Commercial Metals Co. (CMC) 2020年年度報告「NYSE」.pdf

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1、2020 Annual ReportCommercial Metals Company and its subsidiaries manufacture,recycle and fabricate steel and metal products,related materials and services through a network of facilities that includes seven electric arc furnace(“EAF”)mini mills,two EAF micro mills,two rerolling mills,steel fabricati

2、on and processing plants,construction-related product warehouses,and metal recycling facilities in the United States and Poland.2 LETTER TO STOCKHOLDERS 7 FINANCIAL HIGHLIGHTS 8 NORTH AMERICA 10 EUROPE 12 BOARD&EXECUTIVE MANAGEMENT 16 SELECTED FINANCIAL DATA 18 10-KRETURN ON INVESTED CAPITAL:FREE CA

3、SH FLOW:12%$604 MILLIONOptimized over the last decade to capitalize on our core strengths,Commercial Metals Company realized a landmark year in fiscal 2020.Among the numbers that speak to our achievement this past fiscal year:Our numbers point to how we continue to optimize production between our st

4、eel mills and our downstream fabrication activities,maximizing earnings,and how effective we have been as stewards of shareholder capital,with a strong balance sheet that positions us to pursue opportunities for further growth in the years ahead.Our strong fiscal 2020 results validate our efforts ov

5、er the last several years,as we divested non-core assets and acquired new ones that enhance our ability to focus on our core strengths:providing exceptional service to customers in construction and industrial markets across North America and Europe.In addition to major acquisitions acquiring four st

6、eel mills and 33 fabrication facilities in fiscal 2019 our efforts include reducing our operating costs and further strengthening our balance sheet.By optimizing our enterprise to perform in all market climates,we look forward to the years ahead with well-earned optimism.1Fiscal 2020 was an exceptio

7、nal year for CMC.We improved our earnings,increased our cash flow,enhanced our operational flexibility and strengthened our balance sheet.These results attest to the success of the strategic transformation we have realized over the last several years.By focusing on our core strengths and optimizing

8、our operations,we have become a better,stronger steelmaker.While we are duly proud of our results in 2020,we must also acknowledge what an unsettling year it was,a year of unprecedented challenges that altered the work and home life of every CMC employee.Our employees did everything in their power t

9、o protect each other and our customers in the course of a global pandemic.I could not be prouder of how CMC employees responded,meeting our customers needs and delivering a banner year for our company despite the difficulties presented by COVID-19.2To Our Stockholders,REPORTING OUR RESULTSIn fiscal

10、2020,the Company realigned its reporting structure to include two operating segments:North America and Europe.North America comprises the Companys former Americas Recycling,Americas Mills,and Americas Fabrication business segments.Europe comprises the Companys former International Mill segment,with

11、no other changes.The decision to realign CMCs operating segment structure was made to reflect:(i)its vertically integrated operating model in North America,which is now supported by a National Sales,Inventory and Operations Planning function created in fiscal 2020,(ii)changes to its operating model

12、and geographic footprint following the full integration of the rebar assets acquired in fiscal 2019 into its North America operations,and(iii)the way management now uses the integrated North America data to manage the business,assess performance and allocate resources.NORTH AMERICAThe North America

13、segment generated adjusted EBITDA of$661.2 million,compared to$456.3 million the prior year.The improvement reflects strong management of non-raw-material costs at each stage of our vertically integrated value chain.Cost performance at the mills was particularly strong.Lower operating costs at downs

14、tream locations also contributed to the improved performance.Shipment volumes of finished goods,which includes steel products and downstream products,were 4.5 million tons,compared to 4.3 million tons in fiscal 2019.EUROPEThe Europe segment reported adjusted EBITDA of$62.0 million,down from$100.1 mi

15、llion the prior year.While shipment volumes were flat compared to fiscal 2019,they remain supported by resilience in the Polish construction sector.The Central European NET SALES BY REGION1North America:83%Europe:11%Other:6%BARBARA R.SMITHChairman of the Board,President and Chief Executive OfficerDe

16、cember 1,20201 Excludes divisions classified as discontinued operationsBARBARA R.SMITHChairman of the Board,President,and Chief Executive Officer3market for long products continues to be challenged by ongoing incursions of imported material,which led to a$38 per ton reduction in steel product margin

17、 over scrap compared to the prior year.A STRONG BALANCE SHEETCMCs structurally enhanced earnings and cash flow capabilities,that resulted from our multi-year strategic transformation,have supported the creation of one of the strongest balance sheets in our sector.At the close of fiscal 2020,our cash

18、 balance stood at$542.1 million,while net debt was below$550 million,giving CMC ample financial flexibility to execute our growth initiatives,navigate economic volatility,and pursue strategic acquisition opportunities that may arise.OPTIMIZING FOR THE FUTUREThough these are uncertain times,we contin

19、ue to build for the future,with initiatives including:Optimizing our network,by improving logistics,increasing our capabilities in higher-margin products,and leveraging our enhanced production flexibility to drive down costs.Through these efforts,we expect improved margins and lower investment in wo

20、rking capital.Expanding our European operations,with a third rolling line at our mini mill in Poland,to be commissioned in fiscal 2021,which will increase capacity and enable us to serve more customers with an optimized high-value product line.Building a new micro mill in Mesa,Arizona,due to be comp

21、lete in 2023,which will be the worlds first such facility capable of producing merchant bar quality(MBQ)products.Though no one can predict the future,we believe we have optimized our company to perform in challenging markets,and we remain optimistic about our ability to profitably serve our customer

22、s and stockholders in the years ahead.My thanks to all the employees and stakeholders of CMC for another successful year.Throughout our history,CMC has demonstrated an ability to quickly and successfully optimize acquired assets into the CMC way of doing business.In our recent major rebar acquisitio

23、n,which added both mills and fabrication facilities to our portfolio,we leveraged best practices of both legacy and acquired talent and instilled our customer service focus and safety culture expeditiously.We concentrated rebar production in underutilized mills and created additional production capa

24、city for merchant bar opportunities.In the wake of this transformational acquisition,we achieved improved utilization,reduced mill production costs per ton,and are optimistic improvements will continue.4Optimization through Integrating AcquisitionsOptimization through Strategic Expansion5In late fis

25、cal 2020,CMC announced plans for a new environmentally-friendly micro mill in Mesa,Arizona,known internally as AZ2.Slated to be commissioned in 2023 with an expected annual capacity of 500,000 tons,AZ2 will be our third micro mill and first with the ability to use renewable solar and wind power for

26、a large portion of its energy needs.AZ2 will replace a higher cost rebar facility in California,whose real estate value we are leveraging to lower overall project costs.Unlike any other micro mill in the world,AZ2 will have the ability to produce merchant quality bar as well as rebar.We are also exp

27、anding our operations in Europe,adding a third rolling mill at our Polish mini mill,which we expect to be operational in 2021,increasing finished product capacity by 200,000 tons.We are optimistic about the payoff for both expansion projects.They will enhance our ability to serve more construction a

28、nd industrial customers on the West Coast in North America and throughout Central Europe.Optimization through Network Improvements6With a significantly larger number of mills and fabrication facilities after recent acquisitions,CMC has changed its mindset from operating individual mills to serve spe

29、cific regions to optimizing a network that balances output across multiple facilities and maximizes margins,while minimizing working capital.CMCs network optimization includes an aggressive Sales Inventory&Operations Planning(SIOP)initiative that will enable us to more efficiently utilize assets,mai

30、ntain high levels of service and avoid lost sales.Through SIOP,we are supporting expansion into the MBQ market,better utilizing logistics lanes,increasing the production of higher margin products,and improving in-stock availability.Early in our SIOP efforts,we are already seeing reduced conversion c

31、osts and higher margins.We are optimistic about achieving improved working capital management,growth in MBQ tonnage,higher mill utilization rates and other benefits going forward.7FINANCIAL HIGHLIGHTS 202020202019Net sales1$5,476,486$5,829,002Earnings from continuing operations278,302198,779Net earn

32、ings279,503198,093Adjusted earnings from continuing operations2317,033247,625Diluted earnings per share2.321.66Adjusted earnings from continuing operations per diluted share22.642.08Adjusted EBITDA from continuing operations2576,608424,085Core EBITDA from continuing operations2650,479501,465Net work

33、ing capital1,468,8401,385,415Cash dividends per share0.480.48Cash dividends paid57,05656,537Stockholders equity1,889,2011,623,861Stockholders equity attributable to CMC per share15.8513.77Total assets$4,081,728$3,758,771Average diluted shares outstanding120,309,621119,124,628EXTERNAL FINISHED TONS S

34、HIPPED BY YEAR3(in millions)NET EARNINGS($in millions)Years Ended August 31(in thousands,except share and per share data)20181392019202019828020174620165520184.3201920205.85.920174.020163.71 Excludes divisions classified as discontinued operations2 For a reconciliation of non-GAAP financial measures

35、,see the supplemental information posted to the investor relations section of our website at 3 External Finished Steel Tons Shipped equal to shipments of Steel Products plus Downstream Products.North America$661,176ADJUSTED EBITDA(in thousands)FINISHED STEEL SHIPMENTS(in thousands)4,451 tons8Fiscal

36、2020 North America Highlights8RECYCLING OPERATIONSMILL OPERATIONSDOWNSTREAM OPERATIONSA Vertically Integrated Steel CompanyCMC is unique within our industry.We manage our multiple lines of business as an integration organization,allowing us to optimize the financial performance and returns of the en

37、tire value chain.Recycling OperationsCMCs recycling operations in North America include more than 40 scrap metal processing plants,concentrated largely in Texas,South Carolina,Florida and the southern United States.CMC is one of the largest processors of both ferrous and non-ferrous scrap in the Uni

