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 28, 1995
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
incorporation or organization) No.)
8333 Central Avenue, Newark, California 94560-3433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including (510) 505-4400
area code
Former name, former address and former N/A
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
November 25, 1995 was 24,354,817.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000) October 28, January 28, October 29,
ASSETS 1995 1995 1994
(Unaudited) (Note A) (Unaudited)
Current Assets
Cash $23,599 $23,581 $17,384
Accounts receivable 9,197 5,360 23,755
Merchandise inventory 344,004 275,183 327,264
Prepaid expenses and other 11,750 12,157 12,870
________________________________________
Total Current Assets 388,550 316,281 381,273
Property And Equipment
Land and buildings 24,102 23,723 23,726
Fixtures and equipment 149,923 145,427 134,980
Leasehold improvements 116,956 111,615 103,685
Construction-in-progress 13,654 12,490 9,080
________________________________________
304,635 293,255 271,471
Less accumulated depreciation and amortization 133,581 122,004 115,507
________________________________________
171,054 171,251 155,964
Intangible and other assets 17,558 18,709 20,581
________________________________________
$577,162 $506,241 $557,818
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $172,809 $109,589 $129,153
Accrued expenses and other 47,097 48,472 39,175
Accrued payroll and benefits 25,364 21,705 19,168
Income taxes payable 2,007 4,739 6,102
________________________________________
Total Current Liabilities 247,277 184,505 193,598
Long-term debt 37,874 46,069 102,230
Deferred income taxes and other liabilities 21,465 21,116 20,196
Stockholders' Equity
Capital stock 244 244 243
Additional paid-in capital 127,567 125,451 122,490
Retained earnings 142,735 128,856 119,061
_________________________________________
270,546 254,551 241,794
_________________________________________
$577,162 $506,241 $557,818
See notes to condensed consolidated financial statements.
3
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended
________________________ __________________________
($000 except per share data, October 28, October 29, October 28, October 29,
unaudited) 1995 1994 1995 1994
Sales $330,682 $294,960 $979,319 $871,464
Costs and Expenses
Cost of goods sold and occupancy 237,555 214,910 710,403 632,448
General, selling and administrative 72,634 64,626 209,329 188,695
Depreciation and amortization 6,834 6,127 20,277 17,418
Interest 473 1,234 2,452 2,748
Insurance proceeds 0 (10,412) 0 (10,412)
_____________________ ______________________
317,496 276,485 942,461 830,897
Earnings before taxes 13,186 18,475 36,858 40,567
Provision for taxes on earnings 5,277 7,390 14,745 16,227
_____________________ ______________________
Net earnings $7,909 $11,085 $22,113 $24,340
Net earnings per share:
Primary $.32 $.45 $.89 $.98
Fully diluted $.32 $.45 $.89 $.98
Weighted average shares outstanding:
Primary 24,863 24,570 24,734 24,776
Fully diluted 24,870 24,570 24,851 24,799
Stores open at end of period 293 276
See notes to condensed consolidated financial statements.
4
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
________________________
($000, unaudited) October 28, October 29,
1995 1994
Cash Flows From Operating Activities
Net earnings $22,113 $24,340
Adjustments to reconcile net earnings to net cash used in
operating activities:
Depreciation and amortization of property and equipment 20,277 17,418
Other amortization 3,799 3,725
Change in current assets and current liabilities:
(Increase) in merchandise inventory (68,821) (98,335)
(Increase) in other current assets - net (3,431) (17,388)
Increase in accounts payable 64,691 40,821
Increase in other current liabilities - net 6,548 5,259
Other 3,624 (7,449)
_____________________
Net cash provided by (used in) operating activities 48,800 (31,609)
Cash Flows From Investing Activities
Additions to property and equipment (29,871) (36,943)
________________________
Net cash used in investing activities (29,871) (36,943)
Cash Flows From Financing Activities
Borrowing under line of credit agreement 5,000 42,100
Proceeds (repayment) of long-term debt (13,241) 26,778
Issuance of common stock related to stock plan 1,812 1,290
Repurchase of common stock (8,054) (12,855)
Dividends paid (4,428) (3,684)
_______________________
Net cash provided by (used in) financing activities (18,911) 53,629
______________________
Net Increase (Decrease) In Cash 18 (14,923)
Cash
Beginning of year 23,581 32,307
_____________________
End of quarter $23,599 $17,384
See notes to condensed consolidated financial statements.
5
ROSS STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Nine Months Ended October 28, 1995 and October 29, 1994
(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 28, 1995 and October 29, 1994; the interim results of operations
for the three and nine months ended October 28, 1995 and October 29, 1994;
and cash flows for the nine months then ended. The balance sheet at
January 28, 1995, 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
28, 1995. 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 28, 1995.
The results of operations for the three and nine month periods herein
presented are not necessarily indicative of the results to be expected for
the full year.
The condensed consolidated financial statements at October 28, 1995 and
October 29, 1994, and for the three and nine 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:
Nine Months Ended
______________________________________
($000, unaudited) October 28, 1995 October 29, 1994
Interest $2,822 $2,715
Income Taxes $17,476 $16,528
NOTE C - BUSINESS INTERRUPTION INSURANCE PROCEEDS
During the third quarter of fiscal 1994, the company recorded $10.4 million
in pre-tax income from the settlement agreement with its insurance carrier
for claims related to the impact on business during the first half of 1994
that resulted from the roof collapse of its distribution center in
Carlisle, Pennsylvania. These insurance proceeds were received in November
1994.
6
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders of Ross Stores, Inc.
Newark, California
We reviewed the accompanying condensed consolidated balance sheets of Ross
Stores, Inc. (the "Company") as of October 28, 1995 and October 29, 1994,
and the related condensed consolidated statements of earnings for the three-
month and nine-month periods then ended and 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 objective 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 28, 1995, 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 13, 1995, 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 28, 1995 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which
it has been derived.
Deloitte & Touche LLP
San Francisco, CA
November 17, 1995
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
PERCENTAGE OF SALES
Three Months Ended Nine Months Ended
______________________ _______________________
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
SALES
Sales ($000) $330,682 $294,960 $979,319 $871,464
Sales growth 12.1% 12.5% 12.4% 12.1%
Comparable store sales growth 4% 1% 2% 3%
COSTS AND EXPENSES
Cost of goods sold and occupancy 71.8% 72.9% 72.5% 72.6%
General, selling and administrative 22.0% 21.9% 21.4% 21.7%
Depreciation and amortization 2.1% 2.1% 2.1% 2.0%
Interest 0.1% 0.4% 0.3% 0.3%
Insurance proceeds 0% (3.5%) 0% (1.2%)
NET EARNINGS 2.4% 3.8% 2.3% 2.8%
Sales
The results of operations for the three and nine months ended October 28,
1995, over the same periods 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 in comparable store sales.
