UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended January 29, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO
FEE REQUIRED]
For the transition period from _______ to _______
Commission file number 0-14678
ROSS STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
94-1390387
(I.R.S. Employer Identification No.)
8333 Central Avenue, Newark, California
(Address of principal executive offices)
94560-3433
(Zip Code)
(510) 505-4400
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
----------------------------
Common stock, par value $.01
Name of each exchange on which registered
- - - - - - - - -
NASDAQ/NMS
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent files pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of April 1, 1994 was
$329,728,439.25.
The number of shares of Common Stock, with $.01 par value,
outstanding on April 1, 1994 was 24,859,733.
Documents incorporated by reference:
Portions of the Proxy Statement for Registrant's Annual
Meeting of Stockholders, to be held Tuesday, June 7, 1994,
are incorporated herein by reference into part III.
begin page 2
PART I
ITEM 1. BUSINESS
Ross Stores, Inc. operates a chain of off-price retail
apparel stores which target value conscious men and women between
the ages of 25 and 54 and their families. The company offers its
merchandise at low everyday prices, generally 20% to 60% below
those of most department and specialty stores. The company
believes it derives a competitive advantage by offering a wide
assortment of quality brand-name apparel within each of its
merchandise categories (e.g., shirts, dresses, shoes) in an
attractive easy-to-shop environment.
Ross Stores' mission is to offer competitive values to its
target customers by focusing on the following key strategic
objectives: achieve an appropriate level of brands and labels at
strong discounts throughout the store; meet customer needs on a
more regional basis; deliver an in-store shopping experience that
reflects the expectations of the off-price customer; and manage
real estate growth to maintain dominance or achieve parity with
the competition in key markets. Ross targets its sales to value-
conscious 25-54 year old men and women in white collar, middle-to-
upper middle income households, which the company believes to be
the largest customer segment in the retailing industry. The
decisions of the company, from merchandising, purchasing and
pricing, to the location of its stores, are aimed at this
customer base.
The original Ross Stores, Inc. was incorporated in
California in 1957. In August 1982, the company was purchased by
some of its current stockholders and restaffed with a new
management team. The six stores acquired at the time were
completely refurbished in the company's current off-price format
and stocked with new merchandise.
At the stockholders' meeting in May 1989, the company's
stockholders approved the reincorporation of Ross Stores, Inc.,
in the state of Delaware. The reincorporation was completed in
June 1989.
Merchandising, Purchasing and Pricing
Ross seeks to provide its target customers with a wide
assortment of first quality, in-season, name brand apparel,
accessories and footwear for the entire family at everyday
savings of 20% to 60% from department and specialty store prices,
as well as similar savings on fragrances and gift items for the
home. In addition, in 1994 Ross will introduce in certain stores
a new department featuring tabletop, bed and bath linens and bath
accessories. The company reviews its merchandise mix each week,
enabling it to respond to merchandise trends and purchasing
opportunities in the market. The company's merchandising
strategy is reflected in its television and newspaper
advertising, which emphasizes a strong value message: Ross'
customers get great prices everyday of the year. Although not a
fashion leader, the company sells recognizable branded
merchandise that is current and fashionable in each category.
Merchandising. The Ross merchandising strategy incorporates
in-season apparel, shoes and accessories for the entire family,
as well as fragrances and giftware for the home. The company's
emphasis on brand names reflects management's conviction that
brand-name apparel sold at affordable prices will continue to be
an important determinant of its success. Ross leaves the brand-
name label on the merchandise it sells.
The company has established a merchandise assortment which
it believes is attractive to its target customer group. Although
Ross Stores offers fewer classifications of merchandise than most
department stores, the company generally offers a large selection
of brand names within each classification with a wide assortment
of vendors, prices, colors, styles and fabrics within each size.
During the year ended January 29, 1994, the overall merchandise
sales mix was approximately 96% first quality merchandise and 4%
irregulars. Ross clears out all in-store seasonal inventory on a
semi-annual basis. During the past year, the respective
departments accounted for total sales approximately as follows:
Ladies 38%, Men's 26%, Accessories, Hosiery and Lingerie 11%,
Shoes 10%, Children's 8%, and Fragrances and Home Accents 7%.
Purchasing. During the past three years, no single vendor
has accounted for more than 1% of the company's purchases. The
company continues to add new vendors and believes it has adequate
sources of first quality merchandise
to meet its requirements. The company purchases the vast
majority of its merchandise directly from manufacturers and has
not experienced any difficulty in obtaining sufficient inventory.
begin page 3
The company believes that its ability to effectively execute
certain off-price buying strategies is a key factor in its
business. Ross buyers use a number of methods that enable the
company to offer customers name brand merchandise at strong
everyday discounts relative to department and specialty stores.
By purchasing later in the merchandise buying cycle than
department and specialty stores, Ross is able to take advantage
of imbalances of manufacturer-projected supply of merchandise.
This purchasing strategy enables Ross to interpret and react
quickly to market conditions and customer demand during the
selling season. As a result, Ross is less dependent than
department and specialty stores on anticipating such
developments.
The company has increased its emphasis in recent years on
opportunistic purchases created by manufacturer overruns and
canceled orders during and at the end of a season. These buys
are referred to as "closeout" or "packaway" purchases. Closeouts
can be shipped to stores in season or stored in the company's
warehouses until the beginning of the next selling season (i.e.,
packaway). Purchases of packaway merchandise are goods that are
not usually affected by seasonal shifts in fashion trends.
Ross, unlike most department and specialty stores, does not
require that manufacturers provide it with promotional and
markdown allowances, return privileges and delayed deliveries.
In addition, Ross requires only one invoice for each delivery,
and deliveries are made to one of the company's two distribution
centers. These characteristics enable the company's buyers to
obtain significant discounts on in-season purchases.
Ross Stores' buying offices are located in New York City and
Los Angeles, the nation's two largest apparel markets. These
strategic locations allow buyers to be in the market on a daily
basis, sourcing opportunities and negotiating purchases with
vendors and manufacturers. These locations also enable the
company's buyers to strengthen vendor relationships, a key
determinant in the success of its off-price buying strategies.
The company's buyers have up to 22 years of experience,
including experience with other retailers such as Bloomingdale's,
Burlington Coat Factory, Dayton Hudson, Lord & Taylor, Macy's,
Marshalls and TJ Maxx. The company has recently increased the
size of its merchandising staff, which is comprised of divisional
merchandise managers, buyers and assistant buyers. Management
believes that these increased resources will enable its merchants
to spend even more time in the market, which should strengthen
the company's ability to procure the most desirable brands at
competitive discounts.
The combination of the above off-price buying strategies
enables the company to purchase merchandise at net prices which
are lower than prices paid by department and specialty stores.
As a summary, important factors in the company's ability to
execute its purchasing strategy are the following:
A recently enlarged merchandising staff strategically
located in the New York and Los Angeles garment districts;
Experienced buyers who select and price the merchandise for
the company's stores and make markdown decisions within pre-
arranged budgets;
Off-price buying techniques that enable the company to offer
strong discounts everyday on name brand merchandise;
A fully-integrated, on-line management information system
which provides buyers with accurate and timely information
on a weekly basis; and
The company's ability to pay its vendors quickly.
Pricing. The company's policy is to sell merchandise which
can generally be priced at 20% to 60% less than most department
and specialty store prices. The Ross pricing policy is to affix
to all brand name merchandise a ticket displaying the company's
selling price as well as the estimated comparable selling price
of that item at department and specialty stores.
begin page 4
The Ross pricing strategy differs from that of a department
or specialty store. Ross purchases its merchandise at lower
prices and marks it up less than a department or specialty store.
This strategy enables Ross to offer customers consistently low
prices. Ticketed prices are not increased and are reviewed
weekly for possible markdowns based on the rate of sales to
promote faster turnover of inventory and accelerate the flow of
fresh merchandise.
Operating Costs
Consistent with the other aspects of its strategy, Ross
strives to keep operating costs as low as possible. Among the
factors which have enabled the company to operate at low costs to
date are:
Reduced in-store labor costs resulting from a store design
which directs customers to merchandise, a self-selection retail
format and utilization of labor saving technologies;
Economies of scale with respect to general and
administrative costs as a result of centralized merchandising,
marketing and purchasing decisions;
Model store layout criteria which facilitate conversion of
existing buildings to the Ross format; and
A fully-integrated, on-line management information system
which enables the company to respond quickly when making
purchasing, merchandising and pricing decisions.
The Ross Store
As of January 29, 1994, the company operated 243 stores.
The typical new Ross store is approximately 27,200 square feet
plus a mezzanine, yielding approximately 21,000 square feet of
selling space. All stores are leased, with the exception of one.
They are conveniently located predominantly in community and
neighborhood strip shopping centers in heavily populated urban
and suburban areas. Where the size of the market permits, the
company clusters stores to maximize economies of scale in
advertising, distribution and management. During the year, the
average Ross store employs approximately 33 full and part-time
people.
