Restoration Hardware 2015 Annual Report Download - page 38

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35
(g) Includes lease termination costs for retail stores that were closed prior to their respective lease termination dates. The
lease termination amount in fiscal 2012 includes changes in estimates regarding liabilities for future lease payments for
closed stores.
(h) Represents legal and other professional fees incurred in connection with the investigation conducted by the special
committee of the board of directors relating to our Chief Executive Officer, Gary Friedman, and our subsequent remedial
actions.
(i) Represents costs incurred in connection with our initial public offering, including a fee of $7.0 million to Catterton
Management Company, LLC, Tower Three Partners LLC and GJK Capital Advisors, LLC in accordance with our
management services agreement, payments of $2.2 million to certain former executives and bonus payments to employees
of $1.3 million.
(j) Represents expense incurred as a result of increased tariff obligations of one of our foreign suppliers following the U.S.
Department of Commerce’s review of the anti-dumping duty order on wooden bedroom furniture from China for the
period from January 1, 2011 through December 31, 2011.
(k) Represents legal and other professional fees incurred in connection with our follow-on offerings in May 2013 and July
2013.
(l) As of the end of fiscal 2012, our U.S. operations achieved a position of cumulative profits for the most recent three-year
period. We concluded that this record of cumulative profitability in recent years, coupled with our business plan for
profitability in future periods provided assurance that our future tax benefits more likely than not would be
realized. Accordingly, in fiscal 2012, we released all of our U.S. valuation allowance against net deferred tax assets. In
addition, income tax items exclude the tax benefit related to the resolution of our Canada Revenue Agency examination in
fiscal 2012, exclude the tax benefit from the utilization of federal and state net operating losses, and assume a normalized
tax rate of 40% for fiscal 2011 through fiscal 2014. The adjustment for fiscal 2015 represents the tax effect of the adjusted
items based on our effective tax rate of 39.2%.
(12) As of fiscal 2015 and fiscal 2014, $130.8 million and $62.2 million, respectively, of our investments are due within one year. As
of fiscal 2015 and fiscal 2014, $22.1 million and $18.3 million, respectively, of our investments are due within two years.
(13) Working capital is defined as current assets, excluding cash and cash equivalents, less current liabilities, excluding the current
portion of long-term debt. Fiscal 2014, fiscal 2013 and fiscal 2012 have been updated to reflect our working capital subsequent
to the adoption of ASU 2015-17, which requires that deferred tax liabilities and assets be classified as non-current in a classified
statement of financial position. We have elected to early adopt the guidance on a retrospective basis effective with the
consolidated balance sheet as of fiscal 2015. This is a change from our historical presentation whereby certain deferred tax
assets and liabilities were classified as current and the remainder were classified as non-current. To conform to the current
period presentation, we reclassified $27.9 million, $21.4 million and $37.0 million current deferred tax assets which were
previously included in current assets as of fiscal 2014, fiscal 2013 and fiscal 2012, respectively, to non-current assets on the
consolidated balance sheets. To conform to the current period presentation, we reclassified $0.1 million current deferred tax
liabilities which were previously included in current liabilities as of both fiscal 2014 and fiscal 2013 to non-current liabilities on
the consolidated balance sheets. We did not have any current deferred tax liabilities as of fiscal 2012. As we did not have any
current deferred tax assets or liabilities as of fiscal 2011, the adoption of ASU 2015-17 did not have an impact on our working
capital for this fiscal year.
(14) Represents our obligations, net of debt discount, related to the 2019 Notes and 2020 Notes. The aggregate principal amounts due
under the 2019 Notes and 2020 Notes are $350 million and $300 million, respectively.
(15) Total debt (including current portion) includes the 2019 Notes and 2020 Notes, net of debt discount, revolving line of credit,
term loan, notes payable for share repurchases and capital lease obligations.