Leases

12 Months Ended

Apr. 30, 2020

Leases

Leases

11.          Leases

The Company leases certain buildings, land and equipment. Under the New Lease Standard, at contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The Company defines the initial lease term to include renewal options determined to be reasonably certain. The Company’s leases have remaining lease terms of less than one year to six years, some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease after two years. None of the Company’s options to extend or terminate are reasonably certain of being exercised, and are therefore not included in the Company’s determination of lease assets and liabilities. For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records incentive as a reduction to fixed lease payments thereby reducing rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease. For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

The Company does not have any finance leases. The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease. Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease.

The components of lease costs recorded in cost of sales for product sales and contract services and selling, general and administrative (“SG&A”) expense were as follows (in thousands):

	Year Ended
	April 30,
	2020
Operating lease cost	$	4,574
Short term lease cost		500
Variable lease cost		987
Sublease income		(287)
Total lease costs, net	$	5,774

Supplemental lease information were as follows:

	Year Ended
	April 30,
	2020
	(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,897
Right-of-use assets obtained in exchange for new lease liabilities	$	13,022
Weighted average remaining lease term		34 months
Weighted average discount rate		3.7%

Maturities of operating lease liabilities as of April 30, 2020 were as follows (in thousands):

2021	$	4,222
2022		3,910
2023		2,171
2024		1,055
2025		62
Thereafter		—
Total lease payments		11,420
Less: imputed interest		(1,207)
Total present value of operating lease liabilities	$	10,213

Maturities of operating lease liabilities as of April 30, 2019 were as follows:

2020	$	5,298
2021		3,527
2022		2,723
2023		1,554
2024		953
Thereafter		—
Total lease payments	$	14,055

Rental expense under operating leases was approximately $4,609,000 and $4,011,000 for the years ended April 30, 2019 and 2018, respectively.