Ross 2007 Annual Report Download - page 48

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46
Self-insurance. The Company is self-insured for workers’ compensation, general liability insurance costs and costs of certain
medical plans. The self-insurance liability is determined actuarially, based on claims filed and an estimate of claims incurred but
not yet reported. Self-insurance reserves as of February 2, 2008 and February 3, 2007 consist of the following:
($ millions) 2007 2006
Workers’ Compensation $ 59.2 $ 60.9
General Liability 16.3 16.5
Medical Plans 2.7 2.8
Total $ 78.2 $ 80.2
Workers’ compensation and self-insured medical plan liabilities are included in accrued payroll and benefits and accruals for
general liability are included in accrued expenses and other in the accompanying consolidated balance sheets.
Lease accounting. When a lease contains “rent holidays” or requires fixed escalations of the minimum lease payments, the
Company records rental expense on a straight-line basis over the term of the lease and the difference between the average
rental amount charged to expense and the amount payable under the lease is recorded as deferred rent. The Company
amortizes deferred rent on a straight-line basis over the lease term commencing on the possession date. As of February 2,
2008 and February 3, 2007, the balance of deferred rent was $55.7 million and $47.2 million, respectively, and is included in
other long-term liabilities. Tenant improvement allowances are included in other long-term liabilities and are amortized over the
lease term. Changes in tenant improvement allowances are included as a component of operating activities in the consolidated
statementofcashows.
Other long-term liabilities. Other long-term liabilities as of February 2, 2008 and February 3, 2007 consist of the following:
($000)
2007 2006
Deferred rent $ 55,655 $ 47, 23 6
Deferred compensation 48,174 47,000
Income taxes (See Note F) 23,221 —
Tenant improvement allowances 29,942 30,228
Other 4,177 4,839
Total $ 161,169 $ 129,303
Estimated fair value of financial instruments. The carrying value of cash and cash equivalents, short-term and long-term
investments, accounts receivable, accounts payable and long-term debt approximates their estimated fair value.
Revenue recognition. The Company recognizes revenue at the point of sale, net of actual returns, and maintains an allowance
for estimated future returns. Sales of gift cards are deferred until they are redeemed for the purchase of Company merchandise.
Sales tax collected is not recognized as revenue and is included in accrued expenses and other.