The company believes a key element of its success is the
attractive, easy-to-shop environment in its stores which allows
each customer to shop at his or her own pace. The Ross store's
sales area is based on a prototype single floor design with a
racetrack aisle layout. A customer can locate desired
departments by signs displayed just below the ceiling of each
department. Ross encourages its customers to select among sizes
and prices through prominent category and sizing markers,
promoting a self-service atmosphere. Shopping carts are
available at the entrance for customer convenience. Checkout
stations are located only at store entrances for customer ease
and efficient employee assignment.
The Ross store is designed for customer convenience in its
merchandise presentation, dressing rooms, and checkout and
merchandise return areas. Racks, displays and dressing rooms are
kept neat and orderly. It is the company's policy to minimize
transaction time for the customer at the checkout counter by
opening a new register whenever a line has three or more
customers and by using electronic systems for scanning each
ticket at the point of sale and authorizing credit for personal
checks and credit cards in a matter of seconds. Approximately
one-third of payments are made with credit cards. Ross provides
full cash or credit card refunds on all merchandise returned with
a receipt and believes this policy appeals to its customers.
Distribution
Each Ross store is serviced by the company's two
distribution centers, an approximately 494,000 square foot
distribution center located in Newark, California, and an
approximately 424,000 square foot center located in Carlisle,
Pennsylvania. Having two distribution centers, one on each
coast, has resulted in faster deliveries, lower freight costs,
and decreased turn-around time in getting the merchandise from
the vendors to the stores.
Turn-around time between receipt of goods at the
distribution centers and when they are staged and ready for
shipment to the stores is approximately five days. Shipments are
made by contract carriers to each store at least once a week,
thereby limiting the requirement for substantial storage space at
the stores.
begin page 5
Advertising
During the fiscal years 1993, 1992, and 1991 advertising
costs were approximately $33.8 million, $34.1 million and $30.0
million. The company utilizes extensive advertising which
emphasizes quality, brand-name merchandise at low everyday
prices. For the current year, approximately 83% of its
advertising budget was devoted to television, 12% to print, and
5% for production and sales promotion expenses. In 1992, the
company allocated approximately 82% of its advertising budget to
television. The high percentage of television usage over the
past couple of years reflects the company's belief that this is
the best medium for presenting Ross' everyday low price message.
Control Systems
The company's management information system fully integrates
data from significant phases of its operations, and is a key
element in the company's planning, purchasing, distribution and
pricing decisions. The system enables Ross to respond to changes
in the retail market and to increase speed and accuracy in its
merchandise distribution.
Data from the current and last fiscal year can be monitored
on levels ranging from merchandise classification units to
overall totals for the company. Data important to the decision-
making process is on-line, real time data to all authorized
users. Merchandise is tracked by the system from the creation of
its purchase order, through its receipt at the distribution
center, through the distribution planning process, and ultimately
to the point of sale.
Stores
From August 1982 to January 29, 1994, the company expanded
from six stores in California to 243 stores in 18 states:
Arizona, California, Colorado, Florida, Georgia, Hawaii, Idaho,
Maryland, Nevada, New Jersey, New Mexico, Oklahoma, Oregon,
Pennsylvania, Texas, Utah, Virginia and Washington.
The company's real estate strategy is to open additional
stores in existing market areas to increase its market
penetration and reduce overhead and advertising expenses as a
percentage of sales in each market. Important considerations in
evaluating a new market are the availability of potential sites,
demographic characteristics, competition, and population density
of the market. The company plans to open new stores primarily in
existing markets through the end of 1995.
Competition
The national apparel retail market is highly fragmented.
Ross faces intense competition for business from its target
customer segment from department stores, specialty stores,
discount stores, other off-price retailers, and manufacturer-
owned outlet stores, many of which are units of large national or
regional chains that have substantially greater resources than
the company. The retail apparel business may become even more
competitive in the future. The company believes that the
principal competitive factors in the off-price retail apparel
industry are offering everyday low prices on name brand
merchandise appealing to its target customer, making buying
decisions based on regional and/or local factors, and
consistently providing a store environment that is convenient,
easy to shop, and time efficient for the customer. The company
believes that it is well positioned to compete on the basis of
each of these factors.
Employees
At January 29, 1994, the company had 8,949 employees which
includes an estimated 5,025 part-time employees. Of the full-
time employees, approximately 410 are administrative employees,
340 are distribution center employees and 3,174 are store
employees. The company's employees are non-union. Management of
the company considers the relationship between the company and
its employees to be excellent.
begin page 6
Seasonality
The combined sales of the company for the third and fourth
(holiday) quarters are higher than the combined sales for the
first two quarters. The company has realized a significant
portion of its profits in each fiscal year during the fourth
quarter. Intensified price competition, lower-than-anticipated
consumer demand or other seasonal factors, if they were to occur
during the last six months, and in particular during the fourth
quarter, could adversely affect the company's fiscal year
results.
ITEM 2. PROPERTIES
The company currently leases its Newark, California
distribution center, corporate and buying offices, store
facilities, and some of its fixtures and equipment. The company
owns its distribution center in Carlisle, Pennsylvania, which has
an outstanding mortgage value of $10.3 million at the end of the
1993 fiscal year. As of January 29, 1994, the company's 243
stores generally range in size from 18,000 to 40,000 gross square
feet, and have an average of 21,442 square feet of selling space.
During the fiscal year ended January 29, 1994, no one store
accounted for more than 2% of the company's sales.
Where possible, the company has obtained sites in existing
buildings requiring minimal alterations. This has allowed Ross
to establish stores in new locations in a relatively short period
of time at reasonable costs in a given market.
At January 29, 1994, the majority of the company's stores
had unexpired original lease terms ranging from one to ten years
with two to three renewal options of five years each. The
average unexpired original lease term of its leased stores is six
years, or 19 years if renewal options are included. See Note D
of notes to consolidated financial statements. Most of the
company's store leases contain provisions for percentage rental
payments after a specified sales level has been achieved. To
date, the company has been able to secure leases in suitable
locations for its stores.
The company's two distribution centers provide the company
with the potential warehouse/distribution capacity to support its
growth for several years.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
begin page 7
EXECUTIVE OFFICERS OF THE REGISTRANT
The following list sets forth the names and ages of all executive
officers of the company indicating each person's principal occupation
or employmlent during the past five years. The term of office is at
the pleasure of the Board of Directors.
Name Age Position
Norman A. Ferber 45 Director, Chairman of the Board
and Chief Executive Officer
Melvin A. Wilmore 48 Director, President and
Chief Operating Officer
Michael A. Balmuth 43 Executive Vice President, Merchandising
Earl T. Benson 46 Senior Vice President, Chief Financial
Officer and Corporate Secretary
Michael J. Bush 33 Senior Vice President,
Marketing and Strategic Planning
James S. Fassio 39 Senior Vice President,
Property Development
Barry S. Gluck 41 Senior Vice President and
General Merchandise Manager
Peter C.M. Hart 43 Senior Vice President, Management
Information Systems and Distribution
James S. Jacobs 49 Senior Vice President, Store Operations
Stephen F. Joyce 52 Senior Vice President, Human Resources
Barbara Levy 39 Senior Vice President and
General Merchandise Manager
John M. Vuko 43 Senior Vice President and Controller
_____________________________
Mr. Ferber has served as Chairman of the Board of Directors
and Chief Executive Officer since March 1993. Prior to March
1993, he served as President and Chief Executive Officer since
January 1988. From February 1987 to January 1988, he served as
President and Chief Operating Officer. Prior to February 1987,
Mr. Ferber was Executive Vice President, Merchandising, Marketing
and Distribution of the company. Mr. Ferber joined the company
in October 1982.
Mr. Wilmore has served as President, Chief Operating Officer
and a member of the Board of Directors since March 1993. Prior
to this, he served as Executive Vice President and Chief
Operating Officer since December 1991. From October 1989 to
December 1991, he was Chief Executive Officer of Live Specialty
Retail, a division of LIVE Entertainment, Inc. From March 1988
to June 1989, he was President/General Partner of Albert's
Acquisition Corporation. From March 1987 to March 1988, Mr.
Wilmore was engaged in the acquisition of Albert's Hosiery and
Bodywear by Albert's Acquisition Corporation. From April 1984 to
March 1987, he was the President and Chief Operating Officer of
Zale Jewelry Stores, a division of Zale Corporation.
Mr. Balmuth became Executive Vice President, Merchandising
in July 1993. Prior to this he served as Senior Vice President
and General Merchandise Manager since November 1989. Before
joining Ross, he was Senior Vice President and General
Merchandise Manager at Bon Marche in Seattle from September 1988
through November 1989. From April 1986 to September 1988, he
served as Executive Vice President and General Merchandise
Manager for Karen Austin Petites.
begin page 8
Mr. Benson has served as Senior Vice President, Chief
Financial Officer, and Corporate Secretary since May 1988. He
joined the company in June 1984 as Controller, Treasurer and
Assistant Secretary and became a Vice President in October 1987.
Mr. Bush has served as Senior Vice President, Marketing and
Strategic Planning since March 1993. He joined the company in
April 1991 as Vice President, Strategic Planning. Prior to
joining Ross, Mr. Bush was affiliated with the consulting firm,
Bain & Company, Inc.
Mr. Fassio has served as Senior Vice President, Property
Development since March 1991. He joined the company in June 1988
as Vice President of Real Estate. Prior to joining Ross, Mr.
