Operating Leases

6 Months Ended

Oct. 31, 2021

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, 2021		April 30, 2021
Operating lease ROU assets	$	121,708	$	121,430
Short-term portion of operating lease liabilities		22,353		22,440
Operating lease liabilities, non-current	$	143,638	$	145,832

During the six months ended October 31, 2021, we added $9.2 million to the ROU assets and $9.1 million to the operating lease liabilities due to new leases, including due to acquisitions, 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,
	2021			2020			2021			2020
Operating lease cost	$	6,325		$	6,611		$	12,242		$	13,246
Variable lease cost		397			730			741			1,251
Short-term lease cost		36			92			56			180
Sublease income		(190	)		(175	)		(391	)		(345	)
Total net lease cost ⁽¹⁾	$	6,568		$	7,258		$	12,648		$	14,332

⁽¹⁾

Total net lease cost does not include those costs and sublease income included in Restructuring and related (credits) charges on our Unaudited Condensed Consolidated Statements of Net Income. This includes those operating leases we had identified in the year ended April 30, 2021 as part of our Business Optimization program that would be subleased. See Note 9, “Restructuring and Related (Credits) Charges” for more information on this program.

Other supplemental information includes the following:

	Six Months Ended October 31,
	2021			2020
Weighted-average remaining contractual lease term (years)		9			9
Weighted-average discount rate		5.79	%		5.91	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14,846		$	16,866

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, 2021:

Fiscal Year	Operating Lease Liabilities
2022 (remaining 6 months)	$	15,618
2023		28,159
2024		26,768
2025		25,364
2026		22,694
Thereafter		95,573
Total future undiscounted minimum lease payments		214,176

Less: Imputed interest		48,185

Present value of minimum lease payments		165,991

Less: Current portion		22,353

Noncurrent portion	$	143,638