the Company and all positions therewith, and supersedes all prior employment or severance or other agreements between Executive and the Company, whether written or oral, or any of its predecessors or affiliates. Except as otherwise provided herein, Executive acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party, or by anyone acting on behalf of either party, which is not embodied herein, and that no agreement, statement, or promise relating to Executive’s resignation from the Company that is not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing and signed by both parties.

15. Executive agrees that, as a condition to receipt of the consideration described in Paragraph 2 and 3 above, he will sign an affirmation of the waiver and release contained in this Agreement on December 31, 2011. The form of affirmation to be signed by Executive is attached as Attachment A hereto.

16. This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Texas without giving effect to any choice of law principles and venue over any claim relating to this Agreement shall rest exclusively in Dallas County, Texas.

WHEREFORE, the parties, by their signatures below, evidence their agreement to the provisions stated above:

I, WILLIAM B. LARSON, HAVE READ AND UNDERSTOOD THIS AGREEMENT AND AM IN AGREEMENT WITH ITS TERMS.


Dated: 5/6/11		Signature:		/s/ William B. Larson Executive

ATTACHMENT A

AFFIRMATION

By my signature below, I hereby re-execute and affirm the Retirement and Transition Agreement, originally signed by me on , 2011, including but not limited to the release and waiver of claims to the extent set forth in the Agreement.

Signed this day of , 2011.


		William B. Larson

Exhibit 10.5

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”) is entered into this 23 ^rd day of May, 2011 by and between COMMERCIAL METALS COMPANY, a Delaware corporation (the “Employer” or “Company”) and MURRAY R. McCLEAN (the “Executive”). The Employer and Executive are collectively referred to as the “Parties,” and individually as a “Party.”

R E C I T A L S:

WHEREAS, the Employer and Executive entered into the original Agreement as of May 23, 2005, and amended the Agreement as of September 1, 2006, April 7, 2009, December 31,2009 and April 7, 2011;

WHEREAS, the Employer and Executive desire to set forth certain terms with respect to Executive’s continued employment; and

WHEREAS, the Parties desire to amend and restate the original Agreement, as amended, to reflect the terms of the desired employment relationship and the ongoing responsibilities of Executive;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows:

1. Purpose. The purpose of this Agreement is to formalize the terms and conditions of Executive’s employment with Employer. This Agreement cannot be amended except by a writing signed by both Parties.

2. Definitions. For the purpose of this Agreement, the following words shall have the following meanings:

(a) “Affiliate” or “Affiliates” shall mean any corporation, partnership, joint venture, association, unincorporated organization or any other legal entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Employer.

(b) “Cause” shall mean: (1) any breach by Executive of any material provision of this Agreement; (2) any act of Executive constituting a felony or otherwise involving theft, embezzlement, fraud, or gross dishonesty; (3) any act by Executive involving moral turpitude or willful misconduct that, in the good faith judgment of the Board of Directors of the Employer either (i) causes material economic harm to the Employer or its Affiliates, (ii) brings substantial discredit to the reputation of the



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 1

Employer or any Affiliate, or (iii) damages or interferes with the relationships of the Employer or any Affiliate with any of their customers, suppliers, employees or other agents; (4) gross negligence on the part of Executive in the performance of his duties as an employee, officer, or director of Employer or any Affiliate; (5) Executive’s breach of his fiduciary obligations to Employer, or (6) any chemical dependence of the Executive which adversely affects the performance of his duties and responsibilities to Employer.

(c) “Change of Control” shall mean any of the following: (i) any consolidation, merger or share exchange of the Employer in which the Employer is not the continuing or surviving corporation or pursuant to which shares of the Employer’s Common Stock would be converted into cash, securities or other property, other than a consolidation, merger or share exchange of the Employer in which the holders of the Employer’s Common Stock immediately prior to such transaction have the same proportionate ownership of Common Stock of the surviving corporation immediately after such transaction; (ii) any sale, lease, exchange or other transfer (excluding transfer by way of pledge or hypothecation) in one transaction or a series of related transactions, of all or substantially all of the assets of the Employer; (iii) the stockholders of the Employer approve any plan or proposal for the liquidation or dissolution of the Employer; (iv) the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals (the “Continuing Directors”) who (x) at the date of this Agreement were directors or (y) become directors after the date of this Agreement and whose election or nomination for election by the Employer’s stockholders, was approved by a vote of at least two-thirds of the directors then in office who were directors at the date of this Agreement or whose election or nomination for election was previously so approved; (v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 20% of the voting power of the Employer’s outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 15% of the voting power of the Employer’s outstanding voting securities on the date of this Agreement, or the acquisition of beneficial ownership of an additional 5% of the voting power of the Employer’s outstanding voting securities by any person or group who beneficially owned at least 15% of the voting power of the Employer’s outstanding voting securities on the date of this Agreement, provided , however , that notwithstanding the foregoing, an acquisition shall not constitute a Change of Control hereunder if the acquiror is (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Employer and acting in such capacity, (y) a Subsidiary of the Employer or a corporation owned, directly or indirectly, by the stockholders of the Employer in substantially the same proportions as their ownership of voting securities of the Employer or (z) any other person whose acquisition of shares of voting securities is approved in advance by a majority of the Continuing Directors; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the Employer to a case under Chapter 7.

