Ross 2011 Annual Report Download - page 42

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40
Other long-term liabilities. Other long-term liabilities as of January 28, 2012 and January 29, 2011 consisted of the following:
($000) 2011 2010
Deferred compensation $ 67,459 $ 63,569
Deferred rent 59,444 58,989
Income taxes (See Note F) 53,534 41,784
Tenant improvement allowances 21,287 22,392
Other 1,901 3,255
Total $ 203,625 $ 189,989
Lease accounting. When a lease contains “rent holidays” or requires fixed escalations of the minimum lease payments, the
Company records rental expense on a straight-line basis over the term of the lease and the difference between the average
rental amount charged to expense and the amount payable under the lease is recorded as deferred rent. The Company begins
recording rent expense on the lease possession date. Tenant improvement allowances are included in other long-term liabilities
and are amortized over the lease term. Changes in tenant improvement allowances are included as a component of operating
activities in the consolidated statements of cash flows.
Estimated fair value of financial instruments. The carrying value of cash and cash equivalents, short- and long-term
investments, accounts receivable, other long-term assets, accounts payable, and other long-term liabilities approximates their
estimated fair value. See Note B and Note D for additional fair value information.
Revenue recognition. The Company recognizes revenue at the point of sale and maintains an allowance for estimated future
returns. Sales of gift cards are deferred until they are redeemed for the purchase of Company merchandise. The Company’s
gift cards do not have expiration dates. Based upon historical redemption rates, a small percentage of gift cards will never be
redeemed, which represents breakage. The Company recognizes income from gift card breakage as a reduction of operating
expenses when redemption by a customer is considered to be remote. Income recognized from breakage was not significant
in fiscal 2011, 2010, and 2009.
Sales tax collected is not recognized as revenue and is included in accrued expenses and other.
Allowance for sales returns. An allowance for the gross margin loss on estimated sales returns is included in accrued
expenses and other in the consolidated balance sheets. The allowance for sales returns consists of the following:
($000) Beginning balance Additions Returns Ending balance
Year ended:
January 28, 2012 $ 5,869 $ 606,293 $ (605,736) $ 6,426
January 29, 2011 $ 5,344 $ 558,361 $ (557,836) $ 5,869
January 30, 2010 $ 4,702 $ 506,249 $ (505,607) $ 5,344