5. Leases — We conduct substantially all operations from leased facilities, with the exception of the corporate headquarters in Dallas and the Dallas warehouse, distribution and retail complex, which are owned facilities. The other warehouse facilities across the country and all other retail store locations are under operating leases that will expire over the next 1 to 11 years. Many of our leases include options to renew at our discretion. We include the lease renewal option periods in the calculation of our operating lease assets and liabilities when it is reasonably certain that we will renew the lease. We also lease certain equipment under finance leases that expire generally within 60 months.

As discussed in Note 1, we adopted ASC 842 effective July 1, 2019 using the modified retrospective adoption method, which resulted in an adjustment to opening retained earnings of $0.6 million to recognize impairment of the opening right-of-use asset balance for two stores for which assets had been previously impaired under ASC 360, “Property, Plant, and Equipment.”

We utilized the simplified transition option available in ASC 842, which allowed the continued application of the legacy guidance in ASC 840, including disclosure requirements, in the comparative periods presented in the year of adoption.

We determine whether an agreement contains a lease at inception based on our right to obtain substantially all of the economic benefits from the use of the identified asset and its right to direct the use of the identified asset. Lease liabilities represent the present value of future lease payments and the right-of-use (ROU) assets represent our right to use the underlying assets for the respective lease terms.

The operating lease liability is measured as the present value of the unpaid lease payments and the ROU asset is derived from the calculation of the operating lease liability. As our leases do not generally provide an implicit rate, we use our incremental borrowing rate as the discount rate to calculate the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate that would be required to borrow over a similar term, on a collateralized basis in a similar economic environment.

Rent escalations occurring during the term of the leases are included in the calculation of the future minimum lease payments and the rent expense related to these leases is recognized on a straight-line basis over the lease term. In addition to minimum lease payments, certain leases require payment of a proportionate share of real estate taxes and certain building operating expenses allocated on a percentage of sales in excess of a specified base. These variable lease costs are not included in the measurement of the ROU asset or lease liability due to unpredictability of the payment amount and are recorded as lease expense in the period incurred. The ROU asset is adjusted to account for previously recorded lease-related expenses such as deferred rent and other lease liabilities.

Our lease agreements do not contain residual value guarantees or significant restrictions or covenants other than those customary in such arrangements. As of September 30, 2019, we did not have material leases that had been signed but not yet commenced.

	Three Months Ended September 30, 2019
Operating lease cost	$	24,068
Variable lease cost		6,553
Finance lease cost:
Amortization of right-of-use assets		71
Interest on lease liabilities		8
Total lease cost	$	30,700

The table below presents additional information related to the Company’s leases as of September 30, 2019:

	Three Months Ended September 30, 2019
Weighted average remaining lease term (in years)
Operating leases		6.4
Finance leases		3.4
Weighted average discount rate
Operating leases		5.8	%
Finance leases		3.8	%

Other information related to leases, including supplemental disclosures of cash flow information, is as follows (in thousands):

	Three Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,281
Operating cash flows from finance leases		8
Financing cash flows from finance leases		71
Right-of-use assets obtained in exchange for operating lease liabilities		12,256

Maturities of lease liabilities were as follows as of September 30, 2019 (in thousands):

	Operating Leases		Finance Leases		Total
Fiscal year:
2020 (remaining)	$	65,529	$	233	$	65,762
2021		79,932		315		80,247
2022		68,669		236		68,905
2023		59,936		97		60,033
2024		51,815		10		51,825
2025		45,043		—		45,043
Thereafter		84,966		—		84,966
Total lease payments	$	455,890	$	891	$	456,781
Less: Interest		77,862		53		77,915
Total lease liabilities	$	378,028	$	838	$	378,866
Less: Current lease liabilities		66,914		288		67,202
Non-current lease liabilities	$	311,114	$	550	$	311,664

Current and non-current finance lease liabilities are recorded in “Accrued liabilities” and “Other liabilities – non-current,” respectively, on our consolidated balance sheet. As of September 30, 2019, there were no operating lease payments for legally binding minimum lease payments for leases signed but not yet commenced.