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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 April 30, 1994
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
incorporation or organization) Identification No.)
8333 Central Avenue, Newark, 94560-3433
California
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, (510) 505-4400
including area code
Former name, former address and N/A
former fiscal year, if 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 May 28, 1994 was 24,577,862.
begin page 2
PART I. FINANCIAL INFORMATION
Item 1. Financial statements.
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
______________________________________________________________________________
($000) April 30, January 29, May 1,
ASSETS 1994 1994 1993
______________________________________________________________________________
(Unaudited) (Note A)(Unaudited)
Current Assets
Cash $ 15,838 $ 32,307 $ 14,103
Accounts receivable 12,366 4,016 7,480
Merchandise inventory 292,309 228,929 275,275
Prepaid expenses and other 11,850 15,224 12,339
Total Current Assets 332,363 280,476 309,197
Property and Equipment
Land and buildings 22,534 22,502 20,061
Fixtures and equipment 124,654 120,493 106,146
Leasehold improvements 93,909 89,588 84,396
Construction-in-progress 4,196 10,739 2,449
245,293 243,322 213,052
Less accumulated depreciation and
amortization 104,260 99,170 85,237
141,033 144,152 127,815
Lease rights and other assets 16,582 12,743 14,227
$489,978 $437,371 $451,239
LIABILITIES AND STOCKHOLDERS' EQUITY
______________________________________________________________________________
Current Liabilities
Accounts payable $129,099 $ 89,561 $102,721
Accrued expenses 36,432 43,262 32,240
Accrued payroll and other 15,903 16,202 15,490
Income taxes payable 5,679 6,404 4,977
Total Current Liabilities 187,113 155,429 155,428
Long-term debt 54,450 33,308 62,772
Deferred income taxes and other liabilities 20,325 20,412 19,960
Stockholders' Equity
Capital stock 247 247 256
Additional paid-in capital 122,021 122,073 120,766
Retained earnings 105,822 105,902 92,057
228,090 228,222 213,079
$489,978 $437,371 $451,239
______________________________________________________________________________
See notes to condensed consolidated financial statements.
begin page 3
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
______________________________________________________________________________
Three Months Ended
April 30, May 1,
($000 except per share data, unaudited) 1994 1993
______________________________________________________________________________
Sales $264,207 $239,552
Costs and Expenses
Cost of goods sold and occupancy 191,586 172,184
General, selling and administrative 59,179 55,849
Depreciation and amortization 5,554 4,895
Interest 541 634
$256,860 $233,562
Earnings before taxes 7,347 5,990
Provision for taxes on earnings 2,939 2,396
Net earnings $ 4,408 $ 3,594
______________________________________________________________________________
Net earnings per share:
Primary $.18 $.14
Fully diluted $.18 $.14
______________________________________________________________________________
Weighted average shares outstanding:
Primary 24,996 26,196
Fully diluted 25,050 26,254
______________________________________________________________________________
Stores open at end of period 251 231
______________________________________________________________________________
See notes to condensed consolidated financial statements.
begin page 4
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
______________________________________________________________________________
Three Months Ended
April 30, May 1,
($000, unaudited) 1994 1993
______________________________________________________________________________
Cash flows from operating activities
Net earnings $ 4,408 $ 3,594
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization of property and
equipment 5,554 4,895
Other amortization 1,178 1,642
Change in current assets and current liabilities:
Increase in merchandise inventory (63,380) (54,227)
Increase in other current assets - net (4,996) (4,326)
Increase in accounts payable 40,773 6,989
Decrease in other current liabilities - net (1,015) (6,638)
Other (3,393) 591
Net cash used in operating activities (20,871) (47,480)
______________________________________________________________________________
Cash flows from investing activities
Additions to property and equipment (9,894) (7,124)
Net cash used in investing activities (9,894) (7,124)
______________________________________________________________________________
Cash flows from financing activities
Borrowing under line of credit agreement 21,200 29,300
Repayment of long-term debt (102) (89)
Issuance of common stock related to stock plan 972 534
Repurchase of common stock (6,539) (1,494)
Dividends paid (1,235)
Net cash provided by financing activities 14,296 28,251
Net increase (decrease) in cash (16,469) (26,353)
Cash
Beginning of year 32,307 40,456
End of quarter $15,838 $14,103
______________________________________________________________________________
See notes to condensed consolidated financial statements.
begin page 5
ROSS STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended April 30, 1994 and May 1, 1993
(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 April 30,
1994 and May 1, 1993; the interim results of operations for the
three months ended April 30, 1994 and May 1, 1993; and changes in
cash flows for the three months then ended. The balance sheet at
January 29, 1994, presented herein, has been derived from the
audited financial statements of the company for the fiscal year
then ended.
