Restoration Hardware Holdings, Inc. Reports Record Fourth Quarter and Fiscal Year 2012 Financial Results

  Restoration Hardware Holdings, Inc. Reports Record Fourth Quarter and Fiscal
  Year 2012 Financial Results

  Q4 Net Revenues Increased 30%; Q4 Comparable Store Sales Increased 26%; Q4
                        Adjusted Diluted EPS of $0.64

 Company Provides Q1 Guidance of Revenue Growth Between 28% and 31%, Diluted
                         EPS of ($0.02) to Breakeven

 Company Provides Fiscal 2013 Guidance of Revenue Growth Between 19% and 22%,
                        Diluted EPS of $1.29 to $1.37

Business Wire

CORTE MADERA, Calif. -- April 18, 2013

Restoration Hardware Holdings, Inc. (NYSE: RH) today announced financial
results for the fourth quarter and fiscal year ended February 2, 2013. The
fourth quarter and fiscal year ended February 2, 2013 included 14 weeks and 53
weeks, respectively. The prior year fourth quarter and fiscal year periods
ended January 28, 2012 included 13 weeks and 52 weeks, respectively.

Fourth Quarter Highlights

  *Net revenues increased 30% on top of a 19% increase for the same period
    last year

       *Comparable store sales increased 26% on top of a 22% increase for the
         same period last year
       *Direct revenues increased 41%, on top of a 23% increase for the same
         period last year

  *Adjusted net income increased 24% from the same period last year to $24.2
    million
  *GAAP net loss of $28.4 million was primarily driven by one-time IPO
    related charges
  *Adjusted diluted earnings per share reached $0.64
  *GAAP net loss per diluted share of $0.79

Full Year Highlights

  *Net revenues increased 25% on top of a 24% increase last year

       *Comparable store sales increased 28% on top of a 25% increase last
         year
       *Direct revenues increased 30% on top of a 27% increase last year

  *Adjusted net income increased 43% from last year to $37.7 million
  *GAAP net loss was $12.8 million
  *Adjusted diluted earnings per share reached $1.01
  *GAAP net loss per diluted share of $1.36

Carlos Alberini, Chief Executive Officer, said, “We are very pleased with our
fourth quarter performance and record financial results. We increased net
revenues by 30% for the period on top of 19% growth last year, delivering our
12th consecutive quarter of double-digit net revenue growth. Our 24% adjusted
net income increase for the period contributed to the Company’s best year
ever.” Mr. Alberini continued, “We are well positioned to continue to gain
market share and further disrupt the highly fragmented home furnishings
marketplace. We have a powerful business model, have made investments to
support future growth, and remain confident that we will continue to drive
operating margin expansion in the future.”

Mr. Alberini continued, “The execution of our real estate transformation into
our new Full Line Design Gallery concept remains our highest priority and is
key to our long term growth strategy. We are in the early stages of this
transformation. Our existing Full Line Design Galleries continue to
outperform, with Los Angeles and Houston delivering store demand growth in
excess of 25% since their first anniversary. Our new Full Line Design Gallery
in Scottsdale has delivered store demand growth in excess of 90%  since its
opening last November.” Mr. Alberini commented, “On April 13th we opened our
largest Gallery to date at The Historic Museum of Natural History in Boston.
This is our best expression of the RH brand to-date and represents the next
evolution of our customer experience. We plan to open new Full Line Design
Galleries in Indianapolis, Greenwich, and Atlanta; and we have identified
locations and are in active lease discussions in over 20 markets including New
York, Chicago, Miami, Denver, and San Diego, to name a few.”

Gary Friedman, Chairman Emeritus, Creator and Curator, commented, “Our ability
to curate and integrate new products, businesses and experiences has
contributed to our strong brand position and market leadership. The growth in
both the depth and breadth of our product offering drove our 25% net revenue
increase in 2012, on top of a 24% increase in 2011, despite the contraction of
our store base. New collections and finishes in furniture, lighting and
textiles, coupled with an expanding Baby & Child offering and the introduction
of Small Spaces, were key contributors to our growth.”

Mr. Friedman continued, “This Spring, our collection will be presented across
six Source Book titles and will total over 1,600 pages. Our Interiors and
Small Spaces Source Books include the addition of new furniture collections
and finishes, the expansion and presentation of color across our upholstered
furniture and textiles collections, and dramatic new lighting collections
highlighted throughout the books. In addition, we are introducing two new
businesses this Spring, RH Objects of Curiosity and RH Tableware, which we
believe represent significant long-term opportunities for RH.” Mr. Friedman
concluded, “Further, our newest business, RH Contemporary Art, has acquired
the Rain Room by Random International, arguably one of the most admired pieces
of modern art in recent history, with exclusive showing rights in North
America. This piece will make its debut in the U.S. and be presented in
collaboration with the Museum of Modern Art in New York, with the launch of
Frieze Art Fair New York in May, and it will be on exhibition at the MOMA
until August. We plan to launch our first freestanding art gallery in the
Chelsea Arts District of New York City, and be live with our online platform
this Fall post the exhibition.”

Fourth Quarter Fiscal 2012 Financial Results

Revenue - Net revenues for the fourth quarter of fiscal 2012 increased 30% to
$398.1 million from $305.2 million for the fourth quarter of fiscal 2011. The
fourth quarter of fiscal 2012 consisted of 14 weeks compared with 13 weeks for
the prior year. The 14th week added approximately $24.0 million in net
revenues for the quarter and the year. Excluding the 14th week, net revenues
increased 23% compared to the fourth quarter of fiscal 2011. This is on top of
a 19% increase in net revenues for the fourth quarter of fiscal 2011.

