Ross 2010 Annual Report Download - page 27

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Earnings per share. Diluted earnings per share in fi scal 2010 was $4.63, compared to $3.54 in fi scal 2009. This 31% increase
in diluted earnings per share is attributable to an approximate 25% increase in net earnings and a 4% reduction in weighted
average diluted shares outstanding, largely due to the repurchase of common stock under our stock repurchase program. Diluted
earnings per share in fi scal 2009 was $3.54, compared to $2.33 in fi scal 2008. This 52% increase in diluted earnings per share is
attributable to an approximate 45% increase in net earnings and a 5% reduction in weighted average diluted shares outstanding
largely due to the repurchase of common stock under our stock repurchase program.
Financial Condition
Liquidity and Capital Resources
Our primary sources of funds for our business activities are cash fl ows from operations and short-term trade credit. Our primary
ongoing cash requirements are for merchandise inventory purchases, payroll, rent, taxes, capital expenditures in connection with
opening new stores, and investments in distribution centers and information systems. We also use cash to repurchase stock
under our stock repurchase program and to pay dividends.
($ millions) 2010 2009 2008
Cash fl ows provided by operating activities $ 673.0 $ 888.4 $ 583.4
Cash fl ows used in investing activities (196.8) (136.8) (218.7)
Cash fl ows used in fi nancing activities (410.6) (304.6) (300.9)
Net increase in cash and cash equivalents $ 65.6 $ 447.0 $ 63.8
Operating Activities
Net cash provided by operating activities was $673.0 million, $888.4 million, and $583.4 million in fi scal 2010, 2009, and 2008,
respectively. The primary sources of cash provided by operating activities in fi scal 2010, 2009, and 2008 were net earnings plus
non-cash expenses for depreciation and amortization. Net cash from operations decreased in 2010 compared to 2009 primarily
due to cash used to purchase additional packaway inventory at the end of 2010. Accounts payable leverage (defi ned as accounts
payable divided by merchandise inventory) was 71% as of January 29, 2011 and 75% as of January 30, 2010. The decrease in
leverage was due to higher packaway inventory.
Our primary source of liquidity is the sale of our merchandise inventory. We regularly review the age and condition of our
merchandise and are able to maintain current merchandise inventory in our stores through replenishment processes and
liquidation of slower-moving merchandise through clearance markdowns.
Investing Activities
In fi scal 2010, 2009, and 2008, our capital expenditures were $198.7 million, $158.5 million, and $224.4 million, respectively.
Our capital expenditures included costs of fi xtures and leasehold improvements to open new stores and costs to implement
information technology systems, build or expand distribution centers, and various other expenditures related to our stores, buying,
and corporate offi ces. In fi scal 2008 we also purchased land in South Carolina with the intention of building a new distribution
center in the future. We opened 56, 56, and 77 new stores in fi scal 2010, 2009, and 2008, respectively.
We had purchases of investments of $6.8 million, $2.9 million, and $37.0 million in fi scal 2010, 2009, and 2008, respectively. We
had sales of investments of $8.6 million, $24.5 million, and $42.5 million in fi scal 2010, 2009, and 2008, respectively.
We are forecasting approximately $380 million to $390 million in capital expenditures in 2011 to fund expenditures for fi xtures and
leasehold improvements to open both new Ross and dd’s DISCOUNTS stores, for the relocation or upgrade of existing stores, for
investments in store and merchandising systems, buildings, equipment and systems, and for various buying and corporate offi ce
expenditures. We expect to fund these expenditures with available cash and cash fl ows from operations.