Operating Leases

6 Months Ended

Oct. 31, 2022

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, 2022		April 30, 2022
Operating lease ROU assets	$	93,334	$	111,719
Short-term portion of operating lease liabilities	19,043		20,576
Operating lease liabilities, non-current	$	120,559	$	132,541

During the six months ended October 31, 2022, we reduced our ROU assets by $(0.5) million and our operating lease liabilities by $(0.5) million due to modifications and remeasurements to our existing operating leases, partially offset by new leases.

As a result of the Fiscal Year 2023 Restructuring Program, which included the exit of certain leased office space beginning in the three months ended July 31, 2022, we recorded restructuring charges. These charges included severance, impairment charges and acceleration of expense associated with certain operating lease ROU assets. See Note 9, “Restructuring and Related Charges (Credits)” for more information on this program and the charges incurred.

Our total net lease costs are as follows:


	Three Months Ended October 31,				Six Months Ended October 31,
	2022		2021		2022		2021
Operating lease cost	$	4,528	$	6,325	$	9,710	$	12,242
Variable lease cost	264		397		542		741
Short-term lease cost	146		36		261		56
Sublease income	(172)		(190)		(370)		(391)
Total net lease cost (1)	$	4,766	$	6,568	$	10,143	$	12,648


(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 as part of our restructuring programs that would be subleased. See Note 9, “Restructuring and Related Charges (Credits)” for more information on this program.

Other supplemental information includes the following:


	Six Months Ended October 31,
	2022			2021
Weighted-average remaining contractual lease term (years)	8			9
Weighted-average discount rate	5.93		%	5.79		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13,756		$	14,846

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, 2022:


Fiscal Year	Operating Lease Liabilities
2023 (remaining 6 months)	$	13,522
2024	25,110
2025	23,691
2026	21,721
2027	17,692
Thereafter	77,499
Total future undiscounted minimum lease payments	179,235

Less: Imputed interest	39,633

Present value of minimum lease payments	139,602

Less: Current portion	19,043

Noncurrent portion	$	120,559