Restoration Hardware 2014 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2014 Restoration Hardware annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

For fiscal 2014, net cash provided by operating activities was $82.5 million and consisted of net income of $91.0
million and non-cash items of $47.1 million, offset by a decrease in working capital and other activities of $55.6
million. Working capital and other activities consisted primarily of increases in inventory of $106.0 million to support
our revenue growth, increases in non-current assets of $6.0 million primarily related to an increase in deposits, as well
as decreases in other current liabilities of $3.1 million related to payments made for federal and state taxes. These uses
of cash from working capital components were partially offset by increases in accrued liabilities and accounts payable
of $25.5 million, increases in deferred revenue and customers deposits of $20.0 million due to the timing of shipments
made at fiscal quarter end and increased special orders and decreases in prepaid expenses and other current assets of
$15.1 million primarily due to a decrease in vendor deposits and capitalized Source Book costs.
For fiscal 2013, net cash provided by operating activities was $87.5 million and consisted of net income of
$18.2 million and non-cash items of $99.2 million, offset by a decrease in working capital and other activities of
$29.9 million. Non-cash items of $99.2 million include stock-based compensation expense of $67.6 million,
depreciation and amortization of $27.7 million, and an increase in our deferred income tax of $5.6 million. The
decrease in working capital and other activities consisted primarily of increases in inventory of $100.9 million to
support our growth, increases in prepaid expenses of $22.8 million primarily due to an increase in vendor
deposits and capitalized Source Book costs, and increases in accounts receivable of $5.0 million due to revenue
growth and tenant improvements. These uses of cash from working capital components were partially offset by
increases in accrued liabilities and accounts payable of $57.3 million primarily due to timing of payments,
increases in other current liabilities of $30.4 million due to federal and state tax liabilities and an increase in our
customer return reserve, increases in deferred revenue and customer deposits of $7.3 million due to the timing of
shipments made at fiscal year-end, as well as increases in deferred rent and lease incentives of $7.2 million
primarily due to entering into new lease agreements for Galleries and new distribution center locations.
For fiscal 2012, net cash used in operating activities was $3.9 million and consisted of an increase in
working capital and other activities of $73.0 million and a net loss of $12.8 million, offset by non-cash items of
$81.9 million. Non-cash items of $81.9 million include a $92.0 million compensation charge related to equity
activity at the time of the Reorganization, a compensation charge of $23.1 million related to the performance-
based vesting of certain shares granted to Mr. Alberini and Mr. Friedman subsequent to the Reorganization and
depreciation and amortization of $26.7 million, offset by the release of our U.S. valuation allowance in fiscal
2012 of $57.2 million and a decrease in our non-cash income tax adjustments of $4.7 million. The increase in
working capital and other activities consisted primarily of increases in inventory of $107.5 million as part of our
strategy to improve our inventory position to meet demand levels, prepaid expenses of $24.5 million primarily
due to an increase in Source Book costs associated with the Source Book strategy and accounts receivable of $5.3
million due to timing of payments received related to our credit card receivables. These uses of cash from
working capital components were partially offset by increases in accrued liabilities and accounts payable of
$36.2 million primarily due to timing of payments, increases in deferred revenue and customer deposits of $16.2
million due to the timing of shipments made at fiscal year end, as well as increases in deferred rent and lease
incentives of $10.9 million primarily due to entering into new lease agreements for Galleries.
Net Cash Used In Investing Activities
Investing activities consist primarily of investments in capital expenditures related to new store openings
and improvements and in supply chain and systems infrastructure.
For fiscal 2014, net cash used in investing activities was $200.5 million primarily as a result of $110.4
million in investments in new stores, supply chain, information technology and systems infrastructure. During
fiscal 2014, we made payments of $9.3 million to escrow accounts for future construction of certain Galleries. In
addition, we made short-term and long-term investments in available-for-sale securities of $91.6 million,
partially offset by maturities of such investments of $11.1 million.
58