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 May 3, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-14678
ROSS STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1390387
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8333 Central Avenue, Newark, California 94560-3433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (510) 505-4400
Former name, former address and 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 30, 1997 was 49,693,516.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000) May 3, February 1, May 4,
ASSETS 1997 1997 1996
(Unaudited) (Note A) (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $26,879 $44,777 $35,036
Accounts receivable 9,583 7,832 11,555
Merchandise inventory 409,014 373,689 332,623
Prepaid expenses and other 13,405 13,289 13,001
__________ __________ __________
Total Current Assets 458,881 439,587 392,215
PROPERTY AND EQUIPMENT
Land and buildings 24,115 24,115 24,102
Fixtures and equipment 176,756 164,980 152,625
Leasehold improvements 137,714 135,810 122,489
Construction-in-progress 12,654 23,798 17,833
__________ __________ __________
351,239 348,703 317,049
Less accumulated depreciation 157,806 156,056 137,674
and amortization
__________ __________ __________
193,433 192,647 179,375
Other assets 30,842 27,244 22,307
__________ __________ __________
$ 683,156 $ 659,478 $593,897
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 197,926 $184,101 $165,036
Accrued expenses and other 60,540 61,761 42,498
Accrued payroll and benefits 26,772 36,356 23,940
Income taxes payable 19,911 22,567 12,137
__________ __________ __________
Total Current Liabilities 305,149 304,785 243,611
Long-term debt 19,736
Deferred income taxes and other liabilities 29,356 25,850 24,033
STOCKHOLDERS' EQUITY
Capital stock 496 493 504
Additional paid-in capital 167,361 164,166 148,609
Retained earnings 180,794 164,184 157,404
__________ __________ __________
348,651 328,843 306,517
__________ __________ __________
$ 683,156 $659,478 $593,897
See notes to condensed consolidated financial statements.
3
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended
May 3, May 4,
($000 except per share data, unaudited) 1997 1996
SALES $442,841 $370,948
COSTS AND EXPENSES
Cost of goods sold and occupancy 309,513 264,058
General, selling and administrative 86,664 76,219
Depreciation and amortization 7,275 7,261
Interest (200) 184
__________ _________
$403,252 $347,722
Earnings before taxes 39,589 23,226
Provision for taxes on earnings 15,836 9,290
__________ _________
Net earnings $23,753 $13,936
Net earnings per share:
Primary $.47 $.27
Fully diluted $.47 $.27
Weighted average shares outstanding:
Primary 50,486 51,294
Fully diluted 50,510 51,616
Stores open at end of period 315 296
See notes to condensed consolidated financial statements.
4
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
May 3, May 4,
($000, unaudited) 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $23,753 $13,936
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities:
Depreciation and amortization of property 7,275 7,261
and equipment
Other amortization 1,832 1,515
Change in current assets and current
liabilities:
Merchandise inventory (35,324) (36,658)
Other current assets - net (1,868) (3,483)
Accounts payable 16,045 29,119
Other current liabilities - net (13,627) 1,076
Other (4) 233
________ ________
Net cash provided by (used in) (1,918) 12,999
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (10,688) (9,334)
Net cash used in investing activities (10,688) (9,334)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under line of credit agreement 2,500 10,000
(Repayment) of long-term debt (47) (110)
Issuance of common stock related to stock 2,754 18,130
plans
Repurchase of common stock (8,286) (18,327)
Dividends paid (2,213) (1,748)
________ ________
Net cash provided by (used in) financing (5,292) 7,945
activities
NET INCREASE (DECREASE) IN CASH (17,898) 11,610
Cash
Beginning of year 44,777 23,426
________ ________
End of quarter $26,879 $35,036
Interest Paid $40 $267
Income Taxes Paid $18,491 $7,709
See notes to condensed consolidated financial statements.
5
ROSS STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended May 3, 1997 and May 4, 1996
(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 May 3, 1997 and May 4, 1996; the interim results
of operations for the three months ended May 3, 1997 and May 4, 1996;
and changes in cash flows for the three months then ended. The
balance sheet at February 1, 1997, 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 February 1, 1997. 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 February 1,
1997.
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 May 3, 1997 and May
4, 1996, 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.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, (SFAS 128),
Earnings per Share (EPS). SFAS 128 requires dual presentation of
basic EPS and diluted EPS on the face of all income statements issued
after December 15, 1997 for all entities with complex capital
structures. Basic EPS is computed as net income divided by the
weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from
common shares issuable through stock options, warrants and other
convertible securities. The pro forma effect assuming adoption of
SFAS 128 at the beginning of each period is presented below.
Three Months Ended
May 3, 1997 May 4, 1996
_______________________________________________
Pro forma EPS:
Basic $.48 $.28
Diluted $.47 $.27
6
INDEPENDENT AUDITORS' REVIEW REPORT
Board of Directors and Stockholders of Ross Stores, Inc.
