Ross 2008 Annual Report Download - page 39

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Property and equipment. Property and equipment, which include amounts recorded under capital leases, 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 $134.0 million, $120.7 million and $107.8 million for fiscal 2008,
2007 and 2006, 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 $125.8 million and $136.4 million
at January 31, 2009 and February 2, 2008, respectively, are included in fixtures and equipment and are amortized over their
estimated useful life generally ranging from five to seven years. Property under capital leases, net of depreciation, of $0.6 million
at January 31, 2009 relates to distribution center equipment and has a term of two years. The Company capitalizes interest
during the construction period. Interest capitalized was $3.2 million and $0.9 million in fiscal 2008 and fiscal 2007, respectively.
Other long-term assets. Other long-term assets as of January 31, 2009 and February 2, 2008 consist of the following:
($000) 2008 2007
Deferred compensation assets $ 37,304 $ 48,174
Goodwill 2,889 2,889
Deposits 3,851 3,270
Intangibles and other 8,082 9,907
Total $ 52,126 $ 64,240
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 flow 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 $0.1
million, $0.2 million and $0.3 million for fiscal 2008, 2007 and 2006, 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 January 31, 2009 and
February 2, 2008, 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. In 2008, the Company closed six Ross Dress for Less and five dd’s DISCOUNTS locations. In connection with
the dd’s store closures, the Company recognized a lease loss liability of approximately $1.0 million. 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 $97.2 million and $102.0 million at January 31, 2009 and February 2, 2008,
respectively. The Company includes the change in book cash overdrafts in operating cash flows.