Accounting policies followed by the company are described in Note
A to the audited consolidated financial statements for the fiscal
year ended January 29, 1994. 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 condensed
consolidated interim financial statements. The condensed
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements, including
notes thereto, for the year ended January 29, 1994.
The results of operations for the three month periods herein
presented are not necessarily indicative of the results to be
expected for the full year.
The condensed consolidated financial statements at April 30, 1994
and May 1, 1993, and for the three months then ended have been
reviewed, prior to filing, by the registrant's independent
accountants whose report covering their review of the financial
statements is included in this report on page 6.
Note B - Statements of Cash Flows Supplemental Disclosures
Total cash paid for interest and income taxes is as follows:
______________________________________________________________________________
Three Months Ended
April 30, May 1,
($000, unaudited) 1994 1993
______________________________________________________________________________
Interest $ 578 $ 557
Income Taxes $3,663 $8,663
______________________________________________________________________________
begin page 6
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Stockholders of Ross Stores, Inc.
Newark, California
We have made a review of the condensed consolidated balance
sheets of Ross Stores, Inc. (the "Company") as of April 30, 1994
and May 1, 1993 and the related condensed consolidated statements
of earnings and cash flows for the three 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. as of January 29, 1994, 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 11, 1994, 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 29, 1994 is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
Deloitte & Touche
San Francisco, CA
May 20, 1994
begin page 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations.
Stores and General
As of April 30, 1994, and May 1, 1993, the company operated a
total of 251 stores and 231 stores respectively. Accordingly,
the results of operations for the three months ended April 30,
1994, over the same quarter last year, reflect an increase in the
level of operations which was due to the greater number of open
stores during the current period as well as an increase of 3% in
comparable store sales.
Results of Operations
Sales
During the quarter ended April 30, 1994, sales were $264 million,
an increase of approximately $25 million over the corresponding
period last year. This increase resulted from the combination of
a greater number of stores in operation and an increase of 3% in
comparable store sales. For the quarter ended May 1, 1993,
comparable store sales decreased 1% from the comparable period of
the prior year.
Costs and Expenses
Cost of goods sold and occupancy as a percentage of sales
increased to 73% for the first quarter of 1994 compared to 72%
for the same period of 1993. This increase mainly resulted from
higher levels of clearance merchandise at the beginning of 1994
as compared to 1993 combined with lower initial pricing in 1994.
General selling and administrative expenses as a percentage of
sales decreased to 22% for the first quarter of 1994 from 23% for
the comparable quarter the prior year. This decrease was
primarily due to lower advertising expenditures combined with
leverage from a larger sales base.
The decrease in interest expense for the first quarter of 1994 is
a result of lower average borrowings.
Taxes on Earnings
The company's effective tax rate for the first quarter of 1994
and 1993 was 40%. Both rates reflect the applicable statutory
tax rates.
Liquidity and Capital Resources
The primary uses of cash during the first quarter of 1994 were
for seasonal inventory build-up, new store capital expenditures,
the company's stock repurchase program and payments to repair the
company's Carlisle, Pennsylvania distribution center as well as
related additional operating expenses. The company believes it
is fully insured for the costs related to the situation at the
Carlisle, Pennsylvania's distribution center and accordingly has
reflected these expenditures as a receivable in the balance
sheet. Partially offsetting this is an increase in accounts
payable resulting from receipt of merchandise purchased late in
the first quarter with payment terms extending into the second
quarter. The company believes it can fund its capital needs for
the remainder of the fiscal year and complete the remainder of
the two million share repurchase program through internally
generated cash, trade credit, and established bank lines and
lease financing.
begin page 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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 (EXHIBITS
10.9 - 10.21)
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 9
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, incorporated by
reference to Exhibit 10.13 to the 1993 Form 10-K filed
by Ross Stores for its year ended January 29, 1994
("1993 Form 10-K").
