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us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-08-31 iso4217:CNY iso4217:USD xbrli:pure xbrli:shares iso4217:USD xbrli:shares jbl:customer jbl:country
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-14063
 
https://cdn.kscope.io/2ee14239ecbaf6c076e27913723877f5-jabillogoa05.jpg
JABIL INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
38-1886260
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
10560 Dr. Martin Luther King, Jr. Street North, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
(727) 577-9749
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value per share
JBL
New York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
  
Smaller reporting company
 
 
Emerging growth company

1


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of March 24, 2020, there were 150,717,416 shares of the registrant’s Common Stock outstanding.

2


JABIL INC. AND SUBSIDIARIES INDEX
 
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 




PART I—FINANCIAL INFORMATION
 
Item 1.
Financial Statements
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

1


 
February 29,
2020
(Unaudited)
 
August 31,
2019
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
696,745

 
$
1,163,343

Accounts receivable, net of allowance for doubtful accounts of $30,191 as of February 29, 2020 and $17,221 as of August 31, 2019
2,314,055

 
2,745,226

Contract assets
1,057,656

 
911,940

Inventories, net
3,339,890

 
3,023,003

Prepaid expenses and other current assets
569,493

 
501,573

Total current assets
7,977,839

 
8,345,085

Property, plant and equipment, net of accumulated depreciation of $4,344,338 as of February 29, 2020 and $4,110,496 as of August 31, 2019
3,462,038

 
3,333,750

Operating lease right-of-use asset
373,413

 

Goodwill
700,597

 
622,255

Intangible assets, net of accumulated amortization of $367,299 as of February 29, 2020 and $337,841 as of August 31, 2019
234,977

 
256,853

Deferred income taxes
194,468

 
198,827

Other assets
196,346

 
213,705

Total assets
$
13,139,678


$
12,970,475

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments of notes payable and long-term debt
$
637,841

 
$
375,181

Accounts payable
4,652,138

 
5,166,780

Accrued expenses
3,015,129

 
2,990,144

Current operating lease liabilities
100,033

 

Total current liabilities
8,405,141


8,532,105

Notes payable and long-term debt, less current installments
2,086,359

 
2,121,284

Other liabilities
315,875

 
163,821

Non-current operating lease liabilities
311,879

 

Income tax liabilities
143,161

 
136,689

Deferred income taxes
118,123

 
115,818

Total liabilities
11,380,538


11,069,717

Commitments and contingencies

 

Equity:
 
 
 
Jabil Inc. stockholders’ equity:
 
 
 
Preferred stock, $0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding

 

Common stock, $0.001 par value, authorized 500,000,000 shares; 263,299,124 and 260,406,796 shares issued and 151,407,526 and 153,520,380 shares outstanding as of February 29, 2020 and August 31, 2019, respectively
263

 
260

Additional paid-in capital
2,363,839

 
2,304,552

Retained earnings
2,048,954

 
2,037,037

Accumulated other comprehensive loss
(102,943
)
 
(82,794
)
Treasury stock at cost, 111,891,598 and 106,886,416 shares as of February 29, 2020 and August 31, 2019, respectively
(2,563,282
)
 
(2,371,612
)
Total Jabil Inc. stockholders’ equity
1,746,831


1,887,443

Noncontrolling interests
12,309

 
13,315

Total equity
1,759,140

 
1,900,758

Total liabilities and equity
$
13,139,678

 
$
12,970,475

See accompanying notes to Condensed Consolidated Financial Statements.