Costs and Expenses
The declines from the prior year in the cost of goods sold and occupancy
percentage for the three and nine month periods were primarily due to (i)
an increase in the initial mark-up from purchasing more opportunistically
and (ii) lower markdowns as a percentage of sales which when combined more
than offset an increase in freight costs.
General, selling and administrative expenses as a percentage of sales
increased incrementally from the prior year during the three months ended
October 28, 1995. Higher variable incentive accruals during the quarter
offset the favorable year-to-date leverage in advertising and store
expenses which contributed to a decline in this ratio for the nine months
ended October 28, 1995.
Net earnings for the three months ended October 28, 1995, totaled $7.9
million, or $.32 per share, compared to net earnings of $4.8 million, or
$.20 per share, for the three months ended October 29, 1994, which excludes
the prior year's one-time, after-tax, insurance proceeds of approximately
$6.2 million or $.25 per share.
During the third quarter of 1994, the company entered into a settlement
agreement with its insurance carrier for claims related to the impact on
business during the first half of 1994 that
8
resulted from the roof collapse of its distribution center in Carlisle,
Pennsylvania in March 1994. The insurance proceeds from this settlement
were included in accounts receivable at the end of the 1994 third quarter
and were received in November 1994.
Taxes on Earnings
The company's effective tax rate for the second quarter of 1995 and 1994
was 40%. The rate for both periods reflects the applicable statutory tax
rates.
LIQUIDITY AND CAPITAL RESOURCES
The primary uses of cash during the first nine months of fiscal 1995 were
for (i) an increase in inventory partially offset by a corresponding
increase in accounts payable, (ii) capital expenditures for new stores and
improvements to existing locations, (iii) reduction in long-term debt and
(iv) repurchase of the company's common stock. Total inventories were up
5% at the end of the third quarter from last year driven primarily by an
increase in the number of open stores over the prior year. The accounts
payable increase was primarily a timing issue due to receipts of
merchandise inventories later in the period than in the prior year,
resulting in a fresher inventory mix at the end of the quarter. Lower
borrowings and lower interest rates resulted in a decline in interest
expense.
On May 8, 1995, the company announced a continuation of its prior stock
repurchase program by authorizing the buyback of an additional one million
shares of its common stock. It is the company's intention to repurchase
the shares over time through open market purchases and/or through other
transactions.
The company believes it can fund its capital needs for the remainder of the
fiscal year and the next twelve months and the current stock repurchase
program through internally generated cash, trade credit, established bank
lines and lease financing.
9
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 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.
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 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 ("Revolving Credit Agreement"),
incorporated by reference to Exhibit 10.17 on the Form 10-Q
filed by Ross Stores for its quarter ended July 31, 1993.
10.3 First Amendment to Revolving Credit Agreement, effective on
July 31, 1994 by and among Ross Stores, Banks and Wells Fargo,
National Association, as agent for Banks, incorporated by
reference to Exhibit 10.5 to the Form 10-Q filed by Ross Stores
for its quarter ended July 30, 1994.
10.4 Second Amendment to Revolving Credit Agreement, effective on
June 15, 1995 by and among Ross Stores, Banks and Wells Fargo,
National Association, as agent for Banks, incorporated by
reference to Exhibit 10.4 to the Form 10-Q filed by Ross Stores
for its quarter ended July 29,1995.
10.5 Credit Agreement, dated as of June 22, 1994, among Ross Stores,
Bank of America National Trust and Savings Association as
Agent, the Industrial Bank of Japan as Co-Agent and the other
financial institutions party thereto ("Credit Agreement"),
incorporated by reference to Exhibit 10.6 to the Form 10-Q
filed by Ross Stores for its quarter ended July 30, 1994.
10.6 First Amendment to Credit Agreement, dated as of June 20, 1995,
among Ross Stores, Bank of America National Trust and Savings
Association as Agent, the Industrial Bank of Japan as Co-Agent
and the several financial institutions party to the Credit
Agreement, incorporated by reference to Exhibit 10.6 to the
Form 10-Q filed by Ross Stores for its quarter ended July 29,
1995.
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
(EXHIBITS 10.7 - 10.25)
10.7 Amended and Restated 1992 Stock Option Plan, incorporated by
reference to the appendix to the Proxy Statement filed by Ross
Stores on April 24, 1995 for its Annual Stockholders Meeting
held May 25, 1995.
10.8 Third Amended and Restated Ross Stores Employee Stock Purchase
Plan, incorporated by reference to the appendix to the Proxy
Statement filed by Ross Stores on April 24, 1995 for its
Annual Stockholders Meeting held May 25, 1995.
10.9 Third Amended and Restated Ross Stores 1988 Restricted Stock
Plan, incorporated by reference to the appendix to the Proxy
Statement filed by Ross Stores on April 24, 1995 for its
Annual Stockholders Meeting held May 25, 1995.
10.10 1991 Outside Directors Stock Option Plan, incorporated by
reference to Exhibit 10.13 to the 1991 Form 10-K filed by Ross
Stores for its year ended February 1, 1992.
10.11 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").
10.12 Third Amended and Restated Ross Stores Executive Supplemental
Retirement Plan, incorporated by reference to Exhibit 10.14 to
the 1993 Form 10-K.
10.13 Ross Stores Non-Qualified Deferred Compensation Plan,
incorporated by reference to Exhibit 10.15 to the 1993 Form 10-K.
10.14 Ross Stores Incentive Compensation Plan, incorporated by
reference to Exhibit 10.16 to the 1993 Form 10-K.
10.15 Employment Agreement by and between Ross Stores and Norman A.
Ferber, effective as of June 8, 1994, incorporated by reference
to Exhibit 10.15 to the Form 10-Q filed by Ross Stores for its
quarter ended July 30, 1994.
10.16 Amendment to Employment and Stock Grant Agreements by and
between Ross Stores and Norman A. Ferber, effective as of March
16, 1995.
10.17 Amended and Restated Employment Agreement by and between Ross
Stores and Norman A. Ferber, effective as of June 1, 1995.