(d) “Confidential Information” means information (1) disclosed to or known by Executive as a consequence of or through his employment with Employer or



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 2

any Affiliate; (2) not generally known outside Employer or its Affiliates; and (3) which relates to any aspect of Employer’s or any Affiliate’s business, research, or development. “Confidential Information” includes, but is not limited to, Employer’s and any Affiliate’s trade secrets, proprietary information, business plans, marketing plans, financial information, compensation and benefit information, cost and pricing information, customer contacts, suppliers, vendors, and information provided to Employer or any Affiliate by a third Party under restrictions against disclosure or use by Employer or others.

(e) “Conflict of Interest” means any situation in which the Executive has two or more duties or interests which are mutually incompatible and may tend to conflict with the proper and impartial discharge of the Executive’s duties, responsibilities or obligations to Employer, including but not limited to those described in Employer’s Policy of Business Conduct and Ethics (the “Policy”) which Executive has either not disclosed to the Board of Directors of the Company or has disclosed and not been granted a waiver under the provisions of such Policy.

(f) “Exit Date” shall mean the first to occur of (i) termination of Executive’s employment without Cause by the Employer, (ii) expiration of this Agreement on August 31, 2012, (iii) termination of this Agreement for Good Reason by Executive and (iv) the date mutually agreed pursuant to Section 6(e).

(g) “Good Reason” shall mean the occurrence, without Executive’s written consent, of any of the following events: (1) a breach of any material provision of this Agreement by Employer; (2) except as otherwise provided or permitted herein, a significant reduction in the authorities, duties, responsibilities, and title of the Executive as set forth in this Agreement; or (3) Employer’s requiring the Executive, without his consent, to be employed at a location more than fifty (50) miles from the Employer’s present office location in Dallas, Texas.

3. Duration . This Agreement shall, unless earlier terminated pursuant to its terms, continue through August 31, 2012.

4. Duties and Responsibilities .

(a) From the date hereof through and including August 31, 2011, Executive shall diligently render his services to Employer as Chief Executive Officer in accordance with Employer’s directives, and shall use his best efforts and good faith in accomplishing such directives. Executive shall report directly to the Board of Directors of the Company. Executive agrees to devote his full-time efforts, abilities, and attention (defined to mean not normally less than forty (40) hours/week) to the business of Employer, and shall not engage in any activities which will interfere with such efforts. Effective as of September 1, 2011, Executive agrees to and shall transfer the role, duties and responsibilities of the Chief Executive Officer as directed by the Board of Directors. Executive acknowledges



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 3

and agrees that, at the direction of the Board of Directors, his duties as Chief Executive Officer may be transitioned to others in advance of the referenced date, that he will cooperate in such transition, and that such transition will be in keeping with and not violate the terms of this Agreement.

(b) From September 1, 2011 through and including August 31, 2012, Executive shall serve as Chairman of Employer’s Board of Directors, and shall render services to Employer consistent with (i) his fiduciary duties as a director, (ii) Employer’s policies as may have been or may be in the future promulgated by the Board of Directors and (iii) those services generally provided by the Chairman of the Board of a company substantially similar to the Employer; provided, however, that Executive’s service as Chairman may be terminated at any time for any reason by the Board of Directors; provided, further, that any such early termination shall not affect any other provision or benefit contained herein, and such early termination shall specifically provide for the termination benefits in Paragraph 7(b).

5. Compensation and Benefits . In return for the services to be provided by Executive pursuant to this Agreement, Employer agrees to pay Executive as follows:

(a) From the date hereof through and including August 31, 2011, Executive shall continue to receive, pro rata, an annual base salary of eight hundred and fifty thousand dollars ($850,000.00) paid according to Employer’s regular payroll practices. From September 1, 2011 through and including August 31, 2012, Executive shall receive an annual base salary of four hundred thousand dollars ($400,000) paid according to Employer’s regular payroll practices. The amounts set forth in this Section 5(a) may be increased at the sole discretion of the Compensation Committee of Employer’s Board of Directors, but cannot be decreased without Executive’s written consent; however the Executive may voluntarily decrease his salary at any time.

