Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

December 5, 2019

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission file number: 001-35720

Graphic

(Exact name of registrant as specified in its charter)

Delaware

    

45-3052669

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

15 Koch Road, Suite K
Corte Madera, CA

 

94925

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (415924-1005

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.0001 par value

RH

New York Stock Exchange, Inc.

(Title of each class)

(Trading symbol)

(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of November 29, 2019, 18,997,010 shares of registrant’s common stock were outstanding.

RH

INDEX TO FORM 10-Q

    

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Condensed Consolidated Balance Sheets (Unaudited) as of November 2, 2019 and February 2, 2019

3

Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended November 2, 2019 and November 3, 2018

4

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended November 2, 2019 and November 3, 2018

5

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) for the three and nine months ended November 2, 2019 and November 3, 2018

6

Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended November 2, 2019 and November 3, 2018

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

38

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

71

Item 4.

Controls and Procedures

73

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

75

Item 1A.

Risk Factors

75

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

79

Item 3.

Defaults Upon Senior Securities

79

Item 4.

Mine Safety Disclosures

79

Item 5.

Other Information

79

Item 6.

Exhibits

80

Signatures

81

2

PART I

Item 1. Financial Statements

RH

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

    

November 2,

    

February 2,

2019

2019

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

38,253

$

5,803

Accounts receivable—net

 

45,312

 

40,224

Merchandise inventories

 

429,189

 

531,947

Assets held for sale

21,795

Prepaid expense and other current assets

 

46,725

 

104,198

Total current assets

 

559,479

 

703,967

Property and equipment—net

 

969,090

 

952,957

Operating lease right-of-use assets

415,912

440,504

Goodwill

 

124,376

 

124,379

Tradenames, trademarks and domain names

 

86,022

 

86,022

Deferred tax assets

 

36,506

 

35,603

Other non-current assets

 

170,628

 

79,586

Total assets

$

2,362,013

$

2,423,018

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

288,937

$

320,497

Deferred revenue and customer deposits

 

167,014

 

152,595

Convertible senior notes due 2019—net

 

 

343,789

Convertible senior notes due 2020—net

285,570

Operating lease liabilities

55,753

66,249

Other current liabilities

 

106,432

 

109,456

Total current liabilities

 

903,706

 

992,586

Asset based credit facility

 

 

57,500

FILO term loan—net

 

89,408

 

Equipment promissory notes—net

 

36,613

 

Convertible senior notes due 2020—net

 

 

271,157

Convertible senior notes due 2023—net

 

262,177

 

249,151

Convertible senior notes due 2024—net

261,010

Non-current operating lease liabilities

 

412,247

 

437,557

Non-current finance lease liabilities

431,379

421,245

Other non-current obligations

 

28,693

 

32,512

Total liabilities

 

2,425,233

 

2,461,708

Commitments and contingencies (Note 15)

 

 

Stockholders’ deficit:

 

  

 

  

Preferred stock—$0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of November 2, 2019 and February 2, 2019

 

 

Common stock—$0.0001 par value per share, 180,000,000 shares authorized, 18,928,309 shares issued and outstanding as of November 2, 2019; 20,480,613 shares issued and 20,477,813 shares outstanding as of February 2, 2019

 

2

 

2

Additional paid-in capital

 

416,946

 

356,422

Accumulated other comprehensive loss

 

(2,481)

 

(2,334)

Accumulated deficit

 

(477,687)

 

(392,537)

Treasury stock—at cost, no shares as of November 2, 2019 and 2,800 shares as of February 2, 2019

 

 

(243)

Total stockholders’ deficit

 

(63,220)

 

(38,690)

Total liabilities and stockholders’ deficit

$

2,362,013

$

2,423,018

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

3

RH

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,

November 3,

November 2,

November 3,

    

2019

    

2018

    

2019

    

2018

Net revenues

$

677,526

$

636,558

$

1,982,461

$

1,834,762

Cost of goods sold

 

393,360

 

386,537

 

1,170,523

 

1,107,064

Gross profit

 

284,166

 

250,021

 

811,938

 

727,698

Selling, general and administrative expenses

 

