Ross 2006 Annual Report Download - page 52

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The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations (shares
in thousands):
Effect of dilutive
Basic common stock Diluted
EPS equivalents EPS
2006
Shares 139,488 2,395 141,883
Amount $ 1.73 $ (.03) $ 1.70
2005
Shares 144,325 2,207 146,532
Amount $ 1.38 $ (.02) $ 1.36
2004
Shares 147,468 2,912 150,380
Amount $ 1.15 $ (.02) $ 1.13
Segment reporting. The Company has one reportable operating segment. The Company’s operations include only activities
related to off-price retailing in stores throughout the United States and, therefore, comprise only one segment.
Comprehensive income. Comprehensive income consists of net earnings and other comprehensive income, principally unre-
alized investment gains and losses. Components of comprehensive income are presented in the consolidated statements of
stockholders’ equity.
Derivative instruments and hedging activities. SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
as amended, requires the Company to record all derivatives as either assets or liabilities on the balance sheet and to measure
those instruments at fair value. The Company had no derivative instruments as of February 3, 2007 or January 28, 2006.
New accounting pronouncements. In June 2006, the FASB ratified Emerging Issues Task Force (“EITF”) Issue 06-2, “Accounting
for Sabbatical Leave and Other Similar Benefits Pursuant to FASB No. 43, Accounting for Compensated Absences” (“EITF No.
06-2”), effective for fiscal years beginning after December 15, 2006. Under EITF No. 06-2, compensation cost associated with a
sabbatical or other similar benefit programs should be accrued over the requisite service period. The Company does not believe
the adoption of EITF No. 06-2 will have a material impact on the Company’s operating results or financial position.
In June 2006, the FASB issued Interpretation Number 48, “Accounting for Uncertainty in Income Taxes” (“FIN No. 48”), effective
for fiscal years beginning after December 15, 2006. FIN No. 48 establishes a new basis for how companies should recognize,
measure, present and disclose uncertain income tax positions that have been or expect to be taken in tax returns. The Company
is required to apply the provisions of FIN No. 48 to all tax positions upon initial adoption with the cumulative effect to be recog-
nized as an adjustment to beginning retained earnings. Upon adoption, the Company estimates that a cumulative effect of $6.0
to $8.0 million will be charged to retained earnings to increase reserves for uncertain tax positions.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), effective for fiscal years begin-
ning after November 15, 2007. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The Company does not believe the adoption of SFAS No. 157 will have a material
impact on the Company’s operating results or financial position.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans” (“SFAS No. 158”), effective for fiscal years ending after December 15, 2006. This statement requires recognition of the
overfunded or underfunded status of defined benefit pension and other post-retirement benefit plans as an asset or liability in
the balance sheet. SFAS No. 158 does not change the amount of expense that is recorded related to these plans. Adoption of
this standard did not have a material impact on the Company’s operating results or financial position.