(b) Bonus. Executive shall be eligible to receive a bonus (the “Bonus” ) for the fiscal year of Employer ending August 31, 2011. The amount of the Bonus shall be determined by, and in the sole discretion of, the Compensation Committee of the Board of Directors, in accordance with established Plans, policies, and practices, and shall be based upon its evaluation of Executive’s performance during the fiscal year and such other factors or criteria as it may, in its sole discretion, consider. The Bonus, if any, shall be paid in a lump sum, as soon as practicable following August 31, 2011, but in no event later than November 30, 2011.

(c) Payment and Reimbursement of Expenses. Employer shall pay or reimburse the Executive for all reasonable travel and other expenses incurred by Executive in performing his obligations under this Agreement in accordance with the policies and procedures of the Employer provided that Executive properly accounts therefore in accordance with such policies and procedures.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 4

(d) Fringe Benefits and Perquisites. Executive shall be entitled to participate in or receive benefits under any plan or arrangement generally made available to the employees or executive officers of Employer, all subject to and on a basis consistent with the terms, conditions, and overall administration of such plans and arrangements and as approved by the Compensation Committee of the Board of Directors of the Company in its sole discretion. Executive shall, during his remaining tenure, continue to be eligible for LTIP payments pursuant to previously granted LTEP awards pursuant to the terms of such awards. To the extent permitted by law and the terms of Employer’s benefit plans, including Employer’s Profit Sharing and 401(k) Plan and Benefit Restoration Plan, prior service by Executive with a subsidiary of Employer shall be credited as service with Employer for purposes of vesting of any benefit. Employer shall furnish Executive with an automobile for the duration of this Agreement consistent with Employer’s policies on automobiles furnished senior corporate executives.

(e) Vacations. In accordance with the policies of Employer, Executive shall be entitled to the number of paid vacation days in each calendar year determined by Employer from time to time for its employees generally, but not fewer than twenty (20) business days in any calendar year (prorated in any calendar year in which Executive is employed hereunder for less than the entire year in accordance with the number of days in such calendar year during which Executive is so employed).

(f) Health Care Coverage. Through August 31, 2012, Employer shall (to the extent Executive elects to participate in such coverage where optional) provide life insurance coverage, disability insurance, and hospital, surgical, medical, and dental benefits for Executive and his qualified dependents, all on such terms as Employer normally provides such benefits for its salaried employees and dependents. From September 1, 2012 through February 28, 2014, and provided Executive elects and receives COBRA coverage, Employer shall pay for such coverage on Executive’s behalf. From February 28, 2014 through February 28, 2015, Employer shall provide reimbursement of premiums for medical plan coverage obtained by Executive similar in its provisions to that provided by Employer up to $2,500 per month or, if Executive is unable to obtain coverage under a medical insurance plan, then reimbursement of actual medical expenses. In no event, however, shall such reimbursements exceed $25,000 in total during 2014 and $5,000 in total during 2015, subject to a gross-up of such amount by Executive’s then-current tax rate; provided , however , that (A) if Executive becomes eligible to receive group health benefits under a program of a subsequent employer or otherwise (including coverage available to Executive’s spouse), the Company’s obligation to pay any portion of the cost of health coverage as described herein shall cease, except as otherwise provided by law; (B) the benefits provided in any one calendar year shall not affect the amount of benefits provided in any other calendar year (other than the effect of any overall coverage benefits under the applicable plans); (C) the reimbursement of an eligible taxable expense shall be made as soon as practicable but not later than December 31 of the year following the year in which the expense was incurred;



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 5

and (D) Executive’s rights pursuant to this Section 5(f) shall not be subject to liquidation or exchange for another benefit.

6. Termination.

(a) Executive’s employment and this Agreement will terminate upon his death, or if, owing to physical or mental impairment, he is unable to perform the functions of his position with reasonable accommodation for four (4) consecutive months, or for a total of six (6) months during any twelve (12) month period.

(b) Employer may terminate Executive’s employment and this Agreement at any time (i) without notice for Cause, in which case the severance provided for in Paragraph 7(c) shall apply or (ii) following thirty (30) days written notice to Executive without Cause, in which case the severance provided for in Paragraph 7(b) shall apply. If Employer is terminating Executive’s employment for Cause pursuant to Section 2(b)(1) of the definition thereof and the Board of Directors determines, in its sole discretion, that such material breach may be cured or rectified, then prior to terminating the Agreement for Cause, Employer shall give Employer thirty (30) days advance written notice of its intent to terminate for Cause and the grounds therefore, such that Executive has the opportunity to cure and/or rectify the alleged breach. Only if Executive has not cured the alleged breach prior to the expiration of thirty (30) days may Employer terminate for Cause.

