Restoration Hardware 2012 Annual Report Download - page 113

(3) Comparable store sales have been calculated based upon retail stores that were open at least fourteen full
months as of the end of the reporting period and did not change square footage by more than 20% between
periods. If a store is closed for seven days during a month, that month will be excluded from comparable
store sales. Comparable store net revenues exclude revenues from outlet stores. Because fiscal 2012 was a
53-week year, comparable store sales percentage for fiscal 2012 excludes that extra week of sales.
(4) Leased selling square footage is retail space at our stores used to sell our products. Leased selling square
footage excludes backrooms at retail stores used for storage office space or similar matters. Leased selling
square footage excludes exterior sales space located outside a store, such as courtyards, gardens and
rooftops. Leased selling square footage includes approximately 4,500 square feet related to one owned store
location.
(5) Retail sales per leased selling square foot is calculated by dividing total net revenues for all retail stores,
comparable and non-comparable, by the average leased selling square footage for the period.
(6) The catalogs and catalog pages circulated from period to period do not take into account different page sizes
per catalog distributed. Page sizes and page counts vary for different catalog mailings and we sometimes
mail different versions of a catalog at the same time. Accordingly, period to period comparisons of catalogs
circulated and catalog pages circulated do not take these variations into account.
(7) Direct revenues include sales through our catalogs and websites.
(8) Adjusted net income is a supplemental measure of financial performance that is not required by, or
presented in accordance with, GAAP. We define adjusted net income as consolidated net income (loss),
adjusted for the impact of certain non-recurring and other items that we do not consider representative of
our ongoing operating performance. Adjusted net income is included in this Form 10-K because
management believes that adjusted net income provides meaningful supplemental information for investors
regarding the performance of our business and facilitates a meaningful evaluation of actual results on a
comparable basis with historical results. Our management uses this non-GAAP financial measure in order to
have comparable financial results to analyze changes in our underlying business from quarter to quarter. The
following table presents a reconciliation of net income (loss), the most directly comparable GAAP financial
measure, to adjusted net income for the periods indicated below.
Year Ended
February 2,
2013
January 28,
2012
January 29,
2011
(in thousands)
Net income (loss) $(12,789) $ 20,588 $(7,051)
Adjustments pre-tax:
Management and board fees (a) 4,258 10,715 4,793
Non-cash and other one-time compensation (b) 115,055 6,350 —
Terminated operations (c) — 1,580 352
Severance and other transaction costs (d) — 621 1,797
Impairment of long-lived assets (e) — — 2,115
Lease termination costs (f) (386) 3,110 —
Non-capitalized IPO costs (g) — — 2,351
Special committee investigation and remediation (h) 4,778 — —
Initial public offering costs (i) 10,755 — —
Anti-dumping exposure (j) 3,250 — —
Subtotal adjusted items 137,710 22,376 11,408
Impact of income tax items (k) (87,182) (16,513) (1,332)
Adjusted net income $ 37,739 $ 26,451 $ 3,025
(a) Includes fees and expenses paid in accordance with our management services agreement with Home
Holdings, as well as fees and expense reimbursements paid to our board of directors prior to the initial
public offering.
(b) The fourth quarter of 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
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Form 10-K