10.18 Agreement between Ross Stores and Norman A. Ferber, dated
August 22, 1995.
10.19 Employment Agreement by and between Ross Stores and Melvin A.
Wilmore, effective as of March 15, 1994, incorporated by
reference to Exhibit 10.20 to the Form 10-Q filed by Ross
Stores for its quarter ended April 30, 1994.
10.20 Amendment to Employment and Stock Grant Agreements by and
between Ross Stores and Melvin A. Wilmore, effective as of
March 16, 1995.
10.21 Second Amendment to Employment Agreement by and between Ross
Stores and Melvin A. Wilmore, effective as of June 1, 1995.
10.22 Agreement between Ross Stores and Melvin A. Wilmore, dated
August 22, 1995.
10.23 Employment Agreement by and between Ross Stores and Michael
Balmuth, effective as of February 1, 1995, incorporated by
reference to Exhibit 10.15 to the Form 10-Q filed by Ross
Stores for its quarter ended April 29, 1995.
10.24 Amendment to Employment Agreement by and between Ross Stores
and Michael Balmuth, effective as of June 1, 1995.
11
10.25 Consulting Agreement between Ross Stores and Stuart G. Moldaw,
effective as of March 16, 1995, incorporated by reference to
Exhibit 10.16 to the Form 10-Q filed by Ross Stores for its
quarter ended April 29, 1995.
11 Statement re: Computation of Per Share Earnings.
15 Letter re: Unaudited Interim Financial Information.
27 Financial Data Schedule (submitted for SEC use only).
(b) Reports on Form 8-K
None.
12
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 8, 1995 /s/John Vuko
John M. Vuko, Senior Vice President, Controller
and Principal Accounting Officer
13
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 25, 1994, incorporated by
reference to Exhibit 3.2 to the Form 10-Q filed by Ross
Stores for its quarter ended October 29, 1994.
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 Revolving Credit Agreement, dated July 31, 1993, among Ross
Stores, Wells Fargo Bank, National Association, Bank of
America, National Trust and Savings Association, and Security
Pacific National Bank ("Banks"); and Wells Fargo Bank,
National Association, as agent for Banks ("Revolving Credit
Agreement"), incorporated by reference to Exhibit 10.17 on
the Form 10-Q filed by Ross Stores for its quarter ended July
31, 1993.
10.3 First Amendment to Revolving Credit Agreement, effective on
July 31, 1994, by and among Ross Stores, Banks and Wells
Fargo Bank, National Association, as agent for Banks,
incorporated by reference to Exhibit 10.5 to the Form 10-Q
filed by Ross Stores for its quarter ended July 30, 1994.
10.4 Second Amendment to Revolving Credit Agreement, effective on
June 15, 1995 by and among Ross Stores, Banks and Wells
Fargo, National Association, as agent for Banks, incorporated
by reference to Exhibit 10.4 to the Form 10-Q filed by Ross
Stores for its quarter ended July 29, 1995.
10.5 Credit Agreement, dated as of June 22, 1994, among Ross
Stores, Bank of America National Trust and Savings
Association as Agent, the Industrial Bank of Japan as Co-
Agent and the other financial institutions party thereto
("Credit Agreement"), incorporated by reference to Exhibit
10.6 to the Form 10-Q filed by Ross Stores for its quarter
ended July 30, 1994.
10.6 First Amendment to Credit Agreement, dated as of June 20,
1995, among Ross Stores, Bank of America National Trust and
Savings Association as Agent, the Industrial Bank of Japan as
Co-Agent and the several financial institutions party to the
Credit Agreement, incorporated by reference to Exhibit 10.6
to the Form 10-Q filed by Ross Stores for its quarter ended
July 29, 1995.
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
(EXHIBITS 10.7 - 10.25)
10.7 Amended and Restated 1992 Stock Option Plan, incorporated by
reference to the appendix to the Proxy Statement filed by
Ross Stores on April 24, 1995 for its Annual Stockholders
Meeting held May 25, 1995.
14
Exhibit
Number Exhibit
_______ _______
10.8 Third Amended and Restated Ross Stores Employee Stock
Purchase Plan, incorporated by reference to the appendix to
the Proxy Statement filed by Ross Stores on April 24, 1995
for its Annual Stockholders Meeting held May 25, 1995.
10.9 Third Amended and Restated Ross Stores 1988 Restricted Stock
Plan, incorporated by reference to the appendix to the Proxy
Statement filed by Ross Stores on April 24, 1995 for its
Annual Stockholders Meeting held May 25, 1995.
10.10 1991 Outside Directors Stock Option Plan, incorporated by
reference to Exhibit 10.13 to the 1991 Form 10-K filed by
Ross Stores for its year ended February 1, 1992.
10.11 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").
10.12 Third Amended and Restated Ross Stores Executive Supplemental
Retirement Plan, incorporated by reference to Exhibit 10.14
to the 1993 Form 10-K.
10.13 Ross Stores Non-Qualified Deferred Compensation Plan,
incorporated by reference to Exhibit 10.15 to the 1993 Form
10-K.
10.14 Ross Stores Incentive Compensation Plan, incorporated by
reference to Exhibit 10.16 to the 1993 Form 10-K.
10.15 Employment Agreement by and between Ross Stores and Norman A.
Ferber, effective as of June 8, 1994, incorporated by
reference to Exhibit 10.15 to the Form 10-Q filed by Ross
Stores for its quarter ended July 30, 1994.
10.16 Amendment to Employment and Stock Grant Agreements by and
between Ross Stores and Norman A. Ferber, effective as of
March 16, 1995.
10.17 Amended and Restated Employment Agreement by and between Ross
Stores and Norman A. Ferber, effective as of June 1, 1995.
10.18 Agreement between Ross Stores and Norman A. Ferber, dated
August 22, 1995.
10.19 Employment Agreement by and between Ross Stores and Melvin A.
Wilmore, effective as of March 15, 1994, incorporated by
reference to Exhibit 10.20 to the Form 10-Q filed by Ross
Stores for its quarter ended April 30, 1994.
10.20 Amendment to Employment and Stock Grant Agreements by and
between Ross Stores and Melvin A. Wilmore, effective as of
March 16, 1995.
10.21 Second Amendment to Employment Agreement by and between Ross
Stores and Melvin A. Wilmore, effective as of June 1, 1995.
10.22 Agreement between Ross Stores and Melvin A. Wilmore, dated
August 22, 1995.
