The Company defines reportable and operating segments on the same basis that it uses to evaluate performance internally by the CODM. The Company has determined that the Chief Executive Officer is its CODM.

The Company has two operating segments: RH Segment and Waterworks. The two operating segments include all sales channels accessed by the Company’s customers, including sales through catalogs, websites, stores, and the commercial channel.

The Company’s two operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared management team and customer base, the Company has determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors.

The Company uses operating income to evaluate segment profitability. Operating income is defined as net income before interest expense—net, goodwill and tradename impairment, loss on extinguishment of debt—net and income tax expense.

The following table presents the statements of operations metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280—Segment Reporting (in thousands):

The following table presents the balance sheet metrics as required under ASC 280—Segment Reporting (in thousands):

(1)	The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively.

(2)	The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018.

The Company uses segment operating income to evaluate segment performance and allocate resources. Segment operating income excludes (i) asset impairments and lease losses, (ii) severance costs associated with a reorganizations, (iii) product recall accruals and adjustments—net, (iv) asset held for sale gain (loss), (v) favorable legal settlements, net of legal expenses, (vi) disposals of inventory and property and equipment, lease related charges, inventory transfer costs and other costs and adjustments associated with distribution center closures, (vii) non-cash amortization of the inventory fair value adjustment recorded in connection with the acquisition of Waterworks, (viii) a non-cash compensation charge related to a fully vested option grant made to Mr. Friedman in May 2017, (ix) the release of the remaining reserve for potential claims regarding anti-dumping duties which the Company believes have lapsed and (x) the gain on sale of building and land for one of the Company’s previously owned retail galleries. These items are excluded from segment operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and management reviews.

The following table presents segment operating income and income before income taxes (in thousands):


	Year Ended
	February 1,		February 2,		February 3,
	2020		2019		2018
Operating income:
RH Segment	$	375,315	$	288,106	$	161,111
Waterworks		3,780		(922)		(1,615)
Asset impairments and lease losses		(21,899)		(7,218)		(4,417)
Reorganization related costs		(1,075)		(9,977)		(949)
Recall accrual		3,988		(1,619)		(7,707)
Asset held for sale gain (loss)		1,529		(8,497)		—
Legal settlements		1,193		5,289		—
Distribution center closures		—		(3,046)		(7,230)
Impact of inventory step-up		—		(380)		(2,527)
Executive non-cash compensation		—		—		(23,872)
Anti-dumping exposure		—		—		2,202
Gain on sale of building and land		—		—		2,119
Income from operations		362,831		261,736		117,115
Interest expense—net		87,177		67,769		56,002
Goodwill and tradename impairment		—		32,086		33,700
Loss on extinguishment of debt—net		6,472		917		4,880
Income before income taxes	$	269,182	$	160,964	$	22,533

The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows (in thousands):


	Year Ended
	February 1,		February 2,		February 3,
	2020		2019		2018
Furniture	$	1,794,317	$	1,625,553	$	1,543,404
Non-furniture		853,120		880,100		896,770
Total net revenues	$	2,647,437	$	2,505,653	$	2,440,174

The Company is domiciled in the United States and primarily operates its retail and outlet stores in the United States. As of February 1, 2020, the Company operates 4 retail and 2 outlet stores in Canada and 1 retail store in the U.K. Revenues from Canadian and U.K. operations, and the long-lived assets in Canada and the U.K., are not material to the Company. Canada and U.K. geographic revenues are based upon revenues recognized at the retail store locations in the respective country.

No single customer accounted for more than 10% of the Company’s revenues in fiscal 2019, fiscal 2018 or fiscal 2017.