Ross 2009 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2009 Ross annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

— 38 —
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Summary of Significant Accounting Policies
Business. Ross Stores, Inc. and its subsidiaries (the “Company”) is an off-price retailer of first-quality, name brand apparel,
shoes, and accessories for the entire family, as well as gift items, linens and other home-related merchandise. At the
end of fiscal 2009, the Company operated 953 Ross Dress for Less® (“Ross”) locations in 27 states and Guam and 52
dd’s DISCOUNTS® stores in four states, all of which are supported by four distribution centers. The Company’s headquarters,
one buying office, two distribution centers and 26% of its stores are located in California.
Segment reporting. The Company has one reportable segment. The Company’s operations include only activities related to
off-price retailing in stores throughout the United States.
Basis of presentation and fiscal year. The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. Intercompany transactions and accounts have been eliminated. The Company
follows the National Retail Federation fiscal calendar and utilizes a 52-53 week fiscal year whereby the fiscal year ends on the
Saturday nearest to January 31. The fiscal years ended January 30, 2010, January 31, 2009 and February 2, 2008 are referred
to as fiscal 2009, fiscal 2008, and fiscal 2007, respectively, and were 52 weeks.
Use of accounting estimates. The preparation of consolidated financial statements in conformity with Generally Accepted
Accounting Principles in the United States of America (“GAAP”) requires the Company to make estimates and assumptions
that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. The Company’s significant accounting estimates include valuation of merchandise inventory
and long-lived assets and accruals for self-insurance.
Purchase obligations. As of January 30, 2010, the Company had purchase obligations of approximately $1,087 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
$1,044 million represent purchase obligations of less than one year as of January 30, 2010.
Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original
maturity of three months or less.
Investments. The Company’s investments are comprised of various debt securities. At January 30, 2010 and January 31,
2009, these investments were classified as available-for-sale and are stated at fair value. Investments are classified as either
short- or long-term based on their original maturities and the Company’s intent. Investments with an original maturity of less than
one year are classified as short-term. See Note B for additional information.
Merchandise inventory. Merchandise inventory is stated at the lower of cost (determined using a weighted average basis)
or net realizable value. The Company purchases manufacturer overruns and canceled orders both during and at the end of a
season which are referred to as “packaway” inventory. Packaway inventory is purchased with the intent that it will be stored
in the Company’s warehouses until a later date, which may even be the beginning of the same selling season in the following
year. Packaway inventory accounted for approximately 38% of total inventories as of January 30, 2010 and January 31, 2009.
The cost of the Company’s merchandise inventory is reduced by valuation reserves for shortage based on historical shortage
experience from the Company’s physical merchandise inventory counts and cycle counts. Merchandise inventory includes
acquisition, processing, and storage costs related to packaway inventory.