15
10.23 Employment Agreement by and between Ross Stores and Michael
Balmuth, effective as of February 1, 1995, incorporated by
reference to Exhibit 10.15 to the Form 10-Q filed by Ross
Stores for its quarter ended April 29, 1995.
10.24 Amendment to Employment Agreement by and between Ross Stores
and Michael Balmuth, effective as of June 1, 1995.
10.25 Consulting Agreement between Ross Stores and Stuart G.
Moldaw, effective as of March 16, 1995, incorporated by
reference to Exhibit 10.16 to the Form 10-Q filed by Ross
Stores for its quarter ended April 29, 1995.
11 Statement re: Computation of Per Share Earnings.
15 Letter re: Unaudited Interim Financial Information.
27 Financial Data Schedule (submitted for SEC use only).
EXHIBIT 10.16
AMENDMENT TO EMPLOYMENT AND STOCK GRANT AGREEMENTS
THIS AMENDMENT TO EMPLOYMENT AND STOCK GRANT AGREEMENTS (the
"Amendment") is made effective as of March 16, 1995, by and between Ross
Stores, Inc. (the "Company") and Norman A. Ferber (the "Executive"). The
Executive and the Company previously entered into an Employment Agreement of
June 8, 1994 (the "Agreement") and the Ross Stores, Inc. Stock Grant
Agreement dated March 15, 1994 (the "Grant"), and it is now the intention of
the Executive and the Company to amend the Agreement and the Grant as set
forth below. Accordingly, the Executive and the Company now enter into this
Amendment.
I. The Executive and the Company hereby amend the Agreement as
follows:
A. Salary. The Executive's salary, referenced in paragraph 4(a)
of the Agreement, shall be not less than $522,000 per annum.
B. Termination by Death. Paragraph 7(a) of the Agreement is
amended to read in its entirety as follows: "Death. The Executive's
employment shall terminate upon his death".
C. Compensation and Benefits Upon Death.
(1) In the event of the Executive's death, he (or his
designee or his estate) shall not be entitled to receive any of the
compensation or benefits set forth in paragraph 9(a) of the Agreement, which
paragraph is amended to read in its entirety as follows:
Disability, Without Cause or For Good Reason. If the
Executive's employment terminates pursuant to paragraph 7(b) [Disability],
(d) [Without Cause] or (e) [For Good Reason], the Company shall:
(i) Salary: continue to pay the Executive his then-
current salary through the remaining term of this Agreement as defined in
paragraph 1;
(ii) Bonus: continue to pay the Executive 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;
2
(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 paragraphs 9(f) and 12.
(2) Paragraph 9(d) of the Agreement is amended to read in its
entirety as follows:
Death or Voluntary Termination. If the Executive's employment
terminates pursuant to paragraph 7(a)[Death] or 7(g) [Voluntary
Termination], he (or his designee or his estate) shall be paid his salary
through his termination date and not thereafter. He (or his designee or his
estate) shall not be entitled to any bonus payments that were not fully
earned prior to his termination date, and he (or his designee or his estate)
shall not be entitled to any pro-rated bonus payment for the year in which
his employment terminates. Any stock options granted to the Executive by the
Company will continue to vest only through the date on which his employment
terminates [provided, however, that if the Executive's employment terminates
as a result of his voluntary termination (but not as a result of his death)
within six months after 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 that is unvested as of the date on which his employment
terminates will automatically be reacquired by the Company and the Executive
(or his designee or his estate) 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 the termination of his employment pursuant to
paragraph 7(a) [Death] or 7(g) [Voluntary Termination].
D. Life Insurance Option. Paragraph 9(g) ("Option to Elect Life
Insurance Coverage") is deleted in its entirety from the Agreement and shall
be of no further legal force or effect.
E. No Other Modifications. Except as modified by this Amendment,
the Agreement shall remain in full force and effect.
II. The Executive and the Company hereby amend the Grant as follows:
A. No Vesting Upon Death. The phrase "1[Death]," is hereby
deleted from the third line of paragraph 3(a)(vi) of the Grant.
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B. Company Reacquisition Upon Death. The phrase "1[Death]," is
hereby added following the word "item" in the second line of paragraph 3(b)
of the Grant.
C. No Other Modification. Except as modified by this Amendment,
the Grant shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Employment and Stock Grant Agreements effective as of the date and year first
above written.
ROSS STORES, INC. EXECUTIVE
By: /s/G. Orban /s/Norman A. Ferber
George P. Orban Norman A. Ferber
Chairman, Compensation Committee
EXHIBIT 10.17
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made effective as
of June 1, 1995, by and between Ross Stores, Inc. (the "Company") and
Norman A. Ferber (the "Executive"). The Executive is presently employed
by the Company as its Chairman of the Board and Chief Executive Officer
pursuant to an employment contract of June 8, 1994, as amended on March
16, 1995 (the "Prior Contract"), and it is now the intention of the
Company and the Executive to enter into a new employment agreement and
to terminate the Prior Contract. Accordingly, the Company and the
Executive hereby terminate the Prior Contract and enter into this
Agreement.
1. Term. Subject to paragraph 3, the employment of the Executive
by the Company will continue as of the date hereof and end on
February 3, 1997, unless extended or terminated in accordance with this
Agreement. During August 1996, and during August every year thereafter
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 one additional year.
2. Position and Duties. Subject to paragraph 3, the Executive
shall continue to serve as the Chairman of the Board and Chief Executive
Officer of the Company with overall responsibility for the Company's
corporate policy-making and the accomplishment of its plans and
objectives until February 3, 1997, all on a mutually-agreeable work
schedule (which after January 31, 1995, has been reduced from the
Executive's prior level of time commitment). The Executive shall
report directly to the Company's Board and shall himself be a member of
such Board. The Executive shall devote substantially all of his working
time and efforts to the business and affairs of the Company while acting
as Chief Executive Officer. During the term of his employment, the
Executive may engage in outside activities provided those activities do
not detract from 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 any business competitive with any
existing business of the Company.
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3. Consulting Relationship. During the period (a) commencing on
the earlier of (i) February 4, 1997 or (ii) the effective date that the
Executive terminates his employment with the Company pursuant to
subsection 8e.(iii) and (b) ending on January 31, 1998 (the "Consultancy
Termination Date"), the Executive shall cease to be employed by and
shall be retained as a consultant to the Company and shall be available
to spend an average of between two and three days a week (at times
reasonably convenient to the Executive and the Company) performing such
consulting services as shall be reasonably requested by the Chief
Executive Officer of the Company. The foregoing notwithstanding, if the
Executive's employment with the Company is extended one additional year
pursuant to paragraph 1, then the Executive's retention as a consultant
shall commence on the expiration of his extended employment and the
Consultancy Termination Date shall be twelve months after such
retention.
