Ross 2015 Annual Report Download - page 51

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49
Workers’ compensation and self-insured medical plan 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.
Other long-term liabilities. Other long-term liabilities as of January 30, 2016 and January 31, 2015 consisted of the
following:
($000)
2015
2014
Income taxes (Note F)
94,194
101,696
Deferred compensation (Note G)
86,073
94,054
Deferred rent
63,241
59,465
Tenant improvement allowances
20,300
19,562
Other
4,360
4,723
Total
268,168
279,500
Lease accounting. 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
begins recording rent expense on the lease possession date. 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.
Revenue recognition. The Company recognizes revenue at the point of sale and maintains an allowance for estimated
future returns. Sales of stored value cards are deferred until they are redeemed for the purchase of Company merchandise.
The Company’s stored value cards do not have expiration dates. Based upon historical redemption rates, a small percentage
of stored value cards will never be redeemed, which represents breakage. The Company recognizes income from stored
value card breakage as a reduction of operating expenses when redemption by a customer is considered to be remote.
Income recognized from breakage was not significant in fiscal 2015, 2014, and 2013.
Sales tax collected is not recognized as revenue and is included in Accrued expenses and other.
Allowance for sales returns. An allowance for the gross margin loss on estimated sales returns is included in Accrued
expenses and other in the Consolidated Balance Sheets. The allowance for sales returns consists of the following:
($000)
Beginning Balance
Additions
Returns
Ending Balance
Year ended:
January 30, 2016
$
8,594
$
737,727
$
(738,366
)
$
7,955
January 31, 2015
$
7,431
$
717,040
$
(715,877
)
$
8,594
February 1, 2014
$
7,165
$
699,835
$
(699,569
)
$
7,431
Store pre-opening. Store pre-opening costs are expensed in the period incurred.
Advertising. Advertising costs are expensed in the period incurred and are included in Selling, general and administrative
expenses. Advertising costs for fiscal 2015, 2014, and 2013 were $77.1 million, $72.1 million, and $70.2 million, respectively.
Stock-based compensation. The Company recognizes compensation expense based upon the grant date fair value of all
stock-based awards, typically over the vesting period. See Note C for more information on the Company’s stock-based
compensation plans.