(c) Executive may terminate his employment and this Agreement upon thirty (30) days written notice to Employer, in which case, the severance provided for in Paragraph 7(c) shall apply. In the event Executive terminates his employment in this manner, he shall remain in Employer’s employ subject to all terms and conditions of this Agreement for the entire thirty (30) day period unless instructed otherwise by Employer.

(d) Executive may terminate this Agreement for Good Reason. Prior to terminating the Agreement for Good Reason, Executive must give Employer thirty (30) days advance written notice of his intent to terminate for Good Reason and the grounds therefore, such that Employer has the opportunity to cure and/or rectify the alleged breach, provided that such notice to terminate must be given no later than ninety (90) days from the initial existence of such Good Reason condition. Only if Employer does not cure the alleged breach at the end of thirty (30) days may Executive terminate for Good Reason, in which case, the severance provided for in Paragraph 7(b) shall apply.

(e) Employer and Executive may mutually agree to terminate this Agreement at any time, in which such case, the severance provided for in Paragraph 7(b) shall apply.

7. Severance . Executive shall be entitled to the following compensation upon termination of his employment resulting from:



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 6

(a) Termination Resulting From Death or Disability. In the event Executive’s employment and this Agreement are terminated as a result of his death or disability on or prior to the Exit Date, and such termination constitutes a “separation from service” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), Executive or his estate shall be entitled to the following:

(i) such life insurance or disability benefits as Executive may be entitled to pursuant to any life or disability insurance then maintained by the Employer for the benefit of its employees and executive officers and, in addition thereto, Employer shall pay a lump sum payment of fifty thousand dollars ($50,000.00) to Executive or his estate;

(ii) in the event of Executive’s death or disability prior to September 1, 2011, a pro-rata share of Bonus in an amount as determined by the Compensation Committee of the Board of Directors in their sole discretion, payable no later than November 30 following the end of Employer’s fiscal year during which termination occurs;

(iii) to the extent permitted by the terms and conditions of Employer’s 2006 Long-Term Incentive Plan or other applicable equity incentive plan(s) and to the extent authorized by the terms of each of Executive’s outstanding award or grant agreements entered into pursuant to such plan(s), immediate vesting of all stock appreciation rights, restricted stock, and/or stock options previously awarded Executive;

(iv) to the extent permitted by the terms and conditions of the Profit Sharing and 401(k) Plan and Benefit Restoration Plan maintained by the Employer, crediting of any Employer contribution to the Executive’s account attributable to the plan year during which termination occurs and accelerated full vesting of any previously unvested Employer contributions to the Executive’s account in such plans; and

(v) to the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided or which Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

(b) Termination Without Cause by Employer, Expiration or For Good Reason by Executive. On the Exit Date, and provided such termination constitutes a “separation from service” under Section 409A of the Code (“Section 409A”), Executive shall be entitled to the following:



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 7

(1) lump sum payment of $3,023,860;

(2) accelerated vesting as of the Exit Date of all 55,000 PSUs granted on June 3, 2010 notwithstanding the vesting provisions of the applicable award agreement; provided, however , that delivery of the shares of Company common stock in settlement of such PSUs shall be delayed until the earlier of (i) the first day of the seventh month following the Exit Date or (ii) the Executive’s death;

(3) accelerated vesting as of the Exit Date of any remaining unvested units of the 75,000 time-vested units granted on June 3, 2010 notwithstanding the vesting provisions of the applicable award agreement; provided , however , that delivery of the shares of Company common stock in settlement of such units shall be delayed until the earlier of (i) the first day of the seventh month following the Exit Date or (ii) the Executive’s death;

(4) prorated vesting through the Exit Date of 42,580 time-vested units granted on January 18, 2011 in accordance with the applicable award agreement; provided , however , that no less than 21,290 of such units shall vest, notwithstanding the vesting provisions of the applicable award agreement; provided , further , that delivery of the shares of Company common stock in settlement of such units shall be delayed until the earlier of (i) the first day of the seventh month following the Exit Date or (ii) the Executive’s death;

(5) the full grant of 63,870 PSUs granted on January 18, 2011 shall remain outstanding and eligible for vesting based on the Company’s achievement of the performance criteria specified in the applicable award agreement during the stated performance period, notwithstanding the provision of the award agreement mandating forfeiture of unvested units as of the Executive’s termination. If the performance criteria are satisfied, then the PSUs shall vest pro rata based on the number of days elapsed during the performance period prior to the Exit Date, but in no event shall less than 31,935 PSUs vest and pay out. Notwithstanding any provisions of the award agreement to the contrary, the PSUs shall pay out all in cash, and the Company agrees to use the closing stock price on the vesting date to value the award and to issue any amounts payable no later than sixty (60) days following the last day of the performance period;

(6) payment of all Other Benefits; and

(7) any payments under the Long-Term Incentive Plan (“LTIP”) for which Executive is eligible, including the LTIP programs covering the periods 2008-2011, 2009-2012 and 2010-2012, prorated through the Exit Date, in the standard practice for retirement from the Company.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 8

(c) Termination for Cause. In the event Executive’s employment is terminated for Cause, Executive shall not be entitled to compensation.

