Ross 2014 Annual Report Download - page 43

The classification between current and long-term is based on the timing of expected payments of the insurance obligations.
Estimated fair value of financial instruments. The carrying value of cash and cash equivalents, short- and long-term
investments, restricted cash and cash equivalents, restricted investments, accounts receivable, other long-term assets, accounts
payable, and other long-term liabilities approximates their estimated fair value. See Note B and Note D for additional fair
value information.
Cash and cash equivalents were $696.6 million and $423.2 million, at January 31, 2015 and February 1, 2014, respectively, and
include bank deposits and money market funds for which the fair value was determined using quoted prices for identical assets
in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosures guidance.
Investments. The Company’s investments are comprised of various debt securities. At January 31, 2015 and February 1, 2014,
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. The timing of the release of packaway inventory to the stores is principally driven
by the product mix and seasonality of the merchandise, and its relation to the Company’s store merchandise assortment plans.
As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains
in storage less than six months. Merchandise inventory includes acquisition, processing, and storage costs related to packaway
inventory. 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.
Cost of goods sold. In addition to product costs, the Company includes in cost of goods sold its buying, distribution and
freight expenses as well as occupancy costs, and depreciation and amortization related to the Company’s retail stores, buying,
and distribution facilities. Buying expenses include costs to procure merchandise inventories. Distribution expenses include the
cost of operating the Company’s distribution centers and warehouse facilities.
Prepaid expenses and other. Prepaid expenses and other as of January 31, 2015 and February 1, 2014 consisted of the
following:
($000) 2014 2013
Restricted cash and investments $ 19,713 $ 20,734
Prepaid expenses 87,06 5 81,257
Total
$ 106,778 $ 101,991
Property and equipment. Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is calculated using the straight-line method over the estimated useful life of the asset, typically ranging from three
to 12 years for equipment and 20 to 40 years for land improvements and buildings. Depreciation and amortization expense on
property and equipment was $233.0 million, $206.1 million, and $185.5 million for fiscal 2014, 2013, and 2012, respectively.
The cost of leasehold improvements is amortized over the useful life of the asset or the applicable lease term, whichever is less.
The Company capitalizes interest during the construction period. Interest capitalized was $10.8 million, $10.8 million, and $3.9
million in fiscal 2014, fiscal 2013, and fiscal 2012, respectively. As of January 31, 2015, February 1, 2014, and February 2, 2013
the Company had $58.6 million, $61.3 million, and $23.7 million, respectively, of property and equipment purchased but not yet
paid. These purchases are included in Property and Equipment and in Accounts payable and Accrued expenses and other in
the accompanying Consolidated Balance Sheets.
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