2


JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
 
Three months ended
 
Six months ended
 
February 29,
2020
 
February 28,
2019
 
February 29,
2020
 
February 28,
2019
Net revenue
$
6,125,083

 
$
6,066,990

 
$
13,630,781

 
$
12,573,265

Cost of revenue
5,694,958

 
5,612,116

 
12,646,817

 
11,598,741

Gross profit
430,125

 
454,874

 
983,964

 
974,524

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
285,024

 
282,142

 
613,923

 
560,268

Research and development
11,290

 
10,155

 
22,060

 
21,298

Amortization of intangibles
13,577

 
7,777

 
29,717

 
15,423

Restructuring and related charges
29,604

 
817

 
74,855

 
6,842

Operating income
90,630

 
153,983

 
243,409

 
370,693

Impairment on securities
12,205

 

 
12,205

 

Other expense
8,501

 
11,757

 
19,673

 
25,307

Interest income
(5,336
)
 
(4,760
)
 
(11,280
)
 
(9,139
)
Interest expense
46,183

 
46,160

 
91,094

 
88,812

Income before income tax
29,077

 
100,826

 
131,717

 
265,713

Income tax expense
31,658

 
33,219

 
93,584

 
74,032

Net (loss) income
(2,581
)
 
67,607

 
38,133

 
191,681

Net income attributable to noncontrolling interests, net of tax
702

 
253

 
994

 
727

Net (loss) income attributable to Jabil Inc.
$
(3,283
)
 
$
67,354

 
$
37,139

 
$
190,954

(Loss) earnings per share attributable to the stockholders of Jabil Inc.:
 
 
 
 
 
 
 
Basic
$
(0.02
)
 
$
0.44

 
$
0.24

 
$
1.21

Diluted
$
(0.02
)
 
$
0.43

 
$
0.24

 
$
1.19

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
152,058

 
154,725

 
152,579

 
158,160

Diluted
152,058

 
156,737

 
156,171

 
160,413

See accompanying notes to Condensed Consolidated Financial Statements.

3


JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
 
Three months ended
 
Six months ended
 
February 29,
2020
 
February 28,
2019
 
February 29,
2020
 
February 28,
2019
Net (loss) income
$
(2,581
)
 
$
67,607

 
$
38,133

 
$
191,681

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Change in foreign currency translation
(10,346
)
 
12,535

 
(10,875
)
 
12,912

Change in derivative instruments:
 
 
 
 
 
 
 
Change in fair value of derivatives
(9,474
)
 
2,386

 
1,471

 
(16,083
)
Adjustment for net (gains) losses realized and included in net income
(3,548
)
 
3,501

 
3,335

 
17,686

Total change in derivative instruments
(13,022
)
 
5,887

 
4,806

 
1,603

Unrealized (loss) gain on available for sale securities
(5,253
)
 
273

 
(14,080
)
 
(8,472
)
Actuarial gain

 

 

 
103

Total other comprehensive (loss) income
(28,621
)
 
18,695

 
(20,149
)
 
6,146

Comprehensive (loss) income
$
(31,202
)
 
$
86,302

 
$
17,984

 
$
197,827

Comprehensive income attributable to noncontrolling interests
702

 
253

 
994

 
727

Comprehensive (loss) income attributable to Jabil Inc.
$
(31,904
)
 
$
86,049

 
$
16,990

 
$
197,100

See accompanying notes to Condensed Consolidated Financial Statements.

4


JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
 
Three months ended
 
Six months ended
 
February 29,
2020
 
February 28,
2019
 
February 29,
2020
 
February 28,
2019
Total stockholders' equity, beginning balances
$
1,849,293

 
$
1,905,513

 
$
1,900,758

 
$
1,963,380

Common stock:
 
 
 
 
 
 
 
Beginning balances
262

 
259

 
260

 
257

Shares issued under employee stock purchase plan
1

 
1

 
1

 
1

Vesting of restricted stock

 

 
2

 
2

Ending balances
263

 
260

 
263

 
260

Additional paid-in capital:
 
 
 
 
 
 
 
Beginning balances
2,332,307

 
2,235,827

 
2,304,552

 
2,218,673

Shares issued under employee stock purchase plan
16,179

 
14,579

 
16,179

 
14,587

Vesting of restricted stock

 

 
(2
)
 