(d) Termination without Cause by Employer or for Good Reason by Executive within Twelve Months Following a Change of Control. If, within twelve months following a Change in Control, Executive’s employment is terminated by the Employer for any reason other than for Cause, death or disability or if Executive terminates employment for Good Reason during such twelve (12) month period, and such termination constitutes a “separation from service” under Section 409A of the Code, Executive shall be entitled to the following:

(i) lump sum payment of two times Executive’s then current annual base salary;

(ii) a cash payment in lieu of Bonus equal to two times the average annual Bonus received by Executive for the five year period ended with Employer’s last complete fiscal year prior to the Change of Control; and

(iii) all those additional amounts described above in 7(a)iii, iv and v; and

(iv) a continuation of Welfare Benefit Plans (as those terms are defined in the Employer’s form Executive Employment Continuity Agreement, a copy of which was filed with the Securities and Exchange Commission as Exhibit 10.1 to Commercial Metals Company’s Form 10-Q for the quarter ended February 28, 2006 (the “EECAs”)), in which the Executive or his dependents are participating immediately prior to the Executive’s termination date. The Executive’s participation in the Welfare Benefit Plans shall be for twenty four (24) months under terms at least as favorable to Executive as those contained in the EECAs. To the extent such benefits provided by the Employer are taxable to Executive, such benefits, for purposes of Section 409A of the Code, shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise exempt from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year, and the rights to such in-kind benefits shall not be subject to liquidation or exchange for another benefit.

(e) Payment of Severance. In no event shall Executive be entitled to receive payments pursuant to more than one subsection of this Paragraph 7. Except as otherwise provided, all lump sum or cash payments due to Executive pursuant to this Paragraph 7, subject to Paragraph 17, shall be paid to Executive as soon as practicable following the Exit Date except that, in the case of payments pursuant to 7(a) as a result of disability (provided Executive is competent), 7(b), 7(d), and 7(e), at least 8 days following execution and delivery to Employer of a general release in the form attached hereto as



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 9

Exhibit “A ,” the provision of such an executed general release being a precondition to entitlement to such payments.

8. Non-Competition, Non-Solicitation, and Confidentiality . Employer and Executive acknowledge and agree that while Executive is employed pursuant to this Agreement, he will have access to Confidential Information of Employer and its Affiliates, will be provided with specialized training on how to perform his duties; and will be provided contact with Employer’s and Affiliates’ customers and potential customers. In consideration of all of the foregoing, Employer and Executive agree as follows:

(a) Non-Competition During Employment. Executive agrees that for the duration of this Agreement, he will not compete with Employer by engaging in the conception, design, development, production, marketing, sourcing or servicing of any product or service that is substantially similar to the products or services which Employer or any Affiliate provides, and that he will not work for, in any capacity, assist, or become affiliated with as an owner, partner, etc., directly or indirectly, any individual or business which offers or performs services, or offers or provides products substantially similar to the services and products provided by Employer or any Affiliate.

(b) Non-Competition After Employment. Executive agrees that for a period of eighteen months after termination of his employment with Employer for any reason, he will not compete with Employer or any Affiliate by engaging in the conception, design, development, production, marketing, sourcing or servicing of any product or service that is substantially similar to the products or services which Employer or any Affiliate provides, and that he will not work for, in any capacity, assist, or become affiliated with as an owner, partner, etc., directly or indirectly, any individual or business which offers or performs services, or offers or provides products substantially similar to the services and products provided by Employer or any Affiliate.

(c) Conflicts of Interest. Executive agrees that for the duration of this Agreement, he will not engage, either directly or indirectly, in any Conflict of Interest, and that Executive will promptly inform the Chairman of the Audit Committee of Employer’s Board of Directors as to each offer received by Executive to engage in any such activity. Executive further agrees to disclose to Employer any other facts of which Executive becomes aware which might involve or give rise to a Conflict of Interest or potential Conflict of Interest.

(d) Non-Solicitation of Customers and Employees. Executive further agrees that for a period of eighteen months after the termination of this Agreement for any reason, he will not either directly or indirectly, on his own behalf or on behalf of others (i) solicit or accept any business from any customer or supplier or prospective customer or supplier with whom Executive personally dealt or solicited at any time on or after September 1, 1999 on behalf of Employer or any Affiliate, or (ii), solicit, attempt to



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 10

hire, or hire any employees of Employer or any Affiliate to work for Executive or for any other entity, firm, corporation, or individual.