  *Comparable store sales on a 13 week basis increased 26% for the fourth
    quarter of fiscal 2012. This growth compares to an increase of 22% in
    comparable store sales for the fourth quarter of fiscal 2011.
  *As of February 2, 2013, the Company operated a total of 71 retail stores,
    consisting of 68 Galleries and 3 Full Line Design Galleries, as well as 13
    outlet stores throughout the United States and Canada. This compares to a
    total of 74 retail stores, consisting of 72 Galleries and 2 Full Line
    Design Galleries, and 10 outlet stores open at the end of the fourth
    quarter of fiscal 2011.
  *Direct revenues increased 41% to $187.9 million for the fourth quarter of
    fiscal 2012. Excluding the 14^th week, direct revenues increased 32%
    compared to the fourth quarter of fiscal 2011. This growth is on top of
    the 23% increase in direct revenues for the fourth quarter of fiscal 2011.

Operating Income (Loss)* - Adjusted operating income for the fourth quarter of
fiscal 2012 increased 21% to $41.4 million compared to $34.1 million for the
fourth quarter of fiscal 2011. Including the impact of non-recurring and other
items, operating income was a loss of $88.6 million compared to operating
income of $26.9 million for the prior year fiscal quarter primarily as a
result of certain charges in connection with our initial public offering.

EBITDA* - Adjusted EBITDA for the fourth quarter of fiscal 2012 increased 18%
to $48.7 million compared to adjusted EBITDA of $41.3 million for the fourth
quarter of fiscal 2011. Including the impact of non-recurring and other items,
EBITDA for the quarter was a loss of $81.3 million compared to EBITDA of $33.7
million for the prior year fiscal quarter.

Net Income (Loss)* - Adjusted net income increased 24% to $24.2 million for
the fourth quarter of fiscal 2012 from $19.5 million for the fourth quarter of
fiscal 2011. GAAP net loss during the fourth quarter 2012 was $28.4 million
compared to GAAP net income of $24.1 million for the fourth quarter of fiscal
2011.

Earnings Per Share* - Adjusted diluted EPS was $0.64 for the fourth quarter of
fiscal 2012. The 14th week in the fourth quarter of 2012 added approximately
$0.04 in adjusted diluted EPS for the quarter and the year. GAAP diluted EPS
during the fourth quarter 2012 was a loss of $0.79.

Fiscal Year 2012 Financial Highlights

Revenue - Net revenues for fiscal 2012 increased 25% to $1.193 billion from
$958.1 million in fiscal 2011. The fiscal year 2012 consisted of 53 weeks
compared with 52 weeks for the prior year. Excluding the 53rd week, fiscal
2012 net revenues increased 22% compared to fiscal 2011. This is on top of a
24% increase in net revenues for fiscal 2011.

  *Comparable store sales on a 52 week basis increased 28% for fiscal 2012.
    This growth compares to an increase of 25% in fiscal 2011.
  *Direct revenues increased 30% to $549.7 million for fiscal 2012. Excluding
    the 53rd week, fiscal 2012 direct revenues increased 27% compared to
    fiscal 2011. This growth is on top of a 27% increase for fiscal 2011.

Operating Income (Loss)* - Adjusted operating income for the fiscal year
period increased 40% to $68.7 million compared to $49.2 million for the same
period last year. Including the impact of non-recurring and other items,
operating income was a loss of $69.0 million compared to operating income of
$26.8 million for the prior year period.

EBITDA* - Adjusted EBITDA for the fiscal year period increased 20% to $96.6
million compared to $80.2 million for the same period last year. Including the
impact of non-recurring and other items, EBITDA was a loss of $42.3 million
compared to EBITDA of $56.0 million for the prior year period.

Net Income (Loss)* - Adjusted net income for the fiscal year 2012 increased
43% to $37.7 million from $26.5 million for the prior year period. GAAP net
loss for the fiscal year period was $12.8 million compared to GAAP net income
of $20.6 million for the prior year period.

Earnings Per Share* - Fiscal year 2012 adjusted diluted EPS was $1.01. Fiscal
year 2012 GAAP diluted EPS was a loss of $1.36.

A reconciliation of GAAP to non-GAAP financial measures is provided in the
tables accompanying this release.

Outlook

The Company is providing the following guidance for the first fiscal quarter
of 2013:

  *Net revenues in the range of $280 million to $285 million
  *Net income in the range of a loss of $1 million to breakeven
  *Diluted EPS in the range of ($0.02) to breakeven

The Company is providing the following guidance for the fiscal year ending
February 1, 2014:

  *Net revenues in the range of $1.42 billion to $1.45 billion
  *Net income in the range of $51 million to $54 million
  *Diluted EPS in the range of $1.29 to $1.37

Note: The Company’s fiscal year 2013 will include 52 weeks compared to fiscal
year 2012 which included 53 weeks.

Conference Call and Webcast Information

Restoration Hardware Holdings, Inc. will host a conference call at 2:00 p.m.
PT (5:00 p.m. ET) today to discuss the fourth quarter and fiscal year results.
Interested parties may access the call by dialing (866) 804-6929 (United
States/Canada) or (857) 350-1675 (International), passcode 96770445. A live
broadcast of Restoration Hardware’s quarterly conference call and an
accompanying slide presentation  will also be available online at the
Company's website www.restorationhardware.com under Investor Relations. A
replay of the conference call will be available through May 2, 2013 by dialing
(888) 286-8010 and entering passcode 62225086 as well as on the Company’s
investor relations website.

About Restoration Hardware Holdings, Inc.

RH (Restoration Hardware Holdings, Inc. - NYSE:RH) is a curator of design,
taste and style in the luxury lifestyle market. The Company offers collections
through its retail galleries, source books, and online at RH.com.

*Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and
presented in accordance with Generally Accepted Accounting Principles (GAAP),
the Company uses the following non-GAAP financial measures: adjusted operating
income, EBITDA, adjusted EBITDA, adjusted net income, pro forma EPS and
adjusted EPS (collectively the “non-GAAP financial measures”). The
presentation of this financial information is not intended to be considered in
isolation or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. The Company uses these
non-GAAP financial measures for financial and operational decision making and
as a means to evaluate period-to-period comparisons. The Company believes that
they provide useful information about operating results, enhance the overall
understanding of past financial performance and future prospects, and allow
for greater transparency with respect to key metrics used by management in its
financial and operational decision making. The non-GAAP financial measures
used by the Company in this press release may be different from the methods
used by other companies.