10.14 Third Amended and Restated Ross Stores Executive
Supplemental Retirement Plan, incorporated by reference
to Exhibit 10.14 to the 1993 Form 10-K.
10.15 Ross Stores Non-Qualified Deferred Compensation Plan,
incorporated by reference to Exhibit 10.15 to the 1993
Form 10-K.
10.16 Ross Stores Incentive Compensation Plan, incorporated
by reference to Exhibit 10.16 to the 1993 Form 10-K.
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 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
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, effective as of March 15, 1994.
10.21 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.
15 Letter re: Unaudited Interim Financial Information.
(b) Reports on Form 8-K
None.
begin page 10
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: June 9, 1994 /s/John M. Vuko
John M. Vuko, Senior Vice President, Controller
and Principal Accounting Officer
begin page 11
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 (EXHIBITS
10.9 - 10.21)
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.
begin page 12
Exhibit
Number Exhibit
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, incorporated by
reference to Exhibit 10.13 to the 1993 Form 10-K filed
by Ross Stores for its year ended January 29, 1994
("1993 Form 10-K").
10.14 Third Amended and Restated Ross Stores Executive
Supplemental Retirement Plan, incorporated by reference
to Exhibit 10.14 to the 1993 Form 10-K.
10.15 Ross Stores Non-Qualified Deferred Compensation Plan,
incorporated by reference to Exhibit 10.15 to the 1993
Form 10-K.
10.16 Ross Stores Incentive Compensation Plan, incorporated
by reference to Exhibit 10.16 to the 1993 Form 10-K.
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 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
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, effective as of March 15, 1994.
10.21 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.
15 Letter re: Unaudited Interim Financial Information.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective as of March 15,
1994, by and between Ross Stores, Inc. (the "Company") and Melvin
A. Wilmore (the "Executive"). The Executive is presently employed
by the Company as its President and Chief Operating Officer
pursuant to an employment contract of November 25, 1991 (the
"Initial Contract"), and it is now the intention of the Company
and the Executive to enter into a new employment agreement and to
terminate the Initial Contract. Accordingly, the Company and the
Executive hereby terminate the Initial Contract and enter into
this Agreement.
1. Term. The employment of the Executive by the Company
will continue as of the date hereof and end on February 1, 1997,
unless extended or terminated in accordance with this Agreement.
During August 1996, and during August every other year thereafter
(every two years) for so long as the Executive is employed by the
Company, upon the written request of the Executive the Board of
Directors of the Company (the "Board") shall consider extending
the Executive's employment with the Company. Such request must
be delivered to the Chairman of the Compensation Committee no
later than the July 31st which precedes the August in which the
requested extension will be considered. The Board shall advise
the Executive, in writing, on or before the September 1st
following its consideration of the Executive's written request,
whether it approves of such extension. The failure of the Board
to provide such written advice shall constitute approval of the
Executive's request for extension. If the Executive's request
for an extension is approved, this Agreement shall be extended
two additional years.
2. Position and Duties. The Executive shall continue to
serve as the President and Chief Operating Officer of the Company
with overall responsibility for the Company's corporate
operations and the accomplishment of its plans and objectives.
The Executive shall report directly to the Company's Chief
Executive Officer and Chairman of the Board of Directors and
shall himself be a member of the Board. The Executive shall
devote substantially all of his working time and efforts to the
business and affairs of the Company. During the term of his
employment, the Executive may engage in outside activities
provided those activities do not conflict with his duties and
responsibilities hereunder, and provided further that the
Executive gives written notice to the Board of any significant
outside business activity in which he plans to become involved,
whether or not such activity is pursued for profit. The
Executive may not render services to or invest in any business
competitive with any existing or contemplated business of the
Company except with respect to personal investments in
securities, limited partnerships or similar passive investment
interests that are publicly traded.
