Ross 2007 Annual Report Download - page 37

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Short-term trade credit represents a significant source of financing for investments in merchandise inventory. Trade credit arises
from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us
from all sources and expect to be able to maintain adequate trade, bank and other credit lines to meet our capital and liquidity
requirements, including lease payment obligations in 2008.
Weestimatethatcashowsfromoperations,bankcreditlinesandtradecreditareadequatetomeetoperatingcashneeds,fund
our planned capital investments, repurchase common stock and make quarterly dividend payments for at least the next twelve
months.
Contractual Obligations
The table below presents our significant contractual obligations as of February 2, 2008:
Less than 1 1 – 3 3 – 5 After 5
($000) year years years years Total1
Contractual Obligations
Senior Notes $ — $ — $ — $ 150,000 $ 150,000
Interest payment obligations 9,668 19,335 19,335 69,530 117,868
Operating leases:
Rent obligations 307,991 550,483 421,637 457,863 1,737,974
Synthetic leases 10,494 8,688 8,182 2,045 29,409
Other synthetic lease obligations 4,733 1,317 — 56,000 62,050
Purchase obligations 760,833 10,020 210 — 771,063
Total contractual obligations $ 1,093,719 $ 589,843 $ 449,364 $ 735,438 $ 2,868,364
1 Pursuant to the guidelines of FIN 48, a $23.2 million reserve for unrecognized tax benefits is included in other long-term liabilities on the Company’s consolidated balance
sheet. These obligations are excluded from the schedule above as the timing of payments cannot be reasonably estimated.
Senior Notes. In October 2006, we entered into a Note Purchase Agreement with various institutional investors for $150 million
of unsecured, senior notes. The notes were issued in two series and funding occurred in December 2006. Series A notes were
issued for an aggregate of $85 million, are due in December 2018, and bear interest at a rate of 6.38%. Series B notes were
issued for an aggregate of $65 million, are due in December 2021, and bear interest at a rate of 6.53%. Interest on these notes is
included in Interest payment obligations in the table above.
Borrowings under these notes are subject to certain operating and financial covenants including maintaining certain interest
coverage and leverage ratios. As of February 2, 2008, we were in compliance with these covenants.
Off-Balance Sheet Arrangements
Operating leases. All but two of our store sites, one of our distribution centers, and our buying offices and corporate
headquarters are leased and, except for certain leasehold improvements and equipment, do not represent long-term capital
investments.
We have lease arrangements for certain equipment in our stores for our point-of-sale (“POS”) hardware and software systems.
These leases are accounted for as operating leases for financial reporting purposes. The initial terms of these leases are two
years, and we typically have options to renew the leases for two to three one-year periods. Alternatively, we may purchase or
return the equipment at the end of the initial or each renewal term. We have guaranteed the value of the equipment of
$6.1 million, at the end of the respective initial lease terms, which is included in Other synthetic lease obligations in the table
above.
We lease approximately 181,000 square feet of office space for our corporate headquarters in Pleasanton, California, under
several facility leases. The terms for these leases expire between 2010 and 2014 and contain renewal provisions.