Notes Payable, Long-Term Debt and Capital Lease Obligations

9 Months Ended

May 31, 2016

Notes Payable, Long-Term Debt and Capital Lease Obligations [Abstract]

Notes Payable, Long-Term Debt and Capital Lease Obligations

7. Notes Payable, Long-Term Debt and Capital Lease Obligations

	Notes payable, long-term debt and capital lease obligations outstanding at May 31, 2016 and August 31, 2015 are
summarized below (in thousands):
			May 31,		August 31,
			2016		2015
	7.750% Senior Notes due 2016		$	311,667	$	310,378
	8.250% Senior Notes due 2018			399,333		399,047
	5.625% Senior Notes due 2020			400,000		400,000
	4.700% Senior Notes due 2022			500,000		500,000
	Borrowings under credit facilities			64		323
	Borrowings under loans(a)			510,794		30,410
	Capital lease obligations			28,758		28,156
	Fair value adjustment related to terminated interest rate swaps on
		the 7.750% Senior Notes		297		2,077
	Total notes payable, long-term debt and capital lease obligations			2,150,913		1,670,391
	Less current installments of notes payable, long-term debt and
		capital lease obligations		359,885		323,833
	Notes payable, long-term debt and capital lease obligations, less
		current installments	$	1,791,028	$	1,346,558

The $312.0 million of 7.750% senior unsecured notes, $400.0 million of 8.250% senior unsecured notes, $400.0 million of 5.625% senior unsecured notes and $500.0 million of 4.700% senior unsecured notes outstanding are carried at the principal amount of each note, less any unamortized discount. The estimated fair values of these senior notes were approximately $313.9 million, $439.1 million, $426.0 million and $500.5 million, respectively, at May 31,2016. The fair value estimates are based upon observable market data (Level 2 criteria).

^(a)On July 6, 2015, the Company entered into an amended and restated senior unsecured five year credit agreement. The credit agreement provides for a revolving credit facility (the “Revolving Credit Facility”) in the initial amount of $1.5 billion, which may, subject to the lenders’ discretion, potentially be increased up to $2.0 billion and a $500.0 million five year delayed draw term loan facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facility”). On September 22, 2015, the Company borrowed $500.0 million against the Term Loan Facility.

During the third quarter of fiscal year 2012, the Company entered into a master lease agreement with a variable interest entity (the “VIE”) whereby it sells to and subsequently leases back from the VIE up to $60.0 million in certain machinery and equipment for a period of up to five years. In connection with this transaction, the Company holds a variable interest in the VIE, which was designed to hold debt obligations payable to third-party creditors. The proceeds from such debt obligations are utilized to finance the purchase of the machinery and equipment that is then leased by the Company. The Company is the primary beneficiary of the VIE as it has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Therefore, the Company consolidates the financial statements of the VIE and eliminates all intercompany transactions. At May 31,2016, the VIE had approximately $21.3 million of total assets, of which approximately $21.0 million was comprised of a note receivable due from the Company, and approximately $20.9 million of total liabilities, of which approximately $20.9 million were debt obligations to the third-party creditors (as the VIE has utilized approximately $20.9 million of the $60.0 million debt obligation capacity). The third-party creditors have recourse to the Company’s general credit only in the event that the Company defaults on its obligations under the terms of the master lease agreement. In addition, the assets held by the VIE can be used only to settle the obligations of the VIE.

On May 19, 2016, the Company entered into a note purchase agreement with certain third parties which it anticipates closing on July 14, 2016 for a private placement of $300.0 million of senior unsecured notes maturing on July 14, 2023 with an interest rate of 4.9% (the “4.900% Senior Notes”). The proceeds from the sale of the notes are anticipated to be used to repay the Company’s $312.0 million 7.750% Senior Notes due July 15, 2016. The Company is subject to financial covenants based in part on those set forth in its Revolving Credit Facility, including: (1) a maximum ratio of consolidated indebtedness to consolidated EBITDA and (2) a minimum ratio of (a) consolidated EBITDA to (b) interest payable on, and amortization of debt discount in respect of, all indebtedness and loss on sale of accounts receivable. In addition, the Company and its subsidiaries are subject to other covenants, such as: limitation upon transactions with affiliates; limitation upon mergers, consolidations, etc.; limitation upon sales of assets; limitation upon changes in line of business; terrorism sanction regulations; limitation upon subsidiary indebtedness; limitation upon liens; financial and business information; visitation rights; compliance with laws; insurance; maintenance of properties; payment of taxes and claims; preservation of corporate existence, etc.; keeping of books and records; subsidiary guarantees or liability for certain indebtedness; and most favored lender requirement with respect to certain indebtedness. Terms used above in the description of financial covenants have specific meanings ascribed to them in the note purchase agreement.