For more information on the non-GAAP financial measures, please see the
Reconciliation of GAAP to non-GAAP Financial Measures tables in this press
release. These accompanying tables have more details on the GAAP financial
measures that are most directly comparable to non-GAAP financial measures and
the related reconciliations between these financial measures.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the
federal securities laws including statements related to the performance of our
full line Design Gallery concept, our ability to gain market share, potential
new markets for our store presence, customer acceptance of our product
offering, our ability to drive operating margin expansion in the future, the
importance of our Full Line Design Gallery concept on our long-term growth
strategy, the timing and manner of introduction of new product categories, the
growth of new product categories, the anticipated timing of the opening of new
full line Design Galleries , and our future financial guidance, including for
the first fiscal quarter of 2013 and the fiscal year ending February 1, 2014.
You can identify forward-looking statements by the fact that they do not
relate strictly to historical or current facts. These statements may include
words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,”
“believe,” “may,” “will,” “should,” “likely” and other words and terms of
similar meaning in connection with any discussion of the timing or nature of
future events. We cannot assure you that future developments affecting us will
be those that we have anticipated. Important risks and uncertainties that
could cause actual results to differ materially from our expectations include,
among others, accounting adjustments as we close our books for the fourth
quarter and as audited year-end financial statements are prepared, recent
changes in general economic conditions and the impact on consumer confidence
and consumer spending, changes in customer demand for our products, our
ability to anticipate consumer preferences and buying trends, risks related to
the number of new business initiatives we are undertaking, risks in the
implementation or our real estate portfolio transformation, delays in store
openings, as well as those risks and uncertainties disclosed under the
sections entitled “Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Restoration Hardware
Holdings’ final prospectus filed with the Securities and Exchange Commission
on November 5, 2012 and available on our investor relations website at
ir.restorationhardware.com and on the SEC website at www.sec.gov. Any
forward-looking statement made by us in this press release speaks only as of
the date on which we make it. We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new information, future
developments or otherwise, except as may be required by any applicable
securities laws.

          
RESTORATION HARDWARE HOLDINGS, INC.

FINANCIAL STATEMENTS AND RELATED INFORMATION
             
TABLE OF CONTENTS
             
Page 7.      Condensed Consolidated Statements of Operations
             
Page 8.      Condensed Consolidated Balance Sheets
             
Page 9.      Condensed Consolidated Statements of Cash Flows
             
Page 10.     Operating Metrics and Other Data
             
Page 11.     Reconciliation of Adjusted Income Statement Items
             
Page 13.     Reconciliation of Net Income (Loss) to Operating Income (Loss)
             and Adjusted Operating Income
             
Page 14.     Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
             
Page 15.     Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income
             
Page 16.     Reconciliation of Pro Forma Net Income (Loss) Per Share to
             Adjusted Net Income Per Share
             

                                                                                                                     
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
                                                                
                     Three Months Ended ^[a]                                      Twelve Months Ended ^[a]
                     February 2,        % of Net     January 28,     % of Net     February 2,        % of Net     January 28,     % of Net
                     2013               Revenues     2012           Revenues     2013               Revenues    2012            Revenues
Net revenues         $ 398,055          100.0  %     $ 305,242       100.0  %     $ 1,193,046        100.0  %     $ 958,084       100.0  %
Cost of goods         252,881         63.5   %      187,716      61.5   %      756,597         63.4   %      601,735      62.8   %
sold
Gross profit           145,174          36.5   %       117,526       38.5   %       436,449          36.6   %       356,349       37.2   %
Selling, general
and                   233,769         58.7   %      90,615       29.7   %      505,485         42.4   %      329,506      34.4   %
administrative
expenses
Income (loss)          (88,595    )     -22.2  %       26,911        8.8    %       (69,036    )     -5.8   %       26,843        2.8    %
from operations
Interest expense      (1,178     )     -0.3   %      (1,648  )     -0.5   %      (5,776     )     -0.5   %      (5,134  )     -0.5   %
Income (loss)
before income          (89,773    )     -22.5  %       25,263        8.3    %       (74,812    )     -6.3   %       21,709        2.3    %
taxes
Income tax
expense               (61,411    )     -15.4  %      1,209        0.4    %      (62,023    )     -5.2   %      1,121        0.1    %
(benefit)
Net income           $ (28,362    )     -7.1   %     $ 24,054       7.9    %     $ (12,789    )     -1.1   %     $ 20,588       2.2    %
(loss)
                                                                                                                                  
Adjusted EBITDA      $ 48,701           12.2   %     $ 41,305        13.5   %     $ 96,571           8.1    %     $ 80,154        8.4    %
^[b]
                                                                                                                                  
Weighted-average
shares used in
computing basic        35,692,064                      1,000                        9,428,828                       468
and diluted net
income (loss)
per share
                                                                                                                                  
Basic and
diluted net          $ (0.79      )                  $ 24,054                     $ (1.36      )                  $ 43,991
income (loss)
per share
                                                                                                                                  
Pro forma
weighted-average
shares used in
computing pro          37,578,314                                                   37,131,790
forma basic and
diluted net loss
per share ^[c]
                                                                                                                                  
Pro forma basic
and diluted net      $ (0.75      )                                               $ (0.34      )
loss per share
                                                                                                                                  

