Leases

3 Months Ended

Nov. 30, 2019

Leases

Note 14 – Leases

Lessor

Equipment on operating leases is reported net of accumulated depreciation of $35.1 million and $44.2 million as of November 30, 2019 and August 31, 2019, respectively. Depreciation expense was $3.5 million for the three months ended November 30, 2019. In addition, certain railcar equipment leased-in by the Company on operating leases is subleased to customers under non-cancelable operating leases with lease terms ranging from one to five years. Operating lease rental revenues included in the Company’s Statement of Income for the three months ended November 30, 2019 was $11.4 million, which included $3.7 million of revenue as a result of daily, monthly or car hire utilization arrangements.

Aggregate minimum future amounts receivable under all non-cancelable operating leases and subleases at November 30, 2019, will mature as follows:

(in thousands)
Remaining nine months of 2020		24,502
2021		22,541
2022		21,019
2023		15,219
2024		11,371
Thereafter		22,005
	$	116,657

Lessee

The Company leases railcars, real estate, and certain equipment under operating and, to a lesser extent, finance lease arrangements. As of and for the three months ended November 30, 2019, finance leases were not a material component of the Company’s lease portfolio. The Company’s real estate and equipment leases have remaining lease terms ranging from less than one year to 79 years, with some including options to extend up to 15 years. The Company recognizes a lease liability and corresponding right-of-use (ROU) asset based on the present value of lease payments. To determine the present value of lease payments, as most of its leases do not provide a readily determinable implicit rate, the Company’s incremental borrowing rate is used to discount the lease payments based on information available at lease commencement date. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when estimating its incremental borrowing rate.

The components of operating lease costs were as follows:

(in thousands)	Three months ended November 30, 2019
Operating lease expense	$	3,422
Short-term lease expense		1,406
Total	$	4,828

Aggregate minimum future amounts payable under operating leases having initial or remaining non-cancelable terms at November 30, 2019 will mature as follows:

(in thousands)
Remaining nine months of 2020	$	9,355
2021		8,810
2022		5,765
2023		5,264
2024		3,814
Thereafter		10,367
Total lease payments	$	43,375
Less: Imputed interest		(4,978	)
Total lease obligations	$	38,397

The table below presents additional information related to the Company’s leases:

Weighted average remaining lease term
Operating leases	13.8 years
Weighted average discount rate
Operating leases	3.2	%

Supplemental cash flow information related to leases were as follows:

(in thousands)	Three months ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,641