Ross 2007 Annual Report Download - page 47

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Property and equipment. Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is calculated using the straight-line method over the estimated useful life of the asset, typically ranging from
five to twelve years for equipment and 20 to 40 years for real property. Depreciation and amortization expense on property
and equipment was $120.7 million, $107.8 million and $93.7 million for fiscal 2007, 2006 and 2005, respectively. The cost of
leasehold improvements is amortized over the useful life of the asset or the applicable lease term, whichever is less. Computer
hardware and software costs, net of amortization, of $136.4 million and $147.9 million at February 2, 2008 and February 3, 2007,
respectively, are included in fixtures and equipment and are amortized over their estimated useful life generally ranging from five
to seven years. The Company capitalizes interest during the construction period. Interest capitalized was $0.9 million and
$0.0 million in fiscal 2007 and fiscal 2006, respectively.
In May 2006, the Company exercised its option to purchase its Fort Mill, South Carolina distribution center and paid cash in
the amount of $87.3 million to acquire the facility from the lessor. The Company estimated the fair value of the components of
the facility and the related equipment using various valuation techniques, including appraisals, market prices, and cost data.
Amounts recorded for each component were based on these fair value estimates.
Other long-term assets. Other long-term assets as of February 2, 2008 and February 3, 2007 consist of the following:
($000)
2007 2006
Deferred compensation $ 48,174 $ 47,000
Goodwill 2,889 2,889
Deposits 3,270 3,350
Intangibles and other 9,907 11,027
Total $ 64,240 $ 64,266
Intangible assets are principally comprised of lease rights, which are payments made to acquire store leases. An impairment
losswouldberecognizediftheundiscountedcashowofanassetgroupwaslessthanthecarryingvalueoftheassetgroup.
Lease rights are amortized over the remaining life of the lease. Amortization expense related to these intangible assets was
$0.0 million, $0.3 million and $0.5 million for fiscal 2007, 2006 and 2005, respectively.
Other long-term assets and certain identifiable intangibles that are subject to amortization are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible
assets that are not subject to amortization, including goodwill, are tested for impairment annually or more frequently if events or
changes in circumstances indicate that the asset may be impaired. Based on the Company’s evaluation as of February 2, 2008
and February 3, 2007, no adjustments were required to reduce the carrying value of intangible assets to fair value.
Store closures. The Company continually reviews the operating performance of individual stores. For stores that are to be
closed, the Company records a liability for future minimum lease payments and related ancillary costs at the time the liability is
incurred. Operating costs, including depreciation, of stores to be closed are expensed during the period they remain in use.
Accounts payable. Accounts payable represents amounts owed to third parties at the end of the period. Accounts payable
includes book cash overdrafts (checks issued under zero balance accounts not yet presented for payment) in excess of cash
balances in such accounts of approximately $102.0 million and $165.0 million at February 2, 2008 and February 3, 2007,
respectively.TheCompanyincludesthechangeinbookcashoverdraftsinoperatingcashows.