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively. The twelve months ended February 2, 2013 and
January 28, 2012 included 53 weeks and 52 weeks, respectively.
[b] EBITDA and Adjusted EBITDA are supplemental measures of financial
performance that are not required by, or presented in accordance with,
Generally Accepted Accounting Principles (GAAP). We define EBITDA as
consolidated net income (loss) before depreciation and amortization, interest
expense and provision for income taxes. Adjusted EBITDA reflects further
adjustments to EBITDA to eliminate the impact of certain items including
non-cash or other items that we do not consider representative of our ongoing
financial performance. EBITDA and Adjusted EBITDA are included in this press
release because they are key metrics used by management, our Board of
Directors and our principal shareholders to assess our financial performance,
and Adjusted EBITDA is used in connection with determining incentive
compensation under our Management Incentive Program (“MIP”). Additionally,
EBITDA is frequently used by analysts, investors and other interested parties
to evaluate companies in our industry. We use EBITDA and Adjusted EBITDA,
alongside other GAAP measures such as gross profit, operating income (loss)
and net income (loss), to measure profitability, as a key profitability target
in our annual and other budgets, and to compare our performance against that
of peer companies. We believe that Adjusted EBITDA provides useful information
facilitating operating performance comparisons from period to period and
company to company. Please see the table titled “Reconciliation of Net Income
(Loss) to EBITDA and Adjusted EBITDA” for further information.
[c] On a pro forma basis, basic and diluted shares outstanding include (1) the
impact of the Company’s reorganization, as further described in the Company’s
final prospectus filed with the Securities and Exchange Commission on November
5, 2012 (the “Reorganization”), as well as (2) the 4,782,609 shares of common
stock that the Company issued and sold on November 7, 2012 in its initial
public offering, as if such events had been completed as of the beginning of
the respective periods and the common stock resulting therefrom was
outstanding for the respective periods.

                                                           
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                           
                                               February 2,     January 28,

                                               2013            2012
                                                               
ASSETS
Cash and cash equivalents                      $  8,354        $  8,512
Merchandise inventories                           353,329         245,876
Other current assets                             131,075        68,490
Total current assets                              492,758         322,878
Property and equipment—net                        111,406         83,558
Goodwill and other intangibles                    172,724         175,121
Other assets                                     12,725         5,253
Total assets                                   $  789,613      $  586,810
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses          $  145,353      $  105,694
Other current liabilities                        74,071         56,280
Total current liabilities                         219,424         161,974
Revolving line of credit and term loan            82,501          122,300
Other long term liabilities                      36,077         52,073
Total liabilities                                338,002        336,347
                                                               
Stockholders’ equity                             451,611        250,463
Total liabilities and stockholders’ equity     $  789,613      $  586,810
                                                                  

                                                              
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                                   
                                                  Twelve Months Ended ^ [a]
                                                  February 2,      January 28,

                                                  2013             2012
                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                 $ (12,789  )     $ 20,588
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization                       26,748           29,186
Stock-based compensation expense and other          116,183          7,907
non-cash compensation
Other non-cash items                                (61,008  )       11,546
Change in assets and liabilities:
Merchandise inventories                             (107,454 )       (39,475 )
Accounts payable, accrued expenses, and other      34,456         (12,631 )
Net cash provided by (used in) operating           (3,864   )      17,121  
activities
                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                (49,058  )       (25,593 )
Purchase of domain name                            (310     )      —       
Net cash used in investing activities              (49,368  )      (25,593 )
                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under line of credit                 (25,001  )       (4,607  )
Net borrowings under term loan                      (15,000  )       15,000
Debt issuance costs                                 (426     )       (2,834  )
Payments on capital leases                          (4,214   )       (4,188  )
Proceeds from issuance of common stock—net of      97,693         —       
issuance costs
Net cash provided by financing activities          53,052         3,371   
Effects of foreign currency exchange rate          22             249     
translation
Net decrease in cash and cash equivalents           (158     )       (4,852  )
Cash and cash equivalents
Beginning of period                                8,512          13,364  
End of period                                     $ 8,354         $ 8,512   

[a] The twelve months ended February 2, 2013 and January 28, 2012 included 53
weeks and 52 weeks, respectively.


                                                            
RESTORATION HARDWARE HOLDINGS, INC.
OPERATING METRICS AND OTHER DATA
(Unaudited)
                                                              
                   Three Months Ended ^[a]        Twelve Months Ended ^ [a]
                   February 2,     January 28,     February 2,     January 28,

                   2013            2012            2013            2012
Growth in net
revenues:
Stores ^[b]           22     %        17     %        20     %        22     %
Direct                41     %        23     %        30     %        27     %
Total                 30     %        19     %        25     %        24     %
Retail ^[c]:
Comparable
store sales           26     %        22     %        28     %        25     %
change ^[d]
Retail stores
open at               73              84              74              91
beginning of
period
Stores opened         2               2               5               5
Stores closed         4               12              8               22
Retail stores
open at end of        71              74              71              74
period
Retail sales
per leased         $  382          $  293          $  1,143        $  846
selling square
foot ^[e]
Total leased
square footage
at end of             768             808             768             808
period (in
thousands)
Total leased
selling square
footage at end        501             516             501             516
of period (in
thousands)
^[f]
Direct:
Catalogs
circulated (in        5,861           4,974           32,712          26,052
thousands)
^[g]
Catalog pages
circulated (in        669             726             16,029          8,848
millions) ^[g]
Direct as a
percentage of         47     %        44     %        46     %        44     %
net revenues
^[h]
                                                                   

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively. The twelve months ended February 2, 2013 and
January 28, 2012 included 53 weeks and 52 weeks, respectively.
[b] Store data represents retail stores plus outlet stores. Net revenues for
outlet stores for the three months ended February 2, 2013 and January 28, 2012
were $16.1 million and $12.7 million, respectively. Net revenues for outlet
stores for the twelve months ended February 2, 2013 and January 28, 2012 were
$54.3 million and $43.9 million, respectively.
[c] Retail data have been calculated based upon retail stores, which includes
our Baby & Child stores, and excludes outlet stores.
[d] Comparable store sales have been calculated based upon retail stores that
were open at least fourteen full months as of the end of the reporting period
and did not change square footage by more than 20% between periods. If a store
is closed for seven days during a month, that month will be excluded from
comparable store sales. Comparable store net revenues exclude revenues from
outlet stores. Because fiscal 2012 was a 53-week year, comparable store sales
percentage for fiscal 2012 excludes the extra week of sales.
[e] Retail sales per leased selling square foot is calculated by dividing
total net revenues for all retail stores, comparable and non-comparable, by
the average leased selling square footage for the period.
[f] Leased selling square footage is retail space at our stores used to sell
our products. Leased selling square footage excludes backrooms at retail
stores used for storage office space or similar matters. Leased selling square
footage excludes exterior sales space located outside a store, such as
courtyards, gardens and rooftops. Leased selling square footage includes
approximately 4,500 square feet related to one owned store location.
[g] The catalogs and catalog pages circulated from period to period do not
take into account different page sizes per catalog distributed. Page sizes and
page counts vary for different catalog mailings and we sometimes mail
different versions of a catalog at the same time. Accordingly, period to
period comparisons of catalogs circulated and catalog pages circulated do not
take these variations into account.
[h] Direct revenues include sales through our catalogs and websites.