(2
)
Recognition of stock-based compensation
15,353

 
14,560

 
43,110

 
31,708

Ending balances
2,363,839

 
2,264,966

 
2,363,839

 
2,264,966

Retained earnings:
 
 
 
 
 
 
 
Beginning balances
2,064,758

 
1,911,451

 
2,037,037

 
1,760,097

Declared dividends
(12,521
)
 
(12,705
)
 
(25,222
)
 
(25,806
)
Cumulative effect adjustment for adoption of new accounting standards

 

 

 
40,855

Net (loss) income attributable to Jabil Inc.
(3,283
)
 
67,354

 
37,139

 
190,954

Ending balances
2,048,954

 
1,966,100

 
2,048,954

 
1,966,100

Accumulated other comprehensive loss:
 
 
 
 
 
 
 
Beginning balances
(74,322
)
 
(31,948
)
 
(82,794
)
 
(19,399
)
Other comprehensive (loss) income
(28,621
)
 
18,695

 
(20,149
)
 
6,146

Ending balances
(102,943
)
 
(13,253
)
 
(102,943
)
 
(13,253
)
Treasury stock:
 
 
 
 
 
 
 
Beginning balances
(2,487,319
)
 
(2,223,673
)
 
(2,371,612
)
 
(2,009,371
)
Purchases of treasury stock under employee stock plans
(3,693
)
 
(1,489
)
 
(23,010
)
 
(11,204
)
Treasury shares purchased
(72,270
)
 
(145,736
)
 
(168,660
)
 
(350,323
)
Ending balances
(2,563,282
)
 
(2,370,898
)
 
(2,563,282
)
 
(2,370,898
)
Noncontrolling interests:
 
 
 
 
 
 
 
Beginning balances
13,607

 
13,597

 
13,315

 
13,123

Net income attributable to noncontrolling interests
702

 
253

 
994

 
727

Acquisition of noncontrolling interests

 
1,112

 

 
1,112

Disposition of noncontrolling interests

 
(1,785
)
 

 
(1,785
)
Declared dividends to noncontrolling interests
(2,000
)
 
(1,500
)
 
(2,000
)
 
(1,500
)
Ending balances
12,309

 
11,677

 
12,309

 
11,677

Total stockholders' equity, ending balances
$
1,759,140

 
$
1,858,852

 
$
1,759,140

 
$
1,858,852


See accompanying notes to Condensed Consolidated Financial Statements.

5


JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
 
Six months ended
 
February 29,
2020
 
February 28,
2019
Cash flows provided by operating activities:
 
 
 
Net income
$
38,133

 
$
191,681

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
402,347

 
381,510

Restructuring and related charges
33,061

 
(3,212
)
Recognition of stock-based compensation expense and related charges
45,332

 
32,946

Deferred income taxes
3,087

 
23,921

Provision for allowance for doubtful accounts
10,185

 
5,598

Other, net
13,838

 
38,559

Change in operating assets and liabilities, exclusive of net assets acquired:
 
 
 
Accounts receivable
424,971

 
(365,192
)
Contract assets
(63,302
)
 
(815,144
)
Inventories
(279,664
)
 
225,036

Prepaid expenses and other current assets
(62,881
)
 
(4,895
)
Other assets
(8,438
)
 
(10,170
)
Accounts payable, accrued expenses and other liabilities
(472,503
)
 
407,127

Net cash provided by operating activities
84,166

 
107,765

Cash flows used in investing activities:
 
 
 
Acquisition of property, plant and equipment
(448,765
)
 
(537,140
)
Proceeds and advances from sale of property, plant and equipment
36,624

 
144,968

Cash paid for business and intangible asset acquisitions, net of cash
(141,195
)
 
(80,778
)
Cash receipts on sold receivables

 
96,846

Other, net
(2,013
)
 
(13,504
)
Net cash used in investing activities
(555,349
)

