Leases (Notes)

3 Months Ended

Nov. 30, 2020

Leases of Lessee Disclosure [Text Block]

Leases

We assess arrangements at inception to determine whether they contain a lease. An arrangement is considered to contain a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration. The right to control the use of an asset must include both (a) the right to obtain substantially all economic benefits associated with an identified asset and (b) the right to direct how and for what purpose the identified asset is used. Certain arrangements provide us with the right to use an identified asset; however, most of these arrangements are not considered to represent a lease as we do not control how and for what purpose the identified asset is used. For example, our supply agreements, warehousing and distribution services agreements, and transportation services agreements generally do not contain leases.

We lease property, plant and equipment used in our operations primarily under operating lease agreements and, to a lesser extent, under finance lease agreements. Our operating leases are primarily for railcars, equipment, vehicles and office space, many of which contain renewal options and escalation clauses. Renewal options are included as part of the right of use asset and liability when it is reasonably certain that we will exercise the renewal option; however, renewal options are generally not included as we are not reasonably certain to exercise such options.

Operating lease right of use assets and liabilities for operating leases are recognized at the lease commencement date for leases in excess of 12 months based on the present value of lease payments over the lease term. For measurement and classification of lease agreements, lease and nonlease components are grouped into a single lease component for all asset classes. Variable lease payments are excluded from measurement of right of use assets and liabilities and generally include payments for nonlease components such as maintenance costs, payments for leased assets beyond their noncancelable lease term and payments for other nonlease components such as sales tax. The discount rate used to calculate present value is our collateralized incremental borrowing rate or, if available, the rate implicit in the lease. The incremental borrowing rate is determined for each lease based primarily on its lease term. Certain lease arrangements include rental payments adjusted annually based on changes in an inflation index. Our lease arrangements generally do not contain residual value guarantees or material restrictive covenants.

Lease expense is recognized on a straight-line basis over the lease term. The components of lease expense recognized in our Condensed Consolidated Statements of Operations are as follows:


	Three Months Ended November 30,
	2020		2019
	(Dollars in thousands)
Operating lease expense	$	17,914	$	16,480
Finance lease expense:
Amortization of assets	2,055		2,189
Interest on lease liabilities	246		224
Short-term lease expense	4,356		3,343
Variable lease expense	678		116
Total net lease expense*	$	25,249	$	22,352

*Income related to sub-lease activity is not material and has been excluded from the table above.

Supplemental balance sheet information related to operating and finance leases is as follows:


	Balance Sheet Location	November 30, 2020			August 31, 2020
		(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets	Other assets	$	251,968		$	257,834
Liabilities
Current operating lease liabilities	Accrued expenses	56,531			57,200
Long-term operating lease liabilities	Other liabilities	198,481			203,691
Total operating lease liabilities		$	255,012		$	260,891

Finance leases
Assets
Finance lease assets	Property, plant and equipment	$	42,449		$	44,860
Liabilities
Current finance lease liabilities	Current portion of long-term debt	7,236			7,993
Long-term finance lease liabilities	Long-term debt	21,636			23,467
Total finance lease liabilities		$	28,872		$	31,460

Weighted average remaining lease term (in years)
Operating leases		8.2			8.3
Finance leases		6.2			6.0

Weighted average discount rate
Operating leases		3.10		%	3.11		%
Finance leases		3.41		%	3.33		%

Supplemental cash flow and other information related to operating and finance leases are as follows:


	Three Months Ended November 30,
	2020		2019
	(Dollars in thousands)
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	18,314	$	15,722
Operating cash flows from finance leases	246		224
Financing cash flows from finance leases	2,869		1,673
Supplemental noncash information:
Right of use assets obtained in exchange for lease liabilities	4,482		4,724
Right of use asset modifications	6,822		—

Maturities of lease liabilities as of November 30, 2020, were as follows:


	November 30, 2020
	Finance Leases		Operating Leases
	(Dollars in thousands)
Remainder of fiscal 2021	$	5,755	$	48,395
Fiscal 2022	7,049		53,090
Fiscal 2023	6,091		42,893
Fiscal 2024	3,482		34,307
Fiscal 2025	2,077		24,945
After fiscal 2025	8,076		96,394
Total maturities of lease liabilities	32,530		300,024
Less amounts representing interest	3,658		45,012
Present value of future minimum lease payments	28,872		255,012
Less current lease liabilities	7,236		56,531
Long-term lease liabilities	$	21,636	$	198,481