Operating Leases

6 Months Ended

Oct. 31, 2020

Note 5 — Operating Leases

We have contractual obligations as a lessee with respect to offices, warehouses and distribution centers, automobiles, and office equipment.

We determine if an arrangement is a lease at inception of the contract in accordance with guidance detailed in the lease standard and we perform the lease classification test as of the lease commencement date. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The present value of the lease payments is calculated using an incremental borrowing rate, which was determined based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use an unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate.

Under the leasing standard, leases that are more than one year in duration are capitalized and recorded on our Unaudited Condensed Consolidated Statements of Financial Position. Some of our leases offer an option to extend the term of such leases. We utilize the reasonably certain threshold criteria in determining which options we will exercise. Furthermore, some of our lease payments are based on index rates with minimum annual increases. These represent fixed payments and are captured in the future minimum lease payments calculation.

For operating leases, the ROU assets and liabilities are presented on our Unaudited Condensed Consolidated Statement of Financial Position as follows:

	October 31, 2020		April 30, 2020
Operating lease right-of-use assets	$	137,095	$	142,716
Short-term portion of operating lease liabilities		20,071		21,810
Operating lease liabilities, non-current	$	153,355	$	159,782

During the six months ended October 31, 2020, we added $2.2 million to the ROU assets and to the operating lease liabilities due to new leases, as well as modifications and remeasurements to our existing operating leases.

Our total net lease costs are as follows:

	Three Months Ended October 31,					Six Months Ended October 31,
	2020			2019		2020			2019
Operating lease cost	$	6,611		$	6,199	$	13,246		$	13,060
Variable lease cost		730			915		1,251			2,118
Short-term lease cost		92			—		180			—
Sublease income		(175	)		184		(345	)		(339	)
Total net lease cost ⁽¹⁾	$	7,258		$	7,298	$	14,332		$	14,839

⁽¹⁾	Total net lease cost does not include those costs included in Restructuring and Related Charges on our Unaudited Condensed Consolidated Statements of Income. See Note 9, “Restructuring and Related Charges” for more information on these programs.

Other supplemental information includes the following for our operating leases:

	Six Months Ended October 31,
	2020			2019
Weighted-average remaining contractual lease term (years)		9			10

Weighted-average discount rate		5.91	%		5.91	%

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	16,866		$	14,716

The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in our Unaudited Condensed Consolidated Statement of Financial Position as of October 31, 2020:

Fiscal Year	Operating Lease Liabilities
2021 (remaining 6 months)	$	15,751
2022		28,530
2023		25,581
2024		23,609
2025		22,149
Thereafter		113,972
Total future undiscounted minimum lease payments		229,592

Less: Imputed interest		56,166

Present Value of Minimum Lease Payments		173,426

Less: Current portion		20,071

Noncurrent portion	$	153,355