Fassio was Vice President, Real Estate and Construction at
Craftmart and Property Director of Safeway Stores, Inc.
Mr. Gluck became Senior Vice President and General
Merchandise Manager in August 1993. From February 1989 to August
1993, he served as Vice President and Divisional Merchandise
Manager. Prior to joining Ross, Mr. Gluck served as General
Merchandise Manager, Vice President and Member of Executive
Committee for Today's Man from May 1987 to February 1989.
Mr. Hart has served as Senior Vice President, Management
Information Systems (MIS) and Distribution since November 1988.
From January 1987 to November 1988, he served as Senior Vice
President of MIS.
Mr. Jacobs has served as Senior Vice President, Store
Operations since November 1988. From November 1986 to October
1988, he served as Regional Vice President, Director of Stores
for the J.W. Robinson's division of May Department Stores.
Mr. Joyce has served as Senior Vice President, Human
Resources since July 1988. Before joining Ross, he was Vice
President, Human Resources at Denny's, Inc. since February 1983.
Ms. Levy became Senior Vice President and General
Merchandise Manager in May 1993. Prior to joining Ross, Ms. Levy
was with R. H. Macy & Co., Inc. most recently as Senior Vice
President and General Merchandise Manager from January 1992 to
April 1993 and before that as their Regional Director - Stores
from May 1989 to January 1992 and from August 1985 to May 1989
she was their Divisional Merchandise Manager - Better Sportswear.
Mr. Vuko has served as Senior Vice President and Controller since
June 1992. He joined the company in October 1989 as Vice President,
Treasurer and Controller. Before joining Ross, he was an executive
with The Cooper Companies from May 1988 to January 1989.
He was Vice President, Treasurer and Controller of Cooper
Lasersonics, Inc., from December 1986 to May 1988. In 1989,
prior to his employment with Ross, the SEC alleged that Mr. Vuko
traded on inside information involving a company that then
employed Mr. Vuko's wife and that he realized profits of $9,990.
Mr. Vuko informed the company of these allegations prior to
joining the company. In order to avoid costly and prolonged
legal action by the SEC, without admitting or denying the
allegations, Mr. Vuko consented to the entry on March 27, 1990 of
an order against him in the U.S. District Court for the Northern
District of California permanently enjoining him from violations
of federal securities laws.
begin page 9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
See information set forth under the caption "Quarterly
Financial Data (Unaudited)" under Note I of notes to consolidated
financial statements in Item 8 of this document which is
incorporated herein by reference. The company's stock is traded
on the NASDAQ national market system under the symbol ROST. The
number of stockholders of record as of April 18, 1994 was 1,252.
On January 27, 1994, the company's Board of Directors declared an
initial quarterly cash dividend of $0.05 per share of common
stock. The first record date was set at March 11, 1994.
ITEM 6. SELECTED FINANCIAL DATA
($000, except per share data) 1993 1992 1991 1990 1989<F1> 1988
Operating Results
Sales $1,122,033 1,043,062 926,377 798,350 733,469 626,409
Cost of goods sold and
occupancy 814,745 742,749 656,504 568,896 508,788 438,862
Percent of sales 72.6% 71.2% 70.9% 71.3% 69.4% 70.1%
General, selling and
administrative 235,558 221,795 203,120 184,140 159,560 136,825
Percent of sales 21.0% 21.3% 21.9% 23.1% 21.8% 21.8%
Depreciation and
amortization 20,539 18,740 15,922 13,140 11,961 10,418
Interest 2,318 3,071 5,395 6,955 5,907 3,332
Earnings before taxes 48,873 56,707 45,436 25,219 47,253 36,972
Percent of sales 4.4% 5.4% 4.9% 3.2% 6.4% 5.9%
Provision for taxes
on earnings 19,549 22,683 17,720 8,574 17,413 10,722
Net earnings 29,324 34,024 27,716 16,645 29,840 26,250
Percent of sales 2.6% 3.3% 3.0% 2.1% 4.1% 4.2%
Earnings per fully-diluted
common share $1.14 $1.30 $1.09 $.72 $1.24 $.97
<FN>
<F1>Fiscal 1989 is a 53-week year; all other fiscal years are 52 weeks.
begin page 10
($000, except per share data) 1993 1992 1991 1990 1989<F1>1988
Financial Position
Merchandise inventory $228,929 $221,048 $185,041 $157,899 $129,413 $117,200
Property and equipment, net 144,152 128,070 126,848 114,913 88,342 71,948
Total assets 437,371 419,870 357,690 309,543 249,766 260,726
Working capital 125,047 121,012 77,448 67,002 60,373 68,790
Current ratio 1.8:1 1.8:1 1.6:1 1.6:1 1.7:1 1.7:1
Total debt, including
current installments 33,308 33,525 40,723 57,600 53,900 45,000
Stockholders' equity 228,222 209,595 162,583 123,064 103,768 114,286
Book value per common share
outstanding at year-end $9.24 $8.23 $6.64 $5.33 $4.53 $4.52
Total debt as a percent of
total capitalization 13% 14% 20% 32% 34% 28%
Return on average stockholders'
equity 13% 18% 19% 15% 27% 23%
Other Statistics
Number of stores opened 22 23 20 29 17 9
Number of stores closed 2 3 2 1
Number of stores at year-end 243 223 203 185 156 140
Comparable store sales growth
(decline) (52-week basis) (1%) 3% 2% (3%) 7% 5%
Sales per square foot of selling
space (52-week basis)<F2> $222 $222 $214 $208 $215 $196
Square feet of selling space
at year-end (000) 5,210 4,879 4,518 4,155 3,590 3,315
Number of employees at year-end 8,949 8,156 7,397 7,164 6,054 5,280
Number of average fully-diluted
shares at year-end (000) 25,791 26,249 25,496 23,251 24,142 27,123
Number of common stockholders
of record at year-end 1,275 1,381 1,340 1,715 1,511 1,395
<FN>
<F1> Fiscal 1989 is a 53-week year; all other fiscal years are 52 weeks.
<F2> Based on average annual selling square footage.
begin page 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the fiscal years ended January 29, 1994, January 30, 1993 and
February 1, 1992 (referred to as 1993, 1992 and 1991).
Results of Operations
Stores. Total stores open at the end of 1993, 1992 and 1991
were 243, 223 and 203. During 1993, the company opened 22 stores
and closed 2 stores. During 1992, the company opened 23 stores
and closed 3 stores. In 1991, the company opened 20 stores and
closed 2 stores.
Sales. Sales were $1.122 billion, $1.043 billion and $.926
billion in 1993, 1992 and 1991, with each year consisting of 52
weeks. Comparable store sales decreased 1% for 1993, increased
3% for 1992 and increased 2% for 1991. Thus, in 1993 the
increase in sales was due to a greater number of stores in
operation. The increases in sales for 1992 and 1991 were due to
an increase in comparable store sales and a greater number of
stores in operation. The company believes that both the 1992 and
1991 comparable store sales increases resulted from the emphasis
on quality brand name merchandise at low everyday prices. During
1993, the company continued to increase the percentage of quality
brand name merchandise in its stores. The company believes the
decline in comparable store sales from 1992 was due to an
increasingly competitive environment for apparel retailers in
1993, which narrowed the value differential the company normally
offers compared to department and specialty stores. In 1994, the
company plans to offer larger discounts on key name brand items
throughout the store to improve productivity as defined by sales
per square foot. Therefore, the company is not relying on
increasing gross margins in 1994; rather, the company intends to
generate earnings growth primarily through sales increases and
leveraging down expenses as a percentage of sales.
Cost of Goods Sold and Occupancy. Cost of goods sold and
occupancy as a percentage of sales increased to 73% in 1993 from
71% for 1992 and 1991. This change was primarily due to
increased pressures on price points and markdown levels,
resulting from the more competitive retail climate in 1993.
General, Selling and Administrative Expenses. General,
selling and administrative expenses for 1993, 1992 and 1991 were
21%, 21% and 22% of sales. In 1993, management focused store
growth primarily in existing markets and also maintained strong
expense controls. These actions offset the unfavorable
percentage increase normally associated with a same store sales
decline. The percentage decrease in general, selling and
administrative expenses between 1992 and 1991 was due to
increased efficiencies at the store and corporate levels.
The largest component of general, selling and administrative
expenses is payroll. The total number of employees, including
both full and part-time, at year-end 1993, 1992 and 1991 was
approximately 8,900, 8,200 and 7,400.
Depreciation and Amortization. Depreciation and
amortization as a percentage of sales has remained relatively
constant over the last three years, due primarily to the
consistent level of assets in each store.
Interest. The decrease in interest expense in 1993 from
1992 was due to lower interest rates from the prior year
partially offset by increased borrowings due primarily to the
company's repurchases of its common stock. The decrease in
interest expense in 1992 from 1991 was due to lower average
borrowings and a decline in interest rates from the prior year.
Taxes on Earnings. The company's effective rate for 1993,
1992 and 1991 was 40%, 40% and 39%, which represents the
applicable statutory rates reduced by the federal benefit
received for state taxes and targeted jobs tax credits. In 1992,
the company adopted Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. The adoption of this
standard did not have an effect on the company's earnings or
financial position. See Notes A and E of Notes to Consolidated
Financial Statements.
In August 1993, the federal government enacted a new income
tax law which raised the 34% corporate income tax rate to 35%.
The change in both the mix of state income taxes and available
tax credits allowed the company to maintain its 40% effective tax
rate.
begin page 12
Financial Condition
Liquidity and Capital Resources. During 1993, 1992 and
1991, liquidity and capital requirements were provided by cash
flows from operations, bank borrowings and trade credit. The
company's store sites, central office, and California
distribution center, as well as the buying offices, are leased
and, except for certain leasehold improvements and equipment, do
not represent fixed capital investments. Commitments related to
operating leases are described in Note D of Notes to Consolidated
Financial Statements. The company's east coast distribution
center is owned by the company and was financed by a ten-year
mortgage (see Note C of Notes to Consolidated Financial
Statements). Short-term trade credit represents a significant
source of financing for investments in merchandise inventories.
Trade credit arises from customary trade practices with the
company's vendors. Management regularly reviews the adequacy of
credit available to the company from all sources and has been
able to maintain adequate lines to meet the capital and liquidity
requirements of the company.
During 1993, the primary uses of cash, other than current
operating expenditures, were for merchandise inventory and
property and equipment to open 22 stores, timing of accounts
payable payments, and repurchases in the open market of 1.2
million shares of the company's common stock. The primary uses
of cash in 1992, other than operating expenditures, were for
merchandise inventory and property and equipment to open 23
stores, prepaying $7 million of senior debt, and making
opportunistic inventory purchases, thereby increasing the level
of packaway inventory. In 1991, the primary uses of cash, other
than operating expenditures, were for merchandise inventory and
property and equipment to open 20 stores, constructing the east
coast distribution center, repaying borrowings under the
company's long-term debt agreements, and higher levels of
opportunistic inventory purchases, thereby increasing the level
of packaway inventory. In 1993, 1992 and 1991, the company spent
approximately $35 million, $22 million and $32 million for
capital expenditures, net of leased equipment, that included
fixtures and leasehold improvements to open 22, 23 and 20 stores,
construction costs for the east coast distribution center and
modifications to our New York buying office, purchase of
previously leased equipment and various expenditures for existing
stores and the central office.
The company currently intends to open about 20 to 25 stores
annually through 1995. The company anticipates that this growth
will be financed primarily from cash flows from operating
activities and available credit facilities.
On January 27, 1994, the company's Board of Directors
declared an initial quarterly cash dividend of $0.05 per common
share payable on or about April 1, 1994 to stockholders of record
as of the close of business on March 11, 1994. The company
intends to use cash flows from operations and available cash
resources to provide for the dividends.
The company has available under its principal bank credit
agreement a $110 million revolving credit facility, which expires
in July 1996. At the company's option, the bank credit agreement
can be extended in two one-year increments, or until July 1998.
In March 1992, the company obtained two short-term revolving
credit facilities of $10 million and $15 million each. A third
short-term credit facility of $15 million was added in November
1992. These facilities are available until canceled by either
party. At year-end 1993, 1992 and 1991, there were no
outstanding balances under any revolving credit facility. In
addition, at year-end 1993, 1992 and 1991, the company had
outstanding a term loan of $23 million, which will mature in
November 1994. The company has the ability and intention to
refinance this facility with a long-term financing arrangement.
During 1991, the company issued a ten-year mortgage note in the
amount of $10.8 million on the east coast distribution center.
For additional information relating to these obligations, refer
to Note C of Notes to Consolidated Financial Statements.
Working capital was approximately $125 million at the end of
1993 compared to $121 million at the end of 1992 and $77 million
at the end of 1991. At year-end 1993, 1992 and 1991, the
company's current ratios were 1.8:1, 1.8:1 and l.6:1. The
percentage of long-term debt to total capitalization at year-end
1993, 1992 and 1991 was 13%, 14% and 20%.
The company's primary source of liquidity is the sale of its
merchandise inventories. Management regularly reviews the age
and condition of the merchandise and is able to maintain current
inventory in its stores through the replenishment processes and
liquidation of non-current merchandise through markdowns and
clearances.
In March 1994, a section of the roof at the company's
distribution center in Carlisle, Pennsylvania collapsed due to
unusually heavy snow accumulation. The distribution center in
Newark, California has been utilized to support
begin page 13
the flow of goods to the stores. The company expects the east
coast distribution center to be operating at normal capacity by
June 1994. The company believes that it is fully insured for
costs related to this situation.
The company believes that cash flows from operations, bank
credit lines and trade credit are adequate to meet operating cash
needs as well as to complete the two million share repurchase
plan authorized by the Board of Directors and to provide for
dividend payments and planned capital additions during the
upcoming year.
begin page 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
($000, except per share data) January 29, January 30,
1994 1993
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 32,307 $ 40,457
Accounts receivable 4,016 5,848
Merchandise inventory 228,929 221,048
Prepaid expenses and other 15,224 10,323
Total Current Assets 280,476 277,676
PROPERTY AND EQUIPMENT
Land and buildings 22,502 20,004
Fixtures and equipment 120,493 101,751
Leasehold improvements 89,588 82,506
Construction-in-progress 10,739 4,319
243,322 208,580
Less accumulated depreciation and amortization 99,170 80,510
144,152 128,070
Lease rights 1,804 2,185
Other assets 7,039 7,890
Excess of cost over net assets of acquired 3,900 4,049
subsidiary
$ 437,371 $ 419,870
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 89,561 $ 95,731
Accrued expenses 43,262 30,339
Accrued payroll and benefits 16,202 19,350
Income taxes payable 6,404 11,244
Total Current Liabilities 155,429 156,664
Long-term debt 33,308 33,525
Deferred income taxes and other 20,412 20,086
liabilities
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share
Authorized 100,000,000 shares
Issued and outstanding 24,695,000 and 247 255
25,461,000 shares
Additional paid-in capital 122,073 119,743
Retained earnings 105,902 89,597
228,222 209,595
$ 437,371 $ 419,870
See notes to consolidated financial statements.
begin page 15
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended Year Ended Year Ended
($000, except per share data) January 29, January 30, February 1,
1994 1993 1992
SALES $ 1,122,033 $ 1,043,062 $ 926,377
COSTS AND EXPENSES
Cost of goods sold and occupancy 814,745 742,749 656,504
General, selling and 235,558 221,795 203,120
administrative
Depreciation and amortization 20,539 18,740 15,922
Interest 2,318 3,071 5,395
1,073,160 986,355 880,941
Earnings before taxes 48,873 56,707 45,436
Provision for taxes on earnings 19,549 22,683 17,720
Net earnings $ 29,324 $ 34,024 $ 27,716
EARNINGS PER SHARE
Primary $ 1.14 $ 1.32 $ 1.13
Fully-diluted $ 1.14 $ 1.30 $ 1.09
WEIGHTED AVERAGE SHARES
OUTSTANDING (000)
Primary 25,715 25,683 24,549
Fully-diluted 25,791 26,249 25,496
- --------
See notes to consolidated financial statements.
begin page 16
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Additional
Common Stock Paid-In Retained
($000) Shares Amount Capital Earnings Total
BALANCE AT FEBRUARY 2, 1991 23,099 $ 231 $ 94,976 $ 27,857 $ 123,064
Common stock issued
under stock plans,
including tax benefit 1,392 14 11,516 11,530
Payment on stock purchased 273 273
Net earnings 27,716 27,716
BALANCE AT FEBRUARY 1, 1992 24,491 245 106,765 55,573 162,583
Common stock issued
under stock plans,
including tax benefit 970 10 12,957 12,967
Payment on stock purchased 21 21
Net earnings 34,024 34,024
BALANCE AT JANUARY 30, 1993 25,461 255 119,743 89,597 209,595
Common stock issued
under stock plans,
including tax benefit 414 4 8,101 8,105
Stock repurchased (1,180) (12) (5,771) (11,791) (17,574)
Net earnings 29,324 29,324
Dividends declared (1,228) (1,228)
BALANCE AT JANUARY 29, 1994 24,695 $ 247 $ 122,073 $ 105,902 $ 228,222
_____
See notes to consolidated financial statements.
begin page 17
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Year Ended Year Ended
($000) January 29, January 30, February 1,
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $29,324 $34,024 $27,716
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of
property and equipment 20,539 18,740 15,922
Other amortization 9,077 8,433 8,160
Deferred income taxes 669 2,911 (2,908)
Change in current assets and current
liabilities:
Increase in merchandise inventory (7,881) (36,007) (27,142)
Increase in other current assets - net (6,528) (5,385) (4,003)
Increase (decrease) in accounts payable (7,398) 5,427 14,771
Increase (decrease) in other current
liabilities - net (361) 11,615 14,523
Other 2,466 3,609 3,501
Net cash provided by operating activities 39,907 43,367 50,540
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (34,777) (21,657) (31,729)
Net cash used in investing activities (34,777) (21,657) (31,729)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of senior notes (7,000) (23,000)
Repayment under line of
credit agreement (27,600)
Proceeds (repayment) of long-term debt (303) (296) 33,941
Issuance of common stock
related to stock plan 4,597 9,669 8,948
Repurchase of common stock (17,574)
Net cash provided by (used in) financing activities (13,280) 2,373 (7,711)
Net increase (decrease) in cash and cash equivalents (8,150) 24,083 11,100
Cash and cash equivalents:
Beginning of year 40,457 16,374 5,274
End of year $32,307 $40,457 $16,374
See notes to consolidated financial statements.
begin page 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended January 29, 1994, January 30,
1993 and February 1, 1992 (referred to as 1993, 1992 and 1991).