3. Place of Performance. The Executive shall be employed
at the principal executive or operational offices of the Company
except for required travel on the Company's business to an extent
substantially consistent with present business travel
obligations.
begin page 2
4. Compensation and Related Matters.
a. Salary. During his employment the Company shall
pay the Executive a salary of not less than $425,000 per annum.
This salary shall be payable in equal installments in accordance
with the Company's normal payroll practices applicable to senior
officers. Subject to the first sentence of this paragraph, the
Executive's salary may be adjusted from time to time by the Board
in accordance with normal business practices of the Company.
b. Bonus. During his employment the Company shall
continue to pay the Executive an annual bonus in accordance with
the terms of the existing bonus incentive plan that covers the
Executive (or any replacement plan of substantially equivalent or
greater value that may subsequently be established and in effect
at the time for such action).
c. Expenses. During his employment the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him in performing services
hereunder, including all reasonable expenses of travel and living
while away from home, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures
established by the Company.
d. Other Benefits. The Executive shall be entitled
to continue to participate in all of the Company's employee
benefit plans and arrangements in effect on the date hereof in
which the Executive now participates (including without
limitation each pension and retirement plan and arrangement,
supplemental pension and retirement plan, deferred compensation
plan, short-term and long-term incentive plan, stock option plan,
life insurance and health-and-accident plan and arrangement,
medical insurance plan, physical examination program, dental care
plan, accidental death and disability plan, survivor income plan,
relocation plan, financial, tax and legal counseling programs,
and vacation plan). The Company shall not make any changes in
such plans or arrangements which would adversely affect the
Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all senior executives
of the Company and does not result in a proportionately greater
reduction in the rights of, or benefits to, the Executive as
compared with any other senior executive of the Company. The
Executive shall be entitled to participate in or receive benefits
under any employee benefit plan or arrangement made available by
the Company in the future to its executives and key management
employees, subject to, and on a basis consistent with, the terms,
conditions and overall administration of such plans and
arrangements. Except as otherwise specifically provided herein,
nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be in
lieu of the salary or bonus payable under subsections (a) and
(b).
e. Vacations. The Executive shall be entitled to the
number of vacation days in each calendar year, and to
compensation in respect of earned but unused vacation days,
determined in accordance with the Company's vacation plan. The
Executive shall also be
begin page 3
entitled to all paid holidays given by the Company to its
executives. Unused vacation days shall not be forfeited once
they have been earned and, if still unused at the time of the
Executive's termination of employment with the Company, shall be
promptly paid to the Executive at their then-current value, based
on the Executive's rate of pay at the time of his termination of
employment.
f. Services Furnished. The Company shall furnish the
Executive with office space and such services as are suitable to
the Executive's position and adequate for the performance of his
duties.
5. Offices. The Executive agrees to serve, if elected or
appointed thereto, as a director of the Company and any of its
subsidiaries and in one or more executive offices of any of the
Company's subsidiaries, provided that the Executive is
indemnified for serving in any and all such capacities on a basis
no less favorable than is currently provided by the Company's
by-laws and applicable state law.
6. Confidential Information.
a. The Executive agrees not to disclose, either while
in the Company's employ or at any time thereafter, to any person
not employed by the Company, or not engaged to render services to
the Company, any confidential information obtained while in the
employ of the Company, including, without limitation, any of the
Company's inventions, processes, methods of distribution or
customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure
of information known generally to the public or from disclosure
required by law or court order.
b. The Executive agrees that upon leaving the
Company's employ he will make himself reasonably available to
answer questions from Company officers regarding his former
duties and responsibilities and the knowledge he obtained in
connection therewith. In addition, he will not take with him,
without the prior written consent of any officer authorized to
act in the matter by the Board, any study, memoranda, drawing,
blueprint, specification or other document of the Company, its
subsidiaries, affiliates and divisions, which is of a
confidential nature relating to the Company, its subsidiaries,
affiliates and divisions.
