Annual report pursuant to Section 13 and 15(d)

Leases

v3.20.2
Leases
12 Months Ended
Apr. 30, 2020
Leases [Abstract]  
Leases

14. Leases

The Company’s lease portfolio is comprised of operating leases for office space and equipment and finance leases for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Company’s leases include both lease and non-lease components. Non-lease components primarily include maintenance, insurance, taxes and other utilities. The Company has decided to combine fixed payments for non-lease components with its lease payments and account for them as a single lease component, which increases its ROU assets and lease liabilities. Some of the leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for leases with an initial term of 12 months or less.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of the future minimum lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since it has a centrally managed treasury function. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment.

Operating leases contain both office and equipment leases and have remaining terms that range from less than one year to 10 years, some of which also include options to extend or terminate the lease. Finance leases are comprised of equipment leases and have remaining terms that range from less than one year to 5 years. Finance lease assets are included in property and equipment, net while finance lease liabilities are included in other accrued liabilities and other liabilities.

As a result of the acquisition of the Acquired Companies, the Company recognized ROU assets of $3.2 million with a corresponding liability of $6.7 million. The ROU asset balance was adjusted by reclassification of pre-existing prepaid expenses, restructuring liabilities and deferred rent totaling $3.5 million. As part of the plan for integrating the Acquired Companies, the Company decided to exit 16 office leases and as a result, recorded an impairment charge of the ROU assets of $2.3 million recorded in the consolidated statement of income.

The components of lease expense were as follows:

 

 

 

Year Ended

April 30, 2020

 

 

 

(in thousands)

 

Finance lease cost

 

 

 

 

Amortization of ROU assets

 

$

1,820

 

Interest on lease liabilities

 

 

149

 

 

 

 

1,969

 

Operating lease cost

 

 

57,683

 

Short-term lease cost

 

 

1,111

 

Variable lease cost

 

 

13,562

 

Lease impairment cost

 

 

2,282

 

Sublease income

 

 

(447

)

  Total lease cost

 

$

76,160

 

 

Rent expense, as previously defined under ASC 840, which includes the Company leased office premises and certain office equipment leases for the years ended April 30, 2019, and 2018, was $58.2 million and $57.6 million, respectively.  

 

Supplemental cash flow information related to leases was as follows:

 

 

 

Year Ended

April 30, 2020

 

 

 

(in thousands)

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

Operating cash flows from operating leases

 

$

59,631

 

Financing cash flows from finance leases

 

$

1,833

 

 

 

 

 

 

ROU assets obtained in exchange for lease obligations:

 

 

 

 

Operating leases

 

$

15,246

 

Finance leases

 

$

1,333

 

 

Supplemental balance sheet information related to leases was as follows:

 

 

 

April 30, 2020

 

 

 

(in thousands)

 

Finance Leases:

 

 

 

 

 

 

 

 

 

Property and equipment, at cost

 

$

4,281

 

Accumulated depreciation

 

 

(1,485

)

Property and equipment, net

 

$

2,796

 

 

 

 

 

 

Other accrued liabilities

 

$

1,241

 

Other liabilities

 

 

1,634

 

Total finance lease liabilities

 

$

2,875

 

 

 

 

 

 

Weighted average remaining lease terms:

 

 

 

 

Operating leases

 

5.5 years

 

Finance leases

 

2.9 years

 

 

 

 

 

 

Weighted average discount rate:

 

 

 

 

Operating leases

 

 

4.8

%

Finance leases

 

 

4.1

%

 

Maturities of lease liabilities are as follows:

Year Ending April 30,

 

Operating

 

 

Financing

 

 

 

(in thousands)

 

2021

 

$

60,052

 

 

$

1,325

 

2022

 

 

50,246

 

 

 

940

 

2023

 

 

43,334

 

 

 

445

 

2024

 

 

40,091

 

 

 

245

 

2025

 

 

31,601

 

 

 

85

 

Thereafter

 

 

44,444

 

 

 

 

Total lease payments

 

 

269,768

 

 

 

3,040

 

Less: imputed interest

 

 

34,151

 

 

 

165

 

Total

 

$

235,617

 

 

$

2,875

 

 

Future minimum commitments under non-cancelable operating leases with lease terms in excess of one year, excluding commitments accrued in the restructuring liability under ASC 840 at April 30, 2019, are as follows:

 

Year Ending April 30,

 

Lease

Commitments

 

 

 

(in thousands)

 

2020

 

$

55,351

 

2021

 

 

52,567

 

2022

 

 

45,465

 

2023

 

 

38,582

 

2024

 

 

34,008

 

Thereafter

 

 

74,764

 

 

 

$

300,737