Leases (Notes)

6 Months Ended

Feb. 28, 2021

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				Six Months Ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
	(Dollars in thousands)
Operating lease expense	$	18,060	$	20,538	$	35,974	$	36,098
Finance lease expense:
Amortization of assets	1,890		1,073		3,945		3,262
Interest on lease liabilities	230		261		476		485
Short-term lease expense	4,068		6,317		8,424		9,660
Variable lease expense	863		710		1,541		913
Total net lease expense*	$	25,111	$	28,899	$	50,360	$	50,418

*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	February 28, 2021			August 31, 2020
		(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets	Other assets	$	265,684		$	257,834
Liabilities
Current operating lease liabilities	Accrued expenses	58,766			57,200
Long-term operating lease liabilities	Other liabilities	210,440			203,691
Total operating lease liabilities		$	269,206		$	260,891

Finance leases
Assets
Finance lease assets	Property, plant and equipment	$	40,502		$	44,860
Liabilities
Current finance lease liabilities	Current portion of long-term debt	6,827			7,993
Long-term finance lease liabilities	Long-term debt	20,379			23,467
Total finance lease liabilities		$	27,206		$	31,460

Weighted average remaining lease term (in years)
Operating leases		8.1			8.3
Finance leases		6.2			6.0

Weighted average discount rate
Operating leases		3.05		%	3.11		%
Finance leases		3.37		%	3.33		%

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


	Six Months Ended
	February 28, 2021		February 29, 2020
	(Dollars in thousands)
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	37,460	$	28,368
Operating cash flows from finance leases	476		485
Financing cash flows from finance leases	4,602		3,285
Supplemental noncash information:
Right of use assets obtained in exchange for lease liabilities	27,919		18,162
Right of use asset modifications	18,038		3,967

Maturities of lease liabilities as of February 28, 2021, were as follows:


	February 28, 2021
	Finance Leases		Operating Leases
	(Dollars in thousands)
Remainder of fiscal 2021	$	3,775	$	35,958
Fiscal 2022	7,051		62,491
Fiscal 2023	6,121		48,834
Fiscal 2024	3,494		38,956
Fiscal 2025	2,086		28,928
After fiscal 2025	8,113		105,485
Total maturities of lease liabilities	30,640		320,652
Less amounts representing interest	3,434		51,446
Present value of future minimum lease payments	27,206		269,206
Less current lease liabilities	6,827		58,766
Long-term lease liabilities	$	20,379	$	210,440