7. Termination. The Executive's employment may be
terminated during the term of this Agreement only as follows:
a. Death. The Executive's employment shall terminate
upon his death. A termination of employment pursuant to this
paragraph 7(a) shall be deemed an involuntary termination for
purposes of this Agreement or any plan or practice of the
Company.
begin page 4
b. Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall
have been absent from his duties hereunder on a full-time basis
for the entire period of six consecutive months, and within
thirty days after written notice of termination is given by the
Company or the Executive (which may occur before or after the end
of such six-month period), the Executive shall not have returned
to the performance of his duties hereunder on a full-time basis,
the Executive's employment shall terminate. A termination of
employment pursuant to this paragraph 7(b) shall be deemed an
involuntary termination for purposes of this Agreement or any
plan or practice of the Company.
c. Cause. The Company may terminate the Executive's
employment for Cause. The Company shall have "Cause" to
terminate the Executive's employment upon (A) the continued
failure by the Executive to substantially perform his duties
hereunder (other than a failure resulting from a disability as
defined in subsection (b)) after written notice is delivered by
the Company that specifically identifies the manner in which the
Executive has not substantially performed his duties, or (B) the
engaging by the Executive in knowing, illegal or grossly
negligent conduct which is materially injurious to the Company
monetarily or otherwise.
d. Without Cause. The Company may terminate the
Executive's employment at any time without cause. A termination
"without cause" is a termination of the Executive's employment by
the Company for any reason other than those set forth in
subsections (a)[Death], (b)[Disability] or (c)[For Cause] of this
paragraph.
e. Termination by the Executive for Good Reason. The
Executive may terminate his employment with the Company for Good
Reason which shall be deemed to occur if he terminates his
employment within six months after (i) written notice of a
failure by the Company to comply with any material provision of
this Agreement which failure has not been cured within ten days
after such written notice of noncompliance has been given by the
Executive to the Company, or (ii) a significant diminishment in
the nature or scope of the authority, power, function or duty
attached to the position which the Executive currently maintains
without the express written consent of the Executive.
f. Termination Following Change of Control. The
Executive may terminate his employment with the Company within
six months after a Change of Control, which shall be deemed to
have occurred in the event of: (i) the direct or indirect sale
or exchange by the stockholders of the Company of all or
substantially all of the stock of the Company, in a single or
series of related transactions, after which sale or exchange the
stockholders of the Company immediately prior to such
transactions do not retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the
Company; (ii) a merger in which the Company is a party after
which merger the stockholders of the Company do not retain,
directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the surviving company; or (iii)
the sale, exchange, or transfer of all or substantially all of
the Company's assets (other than a sale, exchange, or transfer to
one or
begin page 5
more corporations where the stockholders of the Company before
such sale, exchange, or transfer retain, directly or indirectly,
at least a majority of the beneficial interest in the voting
stock of the corporation(s) to which the assets were
transferred). Provided, however, that the Executive shall not be
entitled to terminate his employment under this subsection in the
event that the purchaser of the Company, or any successor by
merger, consolidation or otherwise, or the entity to which all or
a significant portion of the Company's assets have been
transferred, shall have expressly assumed in writing all duties
and obligations of the Company under this Agreement.
g. Voluntary Termination. The Executive may
voluntarily terminate his employment with the Company at any
time. A termination of employment by the Executive pursuant to
paragraph 7(e)[For Good Reason] or (f)[Change of Control] shall
not be deemed a voluntary termination by the Executive for
purposes of this Agreement or any plan or practice of the Company
but shall be deemed an involuntary termination.
h. Non-Renewal. If the Executive fails to
request an extension of this Agreement in accordance with
paragraph 1, or if the Board shall fail to approve such request,
this Agreement shall automatically expire at the end of its term.
Such expiration shall not entitle the Executive to any
compensation or benefits except as earned by the Executive
through the date of expiration of this Agreement and set forth in
paragraph 9(e). The parties shall have no further obligations to
each other thereafter except as set forth in paragraphs 6 and 12.
8. Notice and Effective Date of Termination.
a. Notice. Any termination of the Executive's
employment by the Company or by the Executive during the term of
this Agreement (other than as a result of death) shall be
communicated by written notice of termination to the other party
hereto. Such notice shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under that
provision.
b. Date of Termination. The date of termination
shall be:
(i) if the Executive's employment is terminated
by his death, the date of his death;
(ii) if the Executive's employment is terminated
pursuant to paragraph 7(b)[Disability], the date of termination
shall be the 31st day following delivery of the notice of
termination;
(iii) if the Executive's employment is
terminated for any other reason by either party, the date on
which a notice of termination is delivered to the other party;
and
begin page 6
(iv) if the Agreement expires pursuant to
paragraph 7(h)[Non-Renewal], the parties' employment relationship
shall terminate on the last day of the term of this Agreement
without any notice.
