<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-14678
ROSS STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1390387
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8333 CENTRAL AVENUE, NEWARK, CALIFORNIA 94560-3433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 505-4400
Former name, former address and former fiscal year, if N/A
changed since last report.
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 __
The number of shares of Common Stock, with $.01 par value, outstanding on
November 27, 1999 was 88,542,788.
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
OCTOBER 30, January 30, October 31,
($000) 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
(UNAUDITED) (Note A) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 31,645 $ 80,083 $ 26,657
Accounts receivable 15,884 11,566 12,212
Merchandise inventory 570,965 466,460 511,484
Prepaid expenses and other 16,591 15,825 16,371
--------------------------------------------------
Total Current Assets 635,085 573,934 566,724
PROPERTY AND EQUIPMENT
Land and buildings 49,593 48,789 48,789
Fixtures and equipment 236,611 217,629 207,856
Leasehold improvements 150,481 142,716 139,296
Construction-in-progress 46,991 32,023 29,861
--------------------------------------------------
483,676 441,157 425,802
Less accumulated depreciation and amortization (217,004) (192,445) (185,965)
--------------------------------------------------
266,672 248,712 239,837
Deferred income taxes and other assets 51,723 47,660 37,839
--------------------------------------------------
TOTAL ASSETS $953,480 $870,306 $844,400
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $263,121 $248,103 $228,261
Accrued expenses and other 97,755 95,059 95,202
Accrued payroll and benefits 46,176 40,885 35,723
Income taxes payable 20,579 19,092 3,080
Short-term debt 28,900 - 43,500
--------------------------------------------------
Total Current Liabilities 456,531 403,139 405,766
Long-term debt 24,000 - 30,000
Long-term liabilities 47,200 42,464 38,347
STOCKHOLDERS' EQUITY
Common stock 887 924 920
Additional paid-in capital 220,641 215,369 198,413
Retained earnings 204,221 208,410 170,954
--------------------------------------------------
425,749 424,703 370,287
--------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $953,480 $870,306 $844,400
- ------------------------------------------------------------------ ----------------- ----------------- ---------------
</TABLE>
See notes to condensed consolidated financial statements.
2
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ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
- -------------------------------------------------------------------------------------------------------------------------
OCTOBER 30, October 31, OCTOBER 30, October 31,
($000, except per share data, unaudited) 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $608,720 $531,139 $1,774,121 1,552,390
COSTS AND EXPENSES
Cost of goods sold and occupancy 416,442 365,654 1,219,963 1,074,466
General, selling and administrative 125,833 110,593 349,702 308,005
Depreciation and amortization 9,459 8,653 27,911 24,765
Interest expense 147 329 167 459
------------------------------- -----------------------------
551,881 485,229 1,597,743 1,407,695
Earnings before taxes 56,839 45,910 176,378 144,695
Provision for taxes on earnings 22,224 17,905 68,964 56,431
------------------------------- ------------------------------
Net earnings $34,615 $28,005 $ 107,414 $ 88,264
- --------------------------------------------------------------------------------------------------------------------------
Net earnings per share:
Basic $ .38 $ .30 $ 1.18 $ .93
Diluted $ .38 $ .30 $ 1.16 $ .92
- -------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding:
Basic 89,986 93,466 91,015 94,692
Diluted 91,138 94,872 92,444 96,398
- --------------------------------------------------------------------------------------------------------------------------
Stores open at end of period 381 350 381 350
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
-----------------
OCTOBER 30, October 31,
($000, unaudited) 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $107,414 $88,264
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization of property and equipment 27,911 24,765
Other amortization 7,442 7,105
Change in assets and liabilities:
Merchandise inventory (104,505) (92,659)
Other current assets - net (5,083) (5,352)
Accounts payable 18,023 28,899
Other current liabilities - net 20,372 14,436
Other
2,206 3,479
----------------------
Net cash provided by operating activities 73,780 68,937
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (58,918) (64,389)
----------------------
Net cash used in investing activities (58,918) (64,389)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under lines of credit 28,900 43,500
Proceeds from long-term debt 24,000 30,000
Issuance of common stock related to stock plans 9,536 7,138
Repurchase of common stock (116,845) (107,083)
Dividends paid (8,891) (7,815)
----------------------
Net cash used in financing activities (63,300) (34,260)
----------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (48,438) (29,712)
Cash and cash equivalents:
Beginning of year 80,083 56,369
----------------------
End of quarter $ 31,645 $ 26,657
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 374 $ 710
Income taxes paid $ 66,863 $ 49,443
- ---------------------------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
ROSS STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Nine Months Ended October 30, 1999 and October 31, 1998
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared from the records of the company without audit and, in the opinion of
management, include all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position at October 30, 1999
and October 31, 1998; the results of operations for the three and nine months
ended October 30, 1999 and October 31, 1998; and changes in cash flows for the
nine months ended October 30, 1999 and October 31, 1998. The balance sheet at
January 30, 1999, presented herein, has been derived from the audited financial
statements of the company for the fiscal year then ended. Certain
reclassifications have been made to the 1998 presentation to conform to the 1999
presentation.
