Leases

12 Months Ended

Aug. 31, 2021

Note 5 - Leases

The Company’s operating leases for real property underlying certain auto parts stores, metals recycling facilities, and administrative offices generally have non-cancellable lease terms of 5 to 10 years, and the significant majority contain multiple renewal options for a further 5 to 20 years. Renewal options which the Company is reasonably certain to exercise are included in the measurement of lease term. The Company’s finance leases and other operating leases involve primarily transportation equipment assets, have non-cancellable lease terms of less than 10 years and usually do not include renewal options.

The Company’s fiscal 2021 total lease cost was $30 million, consisting primarily of operating lease expense of $24 million and short-term lease expense of $5 million. The Company’s fiscal 2020 total lease cost was $28 million, consisting primarily of operating lease expense of $23 million and short-term lease expense of $4 million. The other components of the Company’s total lease cost for each of fiscal 2021 and 2020, including finance lease amortization and interest expense, variable lease expense, and sublease income, were not material both individually and in aggregate. The substantial majority of the Company’s total lease cost for each of fiscal 2021 and 2020 is presented within cost of goods sold in the Consolidated Statements of Operations. Rent expense was $27 million for fiscal 2019.

Finance lease assets and liabilities consisted of the following as of August 31 (in thousands):

	Balance Sheet Classification	2021		2020
Assets:
Finance lease right-of-use assets⁽¹⁾	Property, plant and equipment, net	$	5,422	$	6,274
Liabilities:
Finance lease liabilities - current	Short-term borrowings	$	1,464	$	1,341
Finance lease liabilities - noncurrent	Long-term debt, net of current maturities		5,127		6,167
Total finance lease liabilities		$	6,591	$	7,508

(1)	Presented net of accumulated amortization of $2 million and $1 million as of August 31, 2021 and 2020, respectively.

The weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of August 31:

	2021					2020
	Weighted Average Remaining Lease Term (Years)		Weighted Average Discount Rate			Weighted Average Remaining Lease Term (Years)		Weighted Average Discount Rate
Operating leases		9.7		3.37	%		10.2		3.37	%
Finance leases		5.2		7.78	%		6.0		8.22	%

Maturities of lease liabilities by fiscal year as of August 31, 2021 were as follows (in thousands):

Year Ending August 31,	Finance Leases			Operating Leases
2022	$	1,865		$	25,519
2023		1,792			24,021
2024		1,498			20,000
2025		714			14,703
2026		595			11,351
Thereafter		1,286			64,784
Total lease payments		7,750			160,378
Less amounts representing interest		(1,159	)		(25,796	)
Total lease liabilities		6,591			134,582
Less current maturities		(1,464	)		(21,417	)
Lease liabilities, net of current maturities	$	5,127		$	113,165

Supplemental cash flow information and non-cash activity related to leases are as follows (in thousands):

	Year Ended August 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	24,154	$	22,225
Operating cash flows for finance leases	$	498	$	628
Financing cash flows for finance leases	$	1,332	$	1,336
Lease liabilities arising from obtaining right-of-use assets⁽¹⁾:
Operating leases	$	8,325	$	34,586
Finance leases	$	445	$	1,230

(1)	Amounts include new leases and adjustments to lease balances as a result of remeasurement.