                                                                                                                            
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS
(In thousands, except share and per share amounts)
(Unaudited)
                                                                       
                     Three Months Ended ^[a]
                     Reported                            Adjusted                        Reported                        Adjusted
                     February 2,                         February 2,        % of Net     January 28,                     January 28,     % of Net
                      2013            Adjustments       2013            Revenues      2012         Adjustments      2012         Revenues
Net revenues         $ 398,055          $ —              $ 398,055          100.0  %     $ 305,242       $  —            $ 305,242       100.0  %
Cost of goods         252,881          (3,250   )      249,631         62.7   %      187,716        —            187,716      61.5   %
sold ^ [b]
Gross profit           145,174            3,250            148,424          37.3   %       117,526          —              117,526       38.5   %
Selling, general
and                   233,769          (126,783 )      106,986         26.9   %      90,615         (7,220 )      83,395       27.3   %
administrative
expenses ^[c]
Income (loss)          (88,595    )       130,033          41,438           10.4   %       26,911           7,220          34,131        11.2   %
from operations
Interest expense      (1,178     )      —              (1,178     )     -0.3   %      (1,648  )       —            (1,648  )     -0.5   %
Income (loss)
before income          (89,773    )       130,033          40,260           10.1   %       25,263           7,220          32,483        10.7   %
taxes
Income tax
expense               (61,411    )      77,515         16,104          4.0    %      1,209          11,784       12,993       4.3    %
(benefit) ^[d]
Net income           $ (28,362    )     $ 52,518        $ 24,156          6.1    %     $ 24,054       $  (4,564 )     $ 19,490       6.4    %
(loss) ^[e]
                                                                                                                                         
Weighted-average
shares used in
computing basic        35,692,064                          37,578,314                      1,000                           1,000
net income
(loss) per share
^[f]
Weighted-average
shares used in
computing              35,692,064                          37,978,500                      1,000                           1,000
diluted net
income (loss)
per share ^ [f]
                                                                                                                                         
Basic net income     $ (0.79      )                      $ 0.64                          $ 24,054                        $ 19,490
(loss) per share
Diluted net
income (loss)        $ (0.79      )                      $ 0.64                          $ 24,054                        $ 19,490
per share
                                                                                                                                         

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively.
[b] The adjustment to cost of goods sold relates to the anti-dumping exposure.
See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net
Income” for additional details.
[c] The adjustments for selling, general, and administrative expenses include
management and pre-initial public offering board fees, non-cash and other
one-time compensation, terminated operations, severance and other transactions
costs, and initial public offering costs. See table titled “Reconciliation of
GAAP Net Income (Loss) to Adjusted Net Income” for additional details.
[d] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recentthree-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 the three months ended February 2, 2013, we released all of
our valuation allowance against net deferred tax assets for the U.S. In
addition, income tax items exclude the tax benefit from the utilization of
federal and state net operating losses, and assume a normalized tax rate of
40% for all periods presented. See table titled “Reconciliation of GAAP Net
Income (Loss) to Adjusted Net Income” for additional details.
[e] Adjusted net income is a supplemental measure of financial performance
that is not required by, or presented in accordance with, GAAP. We define
adjusted net income as consolidated net income (loss) less non-recurring and
other items. Adjusted net income is included in this press release because
management believes that adjusted net income provides meaningful supplemental
information for investors regarding the performance of our business and
facilitates a meaningful evaluation of actual results on a comparable basis
with historical results. Our management uses this non-GAAP financial measure
in order to have comparable financial results to analyze changes in our
underlying business from quarter to quarter.
[f] On an adjusted basis for the three months ended February 2, 2013, basic
and diluted shares outstanding include (1) the impact of the Reorganization,
as well as (2) the 4,782,609 shares of common stock that the Company issued
and sold on November 7, 2012 in its initial public offering, as if such events
had been completed as of the beginning of the respective periods and the
common stock resulting therefrom was outstanding for the respective periods.

                                                                                                                          
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS
(In thousands, except share and per share amounts)
(Unaudited)
                                                                       
                     Twelve Months Ended ^[a]
                     Reported                           Adjusted                        Reported                        Adjusted
                     February 2,                        February 2,        % of Net     January 28,                     January 28,     % of Net
                      2013           Adjustments       2013            Revenues      2012         Adjustments      2012         Revenues
Net revenues         $ 1,193,046       $ —              $ 1,193,046        100.0  %     $ 958,084       $ —             $ 958,084       100.0  %
Cost of goods         756,597         (3,250   )      753,347         63.1   %      601,735       —             601,735      62.8   %
sold ^ [b]
Gross profit           436,449           3,250            439,699          36.9   %       356,349         —               356,349       37.2   %
Selling, general
and                   505,485         (134,460 )      371,025         31.1   %      329,506       (22,376 )      307,130      32.1   %
administrative
expenses ^[c]
Income (loss)          (69,036   )       137,710          68,674           5.8    %       26,843          22,376          49,219        5.1    %
from operations
Interest expense      (5,776    )      —              (5,776     )     -0.5   %      (5,134  )      —             (5,134  )     -0.5   %
Income (loss)
before income          (74,812   )       137,710          62,898           5.3    %       21,709          22,376          44,085        4.6    %
taxes
Income tax
expense               (62,023   )      87,182         25,159          2.1    %      1,121         16,513        17,634       1.8    %
(benefit) ^[d]
Net income           $ (12,789   )     $ 50,528        $ 37,739          3.2    %     $ 20,588       $ 5,863        $ 26,451       2.8    %
(loss) ^[e]
                                                                                                                                        