4. Place of Performance. The Executive shall be employed or
retained as a consultant at the principal executive or operational
offices of the Company (or, at the option of the Company while the
Executive is retained as a consultant, at separate offices maintained at
the expense of the Company) in the San Francisco Bay Area. The
Executive's travel schedule will be substantially consistent with the
Executive's present business travel obligations during his employment
and will be limited to four business trips during his consultancy.
Nothing herein shall preclude the Executive from rendering consulting
services from his home office.
5. Compensation, Consulting Fees and Related Matters.
a. Salary and Consulting Fees.
(i) During his employment, the Company shall pay the
Executive a salary of not less than $542,000 per annum; provided,
however, for the fiscal year beginning February 4, 1996, the Executive
shall be paid a salary of not less than $750,000 per annum.
(ii) Upon the commencement of his consultancy with the
Company and until the Consultancy Termination Date, the Executive shall
be paid a consulting fee of $62,500 per month; provided however, if the
consultancy commences prior to February 4, 1996, then the consulting fee
shall be $45,167 per month until such date. At the election of the
Executive, such consulting services may be performed by a corporation
wholly owned and controlled by the Executive (a "Controlled
Corporation"), in which event all consulting fees shall be payable to
the Controlled Corporation. The foregoing notwithstanding, the
consulting fees payable to the Executive or a Controlled Corporation
shall be increased to provide that the Executive receives the same net
after tax amounts he received as an employee of the Company. In other
words, the consulting fees payable to the Executive or a Controlled
Corporation shall be adjusted to take into account additional employment
or other tax liability, if any, that the Executive or Controlled
Corporation may incur as a result of being a consultant to, rather than
an employee of, the Company.
(iii) The Executive's salary shall be payable in
equal installments in accordance with the Company's normal payroll
practices applicable to senior officers. Consulting fees
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shall be payable to the Executive as mutually agreed upon between the
Executive and the Company upon the Executive's submission of appropriate
invoices.
b. Bonus. During his employment or consultancy, 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 or new plan of substantially
equivalent or greater value that may subsequently be established and in
effect at the time for such action). The preceding sentence
notwithstanding, each such bonus shall be in an amount equal to the
greater of (A) the bonus attributable to 1995 or (B) the bonus
attributable to the year prior to the termination of the Executive's
employment or consultancy or (C) 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 or as a consultant to the Company;
provided, however, that such post-termination bonuses shall not be paid
until due under the Company's present bonus plan.
c. Expenses. During his employment or consultancy, 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.
(i) Except as hereafter noted, during his employment and
consultancy, 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 and consulting fee or bonus
payable under subsections (a) and (b).
(ii) If, as a result of the Company's retention of the
Executive as a consultant, the Executive shall be ineligible to
participate in any of the Company's employee benefit plans and
arrangements in effect on the date hereof in which the Executive now
participates, then the
4
consulting fees payable to the Executive pursuant to paragraph 5(a)
shall be appropriately increased to enable the Executive to procure (to
the extent available) such benefits at no additional after tax cost to
the Executive.
(iii) The foregoing notwithstanding, during the
period of his consultancy the Executive shall not participate in any new
awards under the Company's stock option, stock purchase and restricted
stock plans.
(iv) Upon the termination of the Executive's employment
with the Company (other than for death), during the remainder of his
life, the Executive and all members of his immediate family shall be
entitled to employee discount cards
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 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. It is agreed between the parties that the
Executive intends to spend up to ten weeks on vacation during the summer
of 1997 but shall nevertheless be available to provide an average of
between two and three days of consultancy to the Company (less normal
vacation time) during the consultancy period.
f. Services Furnished. As contemplated in paragraph 4,
during his employment or consultancy, the Company shall furnish the
Executive, at the Company's expense, with office space (comparable to
his current office) and such services as are suitable to the Executive's
position and adequate for the performance of his duties, including the
services of his present secretary to the extent that she is able and
willing to provide such services.
6. Offices. For so long as the Executive holds the office of
Chief Executive Officer of the Company and, at the option of the
Executive while a consultant to the Company, 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.
7. Confidential Information.
a. The Executive agrees not to disclose, either while in the
Company's employ or retained as a consultant 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 or acting as a consultant to the Company, including,
without limitation, any of the Company's inventions, processes, methods
of distribution or customers or trade secrets; provided, however, that
5
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 or consultancy 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.
8. Termination. The Executive's employment or consultancy may be
terminated during the term of this Agreement only as follows:
a. Death. The Executive's employment or consultancy shall
terminate upon his death.
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 or
consultancy shall terminate. A termination of employment or consultancy
pursuant to this paragraph 8(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 or consultancy for Cause. The Company shall have "Cause" to
terminate the Executive's employment or consultancy 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 or consultancy at any time without cause. A termination
"without cause" is a termination of the Executive's employment or
consultancy 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 [subparagraph (iii) only] or
consultancy with the Company for Good Reason which shall be deemed to
occur if he terminates his employment or consultancy 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, (ii) a significant diminishment
in the nature or scope of the
6
authority, power, function or duty attached to the position which the
Executive currently maintains or maintains as a consultant without the
express written consent of the Executive or (iii) upon the election by
the Board of Directors of the Company of the Executive's successor as
Chief Executive Officer of the Company.
f. Termination Following Change of Control. The Executive
may terminate his employment or consultancy 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 transaction(s) 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 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 or consultancy 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 or consultancy with the Company at any time. A
termination of employment or consultancy by the Executive pursuant to
paragraph 8(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, the Executive's employment
with the Company shall terminate on February 3, 1997, or on such earlier
date as is contemplated in paragraph 3 and this Agreement shall
automatically expire on the Consultancy Termination Date. If the
Executive's employment is extended in accordance with paragraph 1, then
the expiration of such employment and this Agreement shall be extended
appropriately. Any 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. The parties shall have no
further obligations to each other thereafter except as set forth in
paragraphs 7, 10(f) and 13.
