Restoration Hardware 2012 Annual Report Download - page 164

Contingencies
The Company is involved from time to time in various legal claims, actions and complaints arising in
connection with its business. The outcome of matters the Company is involved in cannot be determined at this
time and the results cannot be predicted with certainty and could result in unexpected expenses and liability and
could also materially adversely affect the Company’s operations.
The Company reviews the need for any loss contingency reserves and establishes reserves when, in the
opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can
be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters,
particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine
whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability
until the case is close to resolution, in which case no reserve is established until that time.
NOTE 16—SEGMENT REPORTING
The Company defines an operating segment on the same basis that it uses to evaluate performance internally
by the Chief Operating Decision Maker (“CODM”). The Company has determined that the Chief Executive
Officer (or Co-Chief Executive Officers prior to Mr. Friedman’s resignation from such position) was its CODM
and there was one operating segment. Therefore, the Company reports as a single segment. This includes all sales
channels accessed by the Company’s customers, including sales through catalogs, sales through the Company’s
website and sales through the Company’s stores.
The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both
indoor and outdoor furniture from the Company’s business lines. Non-furniture includes lighting, textiles,
accessories and home décor. Net revenues in each category were as follows (in thousands):
Year Ended
February 2,
2013
January 28,
2012
January 29,
2011
Furniture $ 628,092 $477,730 $339,173
Non-furniture 564,954 480,354 433,579
Total net revenues $1,193,046 $958,084 $772,752
The Company is domiciled in the United States and operates stores in the United States and Canada.
Revenues from Canadian operations, and the long-lived assets in Canada, are not material to the Company.
Geographic revenues are determined based upon where service is rendered.
No single customer accounted for more than 10% of the Company’s revenues in fiscal 2012, fiscal 2011, or
fiscal 2010.
NOTE 17—RETAIL STORE CLOSURES AND OFFICE RESTRUCTURING
Shanghai Office Restructuring
In April 2011, the Company restructured its Shanghai office location and terminated employees at that
office, as well as terminated employees within the corporate headquarters in Corte Madera, CA. As a result,
during fiscal 2011, the Company incurred $1.6 million in restructuring related costs, including one-time
employee termination benefits, contract termination fees, loss on disposal of capitalized property and equipment,
and other associated costs, which are included in selling, general and administrative expenses on the consolidated
statements of operations. During fiscal 2012, the Company did not incur any restructuring related costs. At
February 2, 2013, the Company did not have any remaining future liabilities related to this office restructuring.
The Company does not expect to incur additional costs associated with this office restructuring in future periods.
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