Restoration Hardware 2014 Annual Report Download - page 105

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The weighted-average shares used for earnings per share is as follows (in thousands):
Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Weighted-average shares—basic 39,457,491 38,671,564 9,428,828
Effect of dilutive stock-based awards 1,920,719 1,745,066 —
Weighted-average shares—diluted 41,378,210 40,416,630 9,428,828
The following number of options and restricted stock units were excluded from the calculation of diluted
earnings per share because their inclusion would have been anti-dilutive:
Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Options 1,009,157 774,745 6,020,152
Restricted stock units 4,253 90,988 —
Total anti-dilutive stock-based awards 1,013,410 865,733 6,020,152
NOTE 14—SHARE REPURCHASES
Certain options and awards granted under the Company’s equity plans contain a repurchase right, which
may be exercised at the Company’s discretion in the event of the termination of an employee’s employment with
the Company.
In fiscal 2014, the Company repurchased 251,910 shares of common stock from former employees pursuant
to such repurchase right for fair value at a purchase price of $16.6 million. The repurchases were settled with the
issuance of promissory notes bearing interest at a weighted-average rate of approximately 5%, paid annually,
with principal generally due at the end of an 8-year term.
In fiscal 2013, the Company repurchased 40,353 shares of common stock from former employees pursuant
to such repurchase right for fair value at a purchase price of $2.7 million. The repurchases were settled with the
issuance of promissory notes bearing interest at 5%, paid annually, with principal due at the end of a 10-year
term.
As of January 31, 2015 and February 1, 2014, the aggregate unpaid principal amount of the notes payable
for share repurchases was $19.3 million and $2.7 million, respectively, which is included in other non-current
obligations on the consolidated balance sheets. In fiscal 2014 and fiscal 2013, the Company recorded interest
expense on the outstanding notes of $0.9 million and $0.1 million, respectively. The Company did not incur
interest related to the notes payable for share repurchases in fiscal 2012.
NOTE 15—STOCK-BASED COMPENSATION
The Company estimates the value of equity grants based upon an option-pricing model and recognizes this
estimated value as compensation expense over the vesting periods. The Company recognizes expense associated
with performance-based awards when it becomes probable that the performance condition will be met. Once it
becomes probable that an award will vest, the Company recognizes compensation expense equal to the number of
shares which are probable to vest multiplied by the fair value of the related shares measured at the grant date.
Stock-based compensation expense is included in selling, general and administrative expenses on the
consolidated statements of operations. The Company recorded stock-based compensation expense of $17.1
million, $67.6 million and $116.2 million in fiscal 2014, fiscal 2013 and fiscal 2012, respectively. No stock-
based compensation cost has been capitalized in the accompanying consolidated financial statements.
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