9. Notice and Effective Date of Termination.
a. Notice. Any termination of the Executive's employment or
consultancy by the Company or by the Executive during the term of this
Agreement (other than as a result of death or as a result of the
expiration of this Agreement) shall be communicated by written notice of
termination to
7
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 or consultancy under
that provision.
b. Date of Termination. The date of termination shall be:
(i) if the Executive's employment or consultancy is
terminated by his death, the date of his death;
(ii) if the Executive's employment or consultancy is
terminated pursuant to paragraph 8(b)[Disability], the date of
termination shall be the 31st day following delivery of the notice of
termination;
(iii) if the Executive's employment or consultancy is
terminated for any other reason by either party, the date on which a
notice of termination is delivered to the other party; and
(iv) if the Agreement expires pursuant to paragraph
8(h)[Non-Renewal], the date of termination shall be the Consultancy
Termination Date.
10. Compensation and Benefits Upon Termination.
a. Disability, Without Cause or For Good Reason. If the
Executive's employment or consultancy terminates pursuant to paragraph
8(b)[Disability], (d)[Without Cause] or (e)[For Good Reason], the
Company shall:
(i) Salary: continue to pay the Executive his then-
current salary and/or consulting fee through the Consultancy Termination
Date;
(ii) Bonus: continue to pay the Executive an annual
bonus(es) through the Consultancy Termination Date; each such bonus
shall be in an amount equal to the greater of (A) the bonus
attributable to 1995 or (B) the bonus attributable to the year prior to
his termination or (C) 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 or as a consultant; provided, however, that
such post-termination 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 foregoing
notwithstanding, in the event that the
8
Executive's employment is terminated by the Executive pursuant to
subparagraph 8(e)(iii), then any restricted stock granted to the
Executive shall become fully vested as of the date of such termination.
The Company shall have no further obligations to the Executive as a
result of such termination except as set forth in paragraphs 10(f) and
13.
b. For Cause. If the Executive's employment or consultancy
is terminated for cause as defined in paragraph 8(c)(A)[Failure to
Perform], the Executive shall receive the post-termination compensation
and benefits described in paragraph 10(a)[Compensation and Benefits Upon
Disability, Termination Without Cause or For Good Reason]. If the
Executive's employment is terminated for cause as defined in paragraph
8(c)(B)[Materially Injurious Conduct], he shall only receive the post-
termination compensation and benefits described in paragraph
10(d)[Compensation and Benefits Upon Voluntary Termination].
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 or consultancy
terminates pursuant to paragraph 8(f)[Change of Control], the Company
shall:
(i) Salary/Consulting Fee: continue to pay the
Executive (or his designee or estate) his then-current salary and/or
consulting fee through the Consultancy Termination Date;
(ii) Bonus: continue to pay the Executive (or his
designee or estate) his annual bonus(es) through the Consultancy
Termination Date; each such bonus shall be in an amount equal to the
greater of (A) the bonus attributable to 1995 or (B) the bonus
attributable to the year prior to his termination or (C) 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 or as a
consultant; provided, however, that such post-termination 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 (a) 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 and (b) any
similar California state taxes paid by the Executive. 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, except as set forth in paragraphs 10(f) and 13.
9
d. Death or Voluntary Termination. If the Executive's
employment or consultancy terminates pursuant to paragraph 8(a)[Death]
or 8(g)[Voluntary Termination], he (or his designee or his estate) shall
be paid his salary or consulting fee through his termination date and
not thereafter. He (or his designee or his estate) shall not be
entitled to any bonus payments that were not fully earned prior to his
termination date, and he (or his designee or his estate) shall not be
entitled to any pro-rated bonus payment for the year in which his
employment or consultancy terminates. Any stock options granted to the
Executive by the Company will continue to vest only through the date on
which his employment terminates [provided, however, that if the
Executive's employment terminates as a result of his voluntary
termination (but not as a result of his death) within six months after 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 on which his employment
terminates will automatically be reacquired by the Company and the
Executive (or his designee or his estate) 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 the termination of
his employment or consultancy pursuant to paragraph 8(a)[Death] or
8(g)[Voluntary Termination], except as set forth in paragraphs 10(f) and
13.
e. Non-Renewal. If the Agreement expires as set forth in
paragraph 8(h)[Non-Renewal], the Company shall have no further
obligations to the Executive except as set forth in paragraphs 10(f) and
13.
f. Continued Benefits Upon Any Termination. In the event
that the parties' employment relationship terminates for any of the
reasons set forth in paragraph 8 (death, disability, for cause, without
cause, for good reason, change of control, voluntary termination or non-
renewal) the Company shall continue the Executive's (and/or his eligible
dependents) Health Care and Executive Health Care coverage under the
Company's benefit program at no cost to the Executive for a five year
period, and after such five year period, the Executive (and/or his
eligible dependents) will then be entitled to elect continued group
Health Care and Executive Health Care coverage at their own expense
until August 25, 2013, when the Executive will be eligible for Medicare
coverage. If for any reason the Executive (or his dependents) shall not
be eligible to participate in such group Health Care and Executive
Health Care coverage, the Company shall secure a policy providing
equivalent health care coverage for their benefit, and any cost payable
by the Executive (or his dependents) under this section shall not exceed
the cost that would have been payable by the Executive (or his
dependents) if eligible to participate.
11. Exercise of Stock Options Following Termination. If the
Executive's employment terminates pursuant to paragraph 8(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.
10
12. 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.
13. 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 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.
14. 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: Norman A. Ferber
c/o Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-3433
If to the Company: Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-3433
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.
15. 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. Provided, however,
that nothing in this
11
Agreement is intended to or shall modify in any way the Stock Grant
Agreement of March 16, 1992 between the parties, which shall remain in
full force and effect. 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.
16. 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.
17. No Mitigation. The Executive shall have no duty to seek other
employment or consulting clients in order to mitigate payments that the
Company may be required to make to him or for his benefit hereunder in
the event of the termination of his employment or consultancy.
Provided, however, that if the Executive obtains other employment or
other consulting clients during any period in which he is entitled to
receive continued salary, consulting fees or bonus payments under
paragraph 10, any salary, consulting fees or bonus payments earned by
the Executive during such period shall reduce the Company's obligation
to pay continued salary, consulting fees and/or bonus payments under
paragraph 10 by the amount of the salary, consulting fees and/or bonus
payments so earned by the Executive.
18. 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.
19. Arbitration. In the event of any dispute or claim relating
to or arising out of the parties' employment or consulting 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.
20. Attorneys' Fees. Each party shall bear its own attorneys'
fees and costs incurred in any action or dispute arising out of this
Agreement. The Company, however, shall pay the Executive's reasonable
attorney's fees incurred in the negotiation of this Agreement but not in
excess of $2,500.
21. 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
12
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 Amended and
Restated Employment Agreement effective as of the date and year first
above written.
ROSS STORES, INC.
By: /s/G. Orban /s/Norman A. Ferber
Title: Chairman, Compensation Committee EXECUTIVE
EXHIBIT 10.18
August 22, 1995
Norman A. Ferber
Chairman of the Board and Chief Executive Officer
Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-3433
Re: Death Benefits Pursuant to Amended and Restated Employment
Agreement
Dear Norman:
On behalf of the company, this letter confirms that the compensation and
benefits upon death ("Death Benefits") as set forth in the Employment
Agreement between you and the company, dated June 8, 1994, will remain
in full force and effect until the application for your life insurance
policy has been approved and said policy issued. As of the effective
date of this insurance policy, these Death Benefits will cease to exist
and, in the event of your death, the terms of Paragraph 10(d) of your
Amended and Restated Employment Agreement will control.
You agree that you will promptly provide the company a copy of the
insurance policy once it is effective.
Very truly yours,
ROSS STORES, INC.
By: /s/G. Orban
George P. Orban
Chairman of the Compensation Committee
I agree to and accept the terms set forth in this letter.
/s/Norman A. Ferber
Norman A. Ferber
Chairman of the Board and Chief Executive Officer
EXHIBIT 10.20
AMENDMENT TO EMPLOYMENT AND STOCK GRANT AGREEMENTS
THIS AMENDMENT TO EMPLOYMENT AND STOCK GRANT AGREEMENTS (the
"Amendment") is made effective as of March 16, 1995, by and between
Ross Stores, Inc. (the "Company") and Melvin A. Wilmore (the
"Executive"). The Executive and the Company previously entered into
an Employment Agreement of March 15, 1994 (the "Agreement") and the
Ross Stores, Inc. Stock Grant Agreement dated March 15, 1994 (the
"Grant"), and it is now the intention of the Executive and the Company
to amend the Agreement and the Grant as set forth below. Accordingly,
the Executive and the Company now enter into this Amendment.
I. The Executive and the Company hereby amend the Agreement as
follows:
A. Term. The termination date referred to in the
second line of paragraph 1 of the Agreement is changed to February 3,
1997.
B. Salary. The Executive's salary, referenced in
paragraph 4(a) of the Agreement, shall be not less than $430,000 per
annum.
C. Termination by Death. Paragraph 7(a) of the Agreement
is amended to read in its entirety as follows: "Death. The
Executive's employment shall terminate upon his death".
D. Compensation and Benefits Upon Death.
(1) In the event of the Executive's death, he (or his
designee or his estate) shall not be entitled to receive any of the
compensation or benefits set forth in paragraph 9(a) of the Agreement,
which paragraph is amended to read in its entirety as follows:
Disability, Without Cause or For Good Reason. If the
Executive's employment terminates pursuant to paragraph 7(b)
[Disability], (d) [Without Cause] or (e) [For Good Reason], the
Company shall:
(i) Salary: continue to pay the Executive his
then-current salary through the remaining term of this Agreement as
defined in paragraph 1;
(ii) Bonus: continue to pay the Executive 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;
2
(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.
(2) Paragraph 9(d) of the Agreement is amended to read
in its entirety as follows:
Death or Voluntary Termination. If the Executive's
employment terminates pursuant to paragraph 7(a)[Death] or 7(g)
[Voluntary Termination], he (or his designee or his estate) shall be
paid his salary through his termination date and not thereafter. He
(or his designee or his estate) shall not be entitled to any bonus
payments that were not fully earned prior to his termination date, and
he (or his designee or his estate) shall not be entitled to any pro-
rated bonus payment for the year in which his employment terminates.
Any stock options granted to the Executive by the Company will
continue to vest only through the date on which his employment
terminates [provided, however, that if the Executive's employment
terminates as a result of his voluntary termination (but not as a
result of his death) within six months after 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 that is
unvested as of the date on which his employment terminates will
automatically be reacquired by the Company and the Executive (or his
designee or his estate) 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 the termination of his employment
pursuant to paragraph 7(a) [Death] or 7(g) [Voluntary Termination].
E. Life Insurance Option. Paragraph 9(f) ("Option to
Elect Life Insurance Coverage") is deleted in its entirety from the
Agreement and shall be of no further legal force or effect.
F. No Other Modifications. Except as modified by this
Amendment, the Agreement shall remain in full force and effect.
II. The Executive and the Company hereby amend the Grant as
follows:
A. No Vesting Upon Death. The phrase "(a)[Death]," is
hereby deleted from the third line of paragraph 3(a)(vii) of the
Grant.
B. Company Reacquisition Upon Death. The phrase
"7(a)[Death]," is hereby added following the word "paragraph" in the
second line of paragraph 3(b) of the Grant.
3
C. No Other Modification. Except as modified by this
Amendment, the Grant shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Employment and Stock Grant Agreements effective as of the date and
year first above written.
ROSS STORES, INC. EXECUTIVE
By: /s/G. Orban /s/M. Wilmore
George P. Orban Melvin A. Wilmore
Chairman, Compensation Committee
EXHIBIT 10.21
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment")
is made effective as of June 1, 1995, by and between Ross Stores, Inc.
(the "Company") and Melvin A. Wilmore (the "Executive"). The
Executive and the Company previously entered into an Employment
Agreement of March 15, 1994, as amended March 16, 1995, (the
"Agreement") and it is now the intention of the Executive and the
Company to further amend the Agreement as set forth below.
Accordingly, the Executive and the Company now enter into this
Amendment.
I. The Executive and the Company hereby amend the Agreement as
follows:
A. Term. The termination date referred to in the
second line of paragraph 1 of the Agreement is changed to February 3,
1999.
B. Salary. Effective June 1, 1995, the Executive's
salary, referenced in paragraph 4(a) of the Agreement, shall be not
less than $475,000 per annum.
C. Services Furnished. Paragraph 4(f) [Services
Furnished] of the Agreement is amended in its entirety as follows:
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 during the term of
this Agreement and for a period of six months following the date
of any termination, except for termination as described in
paragraphs 7(a) [Death], 7(c)(B) [Illegal or Grossly Negligent
Conduct], or 7(h) [Non-Renewal]. Upon mutual agreement between
the Company and the Executive, the office space furnished during
the six-month period following termination may be at a location
other than the Company's principle executive offices.