194,929

 

207,793

550,087

 

555,500

Income from operations

 

89,237

 

42,228

 

261,851

 

172,198

Other expenses

 

  

 

  

 

  

 

  

Interest expense—net

21,564

17,695

67,195

 

48,260

Loss on extinguishment of debt—net

 

6,857

 

 

5,903

 

917

Total other expenses

 

28,421

 

17,695

 

73,098

 

49,177

Income before income taxes

 

60,816

 

24,533

 

188,753

 

123,021

Income tax expense

 

8,353

 

4,419

 

36,811

 

14,540

Net income

$

52,463

$

20,114

$

151,942

$

108,481

Weighted-average shares used in computing
basic net income per share

 

18,765,769

 

22,082,141

 

19,069,501

 

21,850,955

Basic net income per share

$

2.80

$

0.91

$

7.97

$

4.96

Weighted-average shares used in computing
diluted net income per share

 

24,170,172

 

27,703,319

 

23,809,425

 

26,810,035

Diluted net income per share

$

2.17

$

0.73

$

6.38

$

4.05

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

4

RH

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,

November 3,

November 2,

November 3,

2019

    

2018

    

2019

    

2018

Net income

$

52,463

$

20,114

$

151,942

$

108,481

Net gains (losses) from foreign currency translation

 

299

(383)

 

(148)

 

(2,129)

Total comprehensive income

$

52,762

$

19,731

$

151,794

$

106,352

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

5

RH

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

Three Months Ended

 

Accumulated

 

Retained

 

Total

 

Additional

 

Other

 

Earnings

 

Stockholders’

 

Common Stock

 

Paid-In

 

Comprehensive

 

(Accumulated

 

Treasury Stock

 

Equity

    

Shares

    

Amount

    

Capital

    

Income (Loss)

    

Deficit)

    

Shares

    

Amount

    

(Deficit)

Balances—August 4, 2018

 

22,229,439

 

$

2

 

$

925,087

 

$

(1,917)

 

$

218,906

 

20,222,932

 

$

(1,000,569)

 

$

141,509

Stock-based compensation

 

 

 

3,578

 

 

 

 

 

3,578

Vested and delivered restricted stock
units

 

11,831

 

 

(1,084)

 

 

 

 

 

(1,084)

Exercise of stock options

 

129,549

 

 

6,618

 

 

 

 

 

6,618

Repurchases of common stock

 

(1,160,879)

 

 

 

 

 

1,160,879

 

(145,182)

 

(145,182)

Net income

 

 

 

 

 

20,114

 

 

 

20,114

Net gains (losses) from foreign currency
translation

 

 

 

 

(383)

 

 

 

 

(383)

Balances—November 3, 2018

 

21,209,940

 

$

2

 

$

934,199

 

$

(2,300)

 

$

239,020

 

21,383,811

 

$

(1,145,751)

 

$

25,170

Balances—August 3, 2019

 

18,591,763

 

$

2

 

$

355,010

 

$

(2,780)

 

$

(530,150)

 

 

$

 

$

(177,918)

Stock-based compensation

 

 

 

5,009

 

 

 

 

 

5,009

Vested and delivered restricted stock units

 

2,967

 

 

(304)

 

 

 

 

 

(304)

Exercise of stock options

 

279,570

 

 

11,286

 

 

 

 

 

11,286

Shares issued in connection with warrant agreements

 

54,009

 

 

 

 

 

 

 

Net income

 

 

 

 

 

52,463

 

 

 

52,463

Net gains (losses) from foreign currency translation

 

 

 

 

299

 

 

 

 

299

Equity component of the convertible notes issuance—net

 

 

87,070

 

 

 

 

 

87,070

Issuance of warrants

 

 

50,225

 

 

 

 

 

50,225

Purchase of convertible note hedges

 

 

(91,350)

 

 

 

 

 

(91,350)

Balances—November 2, 2019

 

18,928,309

 

$

2

 

$

416,946

 

$

(2,481)

 

$

(477,687)

 

 

$

 

$

(63,220)

6

RH

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

Nine Months Ended

 

Accumulated

 

Retained

 

Total

 

