Debt

3 Months Ended

Nov. 30, 2021

Debt Disclosure [Abstract]

Debt

10. Debt

(In thousands)		As of November 30		As of February 28
Debt Description (1)	Maturity Date	2021		2021
Revolving credit facility (2)	June 2024	$	588,100	$	—
Term loan (2)	June 2024	300,000		300,000
Term loan (2)	October 2026	699,318		—
3.86% Senior notes	April 2023	100,000		100,000
4.17% Senior notes	April 2026	200,000		200,000
4.27% Senior notes	April 2028	200,000		200,000
Financing obligations	Various dates through February 2059	527,260		533,578
Non-recourse notes payable	Various dates through August 2028	15,416,457		13,764,808
Total debt		18,031,135		15,098,386
Less: current portion		(546,035)		(452,579)
Less: unamortized debt issuance costs		(26,236)		(25,888)
Long-term debt, net		$	17,458,864	$	14,619,919

 (1)    Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.

 (2)    Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), or the successor benchmark rate, the federal funds rate, or the prime rate, depending on the type of borrowing.

Revolving Credit Facility. Borrowings under our $1.45 billion unsecured revolving credit facility (the “credit facility”) are available for working capital and general corporate purposes. We pay a commitment fee on unused portions of the available funds. Borrowings under the credit facility are either due “on demand” or at maturity depending on the type of borrowing.  Borrowings with “on demand” repayment terms are presented as short-term debt, while amounts due at maturity are presented as long-term debt.  As of November 30, 2021, the unused capacity of $861.9 million was fully available to us. In December 2021, we exercised the accordion feature to increase the credit limit of this facility to $2.00 billion with no other material changes to the terms of the agreement.

Term Loans. On October 15, 2021, we entered into a term loan agreement for an aggregate principal amount of $700 million, which will mature on October 15, 2026. Borrowings under both our $300 million and $700 million term loans are available for working capital and general corporate purposes. Both term loans were classified as long-term debt, as no repayments are scheduled to be made within the next 12 months.   

Senior Notes. Borrowings under our unsecured senior notes totaling $500 million are available for working capital and general corporate purposes. These notes were classified as long-term debt as no repayments are scheduled to be made within the next 12 months.

Financing Obligations.  Financing obligations relate to stores subject to sale-leaseback transactions that did not qualify for sale accounting.  The financing obligations were structured at varying interest rates and generally have initial lease terms ranging from 15 to 20 years with payments made monthly.  We have not entered into any new sale-leaseback transactions since fiscal 2009. In the event the agreements are modified or extended beyond their original term, the related obligation is adjusted based on the present value of the revised future payments, with a corresponding change to the assets subject to these transactions. Upon modification, the amortization of the obligation is reset, resulting in more of the payments being applied to interest expense in the initial years following the modification.

Non-Recourse Notes Payable.  The non-recourse notes payable relate to auto loans receivable funded through non-recourse funding vehicles.  The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto loans receivable. The current portion of non-recourse notes payable represents principal payments that are due to be distributed in the following period.

Notes payable related to our asset-backed term funding transactions accrue interest predominantly at fixed rates and have scheduled maturities through August 2028, but may mature earlier, depending upon the repayment rate of the underlying auto loans receivable. 

Information on our funding vehicles for non-recourse notes payable as of November 30, 2021, are as follows:

(In billions)	Capacity
Warehouse facilities:
December 2021 expiration	$	0.18
February 2022 expiration	2.35
August 2022 expiration	2.30
Combined warehouse facility limit	$	4.83
Unused capacity	$	1.67
Non-recourse notes payable outstanding:
Warehouse facilities	$	3.16
Asset-backed term funding transactions	12.26
Non-recourse notes payable	$	15.42

We generally enter into warehouse facility agreements for one-year terms and typically renew the agreements annually. The return requirements of warehouse facility investors could fluctuate significantly depending on market conditions.  At renewal, the cost, structure and capacity of the facilities could change.  These changes could have a significant impact on our funding costs.

See Note 5 for additional information on the related auto loans receivable.

Capitalized Interest.    We capitalize interest in connection with the construction of certain facilities.  For the nine months ended November 30, 2021 and 2020, we capitalized interest of $5.0 million and $2.1 million, respectively.

Financial Covenants.  The credit facility, term loans and senior note agreements contain representations and warranties, conditions and covenants.  We must also meet financial covenants in conjunction with certain financing obligations.  The agreements governing our non-recourse funding vehicles contain representations and warranties, financial covenants and performance triggers.  As of November 30, 2021, we were in compliance with all financial covenants and our non-recourse funding vehicles were in compliance with the related performance triggers.