D. No Other Modifications. Except as modified by this
Amendment, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment to Employment Agreement effective as of the date and year
first above written.
ROSS STORES, INC. EXECUTIVE
By: /s/ G. Orban /s/ M. Wilmore
George Orban Melvin A. Wilmore
Chairman, Compensation Committee
EXHIBIT 10.22
August 22, 1995
Melvin A. Wilmore
President and Chief Operating Officer
Ross Stores, Inc.
8333 Central Avenue
Newark, CA 94560-3433
Re: Death Benefits Pursuant to Amendment to Employment Agreement
Dear Mel:
On behalf of the company, this letter confirms that the
compensation and benefits upon death ("Death Benefits") as set
forth in the Employment Agreement between you and the company,
dated March 15, 1994, will remain in full force and effect until
the application for your life insurance policy has been approved
and said policy issued. As of the effective date of this insurance
policy, these Death Benefits will cease to exist and, in the event
of your death, the terms of the Amendment to Employment and Stock
Grant Agreements, effective as of March 16, 1995, will control.
You agree that you will promptly provide the company a copy of the
insurance policy once it is effective.
Very truly yours,
ROSS STORES, INC.
By: /s/G. Orban
George P. Orban
Chairman of the Compensation Committee
I agree to and accept the terms set forth in this letter.
/s/Melvin A. Wilmore
Melvin A. Wilmore
President and Chief Operating Officer
EXHIBIT 10.24
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is
made effective as of June 1, 1995, by and between Ross Stores, Inc.
(the "Company") and Michael Balmuth (the "Executive"). The
Executive and the Company previously entered into an Employment
Agreement of February 1, 1995, (the "Agreement") and it is now the
intention of the Executive and the Company to amend the Agreement
as set forth below. Accordingly, the Executive and the Company now
enter into this Amendment.
I. The Executive and the Company hereby amend the Agreement
as follows:
A. Term. The termination date referred to in the
second line of paragraph 1 of the Agreement is changed to February
3, 1999.
B. Salary. Effective June 1, 1995, the Executive's
salary, referenced in paragraph 4(a) of the Agreement, shall be not
less than $440,000 per annum.
C. Services Furnished. Paragraph 4(f) [Services
Furnished] of the Agreement is amended in its entirety as follows:
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
during the term of this Agreement and for a period of six
months following the date of any termination, except for
termination as described in paragraphs 7(a) [Death],
7(c)(B) [Illegal or Grossly Negligent Conduct], or 7(h)
[Non-Renewal]. Upon mutual agreement between the Company
and the Executive, the office space furnished during the
six month period following termination may be at a
location other than the Company's New York Buying Office.
D. Employment Restriction. A new paragraph 10 shall be
added to the Agreement (and all succeeding paragraphs renumbered
appropriately) to read in full as follows:
2
"10. Employment Restriction. The Company and the Executive
acknowledge that the Company has a special interest in and
derives significant benefit from the unique skills and
experience of the Executive. Accordingly, except as hereafter
noted, in the event that the Executive's employment with the
Company is terminated prior to the earlier of (a) January 31,
1997 and (b) the date on which Norman Ferber ceases to be the
Chief Executive Officer of the Company (the "Employment
Restriction Termination Date"), the Executive agrees that he
will not accept employment with or a be a consultant to,
directly or indirectly, either of the following companies or
their affiliates prior to the Employment Restriction
Termination Date: Marshalls or TJ Maxx. The preceding
sentence shall have no force and effect in the event that (i)
the Executive's employment with the Company is terminated (1)
by the Company pursuant to subsection 7d. [without Cause] or
(2) by the Executive pursuant to either subsection 7e.
[Termination by the Executive for Good Reason] or subsection
7f. [Termination Following Change of Control] or (ii) the
Executive ceases to report to Norman A. Ferber."
E. Governing Law. The first sentence of paragraph 16
[Governing Law;Severability] shall be amended to read in full as
follows: "The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of New York."
F. No Other Modifications. Except as modified by this
Amendment, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment to Employment Agreement effective as of the date and year
first above written.
ROSS STORES, INC. EXECUTIVE
By:/s/ G. Orban /s/ Michael Balmuth
George Orban Michael Balmuth
Chairman, Compensation Committee
EXHIBIT 11
ROSS STORES, INC.
---------------------------------------------------
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
Three Months Ended
_________________________________________
October 28, 1995 October 29, 1994
Fully Fully
Primary Diluted Primary Diluted
Net earnings $7,909 $7,909 $11,085 $11,085
======= ======= ======= =======
Weighted average shares
outstanding:
Common shares 24,578 24,578 24,343 24,343
Common equivalent shares:
Stock options 285 292 227 227
___ ___ ___ ___
Weighted average common and
common equivalent shares
outstanding 24,863 24,870 24,570 24,570
======= ======= ======= =======
Earnings per common and common
equivalent share $.32 $.32 $.45 $.45
======= ======= ======= =======
Nine Months Ended
_________________________________________
October 28, 1995 October 29, 1994
Fully Fully
Primary Diluted Primary Diluted
Net earnings $22,113 $22,113 $24,340 $24,340
======= ======= ======= =======
Weighted average shares
outstanding:
Common shares 24,559 24,559 24,543 24,543
Common equivalent shares:
Stock options 175 292 233 256
___ ___ ___ ___
Weighted average common and
common equivalent shares
outstanding 24,734 24,851 24,776 24,799
====== ======= ======= =======
Earnings per common and common
equivalent share $.89 $.89 $.98 $.98
==== ==== ==== ====
EXHIBIT 15
December 5, 1995
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
interim condensed consolidated financial statements of Ross Stores, Inc.
for the three-month and nine-month periods ended October 28, 1995 and
October 29, 1994, as indicated in our independent accountants' report
dated November 17, 1995; 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 28,
1995, is incorporated by reference in Registration Statements Nos. 33-
61373, 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 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,
Deloitte & Touche LLP
San Francisco, CA
5
0000745732
ROSS STORES, INC.
1,000
9-MOS
FEB-03-1996
JAN-29-1995
OCT-28-1995
23,599
0
9,197
0
344,004
388,550
304,635
133,581
577,162
247,277
37,874
244
0
0
270,302
577,162
979,319
979,319
710,403
942,461
0
0
2,452
36,858
14,745
22,113
0
0
0
22,113
.89
.89
