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Note 9 - Leases | 9 Months Ended
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Jul. 31, 2021
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] |
9. | Leases
We lease certain office space for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842 “Leases” ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Our office lease terms are generally from three to five years and generally contain renewal options. In accordance with ASC 842, our lease terms include those renewals only to the extent that they are reasonably certain to be exercised. The exercise of these lease renewal options is generally at our discretion. In accordance with ASC 842, the lease liability is equal to the present value of the remaining lease payments while the right of use (“ROU”) asset is based on the lease liability, subject to adjustment, such as for lease incentives. Our leases do not provide a readily determinable implicit interest rate and therefore, we must estimate our incremental borrowing rate. In determining the incremental borrowing rate, we consider the lease period and our collateralized borrowing rates. Our lease population at July 31, 2021 is comprised of operating leases where we are the lessee, and these leases are primarily real estate for office space for our corporate office, division offices and design centers. As allowed by ASC 842, we adopted an accounting policy election to not record leases with lease terms of twelve months or less on our Condensed Consolidated Balance Sheets. Lease cost included in our Condensed Consolidated Statements of Operations in Selling, general and administrative expenses and payments on our lease liabilities are presented in the table below. Our short-term lease costs and sublease income are de minimis.
|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | July 31, 2021 |  |  | July 31, 2020 |  |  | July 31, 2021 |  |  | July 31, 2020 |
Operating lease cost |  | $ | 2,760 |  |  | $ | 2,621 |  |  | $ | 7,970 |  |  | $ | 7,837 |
Cash payments on lease liabilities |  | $ | 2,483 |  |  | $ | 2,266 |  |  | $ | 7,171 |  |  | $ | 6,890 |
ROU assets are classified within Prepaids and other assets on our Condensed Consolidated Balance Sheets, while lease liabilities are classified within Accounts payable and other liabilities on our Condensed Consolidated Balance Sheets. During the three and nine months ended July 31, 2021, the Company recorded an additional $0.6 million and $4.6 million, respectively, to both its ROU assets and lease liabilities as a result of new leases that commenced during the period. The following table contains additional information about our leases:
(In thousands) |  | At July 31, 2021 |  |  | At October 31, 2020 |
ROU assets |  | $ | 18,108 |  |  | $ | 20,016 |
Lease liabilities |  | $ | 19,135 |  |  | $ | 21,049 |
Weighted-average remaining lease term (in years) |  |  | 3.1 |  |  |  | 3.5 |
Weighted-average discount rate (incremental borrowing rate) |  |  | 9.4 | % |  |  | 9.6 | %
Maturities of our operating lease liabilities as of July 31, 2021 are as follows:
Year ended October 31, |  | (in thousands) |
2021 (excluding the nine months ended July 31, 2021) |  | $ | 2,380 |
2022 |  |  | 8,587 |
2023 |  |  | 5,341 |
2024 |  |  | 2,627 |
2025 |  |  | 2,126 |
Thereafter |  |  | 1,162 |
Total payments |  |  | 22,223 |
Less: imputed interest |  |  | (3,088 | )
Present value of lease liabilities |  | $ | 19,135 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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