Restoration Hardware 2015 Annual Report Download - page 90

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Available-for-sale marketable debt securities are reviewed periodically to identify possible other-than-temporary impairment.
Although the Company had certain securities that were in a loss position as of January 30, 2016, the Company has no current
requirement or intent to sell the securities in an unrealized loss position nor does it consider any of the unrealized losses to be credit
losses. The Company expects to recover up to (or beyond) the initial cost of the investment for securities held. The available-for-sale
securities in an unrealized loss position were in such a position for less than twelve months as of January 30, 2016.
Fair Value of Financial Instruments
Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value. The
estimated fair value and carrying value of the 2019 Notes and 2020 Notes (carrying value excludes the equity component of the 2019
Notes and 2020 Notes classified in stockholders’ equity) were as follows (in thousands):
January 30, January 31,
2016 2015
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Convertible senior notes due 2019 ......................................... $ 257,624 $ 300,711 $ 260,444 $287,487
Convertible senior notes due 2020 ......................................... $ 198,635 $ 224,887 $ — $ —
The fair value of the 2019 Notes and 2020 Notes were determined based on inputs that are observable in the market or that
could be derived from, or corroborated with, observable market data, including the trading price of the Company’s convertible notes,
when available, the Company’s stock price and interest rates based on similar debt issued by parties with credit ratings similar to the
Company (Level 2).
As the Company’s debt obligations under the revolving line of credit are variable rate, there are no significant differences
between the estimated fair value (level 2) and carrying value.
Non-Financial Assets
As discussed in Note 3—Significant Accounting Policies, the Company did not record an impairment charge on long-lived
assets in fiscal 2015 or fiscal 2014. In fiscal 2013, the Company recorded an impairment charge of $1.4 million related to the
underperformance of a stand-alone RH Baby & Child Gallery. The impairment charge reduced the then carrying amount of the
applicable long-lived assets of $1.4 million to their fair value of zero dollars. The fair value of the long-lived assets was determined
using level 3 inputs and the valuation techniques discussed in Note 3—Significant Accounting Policies.
NOTE 12—INCOME TAXES
The following is a summary of the income tax expense (benefit) (in thousands):
Year Ended
January 30, January 31, February 1,
2016 2015 2014
Current
Federal ........................................................................................... $ 55,676 $ 45,611 $ 21,593
State ............................................................................................... 9,112 9,235 4,182
Foreign .......................................................................................... 227 (596 ) (454)
Total current tax expense ......................................................... 65,015 54,250 25,321
Deferred
Federal ........................................................................................... (5,691) 3,895 6,215
State ............................................................................................... (648) (973 ) (596)
Foreign .......................................................................................... 105 1 (17)
Total deferred tax expense (benefit) ........................................ (6,234) 2,923 5,602
Total income tax expense ........................................................ $ 58,781 $ 57,173 $ 30,923