Restoration Hardware 2015 Annual Report Download - page 97

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NOTE 17—RELATED PARTY TRANSACTIONS
Aircraft Time Sharing Agreement
On March 29, 2016, Restoration Hardware, Inc., a wholly-owned subsidiary of the Company entered into an Amended and
Restated Aircraft Time Sharing Agreement (the “Time Sharing Agreement”) with Gary Friedman, its Chief Executive Officer. The
Time Sharing Agreement governs use of any of the Company’s aircraft (“Corporate Aircraft”) by Mr. Friedman for personal trips and
provides that Mr. Friedman will lease such Corporate Aircraft and pay Restoration Hardware, Inc. an amount equal to the aggregate
actual expenses of each personal use flight based on the variable costs of the flight, with the amount of such lease payments not to
exceed the maximum payment level established under the Federal Aviation Administration rules. Mr. Friedman maintains a deposit
with the Company, to be used towards payment of amounts due under the Time Sharing Agreement.
Reappointment of Gary Friedman as Chairman and Co-Chief Executive Officer
On July 2, 2013, at the time of Mr. Friedman’s reappointment as Chairman of the Company’s Board of Directors and Co-Chief
Executive Officer, Mr. Friedman and Hierarchy, LLC (“Hierarchy”), a newly formed entity in which Mr. Friedman had a controlling
interest, waived all of Home Holdings’ obligations to invest in Hierarchy and all of Home Holdings’ rights with respect to Hierarchy
were canceled, and the Company subsequently acquired all the outstanding interests of Hierarchy. As a result of the acquisition of
Hierarchy, in fiscal 2013 the Company wrote off all outstanding receivables in connection with certain consulting services provided to
Hierarchy, and recorded a charge of $0.2 million.
NOTE 18—COMMITMENTS AND CONTINGENCIES
Leases
The Company leases certain property consisting of retail and outlet stores, corporate offices, distribution centers and equipment.
A majority of the Company’s leases expire at various dates through fiscal 2032. The Company has a lease for one gallery location that
expires in fiscal 2058. The stores, distribution centers and corporate office leases generally provide that the Company assumes the
maintenance and all or a portion of the property tax obligations on the leased property. Most store leases also provide for minimum
annual rent payments, with provisions for additional rent based on a percentage of sales, after meeting certain sales thresholds, and for
payment of certain expenses.
The aggregate future minimum rent payments under leases in effect as of January 30, 2016, are as follows (in thousands):
Lease agreements accounted for as:
Capital
Leases (1)
Operating
Leases Build-to-Suit Total
2016 ........................................................................................ $ 1,147 $ 78,586 $ 17,523 $ 97,256
2017 ........................................................................................ 1,116 67,038 35,353 103,507
2018 ........................................................................................ 1,132 58,518 38,200 97,850
2019 ........................................................................................ 1,155 54,219 39,993 95,367
2020 ........................................................................................ 1,194 48,684 40,525 90,403
Thereafter ............................................................................... 10,374 334,880 631,528 976,782
Minimum lease commitments ................................................ 16,118 $ 641,925 $ 803,122 $ 1,461,165
Less—amount representing interest ....................................... (8,537)
Present value of capital lease obligations ............................... 7,581
Less—current capital lease obligations .................................. (182)
N
o
n
-current capital lease obligations ..................................... $ 7,399
(1) The current and non-current capital lease obligations are included in other current liabilities and other non-current obligations,
respectively, on the consolidated balance sheets.