(e) Confidential Information. Executive further agrees that he will not, except as Employer may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon, publish, or otherwise disclose to any third party any Confidential Information or proprietary information of Employer or any Affiliate, or authorize anyone else to do these things at any time either during or subsequent to his employment with Employer. If Executive becomes legally compelled by deposition, subpoena or other court or governmental action to disclose any Confidential Information, then the Executive shall give Employer prompt notice to that effect, and will cooperate with Employer if Employer seeks to obtain a protective order concerning the Confidential Information. Executive will disclose only such Confidential Information as his counsel shall advise is legally required. Executive agrees to deliver to Employer, at any time Employer may request, all documents, memoranda, notes, plans, records, reports, and other documentation, models, components, devices, or computer software, whether embodied in electronic format on a computer hard drive, disk or in other form (and all copies of all of the foregoing), relating to the businesses, operations or affairs of Employer or any Affiliates and any other Confidential Information that Executive may then possess or have under his control. This section shall continue in full force and effect after termination of Executive’s employment and after the termination of this Agreement for any reason, including expiration of this Agreement. Executive’s obligations under this section of this Agreement with respect to any specific Confidential Information and proprietary information shall cease when that specific portion of Confidential Information and proprietary information becomes publicly known, in its entirety and without combining portions of such information obtained separately and without breach by Executive of his obligations under this Agreement. It is understood that such Confidential Information and proprietary information of Employer and any Affiliate includes matters that Executive conceives or develops, as well as matters Executive learns from other employees of Employers or any Affiliate.

(f) Breach. Executive agrees that any breach of Paragraphs 8(a), (b), (c), (d) or (e) above cannot be remedied solely by money damages, and that in addition to any other remedies Employer may have, Employer is entitled to obtain injunctive relief against Executive. Nothing herein, however, shall be construed as limiting Employer’s right to pursue any other available remedy at law or in equity, including recovery of damages and termination of this Agreement. If the Executive is found to have violated Paragraph 8(b), the Parties agree that the duration of the non-competition period set forth therein shall be automatically extended by the same period of time that Executive is determined to have been in violation of the restriction.

9. Assignment . This Agreement may be assigned by Employer, but cannot be assigned by Executive.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 11

10. Binding Agreement. Executive understands that his obligations under this Agreement are binding upon Executive’s heirs, successors, personal representatives, and legal representatives.

11. Notices. All notices pursuant to this Agreement shall be in writing and sent certified mail, return receipt requested, addressed as follows:


If to Executive:	If to Employer:

Murray R. McClean		Lead Director
5323 Tennington Park		c/o Corporate Secretary
Dallas, Texas 75287		Commercial Metals Company
		6565 N. MacArthur Blvd.
		Suite 800
		Irving, Texas 750397

with a copy to:		with a copy to:

Keith Clouse		General Counsel
1201 Elm Street		Commercial Metals Company
Suite 5200		6565 N. MacArthur Blvd.
Dallas, Texas 75270		Suite 800
		Irving, Texas 75039

12. Waiver . No waiver by either Party to this Agreement of any right to enforce any term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such right in the future or of any other right or remedy available under this Agreement.

13. Severability . If any provision of this Agreement is determined to be void, invalid, unenforceable, or against public policy, such provisions shall be deemed severable from the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full force and effect. Furthermore, any breach by Employer of any provision of this Agreement shall not excuse Executive’s compliance with the requirements of Paragraph 8 to the extent otherwise enforceable.

14. Entire Agreement and Understanding . The terms and provisions contained herein shall constitute the entire agreement between the Parties with respect to Executive’s employment with Employer during the time period covered by this Agreement. This Agreement replaces and supersedes any and all existing agreements, including the existing Agreement and all amendments thereto, entered into between the Parties. The Parties represent and warrant that they have read and understood each and every provision of this Agreement, and that they are free to obtain advice from legal counsel of choice, if necessary and desired, in order to interpret any and all provisions of this Agreement, and that both Parties have voluntarily entered into this Agreement.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 12

15. Effective Date . It is understood that this Agreement shall be effective as of the date hereof and that the terms of this Agreement shall remain in full force and effect both during Executive’s employment and where applicable thereafter.

16. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.

17. Section 409A; Delay of Severance Payments . To the extent (i) any post-termination payments to which Executive becomes entitled under this Agreement or any agreement or plan referenced herein constitute deferred compensation subject to Section 409A of the Code, and (ii) Executive is deemed at the time of such termination of employment to be a “specified employee” under Section 409A of the Code, then such payment will not be made or commence until the earliest of (x) the expiration of the six (6) month period measured from the date of Executive’s “separation from service” (as such term is defined in the Treasury Regulations promulgated under Section 409A of the Code and any other guidance issued under Section 409A of the Code); and (y) the date of Executive’s death following such separation from service. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Paragraph 17 will be paid to Executive or Executive’s beneficiary in one lump sum.

