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SEC Filings

10-Q
ROSS STORES INC filed this Form 10-Q on 12/12/2018
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Changes in packaway inventory levels impact our operating cash flow. As of November 3, 2018, packaway inventory was 41% of total inventory compared to 49% at the end of fiscal 2017. As of October 28, 2017, packaway inventory was 46% of total inventory compared to 49% at the end of fiscal 2016.

Investing Activities

Net cash used in investing activities was $292.6 million and $266.9 million for the nine month periods ended November 3, 2018 and October 28, 2017, respectively. The increase in cash used for investing activities for the nine month period ended November 3, 2018 compared to the nine month period ended October 28, 2017 was primarily due to an increase in our capital expenditures.

Our capital expenditures were $293.4 million and $266.9 million for the nine month periods ended November 3, 2018 and October 28, 2017, respectively. Our capital expenditures include costs to open new stores and improve existing stores; build, expand, and improve distribution centers; and for various other expenditures related to our information technology systems, and our buying and corporate offices.

We are forecasting approximately $440 million in capital expenditures for fiscal year 2018 to fund costs for fixtures and leasehold improvements to open new Ross and dd’s DISCOUNTS stores, the upgrade or relocation of existing stores, investments in information technology systems, and for various other expenditures related to our stores, distribution centers, buying and corporate offices. We expect to fund capital expenditures with available cash and cash equivalents, and cash flows from operations.

Financing Activities

Net cash used in financing activities was $1,099.1 million and $867.1 million for the nine month periods ended November 3, 2018 and October 28, 2017, respectively. For the nine month periods ended November 3, 2018 and October 28, 2017, our liquidity and capital requirements were provided by available cash and cash equivalents, and cash flows from operations. The increase in cash used for financing activities for the nine month period ended November 3, 2018, compared to the nine month period ended October 28, 2017, was primarily due to an increase in the repurchase of our common stock under our stock repurchase program and higher cash dividends.

We repurchased 9.4 million and 10.5 million shares of common stock for aggregate purchase prices of approximately $806.5 million and $648.8 million during the nine month periods ended November 3, 2018 and October 28, 2017, respectively. We also acquired 0.7 million and 0.7 million shares of treasury stock under our employee stock equity compensation programs, for aggregate purchase prices of approximately $53.7 million and $45.4 million during the nine month periods ended November 3, 2018 and October 28, 2017, respectively. In March 2018, our Board of Directors approved an increase in the stock repurchase authorization for fiscal 2018 by $200 million to $1.075 billion, up from the previously available $875 million.

For the nine month periods ended November 3, 2018 and October 28, 2017, we paid cash dividends of $253.9 million and $186.5 million, respectively.

Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources and expect to be able to maintain adequate trade credit, bank lines, and other credit sources to meet our capital and liquidity requirements, including lease payment obligations, in 2018.

We have a $600 million unsecured revolving credit facility which expires in April 2021, and contains a $300 million sublimit for issuance of standby letters of credit (subject to increase in proportion to any increase in the size of the credit facility). The facility also contains an option allowing us to increase the size of our credit facility by up to an additional $200 million, with the agreement of the lenders. Interest on any borrowings under this facility is based on LIBOR plus an applicable margin (currently 100 basis points) and is payable quarterly and upon maturity. As of November 3, 2018, we had no borrowings or standby letters of credit outstanding under this facility and the $600 million credit facility remains in place and available.

The revolving credit facility is subject to a financial leverage ratio covenant. As of November 3, 2018, we were in compliance with this covenant.


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