Restoration Hardware 2012 Annual Report Download - page 106

A reconciliation of net income (loss) to EBITDA and adjusted EBITDA is set forth below:
Successor Predecessor (a)
Year Ended
Period
from
June 17,
2008
Through
January 31,
2009
Period
from
February 3,
2008
Through
June 16,
2008
February 2,
2013
January 28,
2012
January 29,
2011
January 30,
2010
(in thousands)
Net income (loss) $ (12,789) $20,588 $ (7,051) $(28,651) $(27,584) $(23,286)
Depreciation and amortization 26,748 29,186 31,263 43,065 50,222 7,934
Interest expense 5,776 5,134 3,150 3,241 4,907 2,731
Income tax expense (benefit) (62,023) 1,121 685 (423) (201) 508
EBITDA (42,288) 56,029 28,047 17,232 27,344 (12,113)
Management and board fees (b) 4,258 10,715 4,793 4,620 1,985 91
Non-cash and other one-time
compensation (c) 116,157 7,907 1,119 592 — 2,319
Terminated operations (d) — 1,580 352 2,604 3,821 884
Severance and other transaction
costs (e) — 621 1,797 1,521 368 600
Impairment of long-lived assets (f) — — 2,115 2,304 3,868 —
Lease termination costs (g) (386) 3,110 — — — —
Amortization of inventory fair
value adjustment (h) — — — (12,780) (35,075) —
Non-capitalized IPO costs (i) — — 2,351 — — —
Special committee investigation
and remediation (j) 4,778 — — — — —
Initial public offering costs (k) 10,755 — — — — —
Anti-dumping exposure (l) 3,250 — — — — —
Other adjustments allowable
under our agreements with our
stockholders (m) 47 192 523 1,503 2,075 —
Adjusted EBITDA $ 96,571 $80,154 $41,097 $ 17,596 $ 4,386 $ (8,219)
(a) We have presented adjusted EBITDA for the Predecessor periods consistently with the Successor
periods to present information on a comparable basis for those periods.
(b) Includes fees and expenses paid in accordance with our management services agreement with Home
Holdings in the Successor periods, as well as fees and expense reimbursements paid to our board of
directors prior to the initial public offering in both the Predecessor and Successor periods.
(c) Fiscal 2012 includes a $92.0 million non-cash compensation charge related to equity grants at the time
of the Reorganization, as well as a non-cash compensation charge of $23.1 million related to the
performance-based vesting of certain shares granted to Mr. Alberini and Mr. Friedman. Fiscal 2011
includes a $6.4 million compensation charge related to the repayment of loans owed to Home Holdings
by Gary Friedman, through the reclassification by Home Holdings of Mr. Friedman’s Class A and
Class A-1 ownership units into an equal number of Class A Prime and Class A-1 Prime ownership
units. Mr. Friedman served as our Chairman and Co-Chief Executive Officer at the time of such loan
repayment. In addition, amounts include stock-based compensation expense incurred prior to the initial
public offering.
(d) Includes the impact of divesting our Brocade Home brand, closing four temporary clearance centers
operated from October 2008 to March 2010, costs related to closing of The Michaels Furniture
Company and costs related to the restructuring of our Shanghai office location.
(e) Amounts in the 2008 Predecessor period and the 2008 Successor period include severance costs, and
transaction costs associated with our Acquisition by Home Holdings. Amounts in fiscal 2009, fiscal
2010, and fiscal 2011 generally include executive severance and other related costs.
(f) Includes costs related to impairment of long-lived assets related to our retail store operations.
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