(389,608
)
Cash flows provided by (used in) financing activities:
 
 
 
Borrowings under debt agreements
5,063,358

 
6,182,931

Payments toward debt agreements
(4,835,697
)
 
(6,046,181
)
Payments to acquire treasury stock
(168,660
)
 
(350,323
)
Dividends paid to stockholders
(26,280
)
 
(27,422
)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan
16,179

 
14,587

Treasury stock minimum tax withholding related to vesting of restricted stock
(23,010
)
 
(11,204
)
Other, net
(11,617
)
 
(1,500
)
Net cash provided by (used in) financing activities
14,273

 
(239,112
)
Effect of exchange rate changes on cash and cash equivalents
(9,688
)
 
12,063

Net decrease in cash and cash equivalents
(466,598
)

(508,892
)
Cash and cash equivalents at beginning of period
1,163,343

 
1,257,949

Cash and cash equivalents at end of period
$
696,745

 
$
749,057

See accompanying notes to Condensed Consolidated Financial Statements.

6


JABIL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in the Annual Report on Form 10-K of the Company for the fiscal year ended August 31, 2019. Results for the six months ended February 29, 2020 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2020.
2. Trade Accounts Receivable Sale Programs
The Company regularly sells designated pools of high credit quality trade accounts receivable under uncommitted trade accounts receivable sale programs to unaffiliated financial institutions without recourse. As these accounts receivable are sold without recourse, the Company does not retain the associated risks following the transfer of such accounts receivable to the respective financial institutions. The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the trade accounts receivable sale programs. Servicing fees related to each of the trade accounts receivable sale programs recognized during the three months and six months ended February 29, 2020 and February 28, 2019 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 trade accounts receivable sale programs are accounted for as sales and, accordingly, net receivables sold under the trade accounts receivable sale 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 following is a summary of the 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
$
500.0

 
 
Uncommitted
 
December 5, 2020(2)
B
$
150.0

 
 
Uncommitted
 
November 30, 2020(3)
C
800.0

CNY
 
Uncommitted
 
June 30, 2020
D
$
150.0

 
 
Uncommitted
 
May 4, 2023(4)
E
$
50.0

 
 
Uncommitted
 
August 25, 2020
F
$
150.0

 
 
Uncommitted
 
January 25, 2021(5)
G
$
50.0

 
 
Uncommitted
 
February 23, 2023(6)
H
$
100.0

 
 
Uncommitted
 
August 10, 2020(7)
I
$
100.0

 
 
Uncommitted
 
July 21, 2020(8)
J
$
650.0

 
 
Uncommitted
 
December 4, 2020(9)
K
$
110.0

 
 
Uncommitted
 
April 11, 2020(10)
L
100.0

CHF
 
Uncommitted
 
December 5, 2020(2)
 
(1) 
Maximum amount available at any one time.
(2) 
The program will be automatically extended each year through December 5, 2025 unless either party provides 30 days notice of termination.

7


(3) 
The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.
(4) 
Any party may elect to terminate the agreement upon 30 days prior notice.
(5) 
The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.
(6) 
Any party may elect to terminate the agreement upon 15 days prior notice.
(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.
(9) 
The program will be automatically extended each year through December 5, 2024 unless either party provides 30 days notice of termination.
(10) 
The program will be automatically extended each year through April 11, 2025 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
 
Six months ended
 
February 29, 2020
 
February 28, 2019
 
February 29, 2020
 
February 28, 2019
Trade accounts receivable sold
$
2,201

 
$
1,719

 
$
4,163

 
$
3,553

Cash proceeds received
$
2,196

 
$
1,712

 
$
4,153

 
$
3,538

Pre-tax losses on sale of receivables(1)
$
5

 
$
7

 
$
10

 
$
15

 
(1) 
Recorded to other expense within the Condensed Consolidated Statement of Operations.
3. Inventories
Inventories consist of the following (in thousands):
 
February 29, 2020
 
August 31, 2019
Raw materials
$
2,482,072

 
$
2,310,081

Work in process
462,549

 
468,217

Finished goods
455,295

 
314,258

Reserve for excess and obsolete inventory
(60,026
)
 
(69,553
)
Inventories, net
$
3,339,890

 
$
3,023,003


4. Leases
Effective September 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases (Topic 842) using the modified retrospective approach and also elected to apply the package of practical expedients, which among other things, allows entities to maintain the historical lease classification for existing leases. The Company has lease agreements that contain both lease and non-lease components. For lease agreements entered into or reassessed after the adoption of ASU 2016-02, the Company has elected the practical expedient to combine lease and non-lease components for building and real estate leases.
The Company primarily has leases for buildings and real estate with lease terms ranging from 1 year to 36 years. Leases for other classes of assets are not significant. For any leases with an initial term in excess of 12 months, the Company determines whether an arrangement is a lease at contract inception by evaluating if the contract conveys the right to use and control the specific property or equipment. Certain lease agreements contain purchase or renewal options. These options are included in the lease term when it is reasonably certain that the Company will exercise that option. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants.
Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized based on the present value of future lease payments over the lease term at the lease commencement date. When determining the present value of future payment, the Company uses the incremental borrowing rate when the implicit rate is not readily determinable. Any payment deemed probable under residual value guarantees is included in lease payments. Any variable payments, other than those that depend on an index or rate, are excluded from right-of-use assets and lease liabilities.
Leases with an initial term of 12 months or less are not recorded as right-of-use assets and lease liabilities in the Consolidated Balance Sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term.

8


Upon adoption of ASU 2016-02, the Company recorded $414.6 million and $437.5 million of right-of-use assets and lease liabilities, respectively, related to its existing operating lease portfolio. The accounting for the Company's finance leases remained substantially unchanged and balances were not significant on the adoption date. The adoption of this standard did not have a material impact on the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.
The following table sets forth the amount of lease assets and lease liabilities included on the Company's Condensed Consolidated Balance Sheets, as of the period indicated (in thousands):
 
 
Financial Statement Line Item
 
February 29, 2020
Assets
 
 
 
 
Operating lease assets (1)
 
Operating lease right-of-use assets
 
$
373,413

Finance lease assets (2)
 
Property, plant and equipment, net
 
151,401

Total lease assets
 
 
 
$
524,814

Liabilities
 
 
 
 
Current
 
 
 
 
Operating lease liabilities
 
Current operating lease liabilities
 
$
100,033

Finance lease liabilities
 
Accrued expenses
 
6,906

Non-current
 
 
 
 
Operating lease liabilities
 
Non-current operating lease liabilities
 
311,879

Finance lease liabilities
 
Other liabilities
 
156,798

Total lease liabilities
 
 
 
$
575,616

 
(1) 
Net of accumulated amortization of $49.2 million.
(2) 
Net of accumulated amortization of $9.6 million.
The following table is a summary of expenses related to leases included on the Company's Condensed Consolidated Statements of Operations, for the periods indicated (in thousands):
 
Three months ended
 
Six months ended
 
February 29, 2020
 
February 29, 2020
Operating lease cost
$
27,810

 
$
55,546

Finance lease cost
 
 
 
Amortization of leased assets
1,445

 
2,581

Interest on lease liabilities
1,254

 
2,443

Other
1,655

 
4,183

Net lease cost(1)

$
32,164

 
$
64,753

 
(1) 
Lease costs are primarily recognized in cost of revenue.
The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company's leases, as of the period indicated:
 
February 29, 2020
 
Weighted-average remaining lease term
 
Weighted-average discount rate
Operating leases
5.5 years
 
3.22
%
Finance leases
6.3 years
 
4.31
%

The following table sets forth other supplemental information related to the Company's lease portfolio (in thousands):

9


 
Six months ended
 
February 29, 2020
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows for operating leases(1)
$
55,592

