Ross 2009 Annual Report Download - page 32

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We lease a 1.3 million square foot distribution center in Perris, California. The land and building for this distribution center are
financed under a $70 million ten-year synthetic lease that expires in July 2013. Rent expense on this center is payable monthly
at a fixed annual rate of 5.8% on the lease balance of $70 million. At the end of the lease term, we have the option to either
refinance the $70 million synthetic lease facility, purchase the distribution center at the amount of the then-outstanding lease
obligation, or arrange a sale of the distribution center to a third party. If the distribution center is sold to a third party for less than
$70 million, we have agreed under a residual value guarantee to pay the lessor any shortfall amount up to $56 million. The
agreement includes a prepayment penalty for early payoff of the lease. Our contractual obligation of $56 million is included in
Other synthetic lease obligations in the above table.
We have recognized a liability and corresponding asset for the inception date estimated fair value of the residual value guarantee
in the amount of $8.3 million for the Perris, California distribution center and $0.9 million for the POS leases. These residual
value guarantees are being amortized on a straight-line basis over the original terms of the leases. The current portion of the
related asset and liability is recorded in prepaid expenses and accrued expenses, respectively, and the long-term portion
of the related assets and liabilities is recorded in other long-term assets and other long-term liabilities, respectively, in the
accompanying consolidated balance sheets.
We lease two warehouses in Carlisle, Pennsylvania with one lease expiring in 2013 and the other expiring in 2014. In January
2009, we exercised a three-year option for a 255,000 square foot warehouse in Fort Mill, South Carolina, extending the term to
February 2013. In June 2008, we purchased a 423,000 square foot warehouse also in Fort Mill, South Carolina. All four of these
properties are used to store our packaway inventory. We also lease a 10-acre parcel of land that has been developed for trailer
parking adjacent to our Perris distribution center.
The synthetic lease facilities described above, as well as our revolving credit facility and senior notes, have covenant restrictions
requiring us to maintain certain interest coverage and other financial ratios. In addition, the interest rates under the revolving
credit facility may vary depending on actual interest coverage ratios achieved. As of January 30, 2010, we were in compliance
with these covenants.
Purchase obligations. As of January 30, 2010 we had purchase obligations of $1,087 million. These purchase obligations
primarily consist of merchandise inventory purchase orders, commitments related to store fixtures and supplies, and information
technology service and maintenance contracts. Merchandise inventory purchase orders of $1,044 million represent purchase
obligations of less than one year as of January 30, 2010.
Commercial Credit Facilities
The table below presents our significant available commercial credit facilities at January 30, 2010:
Amount of Commitment Expiration Per Period
Total
Less than 1 – 3 3 – 5 After 5 amount
($000) 1 year years years years committed
Revolving credit facility $ — $ 600,000 $ — $ — $ 600,000
Total commercial commitments $ — $ 600,000 $ — $ — $ 600,000
For additional information relating to this credit facility, refer to Note D of Notes to the Consolidated Financial Statements.