38、ted States.These recycling operations have an annual capacity of 4.9 million tons.CMC recycling operations provide a low-cost source of scrap for our mills.Mill OperationsCMCs six mini mills,two micro mills and two rerolling mills have the capacity to produce 5.4 million tons of steel products every

39、 year.CMC mills focus on long products,such as reinforcing bar(rebar),MBQ and wire rod products,to meet the needs of customers in the construction,industrial and agricultural markets.CMC is one of the leading producers of rebar in the U.S.CMCs mills are among the lowest cost and most environmentally

40、 friendly in the world.Downstream OperationsCMC conducts downstream activities at 62 North American locations,including rebar fabrication and fence post facilities.These facilities have an annual capacity of 2.4 million tons,and in fiscal 2020 shipped 1.6 million tons of downstream products to custo

41、mers mainly in the U.S.construction,industrial and agricultural markets.Downstream locations provide a baseload for our mills,protect CMC volumes from imports and offer an internal price hedge.CMC is one of the leading rebar fabricators in the United States.CMCs downstream operations extend our valu

42、e chain directly to the end user,and provide unique insight into market demand and developments.9Europe810Fiscal 2020 Europe HighlightsRECYCLING OPERATIONSMILL OPERATIONSDOWNSTREAM OPERATIONS$62,007ADJUSTED EBITDA(in thousands)FINISHED STEEL SHIPMENTS(in thousands)1,472 tonsVertical IntegrationAs wi

43、th our North America operations,CMCs Europe division is vertically integrated,with nearby scrap yards providing raw materials for our steel mill and downstream facilities delivering finished products to customers in Central Europe.CMCs Europe segment is anchored by an electric arc furnace(EAF)mini m

44、ill in Zawiercie,Poland,supported by 12 scrap yards,a mesh plant and four rebar fabrication shops in southern and central Poland.Going forward,demand is expected to continue to grow,particularly from construction and infrastructure customers in Germany and Poland.Europe Facilities RECYCLING YARDS:12

45、 EAF STEEL MILL:1 DOWNSTREAM OPERATIONS:5Expanding Our OperationsAs part of CMCs growth strategy,we are expanding our mini mill in Poland with the addition of a third rolling mill,due to be up and running in fiscal 2021.The new rolling mill will add 200,000 tons of capacity,increasing our flexibilit

46、y to meet growing customer demand.Projected Mill Capacity:1.5 MILLION TONSAdjusting Our Product MixBy increasing our finishing capacity,CMC adds flexibility to continue optimizing our product mix so that we can focus on more value-added products and supply new products,such as wire mesh.11A Green Ad

47、vantageIn the European Union,58 percent of all steel produced is still made with the traditional blast furnace method.One-hundred percent of the steel products CMC produces in Europe are manufactured with the more environmentally friendly EAF method.Non-EAF steelmakers produce eight times the amount

48、 of CO2 per ton of steel,compared to EAF steelmakers.This means CMC impacts the environment far less than many other European steelmakers,and it also gives us a competitive edge in addressing any potential future carbon-tax regulations in Europe.Since 2016,CMCs Europe segment has adjusted its produc

49、t mix to produce more profitable value-added products.Value-add productsHISTORICAL FINISHED PRODUCTS MIXWire RodMerchantRebar2016202044%48%29%30%28%21%20%40%60%80%100%Barbara R.SmithChairman of the Board,President and Chief Executive OfficerCMC EXECUTIVE MANAGEMENTVicki Avril-GrovesRetired Former Pr

50、esident and Chief Executive Officer of IPSCO Tubulars,Inc.Lisa M.BartonExecutive Vice President and Chief Operating Officer Utilities for American Electric Power Co.,Inc.Barbara R.SmithChairman of the Board,President and Chief Executive Officer of Commercial Metals CompanyRhys J.BestRetired Former C

51、hairman,President and CEO of Lone Star Technologies,Inc.Richard B.KelsonChairman,President and CEO of ServCo,LLCPeter R.MattExecutive Vice President and Chief Financial Officer,Constellium N.V.Rick J.MillsRetired Former Corporate Vice President and President of Components Group of Cummins,Inc.CMC BO

52、ARD OF DIRECTORSJ.David SmithRetired Former Chairman,President and CEO,Euramax International,Inc.Paul LawrenceVice President and Chief Financial OfficerSarah RaissRetired Former Executive Vice President,Corporate Services,TransCanada CorporationTracy L.PorterExecutive Vice President and Chief Operat

53、ing OfficerCharles L.SzewsRetired Former President and CEO of Oshkosh CorporationJody AbsherVice President,General Counsel and Corporate SecretaryJoseph C.WinklerLead Director;Retired Former Chairman and CEO of Complete Production Services,Inc.Jennifer DurbinVice President,Human Resources12its whats

54、 inside that countssLook beneath the surface and youll see all that CMC offers Strength.Integrity.Dependability.Thats not just a description of our products,but also our people.CMC steel forms the backbone of our modern infrastructure just about everywhere you look.Our steel can be found in highways

55、,bridges and buildings all over the world.But at CMC,we also work hard to build something far more important lasting relationships.The kind of partnerships that keep our customers returning to us time and again for their most important and challenging projects.13that countsits whatsCMC steel reinfor

56、ces hundreds of roads,bridges and buildings,playing a key role in meeting infrastructure and construction needs.Here are a few notable projects and the CMC products that make them stronger.ProjectsGLOBE LIFE FIELDArlington,TX|Built with CMC RebarBAYLOR SCOTT&WHITE AT THE STARROLEX BUILDINGFrisco,TX|

57、Built with CMC RebarDallas,TX|Built with CMC Rebar14FORD CENTER AT THE STARFrisco,TX|Built with CMC Rebar15LESNER BRIDGEVirginia Beach,VA|Built with ChromX 9100ROUTE 460 CONNECTOR BRIDGESouthwest VA|Built with ChromX 9100OPERATIONS2020Net sales1$5,476,486Earnings from continuing operations278,302Ear

58、nings before income taxes372,685Income taxes93,182Net earnings attributable to CMC279,503Effective tax rate25.0%Interest expense161,837Depreciation,amortization and impairment charges173,369Adjusted EBITDA from continuing operations2576,608BALANCE SHEET INFORMATION Cash and cash equivalents542,103Ac

59、counts receivable880,728Inventories625,393Total current assets2,214,103Property,plant and equipment Original cost3,399,086 Net of depreciation and amortization1,571,067 Capital expenditures187,618Total assets4,081,728Total current liabilities745,263Net working capital1,468,840Long-term debt31,065,53

60、6Long-term deferred income tax liability130,810Total stockholders equity attributable to CMC1,889,201Return on beginning stockholders equity attributable to CMC17.2%Stockholders equity attributable to CMC per share15.85SHARE INFORMATIONDiluted earnings per share2.32Cash dividends per share of common

61、 stock0.48Total cash dividends paid57,056Average diluted common shares120,309,621OTHER DATANumber of employees at year-end11,297Stockholders of record at year-end2,5001 Excludes divisions classified as discontinued operations2 Adjusted EBITDA from continuing operations=earnings from continuing opera

62、tions before interest expense,income taxes,depreciation,amortization and impairment charges3 Excludes current maturities of long-term debt(in thousands,except share and per share data and ratios)For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measur

63、es,see the supplemental information posted to the investor relations section of our website at .16SELECTED FINANCIAL DATA 2020OPERATIONS20202019201820172016$5,829,002$4,643,723$3,844,069$3,596,068198,779135,23750,17562,001267,932168,61955,61167,24169,83930,1139,27912,479198,093138,50646,33254,76226.

64、1%17.9%16.7%18.6%71,37340,95744,15162,973159,055146,712133,309182,733424,085352,221235,822305,237192,461622,473252,595517,5441,016,088749,484561,411689,382692,368589,005462,648540,0142,080,0052,077,2051,713,9002,048,1253,196,5852,670,8722,572,6932,322,9801,500,9711,075,0381,051,677895,045138,836174,

65、655213,120163,3323,758,7713,328,3042,975,1313,130,869694,590541,943608,438821,1181,385,4151,535,2621,105,4621,227,0071,227,2141,138,619805,580757,94879,29037,83449,16063,0211,623,8611,493,3971,400,7571,367,27213.3%9.9%3.4%4.0%13.7712.7612.1011.931.661.170.390.470.480.480.480.4856,53756,07655,51455,3

66、42119,124,628118,145,848117,364,408116,623,82611,5248,9008,7978,3882,7312,8783,4243,49817FINANCIAL REVIEW202018UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year

67、ended August 31,2020TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period fromtoCommission file number 1-4304Commercial Metals Company(Exact name of registrant as specified in its charter)Delaware75-0725338(State or other jurisdiction ofincor

68、poration or organization)(I.R.S.EmployerIdentification No.)6565 N.MacArthur Blvd.Irving,Texas 75039(Address of Principal Executive Office)(Zip Code)(214)689-4300(Registrants Telephone Number,Including Area Code)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading Symb

69、ol(s)Name of Each Exchange on Which RegisteredCommon Stock,$0.01 par valueCMCNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes NoIndicate by che

70、ck mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of theAct.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or f

71、or such shorter period that the registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule

72、405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorterperiod that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smallerreportin

73、g company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smallerreporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging grow

74、th company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange ActIndicate by check mark whether the registra

75、nt has filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C 7262(b)bythe registered public accounting firm that prepared or issued its audit report.Indicate by check

76、 mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of the Companys common stock on February 29,2020 held by non-affiliates of the registrantbased on the closing price per share on February 29,2020 on the New York Stock Exchange was

77、approximately$2.2 billion.As of October 14,2020,119,580,359 shares of the registrants common stock,par value$0.01 per share,were outstanding.DOCUMENTS INCORPORATED BY REFERENCE:Portions of the following document are incorporated by reference into the listed Part of Form 10-K:Registrants definitive p