Note A: Summary of Significant Accounting Policies
Business. The company is an off-price retailer of first
quality, in-season, branded apparel, shoes, gift items for the
home, fragrances and accessories for the entire family. At
January 29, 1994, the company operated 243 stores.
Principles of Consolidation. The consolidated financial
statements include the accounts of all subsidiaries. Intercompany
transactions and accounts have been eliminated. Certain
reclassifications have been made in the 1992 and 1991 financial
statements to conform to the 1993 presentation. The years 1993,
1992 and 1991 consisted of 52 weeks.
Cash Equivalents. Cash equivalents are highly liquid, fixed
income instruments purchased with a maturity of three months or
less.
Merchandise Inventory. Merchandise inventory is stated at
the lower of cost or market determined under the unit cost
method.
Deferred Store Opening Expenses. During 1992 and 1991
expenses incurred in opening new stores were deferred until
stores were opened and then amortized over a period of 18 months.
During 1993, this accounting treatment was changed, resulting in
all pre-opening expenses for 1993 new stores and any prior year
deferred costs being expensed in 1993. The effect of this change
in accounting principle did not have a material impact on any of
the periods presented.
Beginning with 1994, pre-opening expenses will be deferred
until the store's grand opening date. At that time, the deferred
costs will be expensed.
Deferred Rent. Many of the company's leases signed since
1988 contain fixed escalations of the minimum annual lease
payments during the original term of the lease. For these
leases, the company recognizes rental expense on a straight-line
basis and records the difference between the average rental
amount charged to expense and the amount payable under the lease
as deferred rent. At the end of 1993 and 1992, the balance of
deferred rent was $6.4 million and $5.1 million.
Intangible Assets. Lease rights and interests, consisting
of payments made to acquire store leases, are amortized over the
remaining applicable life of the lease.
The excess of cost over the acquired net assets is amortized
on a straight-line basis over a period of 40 years.
Property and Equipment. Property and equipment are stated
at cost. Depreciation is calculated using the straight-line
method over the estimated useful life of the asset, typically
ranging from five to twelve years for equipment and 20 to 40
years for real property. The cost of leasehold improvements is
amortized over the useful life of the asset or the applicable
lease term, whichever is less. Hardware and software costs are
included in fixtures and equipment and are amortized over their
useful life of five years.
Taxes on Earnings. In 1992, the company adopted Statement
of Financial Accounting Standards No. 109 (SFAS 109), Accounting
for Income Taxes. SFAS 109 is an asset and liability approach
that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been recognized in the company's financial statements
or tax returns. In estimating future tax consequences, SFAS 109
generally considers all expected future events other than
enactments of changes in the tax law or rates.
The adoption of SFAS 109 did not have an impact on the
company's earnings or financial position.
Earnings Per Share. Earnings per share are based on primary
and fully-diluted weighted average common shares and common stock
equivalents outstanding during the year, as calculated under the
treasury stock method. The company's common stock equivalents
consist of outstanding stock options.
begin page 19
Note B: Statements of Cash Flows Supplemental Disclosures
Total cash paid for interest and taxes is as follows:
($000) 1993 1992 1991
Interest $ 2,850 $ 3,229 $ 6,234
Income taxes $21,014 $14,871 $13,717
Note C: Long-Term Debt
Long-term debt consists of the following:
($000) 1993 1992
Mortgage $10,308 $10,525
Term loan 23,000 23,000
$33,308 $33,525
Mortgage. On August 8, 1991, the company obtained a $10.8
million mortgage at 9.5% interest, collateralized by the land and
building of its east coast distribution center. Interest and
principal are based on a 20-year amortization period. The
mortgage is due in 2001 with principal payments of $239,000,
$263,000, $288,000, $318,000 and $349,000 due in 1994, 1995,
1996, 1997 and 1998, respectively. In 1996, the interest rate
will be reset at the lender's best prevailing interest rate or
repaid, at the company's option.
Term Loan. On September 16, 1991, the company signed a term
loan credit agreement with a bank for $23 million due November
1994. The interest rate, which is based on the London Interbank
Offered Rate (LIBOR), was 4.375% at January 29, 1994. The
company has the ability and the intent to refinance this note in
1994 with a long-term financing arrangement.
Bank Credit Facilities. The company has available under its
principal credit agreement a $110 million revolving credit
facility which expires in July 1996 and is renewable at the
company's option for two one-year periods. The credit facility
is also available for the issuance of letters of credit. Interest
is payable monthly under several pricing options, including the
bank's prime rate. At year-end 1993 and 1992, the company had
$11.7 million and $11.0 million in outstanding letters of credit.
Borrowing under the credit facility is subject to the company
maintaining certain levels of tangible net worth, pretax earnings
and leverage ratios.
In addition, the company has $40 million in short-term bank
lines of credit which are available until canceled by either
party. When utilized, interest is payable monthly under several
pricing options.
Included in accounts payable are checks outstanding in
excess of cash balances of approximately $13.9 million and $26.0
million at year-end 1993 and 1992. The company can utilize its
revolving line of credit to cover payment of these checks as they
clear the bank.
Note D: Leases
The company leases its distribution center and corporate
office located in Newark, California under a 15-year,
noncancelable lease agreement expiring 2002. The lease contains
six renewal options of five years each. In addition, the company
leases its store sites, selected computer and related equipment,
certain store fixtures and distribution center equipment under
operating leases with original, noncancelable terms that in
general range from three to fifteen years, expiring through 2008.
Store leases typically contain provisions for two to three
renewal options of five years each. Most store leases also
provide for minimum annual rentals, with provisions for
additional rent based on percentage of sales and for payment of
certain expenses.
begin page 20
The aggregate future minimum annual lease payments under leases
in effect at year-end 1993 are as follows:
($000) Amounts
1994 $ 76,271
1995 75,231
1996 70,314
1997 64,187
1998 61,196
Later years 226,162
Total $ 573,361
Total rent expense for all operating leases is as follows:
($000) 1993 1992 1991
Minimum rentals $70,589 $65,061 $55,607
Percentage rentals 267 268 295
$70,856 $65,329 $55,902
Note E: Taxes on Earnings
The provision for taxes consists of the following:
($000) 1993 1992 1991
CURRENTLY PAYABLE
Federal $14,885 $14,342 $14,396
State 3,995 3,660 3,603
18,880 18,002 17,999
DEFERRED
Federal 506 4,065 (279)
State 163 616
669 4,681 (279)
$19,549 $22,683 $17,720
In 1993, 1992 and 1991, tax benefits of $2.7 million, $2.9
million and $2.3 million related to stock options exercised and
the vesting of restricted stock have been credited to additional
paid-in capital.
The provisions for income taxes for financial reporting
purposes are different from the tax provision computed by
applying the statutory federal income tax rate. The differences
are reconciled as follows:
1993 1992 1991
Federal income taxes at
the statutory rate 35% 34% 34%
Increase (decrease) in
income taxes resulting from:
Utilization of credits (1)
State income taxes, net of
federal benefit 5 5 5
Other, net 1 1
40% 40% 39%
begin page 21
In August of 1993, the federal government enacted a new
income tax law which increased the 34% corporate income tax rate
to 35%. The 1% federal income tax rate increase did not result
in an increase in the company's overall tax rate as it was offset
by a change in the mix of state income taxes and available tax
credits.
The components of the net deferred tax liability at year-end are
as follows:
($000) 1993 1992
DEFERRED TAX ASSETS:
California franchise taxes $ 688 $ 789
Inventory 203 333
Straight-line rent 2,737 2,140
Deferred compensation 2,625 2,055
Reserve for uninsured losses 1,615 1,100
Employee benefits 2,346 1,116
All other 1,230 544
Valuation allowance 0 0
$11,444 $8,077
DEFERRED TAX LIABILITIES:
Depreciation ($11,382) ($10,411)
Prepaid expenses (5,811) (2,626)
Other (29) (149)
(17,222) (13,186)
NET DEFERRED TAX LIABILITIES ($5,778) ($5,109)
Note F: Employee Benefit Plans
The company has available to certain employees a profit
sharing retirement plan. Under the Plan, employee and company
contributions and accumulated plan earnings qualify for favorable
tax treatment under Section 401(k) of the Internal Revenue Code.
In 1987, the company adopted an Incentive Compensation Program,
which provides cash awards to key management employees based on
the company's and the individual's performance. In 1991, the
company began offering an Executive Supplemental Retirement Plan,
which allows eligible employees to purchase individual life
insurance policies and/or annuity contracts. In 1993, the
company made available to management a Nonqualified Deferred
Compensation Plan which allows management to contribute on a pre-
tax basis in addition to the 401(k) Plan. This Plan does not
qualify under Section 401(k) of the Internal Revenue Code.