Weighted-average
shares used in
computing basic        9,428,828                          37,131,790                      468                             468
net income
(loss) per share
^[f]
Weighted-average
shares used in
computing              9,428,828                          37,242,178                      468                             468
diluted net
income (loss)
per share ^ [f]
                                                                                                                                        
Basic net income     $ (1.36     )                      $ 1.02                          $ 43,991                        $ 56,519
(loss) per share
Diluted net
income (loss)        $ (1.36     )                      $ 1.01                          $ 43,991                        $ 56,519
per share
                                                                                                                                        

[a] The twelve months ended February 2, 2013 and January 28, 2012 included 53
weeks and 52 weeks, respectively.
[b] The adjustment to cost of goods sold relates to the anti-dumping exposure.
See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net
Income” for additional details.
[c] The adjustments for selling, general, and administrative expenses include
management and pre-initial public offering board fees, non-cash and other
one-time compensation, terminated operations, severance and other transactions
costs, lease termination costs, special committee investigation and
remediation, and initial public offering costs. See table titled
“Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” for
additional details.
[d] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recentthree-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 the twelve months ended February 2, 2013, we released all of
our valuation allowance against net deferred tax assets for the U.S. In
addition, income tax items exclude the tax benefit related to the resolution
of our Canada Revenue Agency examination in the twelve months ended February
2, 2013, exclude the tax benefit from the utilization of federal and state net
operating losses, and assume a normalized tax rate of 40% for all periods
presented. See table titled “Reconciliation of GAAP Net Income (Loss) to
Adjusted Net Income” for additional details.
[e] Adjusted net income is a supplemental measure of financial performance
that is not required by, or presented in accordance with, GAAP. We define
adjusted net income as consolidated net income (loss) less non-recurring and
other items. Adjusted net income is included in this press release because
management believes that adjusted net income provides meaningful supplemental
information for investors regarding the performance of our business and
facilitates a meaningful evaluation of actual results on a comparable basis
with historical results. Our management uses this non-GAAP financial measure
in order to have comparable financial results to analyze changes in our
underlying business from quarter to quarter.
[f] On an adjusted basis for the twelve months ended February 2, 2013, basic
and diluted shares outstanding include (1) the impact of the Reorganization,
as well as (2) the 4,782,609 shares of common stock that the Company issued
and sold on November 7, 2012 in its initial public offering, as if such events
had been completed as of the beginning of the respective periods and the
common stock resulting therefrom was outstanding for the respective periods.

                                                             
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING INCOME (LOSS)
AND ADJUSTED OPERATING INCOME
(In thousands)
(Unaudited)
                 
                    Three Months Ended ^ [a]        Twelve Months Ended ^ [a]
                    February 2,     January 28,     February 2,     January
                                                                    28,
                    2013            2012            2013
                                                                    2012
Net income          $ (28,362 )     $  24,054       $ (12,789 )     $  20,588
(loss)
Interest              1,178            1,648          5,776            5,134
expense
Income tax
expense              (61,411 )       1,209        (62,023 )       1,121
(benefit)
Operating             (88,595 )        26,911         (69,036 )        26,843
income (loss)
Management and
pre-IPO board         973              7,170          4,258            10,715
fees ^[b]
Non-cash and
other one-time        115,055          —              115,055          6,350
compensation
^[c]
Terminated            —                (100   )       —                1,580
operations ^[d]
Severance and
other                 —                150            —                621
transaction
costs ^[e]
Lease
termination           —                —              (386    )        3,110
costs ^[f]
Special
committee
investigation         —                —              4,778            —
and remediation
^[g]
Initial public
offering costs        10,755           —              10,755           —
^[h]
Anti-dumping         3,250          —            3,250          —
exposure ^[i]
Adjusted
operating           $ 41,438       $  34,131      $ 68,674       $  49,219
income
                                                                       

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively. The twelve months ended February 2, 2013 and
January 28, 2012 included 53 weeks and 52 weeks, respectively.
[b] Includes fees and expenses paid in accordance with our management services
agreement with Home Holdings LLC (“Home Holdings”), as well as fees and
expense reimbursements paid to our Board of Directors prior to the initial
public offering. All management fees were paid in full at the time of the
initial public offering.
[c] The three and twelve months ended February 2, 2013 include a $92.0 million
non-cash compensation charge related to equity grants at the time of the
Reorganization, as well as a non-cash compensation charge of $23.1 million
related to the performance-based vesting of certain shares granted to Mr.
Alberini and Mr. Friedman. The twelve months ended January 28, 2012 includes a
$6.4 million non-cash compensation charge related to the repayment of loans
owed to Home Holdings by our former Chairman and Co-Chief Executive Officer,
Gary Friedman, through the reclassification by Home Holdings of Mr. Friedman’s
Class A and Class A-1 ownership units into an equal number of Class A Prime
and Class A-1 Prime ownership units. Mr. Friedman served as our Chairman and
Co-Chief Executive Officer at the time of such loan repayment.
[d] Includes costs related to the restructuring of our Shanghai office
location.
[e] Amounts include executive severance and other related costs.
[f] Includes lease termination costs for retail stores that were closed prior
to their respective lease termination dates. The amount in the twelve months
ended February 2, 2013 relate to changes in estimates regarding liabilities
for future lease payments for closed stores.
[g] 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 former Chairman and Co-Chief Executive Officer and our
subsequent remedial actions.
[h] Represents costs incurred in connection with our initial public offering,
including a fee of $7.0 million to Catterton, Tower Three and Glenhill 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.
[i] 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 the
People’s Republic of China for the period from January 1, 2011 through
December 31, 2011.