Additional

 

Other

 

Earnings

 

Stockholders’

 

Common Stock

 

Paid-In

 

Comprehensive

 

(Accumulated

 

Treasury Stock

 

Equity

    

Shares

    

Amount

    

Capital

    

Income (Loss)

    

Deficit)

    

Shares

    

Amount

    

(Deficit)

Balances—February 3, 2018

 

21,517,338

 

$

2

 

$

840,765

 

$

(171)

 

$

151,575

 

20,220,132

 

$

(1,000,326)

 

$

(8,155)

Stock-based compensation

 

 

 

17,457

 

 

 

 

 

17,457

Issuance of restricted stock

 

6,405

 

 

 

 

 

 

 

Vested and delivered restricted stock
units

 

114,847

 

 

(8,947)

 

 

 

 

 

(8,947)

Exercise of stock options

 

735,029

 

 

35,827

 

 

 

 

 

35,827

Repurchases of common stock

 

(1,163,679)

 

 

 

 

 

1,163,679

 

(145,425)

 

(145,425)

Equity component value of convertible
note issuance—net

 

 

89,933

 

 

 

 

 

89,933

Sale of common stock warrant

 

 

51,021

 

 

 

 

 

51,021

Purchase of convertible note hedge

 

 

(91,857)

 

 

 

 

 

(91,857)

Impact of Topic 606 adoption

 

 

 

 

(21,036)

 

 

 

(21,036)

Net income

 

 

 

 

 

108,481

 

 

 

108,481

Net gains (losses) from foreign currency
translation

 

 

 

 

(2,129)

 

 

 

 

(2,129)

Balances—November 3, 2018

 

21,209,940

 

$

2

 

$

934,199

 

$

(2,300)

 

$

239,020

 

21,383,811

 

$

(1,145,751)

 

$

25,170

Balances—February 2, 2019

 

20,477,813

 

$

2

 

$

356,422

 

$

(2,333)

 

$

(392,538)

 

2,800

 

$

(243)

 

$

(38,690)

Stock-based compensation

 

 

 

15,788

 

 

 

 

 

15,788

Issuance of restricted stock

 

7,014

 

 

 

 

 

 

 

Vested and delivered restricted stock units

 

104,608

 

 

(6,538)

 

 

 

 

 

(6,538)

Exercise of stock options

 

452,219

 

 

18,509

 

 

 

 

 

18,509

Repurchases of common stock

 

(2,167,396)

 

 

 

 

 

2,167,396

 

(250,032)

 

(250,032)

Retirement of treasury stock

 

 

 

(13,180)

 

 

(237,091)

 

(2,170,154)

 

250,271

 

Shares issued in connection with warrant agreements

 

54,009

 

 

 

 

 

 

 

Net income

 

 

 

 

 

151,942

 

 

 

151,942

Net gains (losses) from foreign currency translation

 

 

 

 

(148)

 

 

 

 

(148)

Equity component of the convertible notes issuance—net

 

 

87,070

 

 

 

 

 

87,070

Issuance of warrants

 

 

50,225

 

 

 

 

 

50,225

Purchase of convertible note hedges

 

 

(91,350)

 

 

 

 

 

(91,350)

Conversion of convertible senior notes

42

(42)

4

4

Balances—November 2, 2019

 

18,928,309

 

$

2

 

$

416,946

 

$

(2,481)

 

$

(477,687)

 

 

$

 

$

(63,220)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

7

RH

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

November 2,

November 3,

    

2019

    

2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

151,942

$

108,481

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

75,945

 

64,934

Non-cash operating lease cost

48,855

51,095

Asset impairments

1,660

5,337

Asset held for sale gain

(1,529)

Amortization of debt discount

 

33,528

 

29,669

Accretion of debt discount upon settlement of debt

(70,482)

Stock-based compensation expense

 

16,109

 

17,777

Non-cash finance lease interest expense

16,864

11,254

Product recalls

(3,516)

Net non-cash charges resulting from inventory step-up

 

 

380

Deferred income taxes

 

667

 

(670)

Loss on extinguishment of debt—net

5,903

917

Other non-cash interest expense

 