Accounting policies followed by the company are described in Note A to the
audited consolidated financial statements for the fiscal year ended January 30,
1999. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted for purposes of the interim condensed
consolidated financial statements. The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements, including notes thereto, for the year ended January 30, 1999.
The results of operations for the three-month and nine-month periods herein
presented are not necessarily indicative of the results to be expected for the
full year.
NOTE B - STOCK SPLIT
On August 26, 1999 the company's Board of Directors declared a 2-for-1 split of
the company's common stock that was effected in the form of a 100% stock
dividend paid on September 22, 1999 to all stockholders of record as of the
close of business on September 7, 1999. All financial statements contained
herein reflect the effect of this action.
5
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INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders of Ross Stores, Inc.
Newark, California
We have reviewed the accompanying condensed consolidated balance sheets of Ross
Stores, Inc. and subsidiaries (the "Company") as of October 30, 1999 and October
31, 1998, and the related condensed consolidated statements of earnings for the
three-month and nine-month periods then ended and the related condensed
consolidated statements of cash flows for the nine-month periods then ended.
These condensed consolidated financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objectives of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Ross Stores, Inc. and subsidiaries
as of January 30, 1999, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated March 12, 1999, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 30, 1999 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/Deloitte & Touche LLP
San Francisco, CA
November 19, 1999
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This section and other parts of this Form 10-Q contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may vary significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but are not
limited to, those discussed in the subsection entitled "Forward-Looking
Statements and Factors Affecting Future Performance" below. The following
discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto included elsewhere in this Form 10-Q and
the consolidated financial statements in the Company's 1998 Form 10-K. All
information is based on the Company's fiscal calendar.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
PERCENTAGES OF SALES
- ---------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
- ---------------------------------------------------------------------------------------------------------------------
OCTOBER 30, October 31, OCTOBER 30, October 31,
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES
Sales ($000) $608,720 $531,139 $1,774,121 $1,552,390
Sales growth 14.6% 10.0% 14.3% 9.6%
Comparable store sales growth 7% 3% 7% 4%
Cost of goods sold and occupancy 68.4% 68.8% 68.8% 69.2%
General, selling and administrative 20.7% 20.8% 19.7% 19.8%
Depreciation and amortization 1.6% 1.6% 1.6% 1.6%
Interest expense 0.0% 0.1% 0.0% 0.0%
NET EARNINGS 5.7% 5.3% 6.1% 5.7%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SALES
The increase in sales for the three and nine months ended October 30, 1999,
compared to the same periods in the prior year, reflects an increase in the
number of stores open during the current period as well as an increase in
comparable store sales.
COSTS AND EXPENSES
Cost of goods sold and occupancy expenses as a percentage of sales for the three
and nine months ended October 30, 1999, decreased compared to the same periods
in the prior year, primarily due to (i) improved merchandise margins, mainly
from a combination of higher initial markups and lower markdowns; and (ii)
leverage on occupancy costs realized from the increase in comparable store
sales.
The decrease in general, selling and administrative expenses as a percentage of
sales for the three and nine months ended October 30, 1999, compared to the same
periods in the prior year, primarily reflects leverage from lower advertising
expenses realized on the increase in comparable store sales, and lower year 2000
remediation costs, partially offset by higher management incentive plan and
benefit costs.
7
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NET EARNINGS
The increase in net earnings as a percentage of sales in the three and nine
months ended October 30, 1999, compared to the same periods in the prior year,
is primarily due to increases in total sales combined with improvement in the
cost of goods sold and occupancy expenses ratio.
