Operating Leases

9 Months Ended

Jan. 31, 2023

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, 2023		April 30, 2022
Operating lease ROU assets	$	94,672	$	111,719
Short-term portion of operating lease liabilities	20,055		20,576
Operating lease liabilities, non-current	$	119,803	$	132,541

During the nine months ended January 31, 2023, we added $2.6 million to the ROU assets and $2.4 million to the operating lease liabilities due to new leases, as well as modifications and remeasurements to our existing operating 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 January 31,				Nine Months Ended January 31,
	2023		2022		2023		2022
Operating lease cost	$	4,356	$	6,015	$	14,066	$	18,257
Variable lease cost	265		386		807		1,127
Short-term lease cost	230		51		491		107
Sublease income	(198)		(315)		(568)		(706)
Total net lease cost (1)	$	4,653	$	6,137	$	14,796	$	18,785


(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 (Loss) 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:


	Nine Months Ended January 31,
	2023			2022
Weighted-average remaining contractual lease term (years)	8			9
Weighted-average discount rate	5.93		%	5.80		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	20,264		$	22,486

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, 2023:


Fiscal Year	Operating Lease Liabilities
2023 (remaining 3 months)	$	7,479
2024	26,261
2025	24,991
2026	23,041
2027	18,411
Thereafter	77,853
Total future undiscounted minimum lease payments	178,036

Less: Imputed interest	38,178

Present value of minimum lease payments	139,858

Less: Current portion	20,055

Noncurrent portion	$	119,803