(1)

Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on our accounting policy. Refer to Note 3—Significant Accounting Policies in the 2019 Form 10-K.

(2)	Included in interest expense—net on the condensed consolidated statements of income.

(3)

Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $2.2 million and $3.5 million for the three months ended August 1, 2020 and August 3, 2019, respectively, and $4.2 million and $6.8 million for the six months ended August 1, 2020 and August 3, 2019, respectively. Other variable costs include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset were not material for the periods reported.

(4)	Included in selling, general and administrative expenses on the condensed consolidated statements of income.

Lease right-of-use assets and lease liabilities consist of the following (in thousands):


		August 1,		February 1,
		2020		2020
	Balance Sheet Classification
Assets
Operating leases	Operating lease right-of-use assets	$	404,508	$	410,904
Finance leases ⁽¹⁾⁽²⁾	Property and equipment—net		732,047		642,117
Total lease right-of-use assets		$	1,136,555	$	1,053,021

Liabilities
Current⁽³⁾
Operating leases	Operating lease liabilities	$	63,866	$	58,924
Finance leases	Other current liabilities		14,117		9,188
Total lease liabilities—current			77,983		68,112

Non-current
Operating leases	Non-current operating lease liabilities		406,012		409,930
Finance leases	Non-current finance lease liabilities		492,136		442,988
Total lease liabilities—non-current			898,148		852,918
Total lease liabilities		$	976,131	$	921,030

(1)	Finance lease right-of-use assets include capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement.

(2)	Finance lease right-of-use assets are recorded net of accumulated amortization of $112.0 million and $92.3 million as of August 1, 2020 and February 1, 2020, respectively.

(3)	Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months.

The maturities of lease liabilities are as follows as of August 1, 2020 (in thousands):


Fiscal year	Operating Leases		Finance Leases		Total
Remainder of fiscal 2020	$	41,441	$	19,253	$	60,694
2021		75,412		38,591		114,003
2022		64,215		39,009		103,224
2023		58,766		39,423		98,189
2024		54,712		39,910		94,622
2025		54,447		41,135		95,582
Thereafter		218,467		594,040		812,507
Total lease payments⁽¹⁾⁽²⁾		567,460		811,361		1,378,821
Less—imputed interest ⁽³⁾		(97,582)		(305,108)		(402,690)
Present value of lease liabilities	$	469,878	$	506,253	$	976,131

(1)

Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $660.4 million of legally binding payments under the noncancellable term for leases signed but not yet commenced as of August 1, 2020, of which $319.6 million is contingent upon certain approvals by local government authorities.

(2)	Excludes future commitments under short-term lease agreements of $1.6 million as of August 1, 2020.

(3)	Calculated using the incremental borrowing rate for each lease at lease commencement.

Supplemental information related to leases consists of the following:


	Six Months Ended
	August 1,		August 3,
	2020		2019
Weighted-average remaining lease term (years)
Operating leases		9.0		8.9
Finance leases		18.8		18.9

Weighted-average discount rate
Operating leases		3.91%		3.81%
Finance leases		5.04%		5.26%

Other information related to leases consists of the following (in thousands):


	Six Months Ended
	August 1,		August 3,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(26,413)	$	(53,670)
Operating cash flows from finance leases		(6,767)		(11,186)
Financing cash flows from finance leases		(4,641)		(4,399)
Total cash outflows from leases	$	(37,821)	$	(69,255)

Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash)
Operating leases	$	27,880	$	17,997
Finance leases		57,286		13,839

Sale-Leaseback Transaction

In July 2020, we executed a sale-leaseback transaction for the Minneapolis Design Gallery for sales proceeds of $25.5 million, which qualified for sale-leaseback accounting in accordance with ASC 842. Concurrently with the sale, we entered into an operating leaseback arrangement with an initial lease term of 20 years and a renewal option for an additional 10 years. We recognized a loss related to the execution of the sale transaction of $9.4 million in the three months ended August 1, 2020, which was recorded in selling, general and administrative expenses on the condensed consolidated statements of income.

Long-lived Asset Impairment

During the first quarter of fiscal 2020, we recognized long-lived asset impairment charges of $3.5 million related to one RH Baby & Child Gallery and one Waterworks showroom, comprised of lease right-of-use asset impairment of $2.0 million and property and equipment impairment of $1.5 million.