We lease all our retail store locations; nearly all of which are operating leases.  Store leases typically provide for initial terms of five to ten years.  Many of our store leases contain the following provisions:

Our store leases typically contain one or more options for us to renew the lease beyond the initial five to ten year term.  In addition, most of our store leases contain provisions that allow for early termination between the third and fifth year of the term if predetermined sales levels are not met, or upon the occurrence of other specified contingent events.  When we have the option to extend the lease term (including by not exercising an available termination option) or purchase the leased asset, and it is reasonably certain that we will do so, we consider these options in determining the classification and measurement of the lease.  However, generally at store lease commencement, it is not reasonably certain that we will exercise an extension or purchase option.  When considering contingent termination provisions, we generally consider both the likelihood of the contingency occurring in addition to the economic factors we consider when assessing any other termination or renewal option.

We determine whether a contract is or contains a lease at contract inception.  Beginning in Fiscal 2020, operating lease liabilities are recognized based on the present value of remaining fixed lease payments over the lease term.  Operating lease ROU assets are recognized based on the calculated lease liability, as adjusted for lease prepayments, initial direct costs and landlord incentives.  Because the implicit rate is generally not readily determinable for our leases, we use our estimated incremental borrowing rate as the discount rate for the leases when measuring operating lease liabilities.  The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over a similar term as the lease term.  Operating lease cost for fixed lease payments is recognized on a straight-line basis over the lease term.  Variable lease payments are generally expensed as incurred.

None of our leases contain material residual value guarantees or material restrictive covenants.  ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize.  This review resulted in a related asset impairment charge of approximately $1.1 million recognized in the 13 weeks ended May 4, 2019.

Prior to the adoption of ASC 842,  we had entered into capital leases for certain property.  At February 2, 2019, total capital lease obligations were $3.0 million, of which $1.0 million was included in short-term capital lease obligations and $2.0 million was included in long-term capital lease obligations on our unaudited condensed consolidated balance sheet.

As previously disclosed in our 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments due under non-cancelable capital and operating leases as of February 2, 2019 were as follows: