Ross 2011 Annual Report Download - page 30

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Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary
payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources
and expect to be able to maintain adequate trade, bank, and other credit lines to meet our capital and liquidity requirements,
including lease payment obligations in 2012.
In March 2011, we entered into a new $600 million unsecured, revolving credit facility. This credit facility, which replaced our
previous $600 million revolving credit facility, expires in March 2016. Interest on this facility is based on LIBOR plus an applicable
margin (currently 150 basis points) and is payable upon maturity but not less than quarterly. As of January 28, 2012, our $600
million credit facility remains in place and available.
We estimate that existing cash balances, cash flows from operations, bank credit lines, and trade credit are adequate to meet our
operating cash needs and to fund our planned capital investments, common stock repurchases, and quarterly dividend payments
for at least the next twelve months.
Contractual Obligations
The table below presents our significant contractual obligations as of January 28, 2012:
Less than 1 1 – 3 3 – 5 After 5
($000) year years years years Total
1
Senior notes $ — $ — $ — $ 150,000 $ 150,000
Interest payment obligations 9,668 19,335 19,335 30,860 79,198
Operating leases:
Rent obligations 364,788 711,005 492,481 444,571 2,012,845
Synthetic leases 5,223 1,714 — — 6,937
Other synthetic lease obligations 989 56,183 — — 57,172
Purchase obligations 1,237,333 5,291 47 — 1,242,671
Total contractual obligations $ 1,618,001 $ 793,528 $ 511,863 $ 625,431 $ 3,548,823
1 We have a $53.5 million liability for unrecognized tax benefits that is included in other long-term liabilities on our consolidated balance sheet. This liability is excluded from the
schedule above as the timing of payments cannot be reasonably estimated.
Senior notes. We have two series of unsecured senior notes with various institutional investors for $150 million. The Series A
notes totaling $85 million are due in December 2018 and bear interest at a rate of 6.38%. The Series B notes totaling $65 million
are due in December 2021 and bear interest at a rate of 6.53%. Interest on these notes is included in Interest payment obligations
in the table above. These notes are subject to prepayment penalties for early payment of principal.
Borrowings under these notes are subject to certain operating and financial covenants, including interest coverage and other
financial ratios. As of January 28, 2012, we were in compliance with these covenants.
Off-Balance Sheet Arrangements
Operating leases. We lease our buying offices, corporate headquarters, one distribution center, one trailer parking lot, three
warehouse facilities, and all but three of our store locations. Except for certain leasehold improvements and equipment, these
leased locations do not represent long-term capital investments.
We have lease arrangements for certain equipment in our stores for our point-of-sale (“POS”) hardware and software systems.
These leases are accounted for as operating leases for financial reporting purposes. The initial terms of these leases are either
two or three years, and we typically have options to renew the leases for two to three one-year periods. Alternatively, we may
purchase or return the equipment at the end of the initial or each renewal term. We have guaranteed the value of the equipment of
$1.2 million at the end of the respective initial lease terms, which is included in Other synthetic lease obligations in the table above.