3,306

 

2,648

Change in assets and liabilities:

 

 

Accounts receivable

 

(2,809)

 

(11,098)

Merchandise inventories

 

102,788

 

(39,815)

Prepaid expense and other assets

 

42,178

 

(51,614)

Landlord assets under construction—net of tenant allowances

 

(49,387)

 

(39,605)

Accounts payable and accrued expenses

 

(41,474)

 

(11,529)

Deferred revenue and customer deposits

 

14,406

 

20,893

Other current liabilities

 

(53,016)

 

9,238

Current and non-current operating lease liability

 

(61,887)

 

(57,806)

Other non-current obligations

 

(19,054)

 

(13,770)

Net cash provided by operating activities

 

210,997

 

96,716

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Capital expenditures

 

(64,614)

 

(73,278)

Deposit on asset under construction

 

(30,000)

 

Proceeds from sale of assets

 

24,078

 

Net cash used in investing activities

 

(70,536)

 

(73,278)

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Borrowings under asset based credit facility

 

322,500

 

656,000

Repayments under asset based credit facility

 

(380,000)

 

(748,470)

Borrowings under term loans

 

320,000

 

Repayments under term loans

(234,000)

(80,000)

Borrowings under promissory and equipment security notes

 

99,000

 

Repayments under promissory and equipment security notes

 

(10,280)

 

(31,974)

Debt issuance costs

 

(4,636)

 

Proceeds from issuance of convertible senior notes

 

350,000

 

335,000

Proceeds from issuance of warrants

 

50,225

 

51,021

Purchase of convertible note hedges

 

(91,350)

 

(91,857)

Debt issuance costs related to convertible senior notes

 

(4,818)

 

(6,349)

Repayments of convertible senior notes

(278,560)

Principal payments under finance leases

(7,136)

(4,937)

Repurchases of common stock—including commissions

 

(250,032)

 

(145,182)

Proceeds from exercise of stock options

 

18,509

 

35,827

Tax withholdings related to issuance of stock-based awards

(6,538)

 

(8,947)

Payments under promissory notes related to share repurchases

(892)

Net cash used in financing activities

 

(108,008)

 

(39,868)

Effects of foreign currency exchange rate translation

 

(3)

 

(136)

Net increase (decrease) in cash and cash equivalents and restricted cash equivalents

 

32,450

 

(16,566)

Cash and cash equivalents and restricted cash equivalents

 

  

 

  

Beginning of period—cash and cash equivalents

 

5,803

 

17,907

Beginning of period—restricted cash equivalents (construction related deposits)

 

 

7,407

Beginning of period—cash and cash equivalents and restricted cash equivalents

$

5,803

$

25,314

 

  

 

  

End of period—cash and cash equivalents

 

38,253

 

7,755

End of period—restricted cash equivalents (construction related deposits)

 

 

993

End of period—cash and cash equivalents and restricted cash equivalents

$

38,253

$

8,748

Non-cash transactions:

 

 

Property and equipment additions in accounts payable and accrued expenses at period-end

$

11,859

$

11,591

Landlord asset additions in accounts payable and accrued expenses at period-end

20,475

16,120

Landlord asset additions from unpaid construction related deposits

 

195

 

809

Reclassification of assets from landlord assets under construction to finance lease right-of-use assets

73,275

Issuance of non-current notes payable related to share repurchases from former employees

 

 

243

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

8

RH

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY

Nature of Business

RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites.

As of November 2, 2019, the Company operated a total of 70 RH Galleries and 39 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 15 Waterworks showrooms throughout the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared from the Company’s records and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, and revisions due to the adoption of the new lease accounting standard described in Note 2—Recently Issued Accounting Standards, necessary to fairly state the Company’s financial position as of November 2, 2019, and the results of operations for the three and nine months ended November 2, 2019 and November 3, 2018. The Company’s current fiscal year, which consists of 52 weeks, ends on February 1, 2020 (“fiscal 2019”).

Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (the “2018 Form 10-K”). Certain prior year amounts have been adjusted to conform to the current period presentation due to the adoption of the new lease accounting standard. Refer to Note 2—Recently Issued Accounting Standards.

