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Operating Leases

12 Months Ended

Apr. 30, 2021

Note 12 — 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. 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 new leasing standard, leases that are more than one year in duration are capitalized and recorded on the 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 as of April 30 are presented in our Consolidated Statement of Financial Position as follows:

	2021		2020
Operating lease ROU assets	$	121,430	$	142,716
Short-term portion of operating lease liabilities		22,440		21,810
Operating lease liabilities, non-current	$	145,832	$	159,782

During the year ended April 30, 2021, we added $6.1 million to the ROU assets and $5.7 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.

As a result of expanding the scope of the Business Optimization Program to include the exit of certain leased office space beginning in the third quarter of fiscal 2021, we incurred a pretax restructuring charge of $18.3 million in the three months ended January 31, 2021. This charge included impairment charges and acceleration of expense associated with certain operating lease ROU assets. See Note 7, “Restructuring and Related Charges” for more information on this program and the charges incurred.

Our total net lease costs were as follows:

	For the Years Ended April 30,
	2021			2020
Operating lease cost	$	24,862		$	26,027
Variable lease cost		2,135			3,856
Short-term lease cost		248			86
Sublease income		(722	)		(691	)
Total net lease cost ⁽¹⁾	$	26,523		$	29,278

⁽¹⁾	Total net lease cost does not include those costs included in Restructuring and related charges on our Consolidated Statements of Income (Loss). See Note 7, “Restructuring and Related Charges” for more information on these programs.

Other supplemental information includes the following:

	For the Years Ended April 30,
	2021			2020
Weighted-average remaining contractual lease term (years)		9			10
Weighted-average discount rate		5.89	%		5.89	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	32,344		$	28,243

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 the Consolidated Statement of Financial Position as of April 30, 2021:

Fiscal Year	Operating Lease Liabilities
2022	$	30,674
2023		26,905
2024		24,799
2025		23,235
2026		20,584
Thereafter		95,000
Total future undiscounted minimum lease payments		221,197

Less: Imputed interest		52,925

Present value of minimum lease payments		168,272

Less: Current portion		22,440

Noncurrent portion	$	145,832

Prior to the Adoption of ASC Topic 842

The following schedule shows the composition of net rent expense for operating leases for the year ended April 30:

	2019
Minimum rental	$	29,066
Less: sublease rentals		(719	)
Total	$	28,347

Rent expense associated with operating leases that include scheduled rent increases and tenant incentives, such as rent holidays or leasehold improvement allowances, were recorded on a straight-line basis over the term of the lease.