Leases

3 Months Ended

Jan. 29, 2021


16			Leases

The company enters into contracts that are, or contain, operating lease agreements for certain property, plant, or equipment assets utilized in the normal course of business, such as buildings for manufacturing facilities, office space, distribution centers, and warehouse facilities; land for product testing sites; machinery and equipment for research and development activities, manufacturing and assembly processes, and administrative tasks; and vehicles for sales, service, marketing, and distribution activities. Contracts that explicitly or implicitly relate to property, plant, and equipment are assessed at inception to determine if the contract is, or contains, a lease. Such contracts for operating lease agreements convey the company's right to direct the use of, and obtain substantially all of the economic benefits from, an identified asset for a defined period of time in exchange for consideration. The lease term begins and is determined upon lease commencement, which is the point in time when the

company takes possession of the identified asset, and generally includes all non-cancelable periods. Lease expense for the company's operating leases is recognized on a straight-line basis over the lease term and is recorded within cost of sales or selling, general and administrative expense within the Condensed Consolidated Statements of Earnings as dictated by the nature and use of the underlying asset. The company does not recognize right-of-use assets and lease liabilities, but does recognize expense on a straight-line basis, for short-term operating leases which have a lease term of 12 months or less and do not include an option to purchase the underlying asset.

Lease payments are determined at lease commencement and generally represent fixed lease payments as defined within the respective lease agreement or, in the case of certain lease agreements, variable lease payments that are measured as of the lease commencement date based on the prevailing index or market rate. Future adjustments to variable lease payments are defined and scheduled within the respective lease agreement and are determined based upon the prevailing market or index rate at the time of the adjustment relative to the market or index rate determined at lease commencement. Certain other lease agreements contain variable lease payments that are determined based upon actual utilization of the identified asset. Such future adjustments to variable lease payments and variable lease payments based upon actual utilization of the identified asset are not included within the determination of lease payments at commencement but rather, are recorded as variable lease expense in the period in which the variable lease cost is incurred.

Right-of-use assets represent the company's right to use an underlying asset throughout the lease term and lease liabilities represent the company's obligation to make lease payments arising from the lease agreement. The company accounts for operating lease liabilities at lease commencement and on an ongoing basis as the present value of the minimum remaining lease payments under the respective lease term. Minimum remaining lease payments are generally discounted to present value based the estimated incremental borrowing rate at lease commencement as the rate implicit in the lease is generally not readily determinable. Right-of-use assets are measured as the amount of the corresponding operating lease liability for the respective operating lease agreement, adjusted for prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial direct costs, and impairment of the operating lease right-of-use asset, as applicable.

The following table presents the lease expense incurred on the company’s operating, short-term, and variable leases:


	Three Months Ended
(Dollars in thousands)	January 29, 2021		January 31, 2020
Operating lease expense	$	4,974	$	4,834
Short-term lease expense	580		682
Variable lease expense	17		37
Total lease expense	$	5,571	$	5,553

The following table presents supplemental cash flow information related to the company's operating leases:


	Three Months Ended
(Dollars in thousands)	January 29, 2021		January 31, 2020
Operating cash flows for amounts included in the measurement of lease liabilities	$	4,682	$	4,741
Right-of-use assets obtained in exchange for lease obligations	$	293	$	6,133

The following table presents other lease information related to the company's operating leases:


(Dollars in thousands)	January 29, 2021		January 31, 2020		October 31, 2020
Weighted-average remaining lease term of operating leases in years	6.9		6.2		7.1
Weighted-average discount rate of operating leases	2.78	%	2.81	%	2.79	%

The following table reconciles the total undiscounted future cash flows based on the anticipated future minimum operating lease payments by fiscal year for the company's operating leases to the present value of operating lease liabilities recorded within the Condensed Consolidated Balance Sheets as of January 29, 2021:


(Dollars in thousands)	January 29, 2021
2021 (remaining)	$	18,801
2022	15,910
2023	12,515
2024	11,044
2025	9,987
Thereafter	23,613
Total future minimum operating lease payments	91,870
Less: imputed interest	13,033
Present value of operating lease liabilities	$	78,837