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Leases
 12 Months Ended
Jul. 31, 2020
Leases [Abstract]  
Leases Leases
Adoption of “Leases (ASC 842)”

We adopted ASC 842, effective August 1, 2019, using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our consolidated balance sheet on August 1, 2019. Results for reporting beginning after August 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and will continue to be reported in accordance with our historical accounting under ASC 840.

We elected a package of practical expedients that were consequently applied to all leases. We did not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases, nor whether previously capitalized initial direct costs would qualify for capitalization under the new standard. Upon transition, we did not elect to use hindsight with respect to lease renewals and purchase options when accounting for existing leases, as well as assessing the impairment of right-of-use assets. Therefore, lease terms largely remained unchanged. In addition, we elected the short-term lease recognition exemption and did not recognize a lease liability and right-of-use asset on our consolidated balance sheet for all leases with terms of 12 months or less. We elected the practical expedient to combine lease and non-lease components, such as common area maintenance fees, in total gross rent for all of our leases which resulted in larger lease liabilities recorded on our consolidated balance sheet.

Our lease portfolio consists primarily of real estate, equipment and vehicles. We have approximately 90 real estate leases with lease terms ranging from 1 year to 16 years, which include our corporate headquarters, regional headquarters, and other facilities for sales and administration, warehousing, manufacturing and training. Our equipment leases primarily consist of furniture, computers and other office equipment.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. At lease commencement, we record a liability for our lease obligation measured at the present value of future lease payments and a right-of-use asset equal to the lease liability adjusted for prepayments and lease incentives. As it related to long-lived assets, the accounting standards for right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We use our collateralized incremental borrowing rate to calculate the present value of lease liabilities as most of our leases do not provide an implicit rate that is readily determinable. Some real estate leases include one or more options to renew or terminate a lease. The exercise of a lease renewal or termination option is assessed at commencement of the lease and only reflected in the lease
term if we are reasonably certain to exercise the option. Operating lease expense is recognized on a straight-line basis over the respective lease term.

Supplemental balance sheet information related to our leases follows:
Lease TypeJuly 31, 2020
Assets:
Operating lease assets$44,267 
Finance lease assets4,417 
Right-of-use assets, net$48,684 
Liabilities:
Operating lease liabilities$9,852 
Finance lease liabilities416 
Current portion of lease liabilities10,268 
Operating lease liabilities36,515 
Finance lease liabilities4,164 
Long-term lease liabilities40,679 
Total lease liabilities$50,947 
Additional Lease DataJuly 31, 2020
Weighted average remaining lease term:
Operating leases6.11 years
Finance leases5.86 years
Weighted average discount rate:
Operating leases2.73 %
Finance leases23.39 %

At July 31, 2020, maturities of lease liabilities for the periods set forth below were as follows:
Fiscal yearOperatingFinanceTotal
202110,938 1,446 12,384 
20228,976 1,432 10,408 
20237,903 1,425 9,328 
20246,739 1,434 8,173 
20255,011 1,422 6,433 
Thereafter11,279 922 12,201 
Total lease payments50,846 8,081 58,927 
Less: interest(4,479)(3,501)(7,980)
Present value of lease liabilities$46,367 $4,580 $50,947 
As previously disclosed in our 2019 Annual Report on Form 10-K and in accordance with our historical accounting under ASC 840, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows:
Fiscal yearTotal
2020$9,099 
20217,671 
20226,021 
20235,659 
20245,159 
Thereafter15,251 
Total$48,860 

Supplemental income statement information related to our leases follows:
 Year Ended
July 31, 2020
Operating lease costs
Amortization of right-of-use assets$10,292 
Interest on lease obligations1,226 
Finance lease costs: 
Amortization of right-of-use assets650 
Interest on lease obligations885 
Variable lease costs3,256 
Short-term lease costs1,427 
Net lease cost$17,736 

Total rental expense related to our operating leases was $9,601 and $8,801 for fiscal 2019 and 2018, respectively.

Supplemental cash flow information related to leases follows:
 Year Ended
July 31, 2020
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases(1)
$20,450 
Finance leases(2)
$4,920 
_______________________________________________
(1) Primarily relates to new warehouse facility included in our Dental segment and operating leases acquired in the Hu-Friedy acquisition.
(2) Includes finance leases acquired in the Hu-Friedy acquisition.
Leases Leases
Adoption of “Leases (ASC 842)”

We adopted ASC 842, effective August 1, 2019, using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our consolidated balance sheet on August 1, 2019. Results for reporting beginning after August 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and will continue to be reported in accordance with our historical accounting under ASC 840.