78、roxy statement for the 2021 annual meeting of stockholders Part III 1 COMMERCIAL METALS COMPANY AND SUBSIDIARIES TABLE OF CONTENTS PART I 2 Item 1:Business 2 Item 1A:Risk Factors 7 Item 1B:Unresolved Staff Comments 17 Item 2:Properties 18 Item 3:Legal Proceedings 19 Item 4:Mine Safety Disclosure 19

79、PART II 19 Item 5:Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6:Selected Financial Data 21 Item 7:Managements Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A:Quantitative and Qualitative Disclo

80、sures about Market Risk 36 Item 8:Financial Statements and Supplementary Data 38 Item 9:Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 79 Item 9A:Controls and Procedures 79 Item 9B:Other Information 80 PART III 80 Item 10:Directors,Executive Officers and Corpora

81、te Governance 80 Item 11:Executive Compensation 80 Item 12:Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 80 Item 13:Certain Relationships and Related Transactions and Director Independence 81 Item 14:Principal Accountant Fees and Services 81 PART IV 8

82、2 Item 15:Exhibits and Financial Statement Schedules 82 Signatures 89 2 PART I ITEM 1.BUSINESS DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K(hereinafter referred to as the Annual Report)contains forward-looking statements within the meaning of Section 27A of the Sec

83、urities Act of 1933,as amended(the Securities Act),and Section 21E of the Securities Exchange Act of 1934,as amended(the Exchange Act).Actual results,performance or achievements could differ materially from those projected in the forward-looking statements as a result of a number of risks,uncertaint

84、ies and other factors.For a discussion of important factors that could cause our results,performance or achievements to differ materially from any future results,performance or achievements expressed or implied by our forward-looking statements,please refer to Part I,Item 1A,Risk Factors and Part II

85、,Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.OVERVIEW Commercial Metals Company(CMC)and its subsidiaries(collectively,the Company,we,our or us)manufacture,recycle and fabricate steel and metal products,related materials and servic

86、es through a network of facilities that includes seven electric arc furnace(EAF)mini mills,two EAF micro mills,two rerolling mills,steel fabrication and processing plants,construction-related product warehouses and metal recycling facilities in the United States(U.S.)and Poland.We were incorporated

87、in 1946 in the state of Delaware.Our predecessor company,a metals recycling business,has existed since 1915.We maintain our corporate office at 6565 North MacArthur Boulevard,Irving,Texas,75039.Our telephone number is(214)689-4300,and our website is http:/.Our fiscal year ends August 31st,and any re

88、ference in this Annual Report to any year refers to the fiscal year ended August 31st of that year,unless otherwise noted.Any reference in this Annual Report to a ton refers to the U.S.short ton,a unit of weight equal to 2,000 pounds.Our Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Curr

89、ent Reports on Form 8-K and all amendments to these reports are made available free of charge through the Investors section of our website as soon as reasonably practicable after such material is electronically filed with,or furnished to,the Securities and Exchange Commission(SEC).The information co

90、ntained on our website or available by hyperlink from our website is not incorporated into this Annual Report or other documents we file with,or furnish to,the SEC.Acquisition On November 5,2018(the Acquisition Date),the Company completed the acquisition(the Acquisition)of 33 reinforcing bar(rebar)f

91、abrication facilities in the U.S.,as well as four EAF mini mills located in Knoxville,Tennessee,Jacksonville,Florida,Sayreville,New Jersey and Rancho Cucamonga,California from Gerdau S.A.,hereinafter collectively referred to as the Acquired Businesses.For further details,refer to Note 3,Changes in B

92、usiness,in Part II,Item 8 of this Annual Report.Segment Reporting Segment information is prepared on the same basis as the financial information management reviews for operational decision-making purposes.In the fourth quarter of 2020,the Company realigned its segment reporting structure to reflect:

93、(i)its vertically integrated operating model in North America,which is now supported by a National Sales,Inventory and Operations Planning function created in 2020,(ii)changes to its operating model and geographic footprint following the full integration of the Acquired Businesses into its North Ame

94、rica operations and(iii)the way the Chief Operating Decision Maker now uses integrated North America data to manage the business,assess performance and allocate resources.As a result of this realignment,the Company now has two operating and reportable segments:North America and Europe.North America

95、comprises our former Americas Recycling,Americas Mills and Americas Fabrication business segments.Europe comprises our former International Mill segment,with no resulting change to the reporting approach.Segment financial information has been retrospectively adjusted to reflect these changes.3 NORTH

96、 AMERICA SEGMENT Our North America segment is a vertically integrated network of recycling facilities,steel mills and fabrication operations.Our strategy in North America is to optimize our vertically integrated value chain to maximize profitability.To execute our strategy,we seek to(i)obtain the lo

97、west possible input costs,primarily from our recycling facilities that we operate to provide low-cost scrap to our steel mills and(ii)enhance operational efficiency by utilizing our fabrication operations to optimize our steel mill volumes and obtain the highest possible selling prices to maximize m

98、etal margin.We strive to maximize cash flow generation through increased productivity,capacity utilization and product mix.To remain competitive,we regularly make substantial capital expenditures.We have invested approximately 68%,64%and 82%of our total capital expenditures in our North America segm

99、ent during 2020,2019 and 2018,respectively.For logistics,we utilize a fleet of trucks we own or lease as well as private haulers,railcars,export containers and barges.Our 41 scrap metal recycling facilities,primarily located in the southeast and central U.S.,process ferrous and nonferrous scrap meta

100、ls.Our recycling facilities are operated to lower the cost of scrap used by our steel mills.These facilities purchase processed and unprocessed ferrous and nonferrous metals from a variety of sources including manufacturing and industrial plants,metal fabrication plants,electric utilities,machine sh

101、ops,factories,railroads,refineries,shipyards,demolition businesses,automobile salvage firms,wrecking companies and retail individuals.Our recycling facilities utilize specialized equipment to efficiently process large volumes of ferrous material,including eight large machines capable of shredding ob

102、solete automobiles or other sources of scrap metal.Certain facilities also have nonferrous downstream equipment,including extensive equipment at three of our facilities that reclaim metal from insulated copper wire,to allow us to capture more metal content.With the exception of precious metals,our s

103、crap metal processing facilities recycle and process almost all types of metal.We sell ferrous and nonferrous scrap metals(collectively referred to as raw materials)to steel mills and foundries,aluminum sheet and ingot manufacturers,brass and bronze ingot makers,copper refineries and mills,secondary

104、 lead smelters,specialty steel mills,high temperature alloy manufacturers and other consumers.Raw material sales accounted for 13%,16%,and 25%of consolidated net sales in 2020,2019 and 2018.Our steel mill operations consist of six EAF mini mills,two EAF micro mills and two rerolling mills.Our steel

105、mills manufacture finished long steel products including rebar,merchant bar,light structural and other special sections as well as semi-finished billets for re-rolling and forging applications(collectively referred to as steel products).Each EAF mini mill consists of:a melt shop with an electric arc

106、 furnace;continuous casting equipment that shapes molten metal into billets;a reheating furnace that prepares billets for rolling;a rolling mill that forms products from heated billets;a mechanical cooling bed that receives hot products from the rolling mill;finishing facilities that shear,straighte

107、n,bundle and prepare products for shipping;and supporting facilities such as maintenance,warehouse and office areas.Our EAF micro mills utilize similar equipment and processes as described above;however,these facilities utilize unique continuous process technology where metal flows uninterrupted fro

108、m melting to casting to rolling.In addition,CMC has two facilities capable of producing spooled rebar.Our rerolling mills do not utilize a melt shop.The process begins by reheating billets or reclaimed rail to roll into finished steel products.The estimated annual capacity for our steel mills,which

109、assumes a typical product mix and does not represent the quantity of likely production or shipments in each fiscal year,is approximately 5.4 million tons of finished steel products.Descriptions of mill capacity,particularly rolling capacity,are highly dependent on the specific product mix manufactur

110、ed.Our mills roll many different types and sizes of products depending on market conditions,including pricing and demand.In August 2020,we announced the construction of a third micro mill in Mesa,Arizona.This micro mill will be the first in the world to produce merchant bar quality products through

111、a continuous production process,and will employ the latest technology in EAF power supply systems which will allow us to directly connect the EAF and the ladle furnace to renewable energy sources such as solar and wind.The new facility will replace higher cost rebar capacity at our Rancho Cucamonga,

112、California mill,which the Company intends to sell,and will allow us to more efficiently meet West Coast demand for steel products.We expect this micro mill to start-up in 2023.Ferrous scrap is the primary raw material used by our steel mills.Although ferrous scrap has historically been subject to si

113、gnificant price fluctuations,we believe the supply is adequate to meet our future needs.Our mills consume large amounts of electricity and natural gas.We have not had any significant curtailments,and we believe that energy supplies are adequate.The supply and demand of regional and national energy,a

114、nd the extent of applicable regulatory oversight of rates charged by providers,affect the prices we pay for electricity and natural gas.Our mills ship to a broad range of customers and end markets across the U.S.The primary end markets are construction and fabricating industries,steel service center

115、s,original equipment manufacturers and 4 agricultural,energy and petrochemical industries.Steel products sales accounted for 32%,30%,and 24%of consolidated net sales in 2020,2019 and 2018.Our fabrication operations include 62 facilities engaged in various aspects of steel fabrication.Most of these f

116、acilities engage in general fabrication of reinforcing steel.Four of these facilities fabricate steel fence posts.Our fabricated rebar and steel fence posts(collectively referred to as downstream products)operations shear,bend,weld and fabricate steel.Fabricated rebar is used to reinforce concrete p

117、rimarily in the construction of commercial and non-commercial buildings,hospitals,convention centers,industrial plants,power plants,highways,bridges,arenas,stadiums and dams,and is generally sold in response to a competitive bid solicitation.The majority of the resulting projects are fixed price ove