9. Compensation and Benefits Upon Termination.
a. Death, Disability, Without Cause or For Good
Reason. If the Executive's employment terminates pursuant to
paragraph 7(a)[Death], (b)[Disability], (d)[Without Cause] or
(e)[For Good Reason], the Company shall:
(i) Salary: continue to pay the Executive (or
his designee or estate) his then-current salary through the
remaining term of this Agreement as defined in paragraph 1;
(ii) Bonus: continue to pay the Executive (or his
designee or estate) an annual bonus(es) throughout such remaining
term; each such bonus shall be in an amount equal to the greater
of (A) the Executive's bonus during the year prior to his
termination or (B) the bonus that the Executive would have earned
under the Company's bonus plan in the year that he was terminated
had he remained in its employment; provided, however, that such
post-termination bonuses shall not exceed the lesser of the 100%
targeted amounts for those bonus payments in the prior and then-
current year, and such bonuses shall not be paid until due under
the Company's present bonus plan;
(iii) Stock Options: with respect to any
stock options granted to the Executive by the Company, the
Executive shall immediately become vested in any unvested stock
options upon such termination; and
(iv) Restricted Stock: with respect to any
restricted stock granted to the Executive by the Company which
has not become vested as of such termination, the Executive shall
immediately become vested in a pro rata portion of such unvested
stock in accordance with the terms of the applicable stock grant
agreements.
The Company shall have no further obligations to the
Executive as a result of such termination except as set forth in
paragraph 12.
b. For Cause. If the Executive's employment is
terminated for cause as defined in paragraph 7(c)(A)[Failure to
Perform], the Executive shall receive the post-termination
compensation and benefits described in paragraph
9(a)[Compensation and Benefits Upon Death, Disability,
Termination Without Cause or For Good Reason]. If the
Executive's employment is terminated for cause as defined in
paragraph 7(c)(B)[Materially Injurious Conduct], he shall only
receive the post-termination compensation and benefits described
in paragraph 9(d)[Compensation and Benefits Upon Voluntary
Termination].
begin page 7
c. Change of Control. Upon a Change of Control
(whether or not the Executive's employment terminates), the
Executive shall immediately become vested in any shares of
restricted stock granted to the Executive by the Company which
had not vested prior to the Change of Control in accordance with
the terms of the applicable stock grant agreements. In addition,
if the Executive's employment terminates pursuant to paragraph
7(f)[Change of Control], the Company shall:
(i) Salary: continue to pay the Executive (or
his designee or estate) his then-current salary through the
remaining term of this Agreement as defined in paragraph 1;
(ii) Bonus: continue to pay the Executive (or his
designee or estate) his annual bonus(es) throughout such
remaining term; each such bonus shall be in an amount equal to
the greater of (A) the Executive's bonus during the year prior to
his termination or (B) the bonus that the Executive would have
earned under the Company's bonus plan in the year that he was
terminated had he remained in its employment; provided, however,
that such post-termination bonuses shall not exceed the lesser of
the 100% targeted amounts for those bonus payments in the prior
and then-current year, and such bonuses shall not be paid until
due under the Company's present bonus plan; and
(iii) Stock Options: with respect to any
stock options granted to the Executive by the Company, the
Executive shall immediately become vested in any unvested stock
options upon such termination.
