XML 35 R15.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Trade Accounts Receivable Securitization and Sale Programs | 3 Months Ended
--- | ---
Nov. 30, 2018
Transfers and Servicing [Abstract] |
Trade Accounts Receivable Securitization and Sale Programs | Trade Accounts Receivable Securitization and Sale Programs The Company regularly sells designated pools of trade accounts receivable under a foreign asset-backed securitization program, a North American asset-back securitization program and nine uncommitted trade accounts receivable sale programs (collectively referred to herein as the “programs”). The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the programs. Servicing fees related to each of the programs recognized during the three months ended November 30, 2018 and 2017 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities. Transfers of the receivables under the programs are accounted for as sales and, accordingly, net receivables sold under the programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. The adoption of ASU 2016-15 described in Note 14, New Accounting Guidance, resulted in a reclassification of cash flows from operating activities to investing activities in the Company’s Condensed Consolidated Statement of Cash Flows for cash receipts related to collections on the deferred purchase price receivable on asset-backed securitization transactions. In addition, the beneficial interest of $162.2 million and $747.3 million for the three months ended November 30, 2018 and 2017, respectively, obtained in exchange for securitized receivables are reported as non-cash investing activities. Asset-Backed Securitization Programs The Company continuously sells designated pools of trade accounts receivable under its foreign asset-backed securitization program to a special purpose entity, which in turn sells certain of the receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution on a monthly basis. Effective October 1, 2018, the foreign asset-backed securitization program terms were amended and the program was extended to September 30, 2021. In connection with this amendment, there is no longer a deferred purchase price receivable for the foreign asset-backed securitization program as the entire purchase price is paid in cash when the receivables are sold. As of October 1, 2018, approximately $734.2 million of accounts receivable sold under the foreign asset-backed securitization program was exchanged for the outstanding deferred purchase price receivable of $335.5 million. The remaining amount due to the financial institution of $398.7 million was subsequently settled for $25.2 million of cash and $373.5 million of trade accounts receivable sold to the financial institution. The previously sold trade accounts receivable were recorded at fair market value. Prior to the amendment, any portion of the purchase price for the receivables not paid in cash upon the sale occurring was recorded as a deferred purchase price receivable, which was paid from available cash as payments on the receivables were collected. The special purpose entity in the foreign asset-backed securitization program is a separate bankruptcy-remote entity whose assets would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company is deemed the primary beneficiary of this special purpose entity as the Company has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, the special purpose entity associated with the foreign asset-backed securitization program is included in the Company’s Condensed Consolidated Financial Statements. The North American asset-backed securitization program was terminated on October 9, 2018 and as of this date approximately $500.0 million of accounts receivable sold under the program was exchanged for the outstanding deferred purchase price receivable of $300.0 million and $200.0 million of cash. The previously sold trade accounts receivable were recorded at fair market value. On November 27, 2018, the Company entered into a new North American asset-backed securitization program. The Company continuously sells designated pools of trade accounts receivable under its new North American asset-backed securitization program to a special purpose entity, which in turn sells certain of the receivables to conduits administered by unaffiliated financial institutions on a monthly basis. The special purpose entity in the North American asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in the Company's Condensed Consolidated Financial Statements. There is no longer a deferred purchase price receivable for the North American asset-backed securitization program as the entire purchase price is paid in cash when the receivables are sold. Additionally, certain receivables are pledged as collateral to the unaffiliated financial institution. Following is a summary of the asset-backed securitization programs and key terms:
| Maximum Amount of Net Cash Proceeds (in millions)(1) |  | Expiration Date
North American | $ | 390.0 |  |  | November 22, 2021
Foreign | $ | 400.0 |  |  | September 30, 2021
(1) | Maximum amount available at any one time.
In connection with the asset-backed securitization programs, the Company recognized the following (in millions):
| Three months ended
| November 30, 2018 (4) |  | November 30, 2017
Trade accounts receivable sold | $ | 750 |  |  | $ | 2,392 |
Cash proceeds received(1) | $ | 744 |  |  | $ | 1,628 |
Pre-tax losses on sale of receivables(2) | $ | 6 |  |  | $ | 4 |
Deferred purchase price receivables as of November 30(3) | $ | — |  |  | $ | 760 |
(1) | For the three months ended November 30, 2018 and 2017, the amount represented proceeds from collections reinvested in revolving-period transfers.
(2) | Recorded to other expense within the Condensed Consolidated Statements of Operations.
(3) | Recorded initially at fair value as prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets and are valued using unobservable inputs (Level 3 inputs), primarily discounted cash flows, and due to their credit quality and short-term maturity the fair values approximated book values. The unobservable inputs consist of estimated credit losses and estimated discount rates, which both have an immaterial impact on the fair value calculations.
(4) | Excludes $650.3 million of trade accounts receivable sold, $488.1 million of cash and $13.9 million of net cash received prior to the amendment of the foreign asset-backed securitization program and under the previous North American asset-backed securitization program.
The asset-backed securitization programs require compliance with several covenants. The North American asset-based securitization program covenants include compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility. The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of November 30, 2018 and August 31, 2018, the Company was in compliance with all covenants under the asset-backed securitization programs. Trade Accounts Receivable Sale Programs The following is a summary of the nine trade accounts receivable sale programs with unaffiliated financial institutions where the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase, at a discount, on an ongoing basis:
Program | Maximum Amount (in millions)(1) |  |  | Type of Facility |  | Expiration Date
A | $ | 875.0 |  |  |  | Uncommitted |  | August 31, 2022(2)(3)
B | $ | 150.0 |  |  |  | Uncommitted |  | November 30, 2019(4)
C | 800.0 |  | CNY |  | Uncommitted |  | February 13, 2019
D | $ | 100.0 |  |  |  | Uncommitted |  | May 4, 2023(5)
E | $ | 50.0 |  |  |  | Uncommitted |  | August 25, 2019
F | $ | 150.0 |  |  |  | Uncommitted |  | January 25, 2019(6)
G | $ | 50.0 |  |  |  | Uncommitted |  | February 23, 2023(3)
H | $ | 100.0 |  |  |  | Uncommitted |  | August 10, 2019(7)
I | $ | 100.0 |  |  |  | Uncommitted |  | July 21, 2019(8)
(1) | Maximum amount available at any one time.
(2) | The maximum amount under the program will reduce to $650.0 million on February 1, 2019.
(3) | Any party may elect to terminate the agreement upon 15 days prior notice.
(4) | The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.
(5) | Any party may elect to terminate the agreement upon 30 days prior notice.
(6) | The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.
(7) | The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.
(8) | The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.
In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):
| Three months ended
| November 30, 2018 |  | November 30, 2017
Trade accounts receivable sold | $ | 1,834 |  |  | $ | 1,095 |
Cash proceeds received | $ | 1,826 |  |  | $ | 1,092 |
Pre-tax losses on sale of receivables(1) | $ | 8 |  |  | $ | 3 |
(1) | Recorded to other expense within the Condensed Consolidated Statement of Operations.

X
- References No definition available. + Details
Name: | us-gaap_TransfersAndServicingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -URI http://asc.fasb.org/topic&trid=2197590 + Details
Name: | us-gaap_TransfersAndServicingOfFinancialAssetsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration