Ross 2006 Annual Report Download - page 50

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During fiscal 2004, the Company relocated its corporate headquarters from Newark, California to Pleasanton, California and
sold the Newark Facility for net proceeds of approximately $17.4 million. The Company recognized a net impairment charge of
approximately $15.8 million related to this disposal.
Store closures. The Company continually reviews the operating performance of individual stores. For stores that are to be
closed, the Company records a liability for future minimum lease payments and related ancillary costs at the time the liability is
incurred. Operating costs, including depreciation, of stores to be closed are expensed during the period they remain in use.
Accounts payable. Accounts payable represents amounts owed to third parties at the end of the period. Accounts payable
includes book cash overdrafts, which are checks issued under zero balance accounts not yet presented for payment, in excess
of cash balances of such accounts of approximately $165.0 million and $55.5 million at February 3, 2007 and January 28, 2006,
respectively. The Company includes the changes in book cash overdrafts in operating cash flows.
Self-insurance. The Company is self-insured for workers’ compensation, general liability costs and certain medical plans. The
self-insurance liability is determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.
Self-insurance reserves as of February 3, 2007 and January 28, 2006 consist of the following:
($ millions) 2006 2005
Workers’ Compensation $ 60.9 $ 62.0
General Liability 16.5 14.7
Medical Plans 2.8 2.6
Total $ 80.2 $ 79.3
Workers’ compensation and self-insured medical liabilities are included in accrued payroll and benefits and accruals for general
liability are included in accrued expenses and other in the accompanying consolidated balance sheets.
Lease accounting. Upon adoption in the first quarter of fiscal 2006, the Company implemented prospectively the Financial
Accounting Standards Board (“FASB”) Staff Position (“FSP”) 13-1, “Accounting for Rental Costs Incurred During a Construction
Period,” which requires that rental costs incurred during a construction period be expensed, not capitalized. Implementation of
this new standard did not have a significant impact on the Company’s financial results in fiscal year 2006.
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 amortizes deferred rent on a
straight-line basis over the lease term commencing on the possession date. As of February 3, 2007 and January 28, 2006, the
balance of deferred rent was $49.8 million and $47.1 million, respectively, and is included in other long-term liabilities. Tenant
improvement allowances are included in other long-term liabilities and are amortized over the lease term. Changes in tenant
improvement allowances are included as a component of operating activities in the consolidated statements of cash flows.
Other long-term liabilities. Other long-term liabilities as of February 3, 2007 and January 28, 2006 consist of the following:
($ 000) 2006 2005
Deferred compensation $ 47,000 $ 43,401
Deferred rent 49,793 47,095
Tenant improvement allowances 27,671 26,868
Other 4,839 5,562
Total $ 129,303 $ 122,926
Estimated fair value of financial instruments. The carrying value of cash and cash equivalents, short-term and long-term
investments, accounts receivable, accounts payable and long-term debt approximates their estimated fair value.