Ross 2015 Annual Report Download - page 40

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Senior notes. In September 2014, we issued unsecured 2024 Notes with an aggregate principal amount of $250 million.
The 2024 Notes were issued at a price equal to 99.329% of the principal amount. Interest on the 2024 Notes is payable
semi-annually beginning March 2015.
As of January 30, 2016, we also had outstanding two series of unsecured senior notes in the aggregate principal amount of
$150 million, held by various institutional investors. 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%. Borrowings under these senior notes are subject to certain financial covenants, including interest coverage and
other financial ratios. As of January 30, 2016, we were in compliance with those covenants.
The 2024 Notes, Series A, and Series B senior notes are all subject to prepayment penalties for early payment of principal.
Off-Balance Sheet Arrangements
Operating leases. We currently lease all but three of our store locations, three warehouse facilities, and a buying office. In
addition, we have a ground lease related to our New York buying office. Except for certain leasehold improvements and
equipment, these leased locations do not represent long-term capital investments.
Two of the warehouses are in Carlisle, Pennsylvania with leases expiring in 2016 and 2017. The third warehouse is in Fort
Mill, South Carolina, with a lease expiring in 2019. The leases for the two Carlisle, Pennsylvania warehouses contain
renewal provisions.
We currently lease approximately 68,000 square feet of office space for our Los Angeles buying office. The lease term for
this facility expires in 2017 and contains renewal provisions.
Purchase obligations. As of January 30, 2016 we had purchase obligations of approximately $1,721 million. These
purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction
projects, store fixtures and supplies, and information technology service, transportation, and maintenance contracts.
Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility in
addition to a funded trust to collateralize our insurance obligations. As of January 30, 2016 and January 31, 2015, we had
$15.3 million and $19.5 million, respectively, in standby letters of credit outstanding and $56.4 million and $56.3 million,
respectively, in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust
consists of restricted cash, cash equivalents, and investments.
Trade letters of credit. We had $32.0 million and $32.8 million in trade letters of credit outstanding at January 30, 2016 and
January 31, 2015, respectively.
Effects of inflation or deflation. We do not consider the effects of inflation or deflation to be material to our financial
position and results of operations.
Other
Critical Accounting Policies
The preparation of our consolidated financial statements requires our management to make estimates and assumptions that
affect the reported amounts. These estimates and assumptions are evaluated on an ongoing basis and are based on
historical experience and on various other factors that management believes to be reasonable. We believe the following
critical accounting policies describe the more significant judgments and estimates used in the preparation of our consolidated
financial statements and are not intended to be a comprehensive list of all of our accounting policies.
In many cases, the accounting treatment of a particular transaction is specifically dictated by Generally Accepted Accounting
Principles (“GAAP”), with no need for management’s judgment in their application. There are also areas in which
management’s judgment in selecting one alternative accounting principle over another would not produce a materially