18. Other Board Service . The Employer and Executive agree that Executive may, with the prior approval of the Board of Directors, accept and begin service on up to two public company boards of directors between September 1, 2011 and the Exit Date, provided Executive complies with his obligations under this Agreement and such service does not violate the provisions of Paragraph 8 hereof or otherwise appear contrary to the best interests of the Company as determined in the sole discretion of the Board of Directors.

19. Acknowledgement . From and after the date of this Amended and Restated Agreement, any and all references to the Agreement shall refer to the Agreement as hereby amended and restated. For the avoidance of doubt, Employer and Executive acknowledge and agree that the matters contemplated by this Amended and Restated Agreement, including without limitation the changes in Executive’s title, responsibilities and compensation set forth herein, shall not constitute “Good Reason” for purposes of the Agreement.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 13

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.


		EMPLOYER

		COMMERCIAL METALS COMPANY

		By: Name:		/s/ Anthony A. Massaro Anthony A. Massaro
		Title:		Lead Director

		By: /s/ Richard B Kelson

		EXECUTIVE

				/s/ Murray R. McClean

		MURRAY R. McCLEAN



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 14

EXHIBIT “A”

GENERAL RELEASE

I, Murray R. McClean, in consideration of the promises given by Commercial Metals Company (the “Company”) in that certain Amended and Restated Employment Agreement dated the ____ day of___, 2011 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and its affiliates and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and its affiliates (collectively, the “Released Parties”) to the extent provided below.

1.		I understand that the cash payments (“Severance Payments”) paid or granted to me under Section 7 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the Severance Payments specified in Section 7 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release. Such payments will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates. I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of any employment by the Company.

2.		Except as specifically provided to the contrary in this General Release or the Agreement, I knowingly and voluntarily (for myself, my spouse, and my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, or any of my heirs, executors, administrators or assigns, may have, including without limitation any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act) (the “ADEA”); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993; the Worker Adjustment and Retraining Notification Act; the Employee Retirement Income Security Act of 1974; as amended; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 15

		incurred in these matters (all of the foregoing collectively referred to herein as the “Claims”).

3.		I represent that I have made no assignment or transfer of any Claim or other right, demand, cause of action, or other matter covered by paragraph 2 above.

4.		I acknowledge and understand that this General Release does not waive or release any rights or claims that I may have under the ADEA which arise after the date I execute this General Release, or any future rights or claims I may have under the Agreement. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including any claim under the ADEA).

5.		I agree that I am waiving all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties for any claims arising prior to the date I sign this General Release of any kind whatsoever, including reinstatement, back pay, front pay, attorneys’ fees and any form of injunctive relief. Notwithstanding the foregoing, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.

6.		In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not aware of any claim of the type described in paragraph 2 above as of the execution of this General Release. Notwithstanding the foregoing, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived by law, including the right to file a charge or participate in an administrative investigation or proceeding of any government agency that does not acknowledge the validity of this General Release; provided, however, that I hereby disclaim and waive any right to share or participate in any monetary or other award resulting from the prosecution of such charge or investigation.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 16

7.		I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

8.		I agree that if I violate this General Release by suing the Company or the other Released Parties in regard to a Claim being released pursuant to this General Release, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees.

9.		I agree to cooperate with the Company in any internal investigation, any administrative, regulatory, or judicial proceeding or any dispute with a third party. I understand and agree that my cooperation may include making myself available to the Company upon reasonable notice for interviews and factual investigations; appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process; volunteering to the Company pertinent information; and turning over to the Company all relevant documents which are or may come into my possession all at times and on schedules that are reasonably consistent with my other permitted activities and commitments. I understand that in the event the Company asks for my cooperation in accordance with this provision, the Company will reimburse me for reasonable travel expenses (including lodging and meals), provided such expenses are approved in advance in writing and upon my submission of receipts.

10.		I agree not to disparage the Company, its past and present investors, officers, directors or employees or its affiliates and to keep all confidential and proprietary information about the past or present business affairs of the Company and its affiliates confidential unless a prior written release from the Company is obtained. I further agree that as of the date hereof, I have returned to the Company any and all property, tangible or intangible, relating to its business, which I possessed or had control over at any time (including company-provided credit cards, building or office access cards, keys, computer equipment, manuals, files, documents, records, software, customer data base and other data) and that I shall not retain any copies, compilations, extracts, excerpts, summaries or other notes of any such manuals, files, documents, records, software, customer data base or other data.

