Leases

12 Months Ended

May 31, 2022

Note T – Leases

We lease office space, warehouses, vehicles, and equipment. Leases have remaining lease terms of 1 year to 38 years, some of which have renewal and termination options. Termination options are exercisable at the our option. The lease terms used to recognize right-of-use assets and lease liabilities include periods covered by options to extend the lease where we are reasonably certain to exercise that option and periods covered by an option to terminate the lease if we are is reasonably certain not to exercise that option.

We determine if an arrangement meets the definition of a lease at inception. Operating lease ROU assets include any initial direct costs and prepayments less lease incentives. Lease terms include options to renew or terminate the lease when it is reasonably certain we will exercise such options. As most of our leases do not include an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of goods sold or SG&A expense depending on the underlying nature of the leased assets.

We lease certain property and equipment from third parties under non-cancellable operating lease agreements. Certain lease agreements provide for payment of property taxes, maintenance and insurance by us. Under Topic 842, we elected the practical expedient to account for lease and non-lease components as a single component for all asset classes. Certain leases include variable lease payments based on usage or an index or rate.

The components of lease expense for fiscal 2022 and fiscal 2021 were as follows:


	2022		2021
(in thousands)
Operating lease expense	$	15,726	$	10,123
Financing lease expense:
Amortization of leased assets		653		648
Interest on lease liabilities		124		145
Total financing lease expense		777		793
Short-term lease expense		2,991		578
Variable lease expense		612		2,398
Total lease expense	$	20,106	$	13,892

Other information related to our leases, as of and for the fiscal years ended May 31, 2022 and May 31, 2021, is provided below:


	2022						2021
(dollars in thousands)	Operating Leases			Financing Leases			Operating Leases			Financing Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	13,514		$	123		$	16,506		$	145
Financing cash flows	$	-		$	101		$	-		$	392
ROU assets obtained in exchange for lease liabilities	$	75,986		$	2		$	20,421		$	-
Weighted-average remaining lease term (in years)		13.48			37.36			5.83			33.03
Weighted-average discount rate		2.97	%		3.75	%		2.61	%		3.71	%

Future minimum lease payments for non-cancelable leases having an initial or remaining term in excess of one year at May 31, 2022, were as follows:


(in thousands)	Operating Leases			Financing Leases
2023	$	14,412		$	173
2024		12,477			177
2025		11,180			182
2026		9,814			186
2027		8,658			186
Thereafter		66,932			5,292
Total		123,473			6,196
Less: imputed interest		(23,606	)		(2,985	)
Present value of lease liabilities	$	99,867		$	3,211