We elected a package of practical expedients that were consequently applied to all leases. We did not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases, nor whether previously capitalized initial direct costs would qualify for capitalization under the new standard. Upon transition, we did not elect to use hindsight with respect to lease renewals and purchase options when accounting for existing leases, as well as assessing the impairment of right-of-use assets. Therefore, lease terms largely remained unchanged. In addition, we elected the short-term lease recognition exemption and did not recognize a lease liability and right-of-use asset on our consolidated balance sheet for all leases with terms of 12 months or less. We elected the practical expedient to combine lease and non-lease components, such as common area maintenance fees, in total gross rent for all of our leases which resulted in larger lease liabilities recorded on our consolidated balance sheet.

Our lease portfolio consists primarily of real estate, equipment and vehicles. We have approximately 90 real estate leases with lease terms ranging from 1 year to 16 years, which include our corporate headquarters, regional headquarters, and other facilities for sales and administration, warehousing, manufacturing and training. Our equipment leases primarily consist of furniture, computers and other office equipment.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. At lease commencement, we record a liability for our lease obligation measured at the present value of future lease payments and a right-of-use asset equal to the lease liability adjusted for prepayments and lease incentives. As it related to long-lived assets, the accounting standards for right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We use our collateralized incremental borrowing rate to calculate the present value of lease liabilities as most of our leases do not provide an implicit rate that is readily determinable. Some real estate leases include one or more options to renew or terminate a lease. The exercise of a lease renewal or termination option is assessed at commencement of the lease and only reflected in the lease
term if we are reasonably certain to exercise the option. Operating lease expense is recognized on a straight-line basis over the respective lease term.

Supplemental balance sheet information related to our leases follows:
Lease TypeJuly 31, 2020
Assets:
Operating lease assets$44,267 
Finance lease assets4,417 
Right-of-use assets, net$48,684 
Liabilities:
Operating lease liabilities$9,852 
Finance lease liabilities416 
Current portion of lease liabilities10,268 
Operating lease liabilities36,515 
Finance lease liabilities4,164 
Long-term lease liabilities40,679 
Total lease liabilities$50,947 
Additional Lease DataJuly 31, 2020
Weighted average remaining lease term:
Operating leases6.11 years
Finance leases5.86 years
Weighted average discount rate:
Operating leases2.73 %
Finance leases23.39 %

At July 31, 2020, maturities of lease liabilities for the periods set forth below were as follows:
Fiscal yearOperatingFinanceTotal
202110,938 1,446 12,384 
20228,976 1,432 10,408 
20237,903 1,425 9,328 
20246,739 1,434 8,173 
20255,011 1,422 6,433 
Thereafter11,279 922 12,201 
Total lease payments50,846 8,081 58,927 
Less: interest(4,479)(3,501)(7,980)
Present value of lease liabilities$46,367 $4,580 $50,947 
As previously disclosed in our 2019 Annual Report on Form 10-K and in accordance with our historical accounting under ASC 840, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows:
Fiscal yearTotal
2020$9,099 
20217,671 
20226,021 
20235,659 
20245,159 
Thereafter15,251 
Total$48,860 

Supplemental income statement information related to our leases follows:
 Year Ended
July 31, 2020
Operating lease costs
Amortization of right-of-use assets$10,292 
Interest on lease obligations1,226 
Finance lease costs: 
Amortization of right-of-use assets650 
Interest on lease obligations885 
Variable lease costs3,256 
Short-term lease costs1,427 
Net lease cost$17,736 

Total rental expense related to our operating leases was $9,601 and $8,801 for fiscal 2019 and 2018, respectively.

Supplemental cash flow information related to leases follows:
 Year Ended
July 31, 2020
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases(1)
$20,450 
Finance leases(2)
$4,920 
_______________________________________________
(1) Primarily relates to new warehouse facility included in our Dental segment and operating leases acquired in the Hu-Friedy acquisition.
(2) Includes finance leases acquired in the Hu-Friedy acquisition.