The results of operations for the three and nine months ended November 2, 2019 presented herein are not necessarily indicative of the results to be expected for the full fiscal year.

Convertible Senior Notes

In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes”). In connection with the issuance of these notes, the Company entered into convertible note hedge transactions for which it paid an aggregate amount of $91.4 million. In connection with the issuance of the 2024 Notes, the Company sold warrants to purchase shares of common stock of the Company, for which it received aggregate proceeds of approximately $50.2 million. Taken together, the Company received total cash proceeds of $304.1 million, net of discounts upon original issuance and offering costs of $4.8 million, from the issuance of the 2024 Notes and the related warrants. Refer to Note 8—Convertible Senior Notes.

Revisions

During the adoption process of the new lease accounting standard (refer to Note 2—Recently Issued Accounting Standards), the Company identified a lease agreement that was incorrectly accounted for as an impaired lease under Accounting Standards Codification (“ASC”) 420—Exit or Disposal Cost Obligations in fiscal 2017 and the first quarter of fiscal 2018. This error resulted in an overstatement of net income of $1.4 million and $0.9 million for the year ended

9

February 3, 2018 and the nine months ended November 3, 2018, respectively. This error also resulted in an overstatement of retained earnings as of February 3, 2018 of $1.4 million, from $152.4 million as reported to $151.0 million as revised, and as of November 3, 2018 of $2.3 million, from $245.9 million as reported to $243.6 million as revised, prior to the impact of the modified retrospective application of the new lease accounting standard as further discussed in Note 2. In addition, as of February 2, 2019, this error resulted in an understatement of other non-current obligations of $3.3 million, an overstatement of other current liabilities of $1.0 million and understatement of accumulated deficit of $2.3 million, from $376.8 million as reported to $379.1 million as revised. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors.

In addition, during the adoption process of the new lease accounting standard, the Company identified an error in its previously reported consolidated statement of cash flows for the quarterly and annual periods in fiscal 2018. This error resulted in an understatement of $9.2 million of net cash provided by operating activities and an understatement of $9.2 million of net cash used in investing activities for each reporting period in fiscal 2018. There was no impact on the condensed consolidated balance sheets, condensed consolidated statements of income or the condensed consolidated statement of stockholders’ equity (deficit) related to this error. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors.

The following are selected line items from the Company’s condensed consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard (in thousands):

Nine Months Ended November 3, 2018

    

As Reported

    

Adjustment

As Revised

Cash flows from operating activities:

Change in accounts payable and accrued expenses

$

(23,601)

$

9,201

$

(14,400)

Net cash provided by operating activities

 

127,592

 

9,201

 

136,793

Cash flows from investing activities:

 

Capital expenditures

 

(104,403)

 

(9,201)

 

(113,604)

Net cash used in investing activities

 

(104,403)

 

(9,201)

 

(113,604)

Fiscal Year Ended February 2, 2019

    

As Reported

    

Adjustment

As Revised

Cash flows from operating activities:

Change in accounts payable and accrued expenses

$

(452)

$

9,201

$

8,749

Net cash provided by operating activities

 

300,556

 

9,201

 

309,757

Cash flows from investing activities:

 

Capital expenditures

 

(136,736)

 

(9,201)

 

(145,937)

Net cash used in investing activities

 

(136,736)

 

(9,201)

 

(145,937)

NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting for Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-02—Leases, which requires a lessee to distinguish all leases as operating leases or finance leases and recognize all leases on the balance sheet as a right-of-use asset with a corresponding lease liability representing the present value of lease payments. The standard also requires a lessee to recognize a single lease cost for operating leases, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. The lease cost for finance leases includes both principal and interest components, and is higher than the corresponding cash payment at the beginning of the lease term and declines over the lease term as the liability is reduced. In July 2018, the FASB issued Accounting Standards Update 2018-10—Codification Improvements to Topic 842 (Leases), and Accounting Standards Update 2018-11—Leases (Topic 842)—Targeted Improvements, which (i) narrows amendments to clarify how to apply certain aspects of the new lease standard, (ii) provides entities with an additional transition method to adopt the new

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