Other Non-Current Obligations

9 Months Ended

Nov. 03, 2018

Other Liabilities Disclosure [Abstract]

NOTE 6—OTHER NON-CURRENT OBLIGATIONS

Other non-current obligations consist of the following (in thousands):

	November 3,	February 3,
	2018	2018
Notes payable for share repurchases	$18,741	$19,390
Lease loss liabilities	12,440	9,684
Capital lease obligations—non-current	7,991	7,509
Unrecognized tax benefits	3,574	3,728
Deferred contract incentive ⁽¹⁾	3,572	5,358
Rollover units and profit interests ⁽²⁾	2,531	2,211
Other non-current obligations	3,224	2,996
Equipment security notes ⁽³⁾	—	13,864
Promissory note ⁽⁴⁾	—	11,627
Total other non-current obligations	$52,073	$76,367

(1)	Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement. The amount will be amortized over the term of the agreement.

(2)	Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 13—Stock-Based Compensation.

(3)

Represents the non-current portion of equipment security notes secured by certain of the Company’s distribution center property and equipment. The equipment security notes were repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt in the nine months ended November 3, 2018.

(4)	Represents the non-current portion of a promissory note secured by the Company’s aircraft. The promissory note was repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt in the nine months ended November 3, 2018.

Lease Loss Liabilities

During the fourth quarter of fiscal 2016, the Company initiated and executed a plan to integrate the RH Contemporary Art (“RHCA”) product line into the broader RH platform and no longer operates RHCA as a separate division. During the third quarter of fiscal 2018, the Company recorded expense of $3.4 million in the RH Segment related to the remeasurement of the lease loss liability for RHCA resulting from an update to both the timing and the amount of future estimated lease related cash inflows based on present market conditions, which is included in selling, general and administrative expenses on the consolidated statements of income.

During the third quarter of fiscal 2018, the Company initiated and executed a plan to close its distribution center located in Essex, MD. As a result of the distribution center closure, the Company incurred restructuring related costs in the RH Segment, including a lease loss liability of $2.2 million, loss on disposal of capitalized property and equipment of $0.2 million, as well as costs for employee termination benefits of $0.2 million. The impact to selling, general and administrative expenses on the consolidated statements of income was $2.6 million, which represents the total charges expected to be incurred with the distribution center closure.