LEASES

9 Months Ended

Jul. 31, 2024

LEASES

LEASES

8.    LEASES

Our lease portfolio includes leased production and assembly facilities, warehouses and distribution centers, office space, vehicles, material handling equipment utilized in our production and assembly facilities, laptops and other information technology equipment, as well as other miscellaneous leased equipment. Most of the leased production and assembly facilities have lease terms ranging from two to five years, although the terms and conditions of our leases can vary significantly from lease to lease. We have assessed the specific terms and conditions of each lease to determine the amount of the lease payments and the length of the lease term, which includes the minimum period over which lease payments are required plus any renewal options that are both within our control to exercise and reasonably certain of being exercised upon lease commencement. In determining whether or not a renewal option is reasonably certain of being exercised, we assessed all relevant factors to determine if sufficient incentives exist as of lease commencement to conclude renewal is reasonably certain. There are no material residual value guarantees provided by us, nor any restrictions or covenants imposed by the leases to which we are a party. In determining the lease liability, we utilize our incremental borrowing rate to discount the future lease payments over the lease term to present value.

We record a right-of-use asset and lease liability on our Condensed Consolidated Balance Sheets for all leases that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases.  

We recorded total operating lease expenses of $1.3 million for each of the three months ended July 31, 2024 and 2023, and $4.1 million and $3.9 million for the nine months ended July 31, 2024 and 2023, respectively, which are classified within Cost of sales and service and Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.  Operating lease expense includes short-term leases and variable lease payments that are immaterial.  There have been no lease costs capitalized on the Condensed Consolidated Balance Sheets as of July 31, 2024.

The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the three and nine months ended July 31, 2024 and 2023 (in thousands):

		Three Months Ended				Nine Months Ended
		July 31,				July 31,
		2024		2023		2024		2023
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,202	$	1,257	$	3,500	$	3,768
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,676	$	3,681	$	4,278	$	6,053

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of July 31, 2024 (in thousands):

Remainder of 2024	$	1,218
2025		3,924
2026		2,910
2027		2,252
2028		1,752
2029 and thereafter		1,426
Total		13,482
Less: Imputed interest		(956)
Present value of operating lease liabilities	$	12,526

As of July 31, 2024, the weighted-average remaining term of our lease portfolio was approximately 4.1 years and the weighted-average discount rate was approximately 3.5%.