118、r the life of the project.We also provide installation services in certain markets.We obtain steel for our fabrication operations primarily from our own steel mills,and the demand created by our fabrication operations optimizes the production from our steel mills.Downstream products sales accounted

119、for 35%,33%,and 25%of consolidated net sales in 2020,2019 and 2018.We also operate Construction Services and CMC Impact Metals businesses.Our Construction Services business sells and rents construction-related products and equipment to concrete installers and other businesses in the construction ind

120、ustry.CMC Impact Metals manufactures high strength bar for the truck trailer industry,special bar quality steel for the energy market and armor plate for military vehicles and is one of North Americas premier producers of high strength steel products.The North America segments backlog,defined as the

121、 total value of unfulfilled orders,was approximately$1.4 billion at both August 31,2020 and 2019.At both August 31,2020 and 2019,$1.1 billion of the total backlog related to downstream products,with the rest related to steel products.Due to the nature of our steel products,we do not have a long lead

122、 time between order receipt and delivery.We generally fill orders for steel products from inventory or with products near completion.As a result,we do not believe our steel product backlog is a significant factor in the evaluation of our North America operations.EUROPE SEGMENT Our Europe segment is

123、a vertically integrated network of recycling facilities,an EAF mini mill and fabrication operations located in Poland.Our strategy in Europe is to optimize profitability of the products manufactured by our mini mill,and we execute this strategy in the same way in our Europe segment as we do in our N

124、orth America segment.Our 12 scrap metal recycling facilities,located throughout Poland,process ferrous scrap metals for use as a raw material for our mini mill.These facilities provide material almost exclusively to our mini mill and operate in order to lower the cost of scrap used by our mini mill.

125、The equipment utilized at these facilities is similar to our North America recycling operations and includes one large capacity scrap metal shredding facility similar to the largest shredder we operate in North America.Nonferrous scrap metal is not material to this segments operations.Our mini mill

126、is a significant manufacturer of steel products including rebar,merchant bar and wire rod in Eastern Europe.One of the two rolling mills includes a flexible rolling mill designed to allow efficient and flexible production of a range of medium section merchant bar products.This rolling mill complemen

127、ts the facilitys other rolling mill dedicated primarily to rebar production.Either rolling mill can feed an alternative rod block designed to produce high grade wire rod.Our mini mill sells steel products primarily to fabricators,manufacturers,distributors and construction companies,primarily to cus

128、tomers located within Poland.However,the mini mill also exports steel products to the Czech Republic,Germany,Hungary,Slovakia and other countries.Ferrous metal,the principal raw material used by our mini mill,electricity,natural gas and other necessary raw materials for the steel manufacturing proce

129、ss are generally readily available,although they can be subject to significant price fluctuations.We are currently constructing a third rolling mill in Poland to feed the rod rolling block independently.The third rolling mill will take advantage of current excess melting capacity and further expand

130、our overall rolling capacity and product mix flexibility.We expect the mill to start-up in late 2021.Our fabrication operations consist of five steel fabrication facilities located in Poland which produce downstream products,primarily fabricated rebar and wire mesh.Three of our facilities have expan

131、ded captive uses for a portion of the rebar and wire rod manufactured at the mini mill.They are similar to the facilities operated by our North America segment and sell fabricated rebar primarily to contractors for incorporation into construction projects.In addition to fabricated rebar,our fabricat

132、ion operations sell other downstream products including fabricated mesh,assembled rebar cages and other fabricated rebar by-products.Additionally,we operate two other fabrication facilities in Poland that produce welded steel mesh,cold rolled wire rod and cold rolled rebar.These facilities supplemen

133、t sales of fabricated rebar by offering wire mesh to customers,which include metals service centers and construction contractors.We are the largest manufacturer of wire mesh in Poland.In addition to sales of downstream products in the Polish market,we also export our downstream products to neighbori

134、ng countries such as the Czech Republic,Germany and Slovakia.5 Our mini mill generally fills orders for steel products from inventory or with products near completion.As a result,we do not believe that backlog levels are a significant factor in evaluating the operations of our Europe segment.The dow

135、nstream product backlog for our Europe segment was approximately$28.1 million at August 31,2020 compared to$33.9 million at August 31,2019.SEASONALITY Many of our facilities serve customers in the construction industry.Due to the increase in construction activities during the spring and summer month

136、s,our net sales are generally higher in our third and fourth quarters than in our first and second quarters.COMPETITION Our North America and Europe segments compete with national and international scrap metal processors and primary nonferrous metal producers and local,regional,national and internat

137、ional manufacturers and suppliers of steel.We compete primarily on the services we provide to our customers and on the quality and price of our products.The nonferrous recycling industry is highly fragmented in the U.S.;however,we believe our recycling operations are one of the largest engaged in th

138、e recycling of nonferrous metals in the U.S.We are also a major regional processor of ferrous metal.We produce a significant percentage of the total U.S.output of rebar and merchant bar.We also believe we are the largest manufacturer,and among the largest fabricators,of rebar in the U.S,as well as t

139、he largest manufacturer of steel fence posts in the U.S.In Poland,we believe we are the largest producer of merchant bars for the products we produce and the second largest producer of rebar and wire rod.No single customer accounted for 10%or more of our consolidated net sales in 2020,2019 or 2018.S

140、ee Part I,Item 1A,Risk Factors Risks Related to Our Industry below.ENVIRONMENTAL MATTERS A significant factor in our business is our compliance with environmental laws and regulations.See Part I,Item 1A,Risk Factors Risks Related to Our Industry in this Annual Report.Compliance with and changes in v

141、arious environmental requirements and environmental risks applicable to our industry may adversely affect our business,results of operations and financial condition.Occasionally,we may be required to clean up or take remedial action with regard to sites we operate or formerly operated.We may also be

142、 required to pay for a portion of the cleanup or remediation cost at sites we never owned or at sites which we never operated,if we are found to have arranged for treatment or disposal of hazardous substances on the sites.Under the Comprehensive Environmental Response,Compensation and Liability Act(

143、CERCLA or Superfund)and analogous state statutes,we could be responsible for both the costs of cleanup as well as for associated natural resource damages.The U.S.Environmental Protection Agency(EPA),or equivalent state agency,has named us as a potentially responsible party(PRP)at several federal Sup

144、erfund sites or similar state sites.In some cases,these agencies allege that we are one of many PRPs responsible for the cleanup of a site because we sold scrap metals to,or otherwise disposed of materials at,the site.With respect to the sale of scrap metals,we contend that an arms length sale of va

145、luable scrap metal for use as a raw material in a manufacturing process that we do not control should not constitute an arrangement for disposal or treatment of hazardous substances as defined under federal law.Subject to the satisfaction of certain conditions,the Superfund Recycling Equity Act prov

146、ides legitimate sellers of scrap metal for recycling with some relief from Superfund liability under federal law.Despite Congress clarification of the intent of the federal law,some state laws and environmental agencies still seek to impose such liability.We believe efforts to impose such liability

147、are contrary to public policy objectives and legislation encouraging recycling and promoting the use of recycled materials,and we continue to support clarification of state laws and regulations consistent with Congress action.New federal,state and local laws,regulations and the varying interpretatio

148、ns of such laws by regulatory agencies and the judiciary impact how much money we spend on environmental compliance.In addition,uncertainty regarding adequate control levels,testing and sampling procedures,new pollution control technology and cost benefit analysis based on market conditions impact o

149、ur future expenditures in order to comply with environmental requirements.We cannot predict the total amount of capital expenditures or increases in operating costs or other expenses that may be required as a result of environmental compliance.We also do not know if we can pass such costs on to our

150、customers through product price increases.During 2020,we incurred environmental costs,including disposal,permits,license fees,tests,studies,remediation,consultant fees and environmental personnel expense of$46.6 million.In addition,we spent approximately$2.7 million on capital expenditures for envir

151、onmental projects in 2020.We believe that our facilities are in material compliance with currently applicable environmental laws and regulations.We anticipate capital expenditures for new environmental control facilities during 2021 to be approximately$4.3 million.6 EMPLOYEES As of August 31,2020,th

152、e Company employed the following numbers of employees in each reportable segment and Corporate:Segment Number of Employees North America 8,580 Europe 2,351 Corporate 366 Total 11,297 Approximately 17%of the employees in our North America segment belong to unions.In addition,approximately 34%of the e

153、mployees in our Europe segment belong to unions.We believe that our labor relations are generally good to excellent and that our work force is highly motivated.INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our Board of Directors typically elects officers at its first meeting after our annual meeting of s

154、tockholders.Our executive officers continue to serve for terms set by our Board of Directors in its discretion.The table below sets forth the name,current position and offices,age and period served for each of our executive officers as of October 15,2020.EXECUTIVE NAME CURRENT POSITION&OFFICES AGE O

155、FFICER SINCE Barbara R.Smith Chairman of the Board,President and Chief Executive Officer 61 2011 Tracy L.Porter Executive Vice President and Chief Operating Officer 63 2010 Paul J.Lawrence Vice President and Chief Financial Officer 50 2016 Jody K.Absher Vice President,General Counsel and Corporate S

156、ecretary 43 2020 Jennifer J.Durbin Vice President of Human Resources 39 2020 Barbara R.Smith joined the Company in May 2011 as Senior Vice President and Chief Financial Officer.Ms.Smith was appointed Chief Operating Officer in January 2016,President and Chief Operating Officer in January 2017 and Pr

157、esident and Chief Executive Officer in September 2017.She was appointed to our Board of Directors on September 1,2017 and was named Chairman of the Board of Directors on January 11,2018.Prior to joining the Company,Ms.Smith served as Vice President and Chief Financial Officer of Gerdau Ameristeel Co

158、rporation,a mini mill steel producer,from July 2007 to May 2011,after joining Gerdau Ameristeel as Treasurer in July 2006.From February 2005 to July 2006,she served as Senior Vice President and Chief Financial Officer of FARO Technologies,Inc.,a developer and manufacturer of 3-D measurement and imag

