Operating Leases

9 Months Ended

Jan. 31, 2022

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:

	January 31, 2022		April 30, 2021
Operating lease ROU assets	$	118,155	$	121,430
Short-term portion of operating lease liabilities		21,598		22,440
Operating lease liabilities, non-current	$	139,587	$	145,832

During the nine months ended January 31, 2022, we added $10.2 million to the ROU assets and $10.1 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 January 31,						Nine Months Ended January 31,
	2022			2021			2022			2021
Operating lease cost	$	6,015		$	5,652		$	18,257		$	18,898
Variable lease cost		386			449			1,127			1,700
Short-term lease cost		51			34			107			214
Sublease income		(315	)		(181	)		(706	)		(526	)
Total net lease cost ⁽¹⁾	$	6,137		$	5,954		$	18,785		$	20,286

⁽¹⁾

Total net lease cost does not include those costs and sublease income included in Restructuring and related charges (credits) 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 Charges (Credits)” for more information on this program.

Other supplemental information includes the following:

	Nine Months Ended January 31,
	2022			2021
Weighted-average remaining contractual lease term (years)		9			9
Weighted-average discount rate		5.80	%		5.89	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	22,486		$	24,563

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 January 31, 2022:

Fiscal Year	Operating Lease Liabilities
2022 (remaining 3 months)	$	7,674
2023		28,264
2024		26,882
2025		25,454
2026		22,807
Thereafter		95,660
Total future undiscounted minimum lease payments		206,741

Less: Imputed interest		45,556

Present value of minimum lease payments		161,185

Less: Current portion		21,598

Noncurrent portion	$	139,587