                                                               
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(In thousands)
(Unaudited)
                                               
                    Three Months Ended ^ [a]        Twelve Months Ended ^ [a]
                    February 2,     January 28,     February 2,     January
                                                                    28,
                    2013            2012            2013
                                                                    2012
Net income          $ (28,362 )     $  24,054       $ (12,789 )     $  20,588
(loss)
Depreciation
and                   7,263            6,830          26,748           29,186
amortization
Interest              1,178            1,648          5,776            5,134
expense
Income tax
expense              (61,411 )       1,209        (62,023 )       1,121
(benefit)
EBITDA ^[b]           (81,332 )        33,741         (42,288 )        56,029
Management and
pre-IPO board         973              7,170          4,258            10,715
fees ^[c]
Non-cash and
other one-time        115,055          344            116,157          7,907
compensation
^[d]
Terminated            —                (100   )       —                1,580
operations ^[e]
Severance and
other                 —                150            —                621
transaction
costs ^[f]
Lease
termination           —                —              (386    )        3,110
costs ^[g]
Special
committee
investigation         —                —              4,778            —
and remediation
^[h]
Initial public
offering costs        10,755           —              10,755           —
^[i]
Anti-dumping          3,250            —              3,250            —
exposure ^[j]
Other ^[k]           —              —            47             192
Adjusted EBITDA     $ 48,701       $  41,305      $ 96,571       $  80,154
^[b]
                                                                    

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively. The twelve months ended February 2, 2013 and
January 28, 2012 included 53 weeks and 52 weeks, respectively.
[b] EBITDA and Adjusted EBITDA are supplemental measures of financial
performance that are not required by, or presented in accordance with, GAAP.
We define EBITDA as consolidated net income (loss) before depreciation and
amortization, interest expense and provision for income taxes. Adjusted EBITDA
reflects further adjustments to EBITDA to eliminate the impact of certain
items including non-cash or other items that we do not consider representative
of our ongoing financial performance. EBITDA and Adjusted EBITDA are included
in this press release because they are key metrics used by management, our
Board of Directors and our principal shareholders to assess our financial
performance, and Adjusted EBITDA is used in connection with determining
incentive compensation under our MIP. Additionally, EBITDA is frequently used
by analysts, investors and other interested parties to evaluate companies in
our industry. We believe that Adjusted EBITDA provides useful information
facilitating operating performance comparisons from period to period and
company to company. We use EBITDA and Adjusted EBITDA, alongside other GAAP
measures such as gross profit, operating income (loss) and net income (loss),
to measure profitability, as a key profitability target in our annual and
other budgets, and to compare our performance against that of peer companies.
EBITDA and Adjusted EBITDA are not GAAP measures of our financial performance
or liquidity and should not be considered as alternatives to net income
(loss), as a measure of financial performance, cash flows from operating
activities, as a measure of liquidity, or any other performance measure
derived in accordance with GAAP and they should not be construed as an
implication that our future results will be unaffected by non-recurring and
other items. Our measures of EBITDA and Adjusted EBITDA are not necessarily
comparable to other similarly titled captions for other companies due to
different methods of calculation.
[c] Includes fees and expenses paid in accordance with our management services
agreement with Home Holdings, as well as fees and expense reimbursements paid
to our Board of Directors prior to the initial public offering. All management
fees were paid in full at the time of the initial public offering.
[d] The three and twelve months ended February 2, 2013 include a $92.0 million
non-cash compensation charge related to equity grants at the time of the
Reorganization, as well as a non-cash compensation charge of $23.1 million
related to the performance-based vesting of certain shares granted to Mr.
Alberini and Mr. Friedman. The twelve months ended January 28, 2012 includes a
$6.4 million non-cash compensation charge related to the repayment of loans
owed to Home Holdings by our former Chairman and Co-Chief Executive Officer,
Gary Friedman, through the reclassification by Home Holdings of Mr. Friedman’s
Class A and Class A-1 ownership units into an equal number of Class A Prime
and Class A-1 Prime ownership units. Mr. Friedman served as our Chairman and
Co-Chief Executive Officer at the time of such loan repayment. In addition,
amounts include stock-based compensation expense incurred prior to the initial
public offering.
[e] Includes costs related to the restructuring of our Shanghai office
location.
[f] Amounts include executive severance and other related costs.
[g] Includes lease termination costs for retail stores that were closed prior
to their respective lease termination dates. The amount in the twelve months
ended February 2, 2013 relate to 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 former Chairman and Co-Chief Executive Officer 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, Tower Three and Glenhill 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 the
People’s Republic of China for the period from January 1, 2011 through
December 31, 2011.
[k] Represents certain other items which management believes are not
indicative of our ongoing operating performance. The twelve months ended
January 28, 2012 adjustments include consulting fees related to organizational
matters and state franchise tax amounts. All periods include foreign exchange
gains and losses.

                                                              
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME
(In thousands)
(Unaudited)
                                              
                   Three Months Ended ^ [a]       Twelve Months Ended ^[a]
                   February 2,     January 28,     February 2,     January 28,

                   2013            2012            2013            2012
GAAP net           $ (28,362 )     $ 24,054       $ (12,789 )     $ 20,588  
income (loss)
Adjustments
(pre-tax):
Management and
pre-IPO board      $ 973           $ 7,170         $ 4,258         $ 10,715
fees ^[b]
Non-cash and
other one-time       115,055         —               115,055         6,350
compensation
^[c]
Terminated
operations           —               (100    )       —               1,580
^[d]
Severance and
other                —               150             —               621
transaction
costs ^[e]
Lease
termination          —               —               (386    )       3,110
costs ^[f]
Special
committee
investigation        —               —               4,778           —
and
remediation
^[g]
Initial public
offering costs       10,755          —               10,755          —
^[h]
Anti-dumping        3,250         —             3,250         —       
exposure ^[i]
Subtotal             130,033         7,220           137,710         22,376
adjusted items
Impact of
income tax          (77,515 )      (11,784 )      (87,182 )      (16,513 )
items ^[j]
Adjusted net       $ 24,156       $ 19,490       $ 37,739       $ 26,451  
income ^[k]
                                                                             

