Leases

12 Months Ended

May 31, 2024

Note T – Leases

We lease office space, warehouses, vehicles, and equipment. Leases have remaining lease terms of 1 year to 36 years, some of which have renewal and termination options. Termination options are exercisable at our option. The lease terms used to recognize ROU 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 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 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 2024 and fiscal 2023 were as follows:


	2024		2023
Operating lease expense	$	8,245	$	7,685
Financing lease expense
Amortization of leased assets		81		81
Interest on lease liabilities		116		118
Total financing lease expense		197		199
Short-term lease expense		2,959		2,579
Variable lease expense		296		294
Total lease expense	$	11,697	$	10,757

Other information related to our leases, as of and for the fiscal years ended May 31, 2024 and May 31, 2023, is provided below:


	2024						2023
	Operating Leases			Financing Leases			Operating Leases			Financing Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	7,395		$	116		$	6,710		$	118
Financing cash flows	$	-		$	50		$	-		$	44
ROU assets obtained in exchange for lease liabilities	$	3,446		$	-		$	4,179		$	-
Weighted-average remaining lease term (in years)		3.55			35.81			4.16			36.82
Weighted-average discount rate		3.44	%		3.75	%		3.11	%		3.75	%

Future minimum lease payments for non-cancelable leases having an initial or remaining term in excess of one year at May 31, 2024, were as follows:


	Operating Leases			Financing Leases
2025	$	6,728		$	171
2026		5,389			176
2027		4,713			181
2028		3,244			187
2029		7			193
Thereafter		-			4,912
Total		20,081			5,820
Less: imputed interest		(1,035	)		(2,748	)
Present value of lease liabilities	$	19,046		$	3,072