Operating cash flows for finance leases(1)
2,443

Financing activities for finance leases(2)
2,808

Non-cash right-of-use assets obtained in exchange for new lease liabilities:
 
Operating leases
34,213

Finance leases
111,591

 
(1) 
Included in accounts payable, accrued expenses and other liabilities in Operating Activities of the Company's Condensed Consolidated Statements of Cash Flows.
(2) 
Included in payments toward debt agreements in Financing Activities of the Company's Condensed Consolidated Statements of Cash Flows.
The future minimum lease payments under operating and finance leases as of February 29, 2020 were as follows (in thousands):
Twelve months ended February 29,
Operating Leases(1)
 
Finance Leases
 
Total
2020
$
110,692

 
$
11,849

 
$
122,541

2021
89,479

 
12,375

 
101,854

2022
69,928

 
11,744

 
81,672

2023
53,400

 
11,879

 
65,279

2024
41,472

 
15,644

 
57,116

Thereafter
92,529

 
128,763

 
221,292

Total minimum lease payments
$
457,500

 
$
192,254

 
$
649,754

Less: Interest
(45,588
)
 
(28,550
)
 
(74,138
)
Present value of lease liabilities
$
411,912

 
$
163,704

 
$
575,616

 
(1) 
Excludes $28.2 million of payments related to leases signed but not yet commenced. Additionally, certain leases signed but not yet commenced contain residual value guarantees and purchase options not deemed probable.
As disclosed in the Company’s Form 10-K for the fiscal year ended August 31, 2019, the future minimum lease payments of non-cancelable operating leases prior to the adoption of ASU 2016-02 were as follows (in thousands):
Fiscal Year Ending August 31,
Amount
2020
$
118,312

2021
102,915

2022
84,729

2023
63,206

2024
51,091

Thereafter
182,932

Total minimum lease payments
$
603,185


Total operating lease expense prior to the adoption of ASU 2016-02 was approximately $125.4 million, $130.2 million and $117.2 million for fiscal years 2019, 2018 and 2017, respectively.


10


5. Notes Payable and Long-Term Debt
Notes payable and long-term debt outstanding as of February 29, 2020 and August 31, 2019 are summarized below (in thousands): 
 
 
Maturity
Date
 
February 29,
2020
 
August 31,
2019
5.625% Senior Notes
 
Dec 15, 2020
 
$
399,332

 
$
398,886

4.700% Senior Notes
 
Sep 15, 2022
 
498,332

 
498,004

4.900% Senior Notes
 
Jul 14, 2023
 
299,178

 
299,057

3.950% Senior Notes
 
Jan 12, 2028
 
495,132

 
494,825

3.600% Senior Notes(1)
 
Jan 15, 2030
 
494,470

 

Borrowings under credit facilities(2)(3)
 
Jan 22, 2023 and Jan 22, 2025
 

 

Borrowings under commercial paper program(4)
 
(4) 
 
237,661

 

Borrowings under loans(2)
 
Jan 22, 2025
 
300,095

 
805,693

Total notes payable and long-term debt
 
 
 
2,724,200

 
2,496,465

Less current installments of notes payable and long-term debt
 
 
 
637,841

 
375,181

Notes payable and long-term debt, less current installments
 
 
 
$
2,086,359

 
$
2,121,284

 
(1) 
On January 15, 2020, the Company issued $500.0 million of publicly registered 3.600% Senior Notes due 2030 (the “3.600% Senior Notes”). The net proceeds from the offering were used for the repayment of term loan indebtedness.
(2) 
On January 22, 2020, the Company entered into a senior unsecured credit agreement which provides for: (i) a Revolving Credit Facility in the initial amount of $2.7 billion, of which $700.0 million expires on January 22, 2023 and $2.0 billion expires on January 22, 2025 and (ii) a $300.0 million Term Loan Facility which expires on January 22, 2025, (collectively the “Credit Facility”). Interest and fees on the Credit Facility advances are based on the Company’s non-credit enhanced long-term senior unsecured debt rating as determined by Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings. In connection with the Company’s entry into the Credit Facility, the Company terminated the Company’s amended and restated five-year credit agreement dated November 8, 2017 and the credit agreement dated August 24, 2018.

