Ross 2005 Annual Report Download - page 35

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In December 2003, the FASB issued the revised FIN No. 46(R), “Consolidation of Variable Interest Entities,” which addresses
consolidation by business enterprises of entities that are not controllable through voting interests or in which the equity investors
do not bear the residual economic risks and rewards. FIN No. 46(R) explains how to identify variable interest entities and how an
enterprise should assess its interest in an entity to decide whether to consolidate that entity. We were not required under FIN No.
46(R) to consolidate our synthetic leases since the lessors/owners are not variable interest entities.
Purchase obligations. As of January 28, 2006 we had purchase obligations of $659.9 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 $614.5 million represent purchase obligations of less
than one year as of January 28, 2006.
Commercial Credit Facilities
The table below presents our significant available commercial credit facilities at January 28, 2006:
Amount of commitment expiration per period
Less than 2–3 4–5 After 5 Total amount
($000) 1 year years years years committed
Commercial Credit Commitments
Revolving credit facility1$ – $ – $ 600,000 $ – $ 600,000
Total commercial commitments $ – $ – $ 600,000 $ – $ 600,000
1Contains a $200 million sublimit for issuances of standby letters of credit, of which $61.7 million is outstanding and $138.3 million is available as of January 28, 2006.
For additional information relating to these credit facilities, refer to Note C of Notes to the Consolidated Financial Statements.
Revolving credit facility. In 2004, we entered into a $600 million revolving credit facility with our banks, which contains a $200 mil-
lion sublimit for issuances of standby letters of credit of which $138.3 million was available at January 28, 2006. Interest is LIBOR-
based plus an applicable margin (currently 75 basis points) and is payable upon borrowing maturity but no less than quarterly. Our
borrowing ability under this credit facility is subject to our maintaining certain interest coverage and leverage ratios. We have had no
borrowings under this facility. This revolving credit facility expires in March 2009.
Standby letters of credit. We use standby letters of credit to collateralize certain obligations related to our self-insured workers’ com-
pensation and general liability claims. We had $61.7 million and $65.8 million in standby letters of credit outstanding at January
28, 2006 and January 29, 2005, respectively.
Trade letters of credit. We had $16.5 million and $17.0 million in trade letters of credit outstanding at January 28, 2006 and January
29, 2005, respectively.
Dividends. In January 2006, our Board of Directors declared a quarterly cash dividend payment of $.06 per common share, payable
on or about March 31, 2006. Our Board of Directors declared quarterly cash dividends of $.06 per common share in November 2005,
$.05 per common share in January, May and August 2005, and cash dividends of $.0425 per common share in January, May, August
and November 2004.
Stock repurchase programs. In January 2004, our Board of Directors authorized a stock repurchase program of up to $350 million for
2004 and 2005. We repurchased 6.4 million and 6.5 million shares of common stock for aggregate purchase prices of approximate-
ly $175 million and $175 million in 2005 and 2004, respectively. We repurchased a total of $150 million of common stock each
year during 2003 and 2002 under a prior program. In November 2005, we announced that our Board of Directors authorized a new
two-year stock repurchase program of up to $400 million for 2006 and 2007.
We estimate that cash flows from operations, bank credit lines and trade credit are adequate to meet operating cash needs, fund our
planned capital investments, repay our term loan, address the amount due in connection with our Fort Mill, South Carolina distribu-
tion center, repurchase common stock and make quarterly dividend payments for at least the next twelve months.