Ross 2011 Annual Report Download - page 39

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Summary of Significant Accounting Policies
Business. Ross Stores, Inc. and its subsidiaries (the “Company”) is an off-price retailer of first-quality, in-season, name
brand and designer apparel, accessories, footwear, and home fashions for the entire family. At the end of fiscal 2011, the
Company operated 1,037 Ross Dress for Less® (“Ross”) locations in 29 states, the District of Columbia, and Guam, and 88
dd’s DISCOUNTS® stores in seven states, all of which are supported by four distribution centers. The Company’s headquarters,
one buying office, two distribution centers, one warehouse, and 26% of its stores are located in California.
Segment reporting. The Company has one reportable segment. The Company’s operations include only activities related to
off-price retailing in stores throughout the United States.
Basis of presentation and fiscal year. The consolidated financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. Intercompany transactions and accounts have been eliminated. The Company follows
the National Retail Federation fiscal calendar and utilizes a 52-53 week fiscal year whereby the fiscal year ends on the Saturday
nearest to January 31. The fiscal years ended January 28, 2012, January 29, 2011 and January 30, 2010 are referred to as fiscal
2011, fiscal 2010, and fiscal 2009, respectively, and had 52 weeks.
Stock dividend. On November 16, 2011, the Company’s Board of Directors declared a two-for-one split of the Company’s
common stock issued in the form of a stock dividend. Stockholders of record as of November 29, 2011 were issued one
additional share of common stock on December 15, 2011 for each share held. All share and per share amounts have been
adjusted for the two-for-one stock split effective December 15, 2011.
Use of accounting estimates. The preparation of consolidated financial statements in conformity with Generally Accepted
Accounting Principles in the United States of America (“GAAP”) requires the Company to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could
differ from those estimates. The Company’s significant accounting estimates include valuation reserves for inventory shortage,
packaway inventory costs, useful lives of fixed assets, self-insurance reserves, and uncertain tax position reserves.
Purchase obligations. As of January 28, 2012, the Company had purchase obligations of approximately $1,243 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 $1,172 million
represent purchase obligations of less than one year as of January 28, 2012.
Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original
maturity of three months or less.
Restricted cash, cash equivalents, and investments. The Company has restricted cash, cash equivalents, and
investments to serve as collateral for certain of the Company’s insurance obligations. These restricted funds are invested in
bank deposits, money market mutual funds, U.S. Government and agency securities, and corporate securities and cannot be
withdrawn from the Company’s account without the prior written consent of the secured parties. As of January 28, 2012, the
Company had cash and cash equivalents of $61.1 million and investments of $5.7 million in restricted accounts. As of January 28,
2012 restricted cash, cash equivalents, and investments of $18.7 million and $48.1 million were included in prepaid expenses and
other and other long-term assets, respectively, in the Consolidated Balance Sheet. The classification between current and long-
term is based on the timing of expected payments of the secured insurance obligations.
Investments. The Company’s investments are comprised of various debt securities. At January 28, 2012 and January 29, 2011,
these investments were classified as available-for-sale and are stated at fair value. Investments are classified as either short- or
long-term based on their original maturities and the Company’s intent. Investments with an original maturity of less than one year
are classified as short-term. See Note B for additional information.