INCOME TAXES PAID
The company paid $66.9 million in income taxes in the nine months ended October
30, 1999, versus $49.4 million in the nine months ended October 31, 1998. This
increase in income taxes paid primarily resulted from the timing of certain tax
deductions taken by the company for its employee-related common stock plans, as
well as higher earnings. The Company's effective tax rate in both periods was
approximately 39%.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The primary uses of cash during the nine months ended October 30, 1999 were for
(i) the repurchase of the company's common stock; (ii) the purchase of
inventory; and (iii) capital expenditures for new stores, improvements to
existing locations, improvements in management information systems, and various
expenditures to improve the central office and distribution centers.
Total consolidated inventories increased 12% at October 30, 1999 from October
31, 1998, due mainly to a 9% increase in the number of stores open at the end of
the current period and a planned increase in the level of packaway merchandise.
The increase in accounts payable at October 30, 1999 from October 31, 1998
resulted mainly from the higher level of inventory purchases over the prior
year.
In January 1999, the company announced a $120 million common stock repurchase
program. In the nine months ended October 30, 1999, the company repurchased
approximately 5.3 million shares for an aggregate purchase price of
approximately $117 million.
The company believes it can fund its operating cash requirements and capital
needs for the balance of this fiscal year (and for the next fiscal year) through
internally generated cash, trade credit, established bank lines and lease
financing.
YEAR 2000 MATTERS
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Certain information
technology systems and their associated software ("IT Systems"), and certain
equipment that uses programmable logic chips to control aspects of their
operation ("embedded chip equipment"), may recognize "00" as a year other than
the year 2000. Some IT Systems and embedded chip equipment used by the company
and by third parties who do business with the company contain two-digit
programming to define a year. The year 2000 issue could result, at the company
and elsewhere, in system failures or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions or to engage in other normal business activities.
8
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READINESS FOR YEAR 2000
The company has addressed its year 2000 issue, including efforts relating to IT
Systems and embedded chip equipment used within the company, efforts to address
issues the company faces if third parties who do business with the company are
not prepared for the year 2000, and contingency planning. In 1997, the company
created a corporation-wide year 2000 task force representing all business and
staff units with the goal of achieving an uninterrupted transition into the year
2000. The company used both internal and external resources to identify,
correct, upgrade or replace and test its IT Systems and embedded chip equipment
for year 2000 compliance.
The company uses a variety of IT Systems, internally developed and third-party
provided software and embedded chip equipment, depending upon business function
and location. For these IT Systems, software and embedded chip equipment, the
company divided its year 2000 efforts into four phases: (i) identification and
inventorying of IT Systems and embedded chip equipment with potential year 2000
problems; (ii) assessment of scope of year 2000 issues for, and assigning
priorities to, each item based on its importance to the company's operations;
(iii) remediation of year 2000 issues in accordance with assigned priorities, by
correction, upgrade, replacement or retirement; (iv) testing for and validation
of year 2000 compliance, including integration testing. The company has
categorized as "mission critical" those IT Systems and embedded chip equipment
whose failure would cause cessation of store operations, or could otherwise have
a sustained and significant detrimental financial impact on the company. The
company believes that as of October 30, 1999, phases (i), (ii), (iii) and (iv)
were substantially complete across all business functions and locations
(including all mission critical IT Systems), or that replacements, changes,
upgrades or workarounds had been identified, tested and deployed. A
comprehensive program of integration testing of the company's IT Systems to
ensure that all systems still work together properly and without year 2000
problems was also substantially complete as of October 30, 1999.
The company's operations are also dependent on the year 2000 readiness of third
parties that do business with the company. In particular, the company's IT
Systems interact with commercial electronic transaction processing systems to
handle customer credit card purchases and other point-of-sale transactions, and
the company is dependent on third-party suppliers of such infrastructure
elements as, but not limited to, telecommunications services, electric power,
water and banking facilities. The company does not depend to any significant
degree on any single merchandise vendor or upon electronic transaction
processing with individual vendors for merchandise purchases. The company has
identified and completed formal communications with these third parties to
determine the extent to which the company will be vulnerable to such parties'
failure to resolve their own year 2000 issues. The company has received
responses from substantially all of those suppliers and merchandise vendors that
it believes are highly critical to its year 2000-remediation efforts. The
company sought to determine whether the supplier is taking appropriate steps to
achieve year 2000 readiness and to be prepared to continue functioning
effectively as a supplier in accordance with the company's business needs. The
company is assessing its risks with respect to failure by third parties to be
year 2000 compliant and intends to seek to mitigate those risks. The company has
also developed contingency plans, discussed below, to address issues related to
suppliers the company determines are not making sufficient progress toward
becoming year 2000 compliant.
