Restoration Hardware 2015 Annual Report Download - page 81

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78
presented. The Company has elected to early adopt the guidance on a retrospective basis effective with the consolidated balance sheet
as of January 30, 2016. This is a change from the Company’s 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, the
Company reclassified $27.9 million and $0.1 million, which were previously included in current assets and current liabilities,
respectively, as of January 31, 2015, to non-current assets and non-current liabilities, respectively, on the consolidated balance sheets.
Accounting for Leases
In February 2016, the FASB issued Accounting Standards Update 2016-02—Leases, which, for operating leases, requires a
lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance
sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the
lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15,
2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects
that the adoption of ASU 2016-02 will have on its consolidated financial statements and anticipates the new guidance will
significantly impact its consolidated financial statements given the Company has a significant number of leases.
Financial Instruments
In January 2016, the FASB issued Accounting Standards Update 2016-01—Financial Instruments—Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities, which amends various aspects of the recognition,
measurement, presentation and disclosure for financial instruments. The new standard is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2017. Early adoption is permitted only for certain provisions. The Company is
evaluating the impact of adopting this new accounting standard on its consolidated financial statements.
Recognition of Breakage
In March 2016, the FASB issued Accounting Standard Update No. 2016-04—Recognition of Breakage for Certain Prepaid
Stored-Value Products. The new guidance creates an exception under ASC 405-20—Liabilities-Extinguishments of Liabilities, to
derecognize financial liabilities related to certain prepaid stored-value products using a revenue-like breakage model. The new
guidance is effective in fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is
permitted. This guidance can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the
date of adoption. The Company is evaluating the impact of adopting this new accounting standard on its consolidated financial
statements.
NOTE 4—PREPAID EXPENSE AND OTHER ASSETS
Prepaid expense and other current assets consist of the following (in thousands):
January 30, January 31,
2016 2015
Capitalized catalog costs ............................................................ $ 35,836 $ 46,911
Vendor deposits ......................................................................... 22,959 21,585
Prepaid expense and other current assets ................................... 20,225 19,480
Total prepaid expense and other current assets .................... $ 79,020 $ 87,976
Other non-current assets consist of the following (in thousands):
January 30, January 31,
2016 2015
Construction related deposits ..................................................... $ 15,384 $ 9,250
Deferred financing fees and convertible debt issuance costs ..... 4,334 3,670
Other deposits ............................................................................ 3,635 6,193
Other non-current assets ............................................................ 4,207 3,793
Total other non-current assets............................................... $ 27,560 $ 22,906