11.		Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

12.		Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 17

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

(a)		I HAVE READ IT CAREFULLY;

(b)		I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

(c)		I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

(d)		I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO SO OF MY OWN CHOOSING;

(e)		I HAVE BEEN GIVEN ALL TIME PERIODS REQUIRED BY LAW TO CONSIDER THIS GENERAL RELEASE, INCLUDING THE 21-DAY PERIOD REQUIRED BY THE ADEA TO CONSIDER THIS RELEASE BEFORE SIGNING. I UNDERSTAND THAT I MAY EXECUTE THIS GENERAL RELEASE LESS THAN 21 DAYS FROM ITS RECEIPT FROM THE COMPANY, BUT AGREE THAT SUCH EXECUTION WILL REPRESENT MY KNOWING WAIVER OF SUCH 21-DAY CONSIDERATION PERIOD.

(f)		I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS GENERAL RELEASE TO REVOKE IT AND THAT NONE OF THIS GENERAL RELEASE, THE COMPANY’S OBLIGATIONS HEREUNDER OR ANY OF THE COMPANY’S OBLIGATIONS UNDER THE AGREEMENT THAT ARE CONDITIONED ON THE EXECUTION, DELIVERY OR EFFECTIVENESS OF THIS GENERAL RELEASE SHALL BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

(g)		I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

(h)		I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.


DATE:
						Murray R. McClean

Witness


Print name:



AMENDED AND RESTATED EMPLOYMENT AGREEMENT		Page 18

Exhibit 10.6

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT TO THE EMPLOYMENT AGREEMENT entered into as of April 16, 2010 (the “ Agreement ”) by and between Commercial Metals Company, a Delaware corporation (the “ Employer ”), and Joseph Alvarado (“ Executive ”), first amended as of April 8, 2011, is made this 26th day of May, 2011.

RECITALS :

WHEREAS, the Employer and Executive entered into the Agreement as of April 16, 2010 and amended the Agreement as of April 8, 2011; and

WHEREAS, the Employer and Executive desire to amend the Agreement in recognition of Executive’s promotion to the position of President and Chief Executive Officer of the Employer effective September 1, 2011;

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Employer and Executive agree to further amend the Agreement as follows:

1. Sections 1. Purpose , 4. Age 65 Mandatory Retirement , and 5. Duties and Responsibilities , are hereby omitted in their entirety and the following revised Sections 1., 4., and 5. are hereby substituted therefor:

	1.		Purpose . The purpose of the Agreement is to formalize the terms and conditions of Executive’s employment with the Employer as President and Chief Executive Officer effective September 1, 2011. This Agreement cannot be amended except by a writing signed by both Parties.

	4.		Age 65 Mandatory Retirement . Executive understands and agrees that the position of President and Chief Executive Officer is subject to a mandatory retirement age of sixty five (65).

	5.		Duties and Responsibilities . Upon execution of this Agreement, Executive shall diligently render his services to the Employer as President and Chief Executive Officer in accordance with the Employer’s directives, and shall use his best efforts and good faith in accomplishing such directives. Executive shall report directly to the Board of Directors of the Employer. Executive agrees to devote his full-time efforts, abilities, and attention (defined to mean not normally less than forty (40) hours/week) to the business of the Employer, and shall not engage in any activities which will interfere with such efforts.

2. Except to the extent specifically amended as provided herein, the Agreement is in all respects ratified and confirmed, and all the terms, conditions and provisions thereof shall be and remain in full force and effect for any and all purposes. From and after the date hereof, any and all references to the Agreement shall refer to the Agreement as hereby amended.

[Signature Page to Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.


EXECUTIVE	EMPLOYER

	COMMERCIAL METALS COMPANY

/s/ Joseph Alvarado Joseph Alvarado	By:	/s/ Richard B. Kelson Richard B. Kelson, Chair of the Nominating and Corporate Governance Committee of the Board of Directors

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Murray R. McClean, certify that:

I have reviewed this report on Form 10-Q of Commercial Metals Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: July 8, 2011

/s/ Murray R. McClean Murray R. McClean
Chairman of the Board and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Barbara R. Smith, certify that:

I have reviewed this report on Form 10-Q of Commercial Metals Company;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: July 8, 2011

/s/ Barbara R. Smith Barbara R. Smith
Senior Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Commercial Metals Company (the “Company”) on Form 10-Q for the period ended May 31, 2011 (the “Report”), I, Murray R. McClean, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Murray R. McClean Murray R. McClean
Chairman of the Board and Chief Executive Officer

Date: July 8, 2011

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Commercial Metals Company (the “Company”) on Form 10-Q for the period ended May 31, 2011 (the “Report”), I, Barbara R. Smith, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Barbara R. Smith Barbara R. Smith
Senior Vice President and Chief Financial Officer

Date: July 8, 2011

COMMERCIAL METALS COMPANY

Murray R. McClean

Dated: 5/6/11

Signature:

/s/ Murray R. McClean

Chief Executive Officer,
and Chairman of the Board