159、ing systems.From 1981 to 2005,Ms.Smith was employed by Alcoa Inc.,a producer of primary aluminum,fabricated aluminum and alumina,where she held various financial leadership positions,including Vice President of Finance for Alcoas Aerospace,Automotive&Commercial Transportation Group,Vice President an

160、d Chief Financial Officer for Alcoa Fujikura Ltd.and Director of Internal Audit.Tracy L.Porter joined the Company in 1991 and has held various positions within the Company,including General Manager of CMC Steel Arkansas in Magnolia,Arkansas,head of the Companys former Rebar Fabrication Division,and

161、Interim President of the former CMC Americas Division.Mr.Porter served as Vice President of the Company and President of the former CMC Americas Division from April 2010 to July 2010.Mr.Porter was appointed Senior Vice President of the Company and President of the former CMC Americas Division in Jul

162、y 2010,Executive Vice President,CMC Operations in September 2016,and Executive Vice President and Chief Operating Officer in April 2018.Paul J.Lawrence joined the Company in February 2016 as Vice President of Finance.He was appointed Vice President of Finance and Treasurer in September 2016;Treasure

163、r,Vice President of Financial Planning and Analysis in January 2017;Vice President of Finance in June 2018;and Vice President and Chief Financial Officer in September 2019.Prior to joining the Company,Mr.Lawrence served as North American Information Technology Leader of Gerdau Long Steel North Ameri

164、ca,a U.S.steel producer,from 2014 to 2016,and from 2010 to 2014,he served as Gerdau Template Deployment Leader at Gerdau Long Steel North America.From 2003 to 2010,Mr.Lawrence held a variety of financial roles at Gerdau Ameristeel Corporation,including Assistant Vice President and Corporate Controll

165、er,and Deputy Corporate Controller.From 1998 to 2002,Mr.Lawrence held several financial positions with Co-Steel Inc.,which was acquired by Gerdau SA.7 Jody K.Absher joined the Company in May 2011 as Legal Counsel.She was appointed Senior Counsel and Assistant Corporate Secretary in October 2013;Lead

166、 Counsel and Assistant Corporate Secretary in November 2014;Interim General Counsel in February 2020;and Vice President,General Counsel and Corporate Secretary in May 2020.From August 2007 to May 2011,Ms.Absher was an attorney at Haynes and Boone,LLP,a global law firm.Jennifer J.Durbin joined the Co

167、mpany in May 2010 as Legal Counsel.She was appointed Senior Counsel in January 2013;Lead Counsel in November 2014;and Vice President of Human Resources in January 2020.From August 2006 to May 2010,Ms.Durbin was an attorney at Sidley Austin,LLP,a global law firm.ITEM 1A.RISK FACTORS There are inheren

168、t risks and uncertainties associated with our business that could adversely affect our business,results of operations and financial condition.Set forth below are descriptions of those risks and uncertainties that we currently believe to be material,but the risks and uncertainties described below are

169、 not the only risks and uncertainties that could adversely affect our business,results of operations and financial condition.If any of these risks actually occurs,our business,results of operations and financial condition could be materially adversely affected.RISKS RELATED TO OUR INDUSTRY Our indus

170、try and the industries we serve are vulnerable to global economic conditions.Metals industries and commodity products have historically been vulnerable to significant declines in consumption,global overcapacity and depressed product pricing during prolonged periods of economic downturn.Our business

171、supports cyclical industries such as commercial,government and residential construction,energy,metals service center,petrochemical and original equipment manufacturing.We may experience significant fluctuations in demand for our products from these industries based on global or regional economic con

172、ditions,energy prices,consumer demand and decisions by governments to fund infrastructure projects such as highways,schools,energy plants and airports.Although the residential housing market is not a significant direct factor in our business,related commercial and infrastructure construction activit

173、ies,such as shopping centers,schools and roads,could be adversely impacted by a prolonged slump in new housing construction.Our business,results of operations and financial condition are adversely affected when the industries we serve suffer a prolonged downturn or anemic growth.Because we do not ha

174、ve unlimited backlogs,our business,results of operations and financial condition are promptly affected by short-term economic fluctuations.Although we believe that the long-term prospects for the steel industry remain bright,we are unable to predict the duration of current economic conditions that a

175、re contributing to current demand for our products.Future economic downturns or a prolonged period of slow growth or economic stagnation could materially adversely affect our business,results of operations and financial condition.We are vulnerable to the economic conditions in the regions in which o

176、ur operations are concentrated.Economic downturns in the U.S.and Central Europe,or decisions by governments that have an impact on the level and pace of overall economic activity in one of these regions,could adversely affect demand for our products and,consequently,our sales and profitability.As a

177、result,our financial results are substantially dependent upon the overall economic conditions in these areas.Rapid and significant changes in the price of metals could adversely impact our business,results of operations and financial condition.Prices for most metals in which we deal have experienced

178、 increased volatility over the last several years,and such increased price volatility impacts us in several ways.While our downstream products may benefit from metal margin expansion as rapidly decreasing input costs for previously contracted fixed price work declines,our steel products would likely

179、 experience reduced metal margin and may be forced to liquidate high cost inventory at reduced metal margins or losses until prices stabilize.Sudden increases in input costs could have the opposite effect in each case.Overall,we believe that rapid substantial price changes are not to our industrys b

180、enefit.Our customer and supplier base would be impacted due to uncertainty as to future prices.A reluctance to purchase inventory in the face of extreme price decreases or to sell quickly during a period of rapid price increases would likely reduce our volume of business.Marginal industry participan

181、ts or speculators may attempt to participate to an unhealthy extent during a period of rapid price escalation with a substantial risk of contract default if prices suddenly reverse.Risks of default in contract performance by customers or suppliers as well as an increased risk of bad debts and custom

182、er credit exposure could increase during periods of rapid and substantial price changes.8 Excess capacity and over-production by foreign producers in our industry as well as the startup of new steel-making capacity in the U.S.could result in lower domestic prices,which would adversely affect our sal

183、es,margins and profitability.Global steel-making capacity exceeds demand for steel products in some regions around the world.Rather than reducing employment by rationalizing capacity with consumption,steel manufacturers in these countries(often with local government assistance or subsidies in variou

184、s forms)have traditionally periodically exported steel at prices significantly below their home market prices,which prices may not reflect their costs of production or capital.For example,steel production in China,the worlds largest producer and consumer of steel,has continued to exceed Chinese dema

185、nd.This rising excess capacity in China has resulted in a further increase in imports of artificially low-priced steel and steel products to the U.S.and world steel markets.A continuation of this trend or a significant decrease in Chinas rate of economic expansion could result in increasing steel im

186、ports from China.Excessive imports of steel into the U.S.have exerted,and may continue to exert,downward pressure on U.S.steel prices,which negatively affects our ability to increase our sales,margins,and profitability.The excess capacity may create downward pressure on our steel prices and lead to

187、reduced sales volumes as imports absorb market share that would otherwise be filled by domestic supply,all of which would adversely affect our sales,margins and profitability and could subject us to possible renegotiation of contracts or increases in bad debt.Excess capacity has also led to greater

188、protectionism as is evident in raw material and finished product border tariffs put in place by China,Brazil and other countries.We believe the downward pressure on,and periodically depressed levels of,U.S.steel prices in some recent years have been further exacerbated by imports of steel involving

189、dumping and subsidy abuses by foreign steel producers.While some tariffs and quotas are periodically put into effect for certain steel products imported from a number of countries that have been found to have been unfairly pricing steel imports to the U.S.,there is no assurance that tariffs and quot

190、as will always be levied,even if otherwise justified,and even when imposed many of these are short-lived or ineffective.On March 8,2018,President Trump signed a proclamation imposing a 25%tariff on all imported steel products for an indefinite period of time under Section 232 of the Trade Expansion

191、Act of 1962(Section 232).The tariff is imposed on all steel imports with the exception of steel imports originating from Argentina,Australia,Brazil,Canada,Mexico and South Korea,and the administration is considering exemption requests from other countries.When this or other tariffs or duties expire

192、or if others are further relaxed or repealed,or if relatively higher U.S.steel prices make it attractive for foreign steelmakers to export their steel products to the U.S.,despite the presence of duties or tariffs,the resurgence of substantial imports of foreign steel could create downward pressure

193、on U.S.steel prices.The adverse effects of excess capacity and over-production by foreign producers could be exacerbated by the startup of new steel-making capacity in the U.S.Any of these adverse effects could have a material adverse effect on our business,results of operations and financial condit

194、ion.Compliance with and changes in environmental compliance requirements and remediation requirements could result in substantially increased capital requirements and operating costs;violations of environmental requirements could result in costs that have a material adverse effect on our business,re

195、sults of operations and financial condition.Existing environmental laws or regulations,as currently interpreted or reinterpreted in the future,and future laws and regulations,may have a material adverse effect on our business,results of operations and financial condition.Compliance with environmenta

196、l laws and regulations is a significant factor in our business.We are subject to local,state,federal and international environmental laws and regulations concerning,among other matters,waste disposal,air emissions,waste and storm water effluent and disposal and employee health.Federal and state regu

197、latory agencies can impose administrative,civil and criminal penalties and may seek injunctive relief impacting continuing operations for non-compliance with environmental requirements.New facilities that we may build,especially steel mills,are required to obtain several environmental permits before

198、 significant construction or commencement of operations.Delays in obtaining permits or unanticipated conditions in such permits could delay the project or increase construction costs or operating expenses.Our manufacturing and recycling operations produce significant amounts of by-products,some of w

199、hich are handled as industrial waste or hazardous waste.For example,our EAF mills generate electric arc furnace dust(EAF dust),which the EPA and other regulatory authorities classify as hazardous waste.EAF dust and other industrial waste and hazardous waste require special handling,recycling or disp

