Operating Leases

12 Months Ended

Apr. 30, 2020

Note 12 — Operating Leases

On May 1, 2019, we adopted a new accounting standard for leases. For further information, see Note 2, “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards.”

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 new 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 are presented in our Consolidated Statement of Financial Position as follows:

	April 30, 2020
Operating lease right-of-use assets	$	142,716
Short-term portion of operating lease liabilities		21,810
Operating lease liabilities, non-current	$	159,782

During the year ended April 30, 2020, we added $22.9 million to the ROU assets and $24.4 million 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:

	Year Ended April 30, 2020
Operating lease cost ⁽¹⁾	$	26,027
Variable lease cost		3,856
Short-term lease cost		86
Sublease income		(691	)
Total net lease cost	$	29,278

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

Other supplemental information includes the following:

	Weighted-Average Remaining Contractual Lease Term (Years)		Year Ended April 30, 2020
Operating leases		10

Weighted-average discount rate:
Operating leases				5.89	%

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	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, 2020:

Fiscal Year	Operating Lease Liabilities
2021	$	32,303
2022		27,338
2023		24,659
2024		23,215
2025		22,004
Thereafter		113,848
Total future undiscounted minimum lease payments		243,367

Less: Imputed interest		61,775
Present Value of Minimum Lease Payments		181,592
Less: Current portion		21,810
Noncurrent portion	$	159,782

Prior to the Adoption of ASC Topic 842

The following schedule shows the composition of net rent expense for operating leases:

	2019			2018
Minimum Rental	$	29,066		$	31,451
Less: Sublease Rentals		(719	)		(708	)
Total	$	28,347		$	30,743

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.