Ross 2015 Annual Report Download - page 49

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Restricted cash, cash equivalents, and investments. The Company has restricted cash, cash equivalents, and
investments that serve as collateral for certain insurance obligations of the Company. These restricted funds are invested in
bank deposits, money market mutual funds, U.S. Government and agency securities, and corporate securities and cannot be
withdrawn from the Company’s account without the prior written consent of the secured parties. The following table
summarizes total restricted cash, cash equivalents, and investments which were included in Prepaid expenses and other
and Other long-term assets in the Consolidated Balance Sheets as of January 30, 2016 and January 31, 2015:
Restricted Assets ($000)
2015
2014
Prepaid expenses and other
$
15,770
$
19,713
Other long-term assets
55,913
56,107
Total
$
71,683
$
75,820
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 $761.6 million and $696.6 million, at January 30, 2016 and January 31, 2015, 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 30, 2016 and January 31,
2015, 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 inventory that can either be shipped to stores or processed as packaway
merchandise with the intent that it will be warehoused and released to stores at 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.