200、osal.In addition,the primary feed materials for the shredders operated by our recycling facilities are automobile hulks and obsolete household appliances.Approximately 20%of the weight of an automobile hull consists of unrecyclable material known as shredder fluff.After the segregation of ferrous an

201、d saleable nonferrous metals,shredder fluff remains.We,along with others in the recycling industry,interpret federal regulations to require shredder fluff to meet certain criteria and pass a toxic leaching test to avoid classification as a hazardous waste.We also endeavor to remove hazardous contami

202、nants from the feed material prior to 9 shredding.As a result,we believe the shredder fluff we generate is not normally considered or properly classified as hazardous waste.If the laws,regulations or testing methods change with regard to EAF dust or shredder fluff or other by-products,we may incur a

203、dditional significant costs.Changes to National Ambient Air Quality Standards(NAAQS)or other requirements on our air emissions could make it more difficult to obtain new permits or to modify existing permits and could require changes to our operations or emissions control equipment.Such difficulties

204、 and changes could result in operational delays and capital and ongoing compliance expenditures.Legal requirements are changing frequently and are subject to interpretation.New laws,regulations and changing interpretations by regulatory authorities,together with uncertainty regarding adequate pollut

205、ion control levels,testing and sampling procedures,new pollution control technology and cost/benefit analysis based on market conditions are all factors that may increase our future expenditures to comply with environmental requirements.Accordingly,we are unable to predict the ultimate cost of futur

206、e compliance with these requirements or their effect on our operations.We cannot predict whether such costs would be able to be passed on to customers through product price increases.Competitors in various regions or countries where environmental regulation is less restrictive,subject to different i

207、nterpretation or generally not enforced,may enjoy a competitive advantage.We may also be required to conduct additional cleanup(and pay for associated natural resource damages)at sites where we have already participated in remediation efforts or take remediation action with regard to sites formerly

208、used in connection with our operations.We may be required to pay for a portion or all of the costs of cleanup or remediation at sites we never owned or on which we never operated if we are found to have arranged for treatment or disposal of hazardous substances on the sites.In cases of joint and sev

209、eral liability,we may be obligated to pay a disproportionate share of cleanup costs if other responsible parties are financially insolvent.We are involved,and may in the future become involved,in various environmental matters that may result in fines,penalties or judgments being assessed against us

210、or liability imposed upon us which we cannot presently estimate or reasonably foresee and which may have a material impact on our business,results of operations and financial condition.Under CERCLA or similar state statutes,we may have obligations to conduct investigation and remediation activities

211、associated with alleged releases of hazardous substances or to reimburse the EPA(or state agencies as applicable)for such activities and to pay for natural resource damages associated with alleged releases.We have been named a PRP at several federal and state Superfund sites because the EPA or an eq

212、uivalent state agency contends that we and other potentially responsible scrap metal suppliers are liable for the cleanup of those sites as a result of having sold scrap metal to unrelated manufacturers for recycling as a raw material in the manufacture of new products.We are involved in litigation

213、or administrative proceedings with regard to several of these sites in which we are contesting,or at the appropriate time may contest,our liability.In addition,we have received information requests with regard to other sites which may be under consideration by the EPA as potential CERCLA sites.We ar

214、e presently participating in PRP organizations at several sites,which are paying for certain remediation expenses.Although we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with various environmental matters or the effect on our consolidated financial p

215、osition,we make accruals as warranted.In addition,although we do not believe that a reasonably possible range of loss in excess of amounts accrued for pending lawsuits,claims or proceedings would be material to our financial statements,additional developments may occur,and due to inherent uncertaint

216、ies,including evolving remediation technology,changing regulations,possible third-party contributions,the inherent uncertainties of the estimation process,the uncertainties involved in litigation and other factors,the amounts we ultimately are required to pay could vary significantly from the amount

217、s we accrue,and this could have a material adverse effect on our business,results of operations and financial condition.Increased regulation associated with climate change and greenhouse gas emissions could impose significant additional costs on both our steelmaking and metals recycling operations.T

218、he U.S.government and various governmental agencies have introduced or are contemplating regulatory changes in response to the potential impact of climate change.International treaties or agreements may also result in increasing regulation of greenhouse gas(GHG)emissions,including the introduction o

219、f carbon emissions trading mechanisms.Any such regulation regarding climate change and GHG emissions could impose significant costs on our steelmaking and metals recycling operations and on the operations of our customers and suppliers,including increased energy,capital equipment,environmental monit

220、oring and reporting and other costs in order to comply with current or future laws or regulations and limitations imposed on our operations by virtue of climate change and GHG emissions laws and regulations.The potential costs of allowances,offsets or credits that may be part of potential cap-and-tr

221、ade programs or similar future regulatory measures are still uncertain.Any adopted future climate change and GHG regulations could negatively impact our ability(and that of our customers and suppliers)to compete with companies situated in areas not subject to such limitations.From a medium and long-

222、term perspective,as a result 10 of these regulatory initiatives,we may see an increase in costs relating to our assets that emit significant amounts of GHGs.These regulatory initiatives will be either voluntary or mandatory and may impact our operations directly or through our suppliers or customers

223、.Until the timing,scope and extent of any future regulation becomes known,we cannot predict the effect on our business,results of operations or financial condition,but such effect could be materially adverse to our business,results of operations and financial condition.Physical impacts of climate ch

224、ange could have a material adverse effect on our costs and operations.There has been public discussion that climate change may be associated with rising sea levels as well as extreme weather conditions such as more intense hurricanes,thunderstorms,tornadoes and snow or ice storms.Extreme weather con

225、ditions may increase our costs or cause damage to our facilities,and any damage resulting from extreme weather may not be fully insured.Many of our facilities are located near coastal areas or waterways where rising sea levels or flooding could disrupt our operations or adversely impact our faciliti

226、es.Furthermore,periods of extended inclement weather or associated flooding may inhibit construction activity utilizing our products,delay or hinder shipments of our products to customers or reduce scrap metal inflows to our recycling facilities.Any such events could have a material adverse effect o

227、n our costs or results of operations.RISKS RELATED TO OUR COMPANY Our business,financial condition,results of operations,cash flows,liquidity and stock price may be adversely affected by global public health epidemics,including the recent COVID-19 pandemic.The recent outbreak of COVID-19 has affecte

228、d,and may continue to adversely affect,our business,financial condition,results of operations,cash flows,liquidity and stock price.Other pandemics,epidemics,widespread illness or other health issues that interfere with the ability of our employees,suppliers,customers,financing sources or others to c

229、onduct business,or negatively affects consumer confidence or the global economy,could also adversely affect us.In March 2020,the World Health Organization characterized the outbreak of COVID-19 as a pandemic,and the President of the United States declared COVID-19 a national emergency.COVID-19 has r

230、esulted in various government actions globally,including governmental actions in both the U.S.and Poland designed to slow the spread of the virus.Shelter-in-place or stay-at-home orders were implemented in many of the jurisdictions where we operate.However,because we operate in a critical infrastruc

231、ture industry,our operations were allowed to remain open in the U.S.Our facilities in Poland have also remained open.In spite of our continued operations,COVID-19 may have negative impacts on our operations,supply chain,transportation networks and customers,which may compress our margins,including a

232、s a result of preventative and precautionary measures that we,other businesses and governments are taking.COVID-19 is a widespread public health crisis that is adversely affecting financial markets and the economies of many countries.Any resulting economic downturn could adversely affect demand for

233、our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products and raw materials.The progression of COVID-19 could also negatively impact our business or results of operations through the temporary closure of our operating facilities

234、 or those of our customers or suppliers.In addition,the ability of our suppliers and customers to work may be significantly impacted by individuals contracting or being exposed to COVID-19 or as a result of the control measures noted above,which may negatively impact our production throughout the su

235、pply chain and constrict sales channels.Our customers may be directly impacted by business interruptions or weak market conditions and may not be willing or able to fulfill their contractual obligations.Furthermore,the progression of and global response to COVID-19 increases the risk of delays in co

236、nstruction activities and equipment deliveries related to our capital projects,including potential delays in obtaining permits from government agencies.The extent of such delays and other effects of COVID-19 on our capital projects,certain of which are outside of our control,is unknown,but they coul

237、d impact or delay the timing of anticipated benefits on capital projects.COVID-19 has also caused volatility in the financial and capital markets and may adversely affect our ability to access,and the costs associated with accessing,the debt or equity capital markets,which could adversely affect our

238、 liquidity.The extent to which COVID-19 may adversely impact our business depends on future developments,which are highly uncertain and unpredictable,including new information concerning the severity of the pandemic and the effectiveness of actions globally to contain or mitigate its effects.While w

239、e expect COVID-19 to negatively impact our results of operations,cash flows and financial position,the current level of uncertainty over the economic and operational impacts of COVID-19 and the actions to contain the outbreak or treat its impact means the related financial impact cannot be reasonabl

240、y estimated at this time.11 Potential limitations on our ability to access credit,or the ability of our customers and suppliers to access credit,may adversely affect our business,results of operations and financial condition.If our access to credit is limited or impaired,our business,results of oper

241、ations and financial condition could be adversely impacted.Our senior unsecured debt is rated by Standard&Poors Corporation,Moodys Investors Service and Fitch Group,Inc.In determining our credit ratings,the rating agencies consider a number of both quantitative and qualitative factors.These factors

242、include earnings(loss),fixed charges such as interest,cash flows,total debt outstanding,off-balance sheet obligations and other commitments,total capitalization and various ratios calculated from these factors.The rating agencies also consider predictability of cash flows,business strategy and diver

243、sity,industry conditions and contingencies.Any downgrades in our credit ratings may make raising capital more difficult,increase the cost and affect the terms of future borrowings,affect the terms under which we purchase goods and services and limit our ability to take advantage of potential busines