Note G: Estimated Fair Value of Financial Instruments
SFAS 107, Disclosures About Fair Value of Financial
Instruments, requires disclosure of the estimated fair value of
financial instruments. The carrying value of cash and cash
equivalents, accounts receivable and accounts payable
approximates their estimated fair value. The carrying value of
long-term debt at year-end 1993 is $33.3 million. Its estimated
fair value based on debt with similar terms and remaining
maturities is $33.8 million.
Note H: Stockholders' Equity
On January 27, 1994, the company's Board of Directors
declared a $0.05 per common share cash dividend, payable on or
about April 1, 1994 to stockholders of record as of March 11,
1994.
Preferred Stock. The company has four million shares of
preferred stock authorized, with a par value of $.01 per share.
No preferred stock has been issued or outstanding during the past
three years.
begin page 22
Common Stock. On February 4, 1993, the company announced
that its Board of Directors approved a repurchase of up to one
million shares of common stock. On November 17, 1993, the
company announced that the Board extended the repurchase program
by authorizing the buyback of an additional one million shares.
Through January 29, 1994, a total of 1.2 million shares were
repurchased at an average price of $14.89 per share. The company
intends to complete the repurchase of the remaining authorized
shares in 1994 through both open-market or privately arranged
transactions.
Stock Options. The company's Stock Option Plan allows for
the granting of incentive and nonqualified stock options. As of
January 29, 1994, 6.4 million common shares had been authorized
for issuance under the Plan. Stock options are to be granted at
prices not less than the fair market value of the common shares
on the date the option is granted, and normally vest over a
period not exceeding four years from the date of grant. The
following is a summary of stock option activity under the Plan
for 1993, 1992 and 1991.
(000) Number of Shares Average Price
Outstanding and exercisable at
February 2, 1991 2,406 $10.49
Granted 1,874 $ 9.46
Exercised (833) $ 7.08
Canceled (1,398) $13.13
Outstanding and exercisable at
February 1, 1992 2,049 $ 9.13
Granted 705 $18.85
Exercised (681) $ 8.47
Canceled (57) $12.39
Outstanding and exercisable at
January 30, 1993 2,016 $12.67
Granted 584 $18.49
Exercised (185) $ 7.59
Canceled (117) $16.04
Outstanding and exercisable at
January 29, 1994 2,298 $14.38
At the year-end 1993, 1992 and 1991, 1.7 million, 2.2 million
and 2.8 million shares remained available for grant under the
Plan.
Restricted Stock. As of January 29, 1994, 1.85 million
common shares had been authorized for issuance under the
company's Restricted Stock Plan. During 1993, 1992 and 1991,
the company awarded 194,000, 234,000 and 450,000 shares to
certain employees, of which 49,000, 7,000 and 0 were subsequently
canceled and returned to the share reserve. At year-end 1993,
1992 and 1991, 495,000, 640,000 and 867,000 shares remained
available for grant under the Plan. The compensation associated
with these awards is amortized over vesting periods of generally
two to five years. At year-end 1993, 1992 and 1991, the
unamortized compensation expense was $4.8 million, $5.1 million
and $4.1 million.
Employee Stock Purchase Plan. As of January 29, 1994,
600,000 common shares had been authorized for issuance under the
company's Employee Stock Purchase Plan. During 1993, employees
purchased approximately 85,000 shares of the company's common
stock through payroll deductions. Through January 29, 1994,
approximately 395,000 shares had been issued under this Plan, and
205,000 shares remained available for future issuance under the
Plan.
Outside Directors Stock Option Plan. As of January 29,
1994, 125,000 common shares had been authorized for issuance
under this plan. Stock options are to be granted at exercise
prices not less than the fair market value of the common shares
on the date the option is granted, and normally vest over a
period not exceeding three years from the date of the grant.
Through January 29, 1994, the company had granted options for
approximately 90,000 shares at exercise prices ranging from $8.63
to $20.88 per share. At year-end 1993, 35,000 shares remained
available for grants under the Plan. All nonqualified options
for shares granted under the Plan remained outstanding and
exercisable as of the end of 1993.
begin page 23
Note I: Quarterly Financial Data (Unaudited)
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 52 Weeks Ended
($000, except per May 1, 1993 July 31, 1993 October 30, 1993 January 29, 1994 January 29,
share data) 1994
Sales $239,552 $275,965 $262,244 $344,272 $1,122,033
Gross margin, after
occupancy 67,368 75,045 71,498 93,378 307,288
Net earnings 3,594 8,153 4,786 12,791 29,324
Net earnings per fully-
diluted share .14 .31 .19 .51 1.14
Dividends declared per
share on common .05 .05
stock
Closing stock price<F1>
High 23 1/2 16 1/8 15 5/8 18 23 1/2
Low 15 12 7/8 13 1/8 12 5/8 12 5/8
13 Weeks Ended 13 Weeks 13 Weeks Ended 13 Weeks Ended 52 Weeks Ended
($000, except per May 2, 1992 Ended October 31, 1992 January 30, January 30,
share data) August 1, 1993 1993
1992
Sales $221,020 $253,891 $246,878 $321,274 $1,043,062
Gross margin, after
occupancy 61,760 75,708 70,068 92,774 300,313
Net earnings 3,254 9,684 4,924 16,162 34,024
Net earnings per fully-
diluted share .13 .38 .19 .61 1.30
Closing stock
price<F1>
High 23 17 1/2 17 1/2 23 1/2 23 1/2
Low 14 1/8 10 7/8 11 3/8 16 5/8 10 7/8
<FN>
<F1> Ross Stores, Inc. common stock trades on the NASDAQ
National Market System (NMS) under the symbol ROST.
begin page 24
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Ross Stores, Inc.
Newark, California
We have audited the accompanying consolidated balance sheets of
Ross Stores, Inc. and subsidiaries as of January 29, 1994 and
January 30, 1993, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the
three years in the period ended January 29, 1994. These
financial statements are the responsibility of the companies'
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
companies as of January 29, 1994 and January 30, 1993, and the
results of their operations and their cash flows for each of the
three years in the period ended January 29, 1994 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE
San Francisco, California
March 11, 1994
begin page 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the executive officers of
the Registrant, see "Executive Officers of the Registrant" at the
end of Part I of this report. Information with respect to the
Directors of the Registrant is incorporated herein by reference
to the section entitled "Information Regarding Nominees and
Incumbent Directors" of the Ross Stores, Inc., Proxy Statement
for the Annual Meeting of Stockholders to be held on Tuesday,
June 7, 1994 (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the sections of the
Proxy Statement entitled (i) "Compensation Committee Interlocks
and Insider Participation"; (ii) "Compensation of Directors";
(iii) "Employment Contracts, Termination of Employment and Change-
in-Control Arrangements"; and (iv) the following tables, and
their footnotes, Summary Compensation, Option Grants in Last
Fiscal Year and Aggregrated Option Exercises and Year-End Value.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference to the section of the Proxy
Statement entitled "Stock Ownership of Certain Beneficial Owners
and Management".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the sections of the
Proxy Statement entitled (i) "Compensation of Directors" and (ii)
"Certain Transactions".
begin page 26
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following financial statements, schedules and exhibits
are filed as part of this report or are incorporated
herein as indicated:
1. List of Financial Statements.
(i) The following consolidated financial statements
included herein as Item 8:
Consolidated Balance Sheets at January 29,
1994 and January 30, 1993.
Consolidated Statements of Earnings for the
years ended January 29, 1994, January 30,
1993 and February 1, 1992.
Consolidated Statements of Stockholders'
Equity for the years ended January 29,
1994, January 30, 1993 and February 1,
1992.
Consolidated Statements of Cash Flows for the
years ended January 29, 1994, January 30,
1993 and February 1, 1992.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
2. List of Financial Statement Schedules.
Independent Auditors' Report on Financial Statement Schedules.
Schedule II - Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
Than Related Parties, page 30.
Schedule V - Property, Plant and
Equipment, page 31.
Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment, page 32.
Schedule VIII - Valuation and Qualifying Accounts and Reserves,
page 33.
Schedule X - Supplementary Income Statement Information,
page 33.
Schedules other than those listed are omitted for the
reason that they are not required or are not
applicable, or the required information is shown in
the financial statements or notes thereto, contained
in, or incorporated by reference into, this Report.
3. List of Exhibits (in accordance with Item 601 of
Regulation S-K)
3.1 Certificate of Incorporation, as amended, incorporated
by reference to Exhibit 3.1 to the Registration
Statement on Form 8-B (the "Form 8-B") filed
September 1, 1989 by Ross Stores, Inc, a Delaware
corporation ("Ross Stores").
3.2 Amended By-laws, dated August 29, 1991, incorporated
by reference to Exhibit 3.2 to the 1991 Form 10-K
filed by Ross Stores for its year ended February
1, 1992 ("1991 Form 10-K").
10.1 Agreement of Lease, dated November 24, 1986, for Ross
Stores' corporate headquarters and distribution
center in Newark, CA, incorporated by reference to
Exhibit 10.5 on Form 8-B.
begin page 27
10.2 Credit Agreement, dated March 2, 1992, among Ross
Stores, Wells Fargo Bank, National Association,
Bank of America, National Trust and Savings
Association, and Security Pacific National Bank;
and Wells Fargo Bank, National Association, as
agent for Banks, incorporated by reference to
Exhibit 10.8 to the 1991 Form 10-K.
10.3 Amended and Restated Credit Agreement, dated November
23, 1992, among Ross Stores, Wells Fargo Bank,
National Association, Bank of America, N.T. &
S.A., Nationsbank of Texas, N.A., and Banque
Nationale de Paris; and Wells Fargo Bank, National
Association, as agent for Banks, incorporated by
reference to Exhibit 10.9 to the 1992 Form 10-K
filed by Ross Stores for its year ended January
30, 1993 ("1992 Form 10-K").
10.4 First Amendment to Amended and Restated Credit
Agreement, entered into as of February 5, 1993, by
and among Ross Stores, Wells Fargo Bank, National
Association, Bank of America, N.T. & S.A.,
Nationsbank of Texas, N.A., and Banque Nationale
de Paris ("Banks"); and Wells Fargo Bank, National
Association, as agent for Banks, incorporated by
reference to Exhibit 10.10 to the 1992 Form 10-K.
10.5 Revolving Credit Agreement, dated July 31, 1993, among
Ross Stores, Wells Fargo Bank, National
Association, Bank of America, N.T. & S.A.,
Nationsbank of Texas, N.A., and Banque Nationale
de Paris ("Banks"), and Wells Fargo Bank, National
Association, as agent for Banks, incorporated by
reference to Exhibit 10.17 on the Form 10-Q filed
by Ross Stores for its quarter ended July 31,
1993.
10.6 Term Credit Agreement, dated September 16, 1991,
between Ross Stores and the Industrial Bank of
Japan, Limited, incorporated by reference to
Exhibit 10 to the Form 10-Q filed by Ross Stores
for its quarter ended August 3, 1991.
10.7 Amendment to Term Credit Agreement, dated February 19,
1993, between Ross Stores and the Industrial Bank
of Japan, Limited, incorporated by reference to
Exhibit 10.12 to the 1992 Form 10-K.
10.8 Second Amendment to Term Credit Agreement,
dated as of October 29, 1993, between Ross Stores
and the Industrial Bank of Japan, Limited,
incorporated by reference to Exhibit 10.13 to the
Form 10-Q filed by Ross Stores for its quarter
ended October 30, 1993.
Management Contracts and Compensatory Plans
10.9 Ross Stores, 1992 Stock Option Plan, incorporated by
reference to Exhibit 19.1 on Form 10-Q filed by
Ross Stores for its quarter ended August 1, 1992.
10.10 Third Amended and Restated Ross Stores Employee Stock
Purchase Plan, incorporated by reference to
Exhibit 19.2 on Form 10-Q filed by Ross Stores for
its quarter ended August 1, 1992.
10.11 Third Amended and Restated Ross Stores 1988 Restricted
Stock Plan, incorporated by reference to Exhibit
19.3 on Form 10-Q filed by Ross Stores, for its
quarter ended August 1, 1992.
10.12 1991 Outside Directors Stock Option Plan, incorporated
by reference to Exhibit 10.13 to the 1991 Form 10-K.
10.13 Ross Stores Executive Medical Plan.
10.14 Third Amended and Restated Ross Stores Executive
Supplemental Retirement Plan.
10.15 Ross Stores Non-Qualified Deferred Compensation Plan.
10.16 Ross Stores Incentive Compensation Plan.
begin page 28
10.17 Employment Agreement between Ross Stores, Inc. and
Norman A. Ferber, dated March 17, 1989,
incorporated by reference to Exhibit 10.4 to the
1988 Annual Report on Form 10-K filed by Ross
Stores, Inc., a California corporation, for its
year ended January 28, 1989.
10.18 Amendment to Employment Agreement between Ross Stores
and Norman A. Ferber, dated March 11, 1991,
incorporated by reference to Exhibit 10.51 to the
1990 Annual Report on Form 10-K filed by Ross
Stores, for its year ended February 2, 1991.
10.19 Second Amendment to Employment Agreement between Ross
Stores and Norman A. Ferber, dated April 23, 1992,
incorporated by reference to Exhibit 10.7 to the
1991 Form 10-K.
10.20 Employment Agreement between Ross Stores and Melvin A.
Wilmore, dated November 25, 1991, incorporated by
reference to Exhibit 10.11 to the 1991 Form 10-K.
10.21 Agreement and General Release between Ross Stores and
Greggory L. Baldwin, dated November 6, 1991,
incorporated by reference to Exhibit 10.12 to the
1991 Form 10-K.
10.22 Consulting Agreement between Ross Stores and Stuart G.
Moldaw, effective as of March 12, 1993,
incorporated by reference to Exhibit 10.16 on the
Form 10-Q filed by Ross Stores for its quarter
ended May 1, 1993.
11 Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent.
23.2 Independent Auditors' Report on Financial
Statement Schedules.
(b) Reports on Form 8-K.
None.
begin page 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ROSS STORES, INC.
(Registrant)
Date: April 27, 1994 By /s/Norman A. Ferber
(Norman A. Ferber, Chairman of the
Board and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/Norman A. Ferber Chairman, Chief Executive April 27, 1994
Norman A. Ferber Officer and Director
/s/M. Wilmore President, Chief Operating April 27, 1994
Melvin A. Wilmore Officer and Director
/s/Earl Benson Senior Vice President, April 27, 1994
Earl T. Benson Chief Financial Officer
and Secretary
/s/John M. Vuko Senior Vice President, April 27, 1994
John M. Vuko Controller and
Principal Accounting
Officer
/s/Stuart G. Moldaw Chairman Emeritus, April 27, 1994
Stuart G. Moldaw Director
/s/Donald G. Fisher Director April 27, 1994
Donald G. Fisher
/s/Franklin P. Johnson Director April 27, 1994
Franklin P. Johnson, Jr.
/s/G. Orban Director April 27, 1994
George P. Orban
/s/Donald H. Seiler Director April 27, 1994
Donald H. Seiler
/s/Phil Schlein Director April 27, 1994
Philip Schlein
/s/D. L. Weaver Director April 27, 1994
Donna L. Weaver
begin page 30
ROSS STORES, INC.
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
(Amounts in thousands)
Column Column Column Column Column
A B C D E
Balance at Balance at
beginning end of period
Name of Debtor of period Additions Deductions CurrentNon Current
Year Ended January 29, 1994
James S. Jacobs $100 $100
Peter C.M. Hart $180 $180
Melvin A. Wilmore $100 $300<F5> $100 $300
Year Ended January 30, 1993
James S. Jacobs $100 $100
Earl T. Benson $ 35 $ 35<F1>
Peter C.M. Hart $180 $180
Melvin A. Wilmore $ 0 $100<F5> $100
Year Ended February 1, 1992
James S. Jacobs $100 $100
<F3>
Earl T. Benson $290 $255 <F1> $ 35
James S. Fassio $105 $105 <F2>
Peter C.M. Hart $ 0 $180<F4> $180
<FN>
<F1> In September and October 1989, the company loaned to Mr.
Earl T. Benson, Senior Vice President, Corporate Secretary,
and Chief Financial Officer, $142,000 for the exercise of
options in the amount of 26,000 shares and $225,000 secured
by a second mortgage on his home. Both loans included
interest at 8% and matured on March 27, 1992, and April 1,
1993, respectively. As of February 1, 1992, Mr. Benson had
repaid the stock option loan, and $190,000 on the second
mortgage on his house, leaving a balance due of $35,000.
This balance was repaid prior to January 30, 1993 and prior
to the due date.
<F2> The company has extended three loans to Mr. James S. Fassio,
Senior Vice President, Property Development. In July 1989,
the company extended a loan in the amount of $70,375 for the
exercise of options in the amount of 12,500 shares at an
annual interest rate of 8.75%, due July 13, 1991. In
January and May 1990, the company extended loans in the
amounts of $21,756 at an annual rate of 8%, due March 31,
1992, and $12,758 at an annual rate of 8.5%, due May 13,
1991, both secured by a deed of trust on his home. Mr.
Fassio repaid all outstanding loans as of February 1, 1992.
<F3> In June 1989, the company extended a loan of $100,000 at an
annual interest rate of 8% to James S. Jacobs, Senior Vice
President, Operations, secured by a first mortgage on his
home. The loan was repaid prior to January 29, 1994 and on
the due date.
<F4> In December 1991, the company loaned $180,000 to Mr. Peter
C.M. Hart, Senior Vice President of Management Information
Systems and Distribution, in three installments, at annual
interest rates from 5.12% to 5.63%, secured by a deed of
trust on the home which the loan helped him purchase. The
loan was repaid prior to January 29, 1994 and prior to the
due date.