The Company shall reimburse the Executive for any excise taxes
paid by the Executive pursuant to Internal Revenue Code section
4999 as a result of any "excess parachute payments" that he
receives from the Company as determined under section 280G of
said Code. This reimbursement shall not include any additional
amount to cover the Executive's income or other taxes on such
reimbursement. The Company shall have no further obligations to
the Executive as a result of such termination.
d. Voluntary Termination. If the Executive
terminates his employment pursuant to paragraph 7(g)[Voluntary
Termination], he shall be paid his salary through his termination
date and not thereafter. He shall not be entitled to any bonus
payments which were not fully earned prior to his termination
date, and he shall not be entitled to any pro-rated bonus payment
for the year in which he terminates his employment. Any stock
options granted to him by the Company will continue to vest only
through the date of his termination (provided, however, that if
the Executive's voluntary termination occurs within six months of
a Change of Control, the Executive shall immediately become fully-
vested in any unvested stock options previously granted to him by
the Company) and any restricted stock that was granted to the
Executive by the Company which is unvested as of the date of his
termination will automatically be reacquired by the Company and
the Executive shall have no further rights with respect to such
restricted stock. The Company shall have no further obligations
to the Executive as a result of such termination.
begin page 8
e. Non-Renewal. If the Agreement expires as set
forth in paragraph 7(h)[Non-Renewal], the Company shall have no
further obligations to the Executive except as set forth in
paragraph 12 and except that with respect to any restricted stock
granted to the Executive by the Company which has not become
vested as of such expiration date, the Executive shall
immediately become vested in a pro rata portion of such unvested
stock in accordance with the terms of the applicable stock grant
agreements.
f. Option to Elect Life Insurance Coverage. In lieu
of the compensation and benefits to be paid upon the Executive's
death as described in paragraph 9(a), the Executive may elect to
have the Company purchase insurance upon his life in such amounts
and on such terms as the Company and the Executive shall agree in
writing. Such life insurance may be elected by the Executive in
lieu of the entire compensation and benefits package described in
paragraph 9(a), or it may be elected in lieu of any one or more
elements (salary, bonus, stock options or restricted stock) of
that compensation and benefits package. After its purchase of
such life insurance, upon the Executive's termination pursuant to
paragraph 7(a)[Death] the Company shall have no further
obligation to provide to the Executive (or his designees, heirs
or estate) the compensation and/or benefits described in
paragraph 9(a) which the Executive and the Company have agreed to
replace with such life insurance. The Executive shall have the
sole and exclusive right to designate the beneficiary or
beneficiaries of any life insurance purchased pursuant to this
paragraph.
10. Exercise of Stock Options Following Termination. If
the Executive's employment terminates pursuant to paragraph
7(a)[Death] or (b)[Disability], he (or his estate) may exercise
his right to purchase any vested stock under the stock options
granted to him by the Company for up to one year following the
date of his termination, but not later than the termination date
of such options. In all other instances, he may exercise that
right for up to three months following the date of his
termination, but not later than the termination date of such
options. All such purchases must be made by the Executive in
accordance with the applicable stock option plans and agreements
between the parties.
11. Successors; Binding Agreement. This Agreement and
all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts would still be payable to him hereunder all
such amounts shall be paid in accordance with the terms of this
Agreement to the Executive's written designee, or if there be no
such designee, to the Executive's estate.
12. Insurance and Indemnity. The Company shall, to the
extent permitted by law, include the Executive during the term of
this Agreement under any directors and officers liability
insurance policy maintained for its directors and officers, with
coverage at least as favorable to the Executive in amount and
each other material respect as the coverage of other directors
and officers covered thereby. This obligation to provide
insurance and indemnify the Executive shall survive expiration or
termination of this Agreement with respect to proceedings
begin page 9
or threatened proceedings based on acts or omissions of the
Executive occurring during the Executive's employment with the
Company or with any affiliated company. Such obligations shall
be binding upon the Company's successors and assigns and shall
inure to the benefit of the Executive's heirs and personal
representatives.
13. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been
duly given when delivered or (unless otherwise specified) mailed
by United States registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Melvin A. Wilmore
c/o Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-3433
If to the Company: Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-0728
Attention: Corporate Secretary
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
14. Modification or Waiver; Entire Agreement. No provision
of this Agreement may be modified or waived except in a document
signed by the Executive and the chairman of the Compensation
Committee of the Board or such other person as may be designated
by the Board. This Agreement, along with any stock option or
restricted stock agreements between the parties, constitute the
entire agreement between the parties regarding their employment
relationship, and any other agreements, including the Initial
Contract, are terminated and of no further force or legal effect.
