Restoration Hardware 2015 Annual Report Download - page 56

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Contractual Obligations
As of January 30, 2016, our future contractual cash obligations over the next several periods were as follows:
Payments Due by Period
Total 2016 2017-2018 2019–2020 Thereafter
(in thousands)
Convertible senior notes due 2019 ........................................ $ 350,000 $ — $ — $ 350,000 $ —
Convertible senior notes due 2020 ........................................ 300,000 — — 300,000 —
Revolving line of credit
(
1
)
..................................................... — — — — —
Operating leases
(
2
)
................................................................ 641,925 78,586 125,556 102,903 334,880
Other non-current obligations
(
3
)
........................................... 803,122 17,523 73,553 80,518 631,528
Capital lease obligations ....................................................... 16,118 1,147 2,248 2,349 10,374
N
otes payable for share repurchases ..................................... 19,523 — — 893 18,630
Letters of credit ..................................................................... 14,983 14,983 — — —
Total ................................................................................. $ 2,145,671 $ 112,239 $ 201,357 $ 836,663 $ 995,412
(1) Under the amended and restated credit agreement, the revolving line of credit has a maturity date of November 24, 2019.
(2) We enter into operating leases in the normal course of business. Most lease arrangements provide us with the option to renew
the leases at defined terms. The table above does not include future obligations for renewal options that have not yet been
exercised. The future operating lease obligations would change if we were to exercise these options. Amounts above do not
include estimated contingent rent due under operating leases. Our obligation for contingent rent as of January 30, 2016 was $5.2
million.
(3) Other non-current obligations include estimated payments for rent associated with build-to-suit lease transactions. These
amounts may be reduced in the event we are able to effect a sale-leaseback on any of these locations.
Other Commitments
The Company enters into various cancellable commitments related to the procurement of merchandise inventory. As of January
30, 2016, these merchandise inventory purchase commitments were $502.5 million.
As of January 30, 2016, the liability of $1.1 million for unrecognized tax benefits associated with uncertain tax positions (refer
to Note 12—Income Taxes in our consolidated financial statements) has not been included in the contractual obligations table above
because we are not able to reasonably estimate when cash payments for these liabilities will occur or the amount by which these
liabilities will increase or decrease over time.
Off Balance Sheet Arrangements
We have no material off balance sheet arrangements as of January 30, 2016.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect amounts reported in our consolidated financial statements and
related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management evaluates its accounting policies, estimates, and
judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that
are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and
conditions and such differences could be material to the consolidated financial statements.
Management evaluated the development and selection of its critical accounting policies and estimates and believes that the
following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and
financial position, and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates
and judgments used in the preparation of our consolidated financial statements. With respect to critical accounting policies, even a
relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact
on subsequent results of operations. However, our historical results for the periods presented on the consolidated financial statements
have not been materially impacted by such variances. More information on all of our significant accounting policies can be found in
Note 3—Significant Accounting Policies to our audited consolidated financial statements.