COSTS
The company believes that its IT Systems and embedded chip equipment were
substantially year 2000 compliant as of October 30, 1999. Aggregate costs for
work related to year 2000 efforts in fiscal 1998 and 1999 currently are
anticipated to total approximately $12.0 million, including about $6.0 million
for capital investments in IT Systems and embedded chip equipment, and will be
funded through operating cash flows. Operating costs related to year 2000
compliance projects have been incurred over several quarters and are expensed as
incurred. In 1998, the company
9
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incurred approximately $4.0 million in expenses related to year 2000, with
approximately $2.0 million expected in fiscal 1999. Capital expenditures in 1998
totaled approximately $4.0 million with approximately $2.0 million in capital
expenditures expected in fiscal 1999.
The company's estimates of the costs of achieving year 2000 compliance and the
dates by which year 2000 compliance has been or will be achieved are based on
management's best estimates, which were derived using numerous assumptions about
future events including the continued availability of certain resources,
third-party modification plans and other factors. However, there can be no
assurance that these estimates will be achieved, and actual results could differ
materially from these estimates. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in year 2000 remediation work, the ability to locate and
correct all relevant computer codes, the success achieved by the company's
suppliers in reaching year 2000 readiness, the timely availability of necessary
replacement items and similar uncertainties.
RISKS
The company believes that it has identified and implemented substantially all of
the changes necessary to address the year 2000 issue for IT Systems and embedded
chip equipment used within the company. The company presently believes that,
with modifications to existing software, conversions to new software, and
appropriate remediation of embedded chip equipment, the year 2000 issue with
respect to the company's IT Systems and embedded chip equipment is not
reasonably likely to pose significant operational problems for the company.
However, if unforeseen difficulties arise or such modifications, conversions and
replacements were not completely identified or remediated on a timely basis, or
if the company's vendors' or suppliers' systems are not modified to become year
2000 compliant, the year 2000 issue may have a material impact on the results of
operations and financial condition of the company.
The company is presently unable to assess the likelihood that the company will
experience significant operational problems due to unresolved year 2000 problems
of third parties that do business with the company. Although the company has not
been put on notice that any known third-party problem will not be timely
resolved, the company has limited information and no assurance of additional
information concerning the year 2000 readiness of third parties. The resulting
risks to the company's business are very difficult to assess due to the large
number of variables involved. If third parties fail to achieve year 2000
compliance, year 2000 problems could have a material impact on the company's
operations. Similarly, there can be no assurance that the company can timely
mitigate its risks related to a supplier's failure to resolve its year 2000
issues. If such mitigation is not achievable, year 2000 problems could have a
material impact on the company's operations.
CONTINGENCY PLANS
The company presently believes that its most reasonably likely worst-case year
2000 scenarios would relate to the possible failure in one or more geographic
regions of third party systems over which the company has no control and for
which the company has no ready substitute, such as, but not limited to, power
and telecommunications services. For example, if such services were to fail, it
could be necessary for the company to temporarily close stores in the affected
geographic areas. The company has in place a business resumption plan that
addresses recovery from various kinds of disasters, including recovery from
significant interruptions to data flows and distribution capabilities at the
company's major data centers and major distribution centers. The company used
that plan as a starting point for developing specific year 2000 contingency
plans, which generally emphasized locating alternate sources of supply, methods
of distribution and ways of processing information. The company's year 2000
contingency plans are substantially complete. During the fourth quarter of 1999,
the company intends to make necessary preparations to be ready to execute the
contingency plans, if needed. However, there can be no assurance that the
company will be able to complete its contingency preparations on that
10
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schedule or that execution of those plans will succeed or will mitigate any
interruption that may result from unresolved year 2000 problems.
FORWARD-LOOKING STATEMENTS AND FACTORS AFFECTING FUTURE PERFORMANCE
This report includes a number of forward-looking statements, which reflect the
company's current beliefs and estimates with respect to future events and the
company's future financial performance, operations and competitive strengths.
The words "expect," "anticipate," "estimate," "believe" and similar expressions
identify forward-looking statements.
The company's continued success depends, in part, upon its ability to increase
sales at existing locations, to open new stores and to operate stores on a
profitable basis. There can be no assurance that the company's existing
strategies and store expansion program will result in a continuation of revenue
and profit growth. Future economic and industry trends that could potentially
impact revenue and profitability remain difficult to predict.