During the three months ended February 29, 2020, the interest rates on the Revolving Credit Facility ranged from 2.5% to 3.0% and the Term Loan Facility ranged from 2.9% to 3.2%. Interest is charged at a rate equal to (a) for the Revolving Credit Facility, either 0.000% to 0.450% above the base rate or 0.975% to 1.450% above the Eurocurrency rate and (b) for the Term Loan Facility, either 0.125% to 0.750% above the base rate or 1.125% to 1.750% above the Eurocurrency rate. The base rate represents the greatest of: (i) Citibank, N.A.’s prime rate, (ii) 0.50% above the federal funds rate, and (iii) 1.0% above one-month LIBOR, but not less than zero. The Eurocurrency rate represents adjusted LIBOR or adjusted CDOR, as applicable, for the applicable interest period, but not less than zero. Fees include a facility fee based on the revolving credit commitments of the lenders and a letter of credit fee based on the amount of outstanding letters of credit.
(3) 
As of February 29, 2020, the Company has $3.1 billion in available unused borrowing capacity under its revolving credit facilities, net of outstanding commercial paper borrowings.
(4) 
The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program. The revolving credit facility supports commercial paper outstanding, if any. As of February 29, 2020, the outstanding commercial paper has maturities of 90 days or less. During the three months ended February 29, 2020, the interest rates on the commercial paper program ranged from 2.0% to 2.6%.
Debt Covenants
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900% Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 5.625%, 4.700%, 4.900%, 3.950% or 3.600% Senior Notes upon a change of control. As of February 29, 2020 and August 31, 2019, the Company was in compliance with its debt covenants.

11


Fair Value
Refer to Note 17 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.
6. Asset-Backed Securitization Programs
The Company continuously sells designated pools of trade accounts receivable, at a discount, under its foreign asset-backed securitization program and its North American asset-backed securitization program to special purpose entities, which in turn sell certain of the foreign asset-backed receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the North American asset-backed receivables to conduits administered by an unaffiliated financial institution on a monthly basis.
The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the asset-backed securitization programs. Servicing fees related to each of the asset-backed securitization programs recognized during the three months and six months ended February 29, 2020 and February 28, 2019 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 asset-backed securitization programs are accounted for as sales and, accordingly, net receivables sold under the asset-backed securitization 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 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. As of February 29, 2020, the special purpose entity has liabilities for which creditors do not have recourse to the general credit of the Company (primary beneficiary). The liabilities cannot exceed the maximum amount of net cash proceeds under the foreign asset-backed securitization program.
The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount approximately equal to the net cash proceeds under the program. No liability has been recorded for obligations under the guarantee as of February 29, 2020.
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. Certain unsold receivables covering the maximum amount of net cash proceeds available under the North American asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of February 29, 2020.
Following is a summary of the asset-backed securitization programs and key terms:    
 
Maximum Amount of
Net Cash Proceeds (in millions)
(1)(2)
 
Expiration
Date
North American
$
390.0

 
November 22, 2021
Foreign
$
400.0

 
September 30, 2021
 
(1) 
Maximum amount available at any one time.
(2) 
As of February 29, 2020, the Company had up to $76.3 million in available liquidity under its asset-backed securitization programs.
In connection with the asset-backed securitization programs, the Company recognized the following (in millions):

12


<
 
Three months ended
 
Six months ended
 
February 29, 2020
 
February 28, 2019
 
February 29, 2020
 
February 28, 2019(3)
Trade accounts receivable sold
$
1,095

 
$
1,078

 
$
2,257

 
$