Restoration Hardware 8-K 2005
WASHINGTON, D.C. 20549
Date of report (Date of earliest event reported): March 4, 2005
RESTORATION HARDWARE, INC.
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code: (415) 924-1005
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
The Company has reviewed its method of accounting for leases in response to views expressed in a letter issued by the Office of the Chief Accountant of the Securities and Exchange Commission (SEC) on February 7, 2005. As a result of this review, on March 4, 2005 management of the Company advised the Companys Audit Committee of the Board of Directors that it had made a determination, similar to recent determinations by many other retail companies, that its current method of accounting for leases was not consistent with the recently expressed views of the SEC staff.
Management and the Audit Committee also discussed these issues with the Companys independent registered public accounting firm, Deloitte & Touche, LLP. As a result, the Audit Committee concurs with the Companys determination that the prior accounting for these leases was in error and will require restatement of certain prior period financial statements. Accordingly, the Company has determined that its previously issued financial statements, including those for fiscal 2002 and 2003 contained in the Companys Annual Report on Form 10-K for the fiscal year ended January 31, 2004, should no longer be relied on.
Historically, and consistent with industry practice, the Company had recognized the straight line rent expense for leases beginning on the earlier of the store opening date or the lease commencement date, which had the effect of excluding the construction period of its stores (rent holiday) from the calculation of the period over which it expensed rent. After further evaluation of the SECs views and consultation with its independent auditors, the Company determined it will include the construction period in its calculation of straight line rent in accordance with Financial Accounting Standards Board Technical Bulletin No. 85-3, Accounting for Operating Leases with Scheduled Rent Increases and will correct its straight line rent accrual and deferred rent credits accordingly.
The Company anticipates filing the corrections to its financial statements in conjunction with the filing of its Annual Report on Form 10-K for the fiscal year ended January 29, 2005.
On March 8, 2005, the Company announced via press release that it is revising its method of accounting for leases as a result of views expressed by the Office of the Chief Accountant of the SEC on February 7, 2005. The full text of the press release issued by the Company is attached as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.