244、s opportunities.We could also be adversely affected if our banks refused to honor their contractual commitments or cease lending.We are also exposed to risks associated with the creditworthiness of our customers and suppliers.In certain markets,we have experienced a consolidation among those entitie

245、s to whom we sell.This consolidation has resulted in an increased credit risk spread among fewer customers,often without a corresponding strengthening of their financial status.If the availability of credit to fund or support the continuation and expansion of our customers business operations is cur

246、tailed or if the cost of that credit is increased,the resulting inability of our customers or of their customers to either access credit or absorb the increased cost of that credit could adversely affect our business by reducing our sales or by increasing our exposure to losses from uncollectible cu

247、stomer accounts.The consequences of such adverse effects could include the interruption of production at the facilities of our customers,the reduction,delay or cancellation of customer orders,delays or interruptions of the supply of raw materials we purchase and bankruptcy of customers,suppliers or

248、other creditors.Any of these events may adversely affect our business,results of operations and financial condition.The potential impact of our customers non-compliance with existing commercial contracts and commitments,due to insolvency or for any other reason,may adversely affect our business,resu

249、lts of operations and financial condition.From time to time in the past,some of our customers have sought to renegotiate or cancel their existing purchase commitments with us.In addition,some of our customers have breached previously agreed upon contracts to buy our products by refusing delivery of

250、the products.Where appropriate,we have and will in the future pursue litigation to recover our damages resulting from customer contract defaults and bankruptcy filings.We use credit assessments in the U.S.and credit insurance in Poland to mitigate the risk of customer insolvency.However,a large numb

251、er of our customers defaulting on existing contractual obligations to purchase our products could have a material adverse effect on our business,results of operations and financial condition.The agreements governing our notes and our other debt contain financial covenants and impose restrictions on

252、our business.The indenture governing our 4.875%senior notes due 2023,our 5.750%senior notes due 2026,and our 5.375%senior notes due 2027 contains restrictions on our ability to create liens,sell assets,enter into sale and leaseback transactions and consolidate or merge.In addition to these restricti

253、ons,our credit facility contains covenants that restrict our ability to,among other things,enter into transactions with affiliates and guarantee the debt of some of our subsidiaries.Our credit facility also requires that we meet certain financial tests and maintain certain financial ratios,including

254、 maximum debt to capitalization and interest coverage ratios.Other agreements that we may enter into in the future may contain covenants imposing significant restrictions on our business that are similar to,or in addition to,the covenants under our existing agreements.These restrictions may affect o

255、ur ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.Our ability to comply with these covenants may be affected by events beyond our control,including prevailing economic,financial and industry conditions.The breach of any o

256、f these covenants could result in a default under the indenture governing our notes or under our other debt agreements.An event of default under our debt agreements would permit our lenders to declare all amounts borrowed from them to be due and payable,together with accrued and unpaid interest.If w

257、e were unable to repay debt to our secured lenders or if we incur secured debt in the future,these lenders could proceed against the collateral securing that debt.In addition,acceleration of our other indebtedness may cause us to be unable to make interest payments on our notes.12 We may not be able

258、 to successfully identify,consummate or integrate acquisitions,and acquisitions may adversely affect our financial leverage.Part of our business strategy includes pursuing synergistic acquisitions.We have expanded,and plan to continue to expand,our business by making strategic acquisitions and regul

259、arly seeking suitable acquisition targets to enhance our growth.We may fund such acquisitions using cash on hand,drawing under our credit facility or accessing the capital markets.To the extent we finance such acquisitions with additional debt,the incurrence of such debt may result in a significant

260、increase in our interest expense and financial leverage,which could be further exacerbated by volatility in the debt capital markets.Further,an increase in our leverage could lead to deterioration in our credit ratings.The pursuit of acquisitions may pose certain risks to us.We may not be able to id

261、entify acquisition candidates that fit our criteria for growth and profitability.Even if we are able to identify such candidates,we may not be able to acquire them on terms or financing satisfactory to us.We will incur expenses and dedicate attention and resources associated with the review of acqui

262、sition opportunities,whether or not we consummate such acquisitions.Additionally,even if we are able to acquire suitable targets on agreeable terms,we may not be able to successfully integrate their operations with ours.Achieving the anticipated benefits of any acquisition will depend in significant

263、 part upon whether we integrate such acquired businesses in an efficient and effective manner.We may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions within the anticipated timing or at all.For example,elimination of duplicative

264、costs may not be fully achieved or may take longer than anticipated.The benefits from any acquisition will be offset by the costs incurred in integrating the businesses and operations.We may also assume liabilities in connection with acquisitions to which we would not otherwise be exposed.An inabili

265、ty to realize any or all of the anticipated synergies or other benefits of an acquisition as well as any delays that may be encountered in the integration process,which may delay the timing of such synergies or other benefits,could have an adverse effect on our business,results of operations and fin

266、ancial condition.New and clarifying guidance with regard to interpretation of certain provisions of the Tax Cuts and Jobs Act may adversely affect our business,results of operations,financial condition and cash flow.On December 22,2017,the President signed into law Public Law No.115-97,commonly refe

267、rred to as the Tax Cuts and Jobs Act(TCJA),following its passage by the United States Congress,which significantly changed the U.S.corporate income tax system.The TCJA requires complex computations to be performed,which require significant judgments,estimates and calculations to be made in interpret

268、ing its provisions.The U.S.Department of Treasury continues to release new and clarifying guidance on certain provisions of the TCJA,which the Company evaluates during the period of enactment.This new guidance could require us to make adjustments to amounts we have previously recorded,which may adve

269、rsely impact our results of operations and financial condition.Goodwill impairment charges in the future could have a material adverse effect on our business,results of operations and financial condition.We review the recoverability of goodwill annually,as of the first day of our fourth quarter,and

270、whenever events or circumstances indicate that the carrying value of a reporting unit may not be recoverable.The impairment tests require us to make an estimate of the fair value of our reporting units.An impairment could be recorded as a result of changes in assumptions,estimates or circumstances,s

271、ome of which are beyond our control.Factors which could result in an impairment include,but are not limited to:(i)reduced demand for our products;(ii)our cost of capital;(iii)higher material prices;(iv)slower growth rates in our industry;and(v)changes in the market based discount rates.Since a numbe

272、r of factors may influence determinations of fair value of goodwill,we are unable to predict whether impairments of goodwill will occur in the future,and there can be no assurance that continued conditions will not result in future impairments of goodwill.The future occurrence of a potential indicat

273、or of impairment could include matters such as(i)a decrease in expected net earnings;(ii)adverse equity market conditions;(iii)a decline in current market multiples;(iv)a decline in our common stock price;(v)a significant adverse change in legal factors or the general business climate;(vi)an adverse

274、 action or assessment by a regulator;(vii)a significant downturn in non-residential construction markets in the U.S.;and(viii)levels of imported steel into the U.S.Any such impairment would result in us recognizing a non-cash charge in our consolidated statements of earnings,which could adversely af

275、fect our business,results of operations and financial condition.13 Impairment of long-lived assets in the future could have a material adverse effect on our business,results of operations and financial condition.We have a significant amount of property,plant and equipment,finite-lived intangible ass

276、ets and right of use assets that may be subject to impairment testing.Long-lived assets are subject to an impairment assessment when certain triggering events or circumstances indicate that their carrying value may be impaired.If the net carrying value of the asset or group of assets exceeds our est

277、imate of future undiscounted cash flows of the operations related to the asset,the excess of the net book value over estimated fair value is charged to impairment loss in the consolidated statements of earnings.The primary factors that affect estimates of future cash flows for these long-lived asset

278、 groups are(i)managements raw material price outlook;(ii)market demand;(iii)working capital changes;(iv)capital expenditures;and(v)selling,general and administrative expenses.There can be no assurance that continued market conditions,demand for our products,or facility utilization levels or other fa

279、ctors will not result in future impairment charges.Increases in the value of the U.S.dollar relative to other currencies may adversely affect our business,results of operations and financial condition.An increase in the value of the U.S.dollar may adversely affect our business,results of operations

280、and financial condition,and in particular,the increased strength of the U.S.dollar as compared to Chinas renminbi or the euro could adversely affect our business,results of operations and financial condition.A strong U.S.dollar makes imported metal products less expensive,resulting in more imports o

281、f steel products into the U.S.by our foreign competitors,while a weak U.S.dollar may have the opposite impact on imports.With the exception of exports of nonferrous scrap metal by the recycling facilities in our North America segment,we have not recently been a significant exporter of metal products

282、.Economic difficulties in some large steel-producing regions of the world,resulting in lower local demand for steel products,have historically encouraged greater steel exports to the U.S.at depressed prices which can be exacerbated by a strong U.S.dollar.As a result,our products that are made in the

283、 U.S.may become relatively more expensive as compared to imported steel,which has had,and in the future could have,a negative impact on our business,results of operations and financial condition.There can be no assurance that we will repurchase shares of our common stock at all or in any particular

284、amounts.During the first quarter of 2015,we announced that our Board of Directors had authorized the Company to repurchase up to$100.0 million of shares of our common stock.The stock markets in general have experienced substantial price and trading fluctuations,which have resulted in volatility in t

285、he market prices of securities that often are unrelated or disproportionate to changes in operating performance.These broad market fluctuations may adversely affect the trading price of our common stock.Price volatility over a given period may also cause the average price at which we repurchase our

286、own common stock to exceed the stocks price at a given point in time.In addition,significant changes in the trading price of our common stock and our ability to access capital on terms favorable to us could impact our ability to repurchase shares of our common stock.The timing and amount of any repu

287、rchases will be determined by the Companys management based on its evaluation of market conditions,capital allocation alternatives and other factors beyond our control.Our share repurchase program may be modified,suspended,extended or terminated by the Company at any time and without notice.Operatin

288、g internationally carries risks and uncertainties which could adversely affect our business,results of operations and financial condition.We have significant facilities in Poland.Our Polish operations generated approximately 13%of our 2020 net sales.Our stability,growth and profitability are subject

289、 to a number of risks inherent in doing business internationally in addition to the currency exchange risk and operating risks discussed above,including:political,military,terrorist or major pandemic events;local labor and social issues;legal and regulatory requirements or limitations imposed by for

290、eign governments(particularly those with significant steel consumption or steel-related production including China,Brazil,Russia and India),including quotas,tariffs or other protectionist trade barriers,adverse tax law changes,nationalization or currency restrictions;disruptions or delays in shipmen

291、ts caused by customs compliance or government agencies;and potential difficulties in staffing and managing local operations.14 These factors may adversely affect our business,results of operations and financial condition.Scrap and other supplies for our business are subject to significant price fluc

292、tuations and limited availability,which may adversely affect our business,results of operations and financial condition.At any given time,we may be unable to obtain an adequate supply of critical raw materials at a price and other terms acceptable to us.We depend on ferrous scrap,the primary raw mat

293、erial used by our steel mills,and other supplies such as graphite electrodes and ferroalloys for our steel mill operations.The price of scrap and other supplies has historically been subject to significant fluctuation,and we may not be able to adjust our product prices to recover the costs of rapid

294、increases in material prices,especially over the short-term and in our fixed price contracts.The profitability of our operations would be adversely affected if we are unable to pass increased raw material and supply costs on to our customers.Changing processes could potentially impact the volume of

295、scrap metal available to us and the volume and realized margins of processed metal we sell.The purchase prices for automobile bodies and various other grades of obsolete and industrial scrap,as well as the selling prices for processed and recycled scrap metals we utilize in our own manufacturing pro

296、cess or resell to others,are highly volatile.A prolonged period of low scrap prices or a fall in scrap prices could reduce our ability to obtain,process and sell recycled material,which could have a material adverse effect on our metals recycling operations business,results of operations and financi

297、al condition.Our ability to respond to changing recycled metal selling prices may be limited by competitive or other factors during periods of low scrap prices,when the supply of scrap may decline considerably,as scrap generators hold onto their scrap in the hope of getting higher prices later.Conve

298、rsely,increased foreign demand for scrap due to economic expansion in countries such as China,India,Brazil and Turkey can result in an outflow of available domestic scrap as well as higher scrap prices that cannot always be passed on to domestic scrap consumers,further reducing the available domesti

299、c scrap flows and scrap margins,all of which could adversely affect our sales and profitability.The availability and process of raw materials may also be negatively affected by new laws and regulations,allocations by suppliers,interruptions in production,accidents or natural disasters,changes in exc

300、hange rates,global price fluctuations,and the availability and cost of transportation.If we were unable to obtain adequate and timely deliveries of our required raw materials,we may be unable to timely manufacture significant quantities of our products.We rely on the availability of large amounts of

301、 electricity and natural gas.Disruptions in delivery or substantial increases in energy costs,including crude oil prices,could adversely affect our business,results of operations and financial condition.Our EAF mills melt steel scrap in electric arc furnaces and use natural gas to heat steel billets

302、 for rolling into finished steel products.As large consumers of electricity and gas,often the largest in the geographic area where our mills are located,we must have dependable delivery of electricity and natural gas in order to operate.Accordingly,we are at risk in the event of an energy disruption

303、.Prolonged black-outs or brown-outs or disruptions caused by natural disasters such as hurricanes would substantially disrupt our production.While we have not suffered prolonged production delays due to our inability to access electricity or natural gas,several of our competitors have experienced su

304、ch occurrences.Prolonged substantial increases in energy costs would have an adverse effect on the costs of operating our mills and would negatively impact our gross margins unless we were able to fully pass through the additional expense to our customers.Our finished steel products are typically de

305、livered by truck.Rapid increases in the price of fuel attributable to increases in crude oil prices would increase our costs and adversely affect many of our customers financial results,which in turn could result in reduced margins and declining demand for our products.The loss of,or inability to hi

306、re,key employees may adversely affect our ability to successfully manage our operations and meet our strategic objectives.Our future success depends,in large part,on the continued service of our officers and other key employees and our ability to continue to attract and retain additional highly qual

307、ified personnel.These employees are integral to our success based on their expertise and knowledge of our business and products.We compete for such personnel with other companies,including public and private company competitors who may periodically offer more favorable terms of employment.The loss o

308、r interruption of the services of a number of our key employees could reduce our ability to effectively manage our operations due to the fact that we may not be able to find appropriate replacement personnel in a timely manner should the need arise.15 We may have difficulty competing with companies

309、that have a lower cost structure or access to greater financial resources.We compete with regional,national and foreign manufacturers and traders.Consolidation among participants in the steel manufacturing and recycling industries has resulted in fewer competitors,and several of our competitors are

310、significantly larger than us and have greater financial resources and more diverse businesses than us.Some of our foreign competitors may be able to pursue business opportunities without regard to certain of the laws and regulations with which we must comply,such as environmental regulations.These c

311、ompanies may have a lower cost structure and more operating flexibility,and consequently they may be able to offer better prices and more services than we can.There is no assurance that we will be able to compete successfully with these companies.Any of these factors could have a material adverse ef

312、fect on our business,results of operations and financial condition.Information technology interruptions and breaches in data security could adversely impact our business,results of operations and financial condition.We rely on computers,information and communications technology and related systems a

313、nd networks in order to operate our business,including to store sensitive data such as intellectual property,our own proprietary business information and that of our customers,suppliers and business partners and personally identifiable information of our employees.Increased global information techno

314、logy security requirements,vulnerabilities,threats and a rise in sophisticated and targeted computer crime pose a risk to the security of our systems,networks and the confidentiality,availability and integrity of our data.Our systems and networks are also subject to damage or interruption from power

315、 outages,telecommunications failures,employee error and other similar events.Any of these or other events could result in system interruption,the disclosure,modification or destruction of proprietary and other key information,legal claims or proceedings,production delays or disruptions to operations

316、 including processing transactions and reporting financial results and could adversely impact our reputation and our operating results.We have taken steps to address these concerns and have implemented internal control and security measures to protect our systems and networks from security breaches;

317、however,there can be no assurance that a system or network failure,or security breach,will not impact our business,results of operations and financial condition.Our mills require continual capital investments that we may not be able to sustain.We must make regular substantial capital investments in

318、our steel mills to maintain the mills,lower production costs and remain competitive.We cannot be certain that we will have sufficient internally generated cash or acceptable external financing to make necessary substantial capital expenditures in the future.The availability of external financing dep

319、ends on many factors outside of our control,including capital market conditions and the overall performance of the economy.If funding is insufficient,we may be unable to develop or enhance our mills,take advantage of business opportunities and respond to competitive pressures.Unexpected equipment fa

320、ilures may lead to production curtailments or shutdowns,which may adversely affect our business,results of operations and financial condition.Interruptions in our production capabilities would adversely affect our production costs,steel available for sale and earnings for the affected period.Our man

321、ufacturing processes are dependent upon critical pieces of steel-making equipment,such as our furnaces,continuous casters and rolling equipment,as well as electrical equipment,such as transformers.This equipment may,on occasion,be out of service as a result of unanticipated failures.We have experien

322、ced,and may in the future experience,material plant shutdowns or periods of reduced production as a result of such equipment failures.In addition to equipment failures,our facilities are also subject to the risk of catastrophic loss due to unanticipated events such as fires,explosions or violent wea

323、ther conditions.Competition from other materials may have a material adverse effect on our business,results of operations and financial condition.In many applications,steel competes with other materials,such as aluminum and plastics(particularly in the automobile industry),cement,composites,glass an

324、d wood.Increased use of or additional substitutes for steel products could adversely affect future market prices and demand for steel products.16 Hedging transactions may expose us to losses or limit our potential gains.Our product lines and global operations expose us to risks associated with fluct

325、uations in foreign currency exchange rates,commodity prices and interest rates.As part of our risk management program,we sometimes use financial instruments,including metals commodity futures,natural gas,electricity and other energy forward contracts,freight forward contracts,foreign currency exchan

326、ge forward contracts and interest rate swap contracts.While intended to reduce the effects of fluctuations in these prices and rates,these transactions may limit our potential gains or expose us to losses.If our counterparties to such transactions or the sponsors of the exchanges through which these

327、 transactions are offered,such as the London Metal Exchange,fail to honor their obligations due to financial distress,we would be exposed to potential losses or the inability to recover anticipated gains from these transactions.We enter into the foreign currency exchange forward contracts as economi

328、c hedges of trade commitments or anticipated commitments denominated in currencies other than the functional currency to mitigate the effects of changes in currency rates.These foreign exchange commitments are dependent on timely performance by our counterparties.Their failure to perform could resul

329、t in our having to close these hedges without the anticipated underlying transaction and could result in losses if foreign currency exchange rates have changed.We are subject to litigation and legal compliance risks which could adversely affect our business,results of operations and financial condit

330、ion.We are involved in various litigation matters,including regulatory proceedings,administrative proceedings,governmental investigations,environmental matters and construction contract disputes.The nature of our operations also exposes us to possible litigation claims in the future.Because of the u

331、ncertain nature of litigation and coverage decisions,we cannot predict the outcome of these matters.These matters could have a material adverse effect on our business,results of operations and financial condition.Litigation is very costly,and the costs associated with prosecuting and defending litig

332、ation matters could have a material adverse effect on our business,results of operations and financial condition.Although we are unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with litigation matters,we make accruals as warranted.However,the amounts that we

333、 accrue could vary significantly from the amounts we actually pay,due to inherent uncertainties,including the inherent uncertainties of the estimation process,the uncertainties involved in litigation and other factors.See Part I,Item 3,Legal Proceedings of this Annual Report,for a description of our current significant legal proceedings.As noted above,existing laws or regulations,as currently inte