As a result, the forward-looking statements that are contained herein are
subject to certain risks and uncertainties that could cause the company's actual
results to differ materially from historical results or current expectations.
These factors include, without limitation, ongoing competitive pressures in the
apparel industry, obtaining acceptable store locations, the company's ability to
continue to purchase attractive name-brand merchandise at desirable discounts,
successful implementation of the company's merchandise diversification strategy,
the company's ability to successfully extend its geographic reach, unseasonable
weather trends, changes in the level of consumer spending on or preferences in
apparel or home-related merchandise and greater than planned costs, including
those that could be related to necessary modifications to or replacements of the
company's IT Systems and embedded chip equipment to enable them to process
information with dates or date ranges spanning the year 2000 and beyond. If
unforeseen difficulties arise or such modifications and replacements are not
completely identified or remediated on a timely basis, or if the company's
vendors' or suppliers' IT Systems and embedded chip equipment are not modified
to become year 2000 compliant, the year 2000 issue may have a material impact on
the operations of the company. In addition, the company's corporate
headquarters, one of its distribution centers and 42% of its stores are located
in California. Therefore, a downturn in the California economy or a major
natural disaster there could significantly affect the company's operating
results and financial condition.
In addition to the above factors, the apparel industry is highly seasonal. The
combined sales of the company for the third and fourth (holiday) fiscal quarters
are historically higher than the combined sales for the first two fiscal
quarters. The company has realized a significant portion of its profits in each
fiscal year during the fourth quarter. If intensified price competition, lower
than anticipated consumer demand or other factors were to occur during the third
and fourth quarters, and in particular during the fourth quarter, the company's
fiscal year results could be adversely affected.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that the market risk associated with the company's ownership
of market-risk sensitive financial instruments (including interest rate risk and
equity price risk) as of October 30, 1999 and January 30, 1999 is not material.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Incorporated herein by reference to the list of Exhibits contained in
the Exhibit Index that begins on page 14 of this Report.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
ROSS STORES, INC.
Registrant
Date: December 7, 1999 /s/ JOHN G. CALL
-------------------------------------
John G. Call, Senior Vice President,
Chief Financial Officer, Corporate
Secretary and Principal
Accounting Officer
13
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------ -------
3.1 Corrected First Restated Certificate of Incorporation, incorporated by
reference to Exhibit 3.1 to the Form 10-K filed by Ross Stores for its
year ended January 30, 1999.
3.2 Amended By-laws, dated August 25, 1994, incorporated by reference to
Exhibit 3.2 to the Form 10-Q filed by Ross Stores for its quarter
ended July 30, 1994.
15 Letter re: Unaudited Interim Financial Information.
27 Financial Data Schedules (submitted for SEC use only).
14
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EXHIBIT 15
December 7, 1999
Ross Stores, Inc.
Newark, California
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the condensed consolidated
financial statements of Ross Stores, Inc. and subsidiaries for the three-month
and nine-month periods ended October 30, 1999, and October 31, 1998, as
indicated in our independent accountants' report dated November 19, 1999;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended October 30, 1999 is
incorporated by reference in Registration Statements Nos. 33-61373, 33-51916,
33-51896, 33-51898, 33-41415, 33-41413, 33-29600, 333-56831, and 333-06119 of
Ross Stores, Inc. on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
/s/Deloitte & Touche LLP
San Francisco, California
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS FOR THE NINE
MONTHS ENDED OCTOBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> OCT-30-1999
<CASH> 31,645
<SECURITIES> 0
<RECEIVABLES> 15,884
<ALLOWANCES> 0
<INVENTORY> 570,965
<CURRENT-ASSETS> 635,085
<PP&E> 483,676
<DEPRECIATION> 217,004
<TOTAL-ASSETS> 953,480
<CURRENT-LIABILITIES> 456,531
<BONDS> 0
0
0
<COMMON> 887
<OTHER-SE> 424,862
<TOTAL-LIABILITY-AND-EQUITY> 953,480
<SALES> 1,774,121
<TOTAL-REVENUES> 1,774,121
<CGS> 1,219,963
<TOTAL-COSTS> 1,597,743
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 167
<INCOME-PRETAX> 176,378
<INCOME-TAX> 68,964
<INCOME-CONTINUING> 107,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,414
<EPS-BASIC> 1.18
<EPS-DILUTED> 1.16
</TABLE>
