Leases

3 Months Ended

Jul. 30, 2022

Leases

Leases

11. Leases

The Company leases certain buildings, land and equipment. 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 on the unaudited condensed consolidated balance sheet.

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. If the Company determines the option to extend or terminate is reasonably certain, it is included in the 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 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 and selling, general and administrative (“SG&A”) expense were as follows (in thousands):

	Three Months Ended		Three Months Ended
	July 30,		July 31,
	2022		2021
Operating lease cost	$	1,590	$	1,677
Short term lease cost		188		252
Variable lease cost		260		102
Sublease income		—		(44)
Total lease costs, net	$	2,038	$	1,987

Supplemental lease information were as follows:

	Three Months Ended		Three Months Ended
	July 30,		July 31,
	2022		2021
	(In thousands)		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,575	$	1,763
Right-of-use assets obtained in exchange for new lease liabilities	$	1,173	$	6,310
Weighted average remaining lease term		60 months		70 months
Weighted average discount rate		3.4%		3.4%

Maturities of operating lease liabilities as of July 30, 2022 were as follows (in thousands):

2023	$	5,245
2024		7,040
2025		6,110
2026		3,600
2027		2,540
Thereafter		5,484
Total lease payments		30,019
Less: imputed interest		(2,619)
Total present value of operating lease liabilities	$	27,400