To the extent that this Agreement is in any way inconsistent with
any prior restricted stock or stock option agreements between the
parties, this Agreement shall control. No agreements or
representations, oral or otherwise, with respect to the subject
matter hereof have been made by either party which are not set
forth expressly in this Agreement.
15. Governing Law; Severability. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of California. The
invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other
provision of this Agreement.
16. Mitigation. In the event the Executive's employment
with the Company terminates for any reason other than death, the
Executive shall be obligated to seek other employment following
such termination in order to mitigate payments that the Company
may
begin page 10
be required to make to him or for his benefit hereunder. Such
obligation shall not apply during any period in which the
Executive is disabled. If the Executive obtains other employment
during any period in which he is entitled to receive continued
salary or bonus payments under paragraph 9, any salary or bonus
payments earned by the Executive during such period shall reduce
the Company's obligation to pay continued salary and/or bonus
payments under paragraph 9 by the amount of the salary and/or
bonus payments so earned by the Executive.
17. Withholding. All payments required to be made by the
Company hereunder to the Executive or his estate or beneficiaries
shall be subject to the withholding of such amounts as the
Company may reasonably determine it should withhold pursuant to
any applicable law. To the extent permitted, the Executive may
provide all or any part of any necessary withholding by
contributing Company stock with value, determined on the date
such withholding is due, equal to the number of shares
contributed multiplied by the closing NASDAQ price on the date
preceding the date the withholding is determined.
18. Arbitration. In the event of any dispute or claim
relating to or arising out of the parties' employment
relationship or this Agreement (including, but not limited to,
any claims of breach of contract, wrongful termination or age,
race, sex, disability or other discrimination), all such disputes
shall be fully, finally and exclusively resolved by binding
arbitration conducted by the American Arbitration Association in
Alameda County, California; provided, however, that this
arbitration provision shall not apply to any disputes or claims
relating to or arising out of the misuse or misappropriation of
the Company's trade secrets or proprietary information.
19. Attorneys' Fees. Each party shall bear its own
attorneys' fees and costs incurred in any action or dispute
arising out of this Agreement.
20. Miscellaneous. No right or interest to, or in, any
payments shall be assignable by the Executive; provided, however,
that this provision shall not preclude Executive from designating
in writing one or more beneficiaries to receive any amount that
may be payable after Executive's death and shall not preclude the
legal representative of Executive's estate from assigning any
right hereunder to the person or persons entitled thereto. This
Agreement shall be binding upon and shall inure to the benefit of
the Executive, his heirs and legal representatives and the
Company and its successors.
IN WITNESS WHEREOF, the parties have executed this
Employment Agreement effective as of the date and year first
above written.
ROSS STORES, INC.
By: /s/ Donald G. Fisher /s/ M. Wilmore
Title: Chairman, Compensation Committee EXECUTIVE
EXHIBIT 11
ROSS STORES, INC.
________________________________________
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
Three Months Ended
April 30, 1994 May 1, 1993
__________________ _________________
Fully Fully
Primary Diluted Primary Diluted
Net earnings $4,408 $4,408 $3,594 $3,594
Weighted average shares outstanding:
Common shares 24,739 24,739 25,528 25,586
Common equivalent shares:
Stock options 257 311 668 668
Weighted average common and common
equivalent shares outstanding 24,996 25,050 26,196 26,254
Earnings per common and common
equivalent share $.18 $.18 $.14 $.14
_______________________________________________________________________
EXHIBIT 15
June 8, 1994
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
unaudited condensed consolidated interim financial statements of
Ross Stores, Inc. for the three-month periods ended April 30,
1994 and May 1, 1993, as indicated in our independent
accountant's review reports dated May 20, 1994 and May 21, 1993,
because we did not perform an audit, we expressed no opinion on
that information.
We are aware that our reports referred to above, which were
included in your Quarterly Reports on Form 10-Q for the quarters
ended April 30, 1994 and May 1, 1993, are incorporated by
reference in Registration Statements nos. 33-51916, 33-51896, 33-
51898, 33-41415, 33-41413, and 33-29600 of Ross Stores, Inc. on
Form S-8.
We are also aware that the aforementioned reports, pursuant to
Rule 436(c) under the Securities Act, are 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.
Deloitte & Touche
San Francisco, CA