Operating Leases

3 Months Ended

Jul. 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.

We recognize operating lease expense on a straight-line basis over the term of the lease. Lease payments may be fixed or variable. Only lease payments that are fixed, in-substance fixed or depend on a rate or index are included in determining the lease liability. Variable lease payments include payments made to the lessor for taxes, insurance and maintenance of the leased asset and are recognized as operating costs as incurred.

We apply certain practical expedients allowed by ASC 842, "Leases." Leases that are more than one year in duration are capitalized and recorded on our Unaudited Condensed Consolidated Statements of Financial Position. Leases with an initial term of 12 months or less are recognized as short term lease operating costs on a straight-line basis over the term. We have also elected to account for the lease and non-lease components as a single component. 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.

For operating leases, the ROU assets and liabilities are presented on our Unaudited Condensed Consolidated Statement of Financial Position as follows:


	July 31, 2023		April 30, 2023
Operating lease ROU assets	$	82,415	$	91,197
Short-term portion of operating lease liabilities	17,869		19,673
Operating lease liabilities, non-current	$	106,652	$	115,540

During the three months ended July 31, 2023, we added $0.2 million to the ROU assets and $0.2 million to the operating lease liabilities due to modifications to our existing operating leases.

As a result of the Global Restructuring Program, which included the exit of certain leased office space, we recorded restructuring and related 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” for more information on this program and the charges incurred.

Our total net lease costs are as follows:


	Three Months Ended July 31,
	2023		2022
Operating lease cost	$	4,083	$	5,182
Variable lease cost	285		278
Short-term lease cost	278		115
Sublease income	(203)		(198)
Total net lease cost (1)	$	4,443	$	5,377


(1)			Total net lease cost does not include those costs and sublease income included in Restructuring and related charges on our Unaudited Condensed Consolidated Statements of Net Loss. 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” for more information on this program.

Other supplemental information includes the following:


	Three Months Ended July 31,
	2023			2022
Weighted-average remaining contractual lease term (years)	8			8
Weighted-average discount rate	5.97		%	5.87		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,736		$	7,341

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 July 31, 2023:


Fiscal Year	Operating Lease Liabilities
2024 (remaining 9 months)	$	18,261
2025	23,544
2026	21,782
2027	17,159
2028	13,282
Thereafter	64,185
Total future undiscounted minimum lease payments	158,213

Less: Imputed interest	33,692

Present value of minimum lease payments	124,521

Less: Current portion	17,869

Noncurrent portion	$	106,652