What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-29 compared with 2022-03-30 · 46 added, 32 removed, 144 unchanged (35% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our senior leadership team, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that the information required to be disclosed by us in such reports is accumulated and communicated to our senior leadership team, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended).

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that the information required to be disclosed by us in such reports is accumulated and communicated to our senior leadership team, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our senior leadership team, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of January 28, 2023 as a result of the material weakness in our internal control over financial reporting described below that was identified in connection with the matter that caused the Restatement (defined below).

Management’s Report on Internal Control over Financial Reporting

1 unchanged sentence

Our senior leadership team conducted an assessment of our internal control over financial reporting as of January 28, 2023 based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on the assessment, our senior leadership team concluded that our internal control over financial reporting was effective as of January 29, 2022.

Based on the assessment, our senior leadership team concluded that our internal control over financial reporting was not effective as of January 28, 2023 due to the existence of a material weakness.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As previously disclosed in our Quarterly Reports on Form 10-Q/A for the fiscal periods ended April 30, 2022, July 30, 2022, and October 29, 2022, we identified the following material weakness:

We did not design and maintain an effective control activity over the presentation and disclosure of net income per share, specifically the application of authoritative guidance, including new accounting standards, to the net income per share computations.

This material weakness resulted in errors in the unaudited condensed consolidated financial statements for the fiscal periods ended April 30, 2022, July 30, 2022 and October 29, 2022 that were restated on Form 10-Q/A (the “Restatement”).

Additionally, this material weakness could result in misstatements of the related accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

The effectiveness of our internal control over financial reporting as of January 28, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Plan for Remediation of Material Weakness in Internal Control Over Financial Reporting

Our senior leadership team is committed to remediating the material weakness in our internal control over financial reporting in a timely manner and with oversight from the Audit Committee.

We have, among other actions, implemented a remediation plan to address the root cause of the material weakness in order to fully remediate the material weakness.

In conjunction with this remediation plan, during our fiscal quarter ended January 28, 2023, we designed and implemented an enhanced control activity related to the presentation and disclosure of net income per share, including the application of authoritative guidance and new accounting standards, to the net income per share computations.

118 | FORM 10-K

PART II — FINANCIAL STATEMENTS

While we believe the above remediation plan will address and remediate the material weakness, and we have enhanced our controls related to the net income per share computations, the material weakness will not be considered remediated until there has been appropriate time for us to conclude through testing that the controls are designed and operating effectively.

Such remediation is anticipated to be completed in the first half of fiscal 2023.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, our senior leadership team recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that our senior leadership team is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

There were no changes in our internal control over financial reporting, other than an enhanced control activity to address the material weakness identified above, that occurred during our fiscal quarter ended January 28, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

On March 24, 2023, we implemented a restructuring that includes workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth.

As a result of the workforce reduction associated with the initiative, which affected approximately 440 roles, we expect to incur certain charges.

The reorganization and accompanying workforce reduction includes the elimination of numerous leadership and other positions throughout the organization.

We are currently unable to make a good faith determination of an estimate of the total amount or range of future amounts for each major type of cost expected to be incurred in connection with the reorganization, an estimate of the total amount or range of future amounts expected to be incurred in connection with the reorganization, or an estimate of the total amount or range of future amounts of the charges that will result in future cash expenditures.

We will provide additional information in a subsequent filing after we determine the costs and charges associated with this business reorganization.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

122 | FORM 10-K

PART II — FINANCIAL STATEMENTS

FORM 10-K | 119

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

15 unchanged sentences

Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022

Consolidated Statements of Income for the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020

Consolidated Statements of Comprehensive Income for the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020

Consolidated Statements of Stockholders’ Equity (Deficit) for the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020

Consolidated Statements of Cash Flows for the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020

Consolidated Statements of Income for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Consolidated Statements of Comprehensive Income for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Consolidated Statements of Cash Flows for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Notes to the Consolidated Financial Statements

6 unchanged sentences

EXHIBIT INDEX

INCORPORATED BY REFERENCE

37 unchanged sentences

March 29, 2018

Form of Base Convertible Bond Hedge Confirmation, dated June 13, 2018, between RH and each of the counterparties thereto.

June 19, 2018

EXHIBIT INDEX

Amended and Restated Aircraft Time Sharing Agreement entered into on March 29, 2016 by and between Restoration Hardware, Inc.

March 30, 2016

122 | FORM 10-K

EXHIBIT INDEX

INCORPORATED BY REFERENCE

EXHIBIT DESCRIPTION

Form of Base Warrant Confirmation, dated June 13, 2018, between RH and each of the counterparties thereto.

June 19, 2018

Form of Base Convertible Bond Hedge Confirmation, dated September 12, 2019, between RH and each of the counterparties thereto.

September 18, 2019

Form of Base Warrant Confirmation, dated September 12, 2019, between RH and each of the counterparties thereto.

September 18, 2019

Form of Additional Convertible Bond Hedge Confirmation, dated September 13, 2019, between RH and each of the Counterparties.

September 18, 2019

Form of Additional Warrant Confirmation, dated September 13, 2019, between RH and each of the Counterparties.

September 18, 2019

Amended and Restated Aircraft Time Sharing Agreement entered into on March 29, 2016 by and between Restoration Hardware, Inc.

March 30, 2016

Credit Agreement, dated as of July 7, 2017, among Restoration Hardware, Inc., as lead borrower, various other subsidiaries of RH named therein as borrowers, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association as administrative agent and collateral agent.

11 unchanged sentences

October 25, 2021

126 | FORM 10-K

Notice of Stock Option Award and Stock Option Award Agreement by and between RH and Gary Friedman dated as of October 18, 2020.

October 21, 2020

Form of Partial Warrant Termination Agreement by and between RH and the applicable Hedge Counterparty

April 13, 2022

Form of Partial Warrant Termination Agreement by and between RH and the applicable Hedge Counterparty

April 13, 2022

Form of Remaining Warrant Termination Agreement by and between RH and the applicable Hedge Counterparty.

April 18, 2022

Form of Bond Hedge Termination Agreement by and between RH and the applicable Hedge Counterparty.

April 18, 2022

Term Loan Credit Agreement dated as of October 20, 2021, as amended by the 2022 Incremental Amendment, dated as of May 13, 2022, by and among Restoration Hardware, Inc.

as the borrower, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

EXHIBIT INDEX

FORM 10-K | 123

INCORPORATED BY REFERENCE

EXHIBIT DESCRIPTION

Notice of Stock Option Award and Stock Option Award Agreement by and between RH and Gary Friedman dated as of October 18, 2020.

October 21, 2020

Subsidiary List

15 unchanged sentences

Indicates management contract or compensatory plan or arrangement.

EXHIBIT INDEX

124 | FORM 10-K

EXHIBIT INDEX

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

31 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures