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, tableware, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites.

As of November 3, 2018, the Company operated a total of 86 retail Galleries and 37 outlet stores in 32 states, the District of Columbia and Canada, and includes 15 Waterworks showrooms in the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong.

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, necessary to fairly state the Company’s financial position as of November 3, 2018, and the results of operations for the three and nine months ended November 3, 2018 and October 28, 2017. The Company’s current fiscal year, which consists of 52 weeks, ends on February 2, 2019 (“fiscal 2018”).

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 3, 2018 (the “2017 Form 10-K”). Certain prior year amounts have been reclassified for consistency with the current period presentation. This reclassification had no effect on the previously reported consolidated financial position or consolidated results of operations, and did not have a material effect on the previously reported consolidated cash flows.

The results of operations for the three and nine months ended November 3, 2018 presented herein are not necessarily indicative of the results to be expected for the full fiscal year.

In June 2018, the Company issued in a private offering $300 million principal amount of 0.00% convertible senior notes due 2023 and issued an additional $35 million principal amount in connection with the overallotment option granted to the initial purchasers (collectively, the “2023 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 $91.9 million. In addition, the Company sold warrants for which it received aggregate proceeds of $51.0 million. Taken together, the Company received total cash proceeds of $287.8 million, net of discounts upon original issuance and offering costs of $6.3 million. Refer to Note 7—Convertible Senior Notes.

During the third quarter of fiscal 2018, management determined that the Company had incorrectly reported the impact during the fiscal year ended February 3, 2018 of retiring its common stock in accordance with Accounting Standards Codification (“ASC”) 505—Equity. The common stock being retired was related to shares repurchased under the Company’s equity plans. This resulted in an overstatement of treasury stock of $19.5 million and an overstatement of additional paid-in capital of $19.5 million on the consolidated balance sheets as of February 3, 2018, May 5, 2018 and August 4, 2018. There was no impact on the consolidated statements of income or cash flows related to this misstatement. This error was not considered to be material to any of the previously issued annual or interim financial statements.

The following are selected line items from the Company’s condensed consolidated balance sheets and consolidated statements of stockholders’ equity illustrating the effect of the revision (in thousands):

	Condensed Consolidated Balance Sheets
	February 3, 2018
	As Reported			Adjustment			As Revised
Stockholders’ equity:
Common stock	$	2		$	—		$	2
Additional paid-in capital		860,288			(19,523	)		840,765
Accumulated other comprehensive income		(171	)		—			(171	)
Retained earnings		152,394			—			152,394
Treasury stock		(1,019,849	)		19,523			(1,000,326	)
Total stockholders’ equity	$	(7,336	)	$	—		$	(7,336	)

	Unaudited Condensed Consolidated Balance Sheets
	May 5, 2018
	As Reported			Adjustment			As Revised
Stockholders’ equity:
Common stock	$	2		$	—		$	2
Additional paid-in capital		870,751			(19,523	)		851,228
Accumulated other comprehensive income		(1,436	)		—			(1,436	)
Retained earnings		159,417			—			159,417
Treasury stock		(1,020,092	)		19,523			(1,000,569	)
Total stockholders’ equity	$	8,642		$	—		$	8,642

	Unaudited Condensed Consolidated Balance Sheets
	August 4, 2018
	As Reported			Adjustment			As Revised
Stockholders’ equity:
Common stock	$	2		$	—		$	2
Additional paid-in capital		944,610			(19,523	)		925,087
Accumulated other comprehensive income		(1,918	)		—			(1,918	)
Retained earnings		223,459			—			223,459
Treasury stock		(1,020,092	)		19,523			(1,000,569	)
Total stockholders’ equity	$	146,061		$	—		$	146,061