[a] The three months ended February 2, 2013 and January 28, 2012 included 14
weeks and 13 weeks, respectively. The twelve months ended February 2, 2013 and
January 28, 2012 included 53 weeks and 52 weeks, respectively.
[b] Represents fees paid in accordance with our management services agreement
with Home Holdings, as well as fees and expense reimbursements paid to our
Board of Directors prior to the initial public offering. All management fees
were paid in full at the time of the initial public offering. Board fees and
expenses subsequent to the initial public offering are not included in the
above adjustments and are included in both the GAAP and adjusted net income
amounts.
[c] The three and twelve months ended February 2, 2013 include a $92.0 million
non-cash compensation charge related to equity grants at the time of the
Reorganization, as well as a non-cash compensation charge of $23.1 million
related to the performance-based vesting of certain shares granted to Mr.
Alberini and Mr. Friedman. The twelve months ended January 28, 2012 includes a
$6.4 million non-cash compensation charge related to the repayment of loans
owed to Home Holdings by our former Chairman and Co-Chief Executive Officer,
Gary Friedman, through the reclassification by Home Holdings of Mr. Friedman’s
Class A and Class A-1 ownership units into an equal number of Class A Prime
and Class A-1 Prime ownership units. Mr. Friedman served as our Chairman and
Co-Chief Executive Officer at the time of such loan repayment.
[d] Represents costs related to the restructuring of our Shanghai office
location.
[e] Amounts include executive severance and other related costs.
[f] Includes lease termination costs for retail stores that were closed prior
to their respective lease termination dates. The amount in the twelve months
ended February 2, 2013 relate to changes in estimates regarding liabilities
for future lease payments for closed stores.
[g] 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 former Chairman and Co-Chief Executive Officer and our
subsequent remedial actions.
[h] Represents costs incurred in connection with our initial public offering,
including a fee of $7.0 million to Catterton, Tower Three and Glenhill 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.
[i] 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 the
People’s Republic of China for the period from January 1, 2011 through
December 31, 2011.
[j] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recentthree-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 the three and twelve months ended February 2, 2013, we
released all of our valuation allowance against net deferred tax assets for
the U.S. In addition, income tax items exclude the tax benefit related to the
resolution of our Canada Revenue Agency examination in the twelve months ended
February 2, 2013, exclude the tax benefit from the utilization of federal and
state net operating losses, and assume a normalized tax rate of 40% for all
periods presented.
[k] Adjusted net income is a supplemental measure of financial performance
that is not required by, or presented in accordance with, GAAP. We define
adjusted net income as consolidated net income (loss) less non-recurring and
other items. Adjusted net income is included in this press release because
management believes that adjusted net income provides meaningful supplemental
information for investors regarding the performance of our business and
facilitates a meaningful evaluation of actual results on a comparable basis
with historical results. Our management uses this non-GAAP financial measure
in order to have comparable financial results to analyze changes in our
underlying business from quarter to quarter.

                                                     
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF PRO FORMA NET INCOME PER SHARE TO
ADJUSTED NET INCOME PER SHARE
(Unaudited)
                                                         
                                    Three Months Ended    Twelve Months Ended
                                    February 2,            February 2,

                                    2013                   2013
                                                           
Pro forma diluted net loss per      $    (0.75    )        $     (0.34    )
share ^[a]
                                                           
EPS impact of adjustments
(pre-tax):
Management and pre-IPO board        $    0.03              $     0.10
fees ^[b]
Non-cash and other one-time              3.03                    3.09
compensation ^[c]
Special committee investigation          —                       0.13
and remediation ^[d]
Initial public offering costs            0.28                    0.29
^[e]
Anti-dumping exposure ^[f]              0.09                  0.09     
Subtotal adjusted items                  3.43                    3.70
Impact of income tax items ^[g]         (2.04    )             (2.35    )
Adjusted diluted net income per     $    0.64             $     1.01     
share ^[h]
                                                                          

[a] Pro forma diluted net loss per share is calculated based on GAAP net
income and the Company’s vested share count as if (1) the Reorganization and
(2) initial public offering had been completed as of the beginning of the
respective periods and the common stock resulting therefrom was outstanding
for the respective periods. See table titled “Reconciliation of GAAP Net
Income (Loss) to Adjusted Net Income” for pro forma net income calculation.
[b] Represents fees and expenses paid in accordance with our management
services agreement with Home Holdings, as well as fees and expense
reimbursements paid to our Board of Directors prior to the initial public
offering. All management fees were paid in full at the time of the initial
public offering. Board fees and expenses subsequent to the initial public
offering are not included in the above adjustments and are included in both
the GAAP and adjusted net income amounts.
[c] The three and twelve months ended February 2, 2013 include a $92.0 million
non-cash compensation charge related to equity grants at the time of the
Reorganization, as well as a non-cash compensation charge of $23.1 million
related to the performance-based vesting of certain shares granted to Mr.
Alberini and Mr. Friedman.
[d] 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 former Chairman and Co-Chief Executive Officer and our
subsequent remedial actions.
[e] Represents costs incurred in connection with our initial public offering,
including a fee of $7.0 million to Catterton, Tower Three and Glenhill 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.
[f] 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 the
People’s Republic of China for the period from January 1, 2011 through
December 31, 2011.
[g] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recentthree-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 the three and twelve months ended February 2, 2013, we
released all of our valuation allowance against net deferred tax assets for
the U.S. In addition, income tax items adjust pro forma net loss to 1) exclude
the tax benefit related to the resolution of our Canada Revenue Agency
examination in the twelve months ended February 2, 2013, 2) exclude the tax
benefit from the utilization of federal and state net operating losses, and 3)
assume a normalized tax rate of 40% for all periods presented.
[h] Adjusted diluted net income per share is a supplemental measure of
financial performance that is not required by, or presented in accordance with
GAAP. We define adjusted net income per share as consolidated net income
(loss) less non-recurring and other items divided by the Company’s
post-initial public offering share count. Adjusted net income per share is
included in this press release because management believes that adjusted net
income per share provides meaningful supplemental information for investors
regarding the performance of our business and facilitates a meaningful
evaluation of actual results on a comparable basis with historical results.
Our management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying business
from quarter to quarter.

Contact:

Restoration Hardware Holdings, Inc.
Cammeron McLaughlin, 415-945-4998
VP, Investor Relations
cmclaughlin@restorationhardware.com