<F5> In June 1992, the company extended a loan of $100,000 at an
annual interest rate of 5% to Melvin Wilmore, President and
Chief Operating Officer, secured by a certificate of
deposit. The loan was due on June 4, 1995; however, all
outstanding principal and interest was paid in full on
February 5, 1993. On February 5, 1993, the company made a
relocation loan of $300,000 to Mr. Wilmore at an annual
interest rate of 0%. The loan, which is secured by a deed
of trust, is due on February 5, 1996.
begin page 31
ROSS STORES, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
($000)
Column Column Column Column Column Column
A B C D E F
Balance at Balance
beginning Additions Retirements Other at end
Classification of period at cost and sales changes of period
Year Ended
January 29, 1994:
Land and buildings $20,004 $2,502 ($4) $22,502
Fixtures and equipment 101,751 21,543 (2,801) 120,493
Leasehold improvements 82,506 9,720 (2,638) 89,588
Construction in progress 4,319 6,420 10,739
$208,580 $40,185 ($5,443) $0 $243,322
Year Ended
January 30, 1993:
Land and buildings $19,994 $11 ($1) $20,004
Fixtures and equipment 84,564 19,157 (1,970) 101,751
Leasehold improvements 77,012 8,083 (2,589) 82,506
Construction in progress 9,184 (4,865) ______ ______ 4,319
$190,754 $22,386 ($4,560) $0 $208,580
Year Ended
February 1, 1992:
Land and buildings $6,174 $13,820 $19,994
Fixtures and equipment 71,121 15,907 ($2,464) 84,564
Leasehold improvements 69,581 9,365 (1,934) 77,012
Construction in progress 18,884 (9,700) _______ ______ 9,184
$165,760 $29,392 ($4,398) $0 $190,754
begin page 32
ROSS STORES, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
($000)
Column Column Column Column Column Column
A B C D E F
Additions
Balance at charged to Balance
beginning costs and Other changes at end
Description of period expenses <F1> Retirements add (deduct)of period
Year Ended
January 29, 1994:
Buildings and land
improvements $2,222 $703 $2,925
Fixtures and equipment 39,955 11,357 ($1,172) 50,140
Leasehold improvements 38,333 8,488 (716) 46,105
$80,510 $20,548 ($1,888) $0 $99,170
Year Ended
January 30, 1993:
Buildings and land
improvements $1,517 $705 $2,222
Fixtures and equipment 31,255 9,648 ($ 948) 39,955
Leasehold improvements 31,134 8,430 (1,231) 38,333
$63,906 $18,783 ($2,179) $0 $80,510
Year Ended
February 1, 1992:
Buildings and land
improvements $1,057 $460 $1,517
Fixtures and equipment 25,170 7,880 ($1,795) 31,255
Leasehold improvements 24,620 7,626 (1,112) 31,134
$50,847 $15,966 ($2,907) $0 $63,906
<FN>
<F1> Depreciation on fixtures and equipment is calculated using
the straight-line method over the estimated useful life of
the asset (approximately five to twelve years). Leasehold
improvements are amortized over the estimated useful lives
of the assets or the applicable lease term, whichever is
less.
begin page 33
ROSS STORES, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($000)
Column Column Column Column Column
A B C D E
Additions
Balance at charged to
beginning costs and Balance at
Description of period expenses Deductions* end of period
Accrued expenses for 1987
store closings
Year ended January 29, 1994 $0 $0
Year ended January 30, 1993 $0 $0
Year ended February 1, 1992 $20 ($20) $0
* Payments for store closures.
ROSS STORES, INC.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
($000)
Column A Column B
1993 1992 1991
Advertising Costs $33,849 $34,079 $29,970
begin page 34
INDEX TO EXHIBITS
Exhibit
Number
Exhibit
3.1 Certificate of Incorporation, as amended, incorporated
by reference to Exhibit 3.1 to the Registration
Statement on Form 8-B (the "Form 8-B") filed September
1, 1989 by Ross Stores, Inc., a Delaware corporation
("Ross Stores").
3.2 Amended By-laws, dated August 29, 1991, incorporated by
reference to Exhibit 3.2 to the 1991 Form 10-K filed by
Ross Stores for its year ended February 1, 1992 ("1991
Form 10-K").
10.1 Agreement of Lease, dated November 24, 1986, for Ross
Stores' corporate headquarters and distribution center
in Newark, CA, incorporated by reference to Exhibit
10.5 on Form 8-B.
10.2 Credit Agreement, dated March 2, 1992, among Ross
Stores, Wells Fargo Bank, National Association, Bank of
America, National Trust and Savings Association, and
Security Pacific National Bank; and Wells Fargo Bank,
National Association, as agent for Banks, incorporated
by reference to Exhibit 10.8 to the 1991 Form 10-K.
10.3 Amended and Restated Credit Agreement, dated November
23, 1992, among Ross Stores, Wells Fargo Bank, National
Association, Bank of America, N.T. & S.A., Nationsbank
of Texas, N.A., and Banque Nationale de Paris; and
Wells Fargo Bank, National Association, as agent for
Banks, incorporated by reference to Exhibit 10.9 to the
1992 Form 10-K filed by Ross Stores for its year ended
January 30, 1993 ("1992 Form 10-K").
10.4 First Amendment to Amended and Restated Credit
Agreement, entered into as of February 5, 1993, by and
among Ross Stores, Wells Fargo Bank, National
Association, Bank of America, N.T. & S.A., Nationsbank
of Texas, N.A., and Banque Nationale de Paris
("Banks"); and Wells Fargo Bank, National Association,
as agent for Banks, incorporated by reference to
Exhibit 10.10 to the 1992 Form 10-K.
10.5 Revolving Credit Agreement, dated July 31, 1993, among
Ross Stores, Wells Fargo Bank, National Association,
Bank of America, N.T. & S.A., Nationsbank of Texas,
N.A., and Banque Nationale de Paris ("Banks"), and
Wells Fargo Bank, National Association, as agent for
Banks, incorporated by reference to Exhibit 10.17 on
the Form 10-Q filed by Ross Stores for its quarter
ended July 31, 1993.
10.6 Term Credit Agreement, dated September 16, 1991,
between Ross Stores and the Industrial Bank of Japan,
Limited, incorporated by reference to Exhibit 10 to the
Form 10-Q filed by Ross Stores for its quarter ended
August 3, 1991.
10.7 Amendment to Term Credit Agreement, dated February 19,
1993, between Ross Stores and the Industrial Bank of
Japan, Limited, incorporated by reference to Exhibit
10.12 to the 1992 Form 10-K.
10.8 Second Amendment to Term Credit Agreement, dated as of
October 29, 1993, between Ross Stores and the
Industrial Bank of Japan, Limited, incorporated by
reference to Exhibit 10.13 to the Form 10-Q filed by
Ross Stores for its quarter ended October 30, 1993.
Management Contracts and Compensatory Plans
10.9 Ross Stores 1992 Stock Option Plan, incorporated by
reference to Exhibit 19.1 on Form 10-Q filed by Ross
Stores for its quarter ended August 1, 1992.
10.10 Third Amended and Restated Ross Stores Employee Stock
Purchase Plan, incorporated by reference to Exhibit
19.2 on Form 10-Q filed by Ross Stores for its quarter
ended August 1, 1992.
begin page 35
Exhibit
Number Exhibit
10.11 Third Amended and Restated Ross Stores, 1988 Restricted
Stock Plan, incorporated by reference to Exhibit 19.3
on Form 10-Q filed by Ross Stores, for its quarter
ended August 1, 1992.
10.12 1991 Outside Directors Stock Option Plan, incorporated
by reference to Exhibit 10.13 to the 1991 Form 10-K.
10.13 Ross Stores Executive Medical Plan.
10.14 Third Amended and Restated Ross Stores Executive
Supplemental Retirement Plan.
10.15 Ross Stores Non-Qualified Deferred Compensation Plan.
10.16 Ross Stores Incentive Compensation Plan.
10.17 Employment Agreement between Ross Stores, Inc. and
Norman A. Ferber, dated March 17, 1989, incorporated by
reference to Exhibit 10.4 to the 1988 Annual Report on
Form 10-K filed by Ross Stores, Inc., a California
corporation, for its year ended January 28, 1989.
10.18 Amendment to Employment Agreement between Ross Stores
and Norman A. Ferber, dated March 11, 1991,
incorporated by reference to Exhibit 10.51 to the 1990
Annual Report on Form 10-K filed by Ross Stores, for
its year ended February 2, 1991.
10.19 Second Amendment to Employment Agreement between Ross
Stores and Norman A. Ferber, dated April 23, 1992,
incorporated by reference to Exhibit 10.7 to the 1991
Form 10-K.
10.20 Employment Agreement between Ross Stores and Melvin A.
Wilmore, dated November 25, 1991, incorporated by
reference to Exhibit 10.11 to the 1991 Form 10-K.
10.21 Agreement and General Release between Ross Stores and
Greggory L. Baldwin, dated November 6, 1991,
incorporated by reference to Exhibit 10.12 to the 1991
Form 10-K.
10.22 Consulting Agreement between Ross Stores and Stuart G.
Moldaw, effective as of March 12, 1993, incorporated by
reference to Exhibit 10.16 on the Form 10-Q filed by
Ross Stores for its quarter ended May 1, 1993.
11 Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent.
23.2 Independent Auditors' Report on Financial Statement
Schedules.