Newark, California
We have reviewed the accompanying condensed consolidated balance
sheets of Ross Stores, Inc. (the "Company") as of May 3, 1997 and May
4, 1996, 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 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 February 1, 1997, 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 7, 1997,
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 February 1,
1997 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
May 23, 1997
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Percentage Of Sales
Three Months Ended
May 3, May 4,
1997 1996
SALES
Sales ($000) $442,841 $370,948
Sales growth 19.4% 24.7%
Comparable store sales growth 11% 14%
COSTS AND EXPENSES
Cost of goods sold and occupancy 69.9% 71.2%
General, selling and administrative 19.6% 20.5%
Depreciation and amortization 1.6% 2.0%
Interest 0% 0%
NET EARNINGS 5.4% 3.8%
Sales
The results of operations for the three months ended May 3, 1997, over
the same period last year, reflect an increase in comparable store
sales and a greater number of open stores during the current period.
Costs and Expenses
The decline from the comparable period in the prior year in the cost
of goods sold and occupancy percentage for the three months ended May
3, 1997 was due to the combination of (i) leverage on occupancy costs
and (ii) lower markdowns as a percentage of sales.
General, selling and administrative expenses as a percentage of sales
also declined from the comparable quarter in the prior year. This
improvement was due to the company's continued focus on strict expense
controls and the leverage realized from the strong comparable store
sales gain of 11%.
Net earnings for the three months ended May 3, 1997, totaled $23.8
million, or $.47 per share, compared to net earnings of $13.9 million,
or $.27 per share, for the three months ended May 4, 1996.
Taxes on Earnings
The company's effective tax rate for the first quarter of 1997 and
1996 was 40%. The rate for both periods reflects the applicable
statutory tax rates.
8
LIQUIDITY AND CAPITAL RESOURCES
The primary uses of cash, other than for operating expenses, during
the first three months of fiscal 1997 were for (i) purchase of
inventory; (ii) a decrease in other current liabilities primarily
resulting from payments of accrued expenses including incentive
bonuses and income taxes; (iii) capital expenditures for new stores
and improvements to existing locations; and (iv) repurchase of the
company's common stock.
Total consolidated inventories were up 23% at the end of the first
quarter from the same quarter last year driven by (i) a planned
increase in packaway inventories and (ii) a larger number of open
stores over the prior year.
The decline in interest expense reflects a decline in borrowings
resulting primarily from the higher earnings levels.
The company believes it can fund its capital needs for the remainder
of the fiscal year and the current stock repurchase program through
internally generated cash, trade credit, established bank lines and
lease financing.
9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Incorporated herein by reference to the list of Exhibits
contained in the Exhibit Index which begins on page 10 of this
Report.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed by the
undersigned thereunto duly authorized.
ROSS STORES, INC.
_____________________
Registrant
Date: June 16, 1997 /s/Melvin A. Wilmore
Melvin A. Wilmore, President,
Chief Operating Officer and
Principal Accounting Officer
10
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 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 to the 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 ("Wells Fargo"), 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.
10.3 First Amendment to Revolving Credit Agreement, effective on
July 31, 1994, by and among Ross Stores, Banks and Wells
Fargo, 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, 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 Third Amendment to Revolving Credit Agreement, effective on
December 2, 1996, by and among Ross Stores, Banks and Wells
Fargo, as agent for Banks, incorporated by reference to
Exhibit 10.5 to the Form 10-K405 filed by Ross Stores for its
fiscal year ended February 1, 1997.
10.6 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, incorporated by
reference to Exhibit 10.6 to the Form 10-Q filed by Ross
Stores for its quarter ended July 30, 1994.
10.7 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, incorporated by reference to Exhibit 10.6 to the
Form 10-Q filed by Ross Stores for its quarter ended July 29, 1995.
10.8 Second Amendment to Credit Agreement, dated as of June 12,
1996, Ross Stores, Bank of America National Trust and Savings
Association as Agent, the Industrial Bank of Japan as Co-
Agent, incorporated by reference to Exhibit 10.7 to the Form
10-Q filed by Ross Stores for its quarter ended August 3, 1996.
11
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
(EXHIBITS 10.9 - 10.34)
Exhibit
Number Exhibit
10.9 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 ("1995 Proxy Statement").
10.10 Third Amended and Restated Ross Stores Employee Stock Purchase
Plan, incorporated by reference to the appendix to the 1995
Proxy Statement.
10.11 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, 1996 for its
Annual Stockholders Meeting held May 30, 1996 ("1996 Proxy
Statement").
10.12 1991 Outside Directors Stock Option Plan, incorporated by
reference to the appendix to the 1996 Proxy Statement.
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 the appendix to the 1996 Proxy Statement.
10.17 Amended and Restated Employment Agreement between Ross Stores
and Norman A. Ferber, effective as of June 1, 1995,
incorporated by reference to Exhibit 10.17 to the Form 10-Q
filed by Ross Stores for its quarter ended October 28, 1995.
10.18 Amendment to Amended and Restated Employment Agreement between
Ross Stores and Norman A. Ferber, entered into July 29, 1996,
incorporated by reference to Exhibit 10.17 to the Form 10-Q
filed by Ross Stores for its quarter ended August 3, 1996.
10.19 Amendment to Amended Restated Employment Agreement between
Ross Stores and Norman A. Ferber, effective as of March 20,
1997.
10.20 Third Amendment to Amended and Restated Employment Agreement
between Ross Stores and Norman A. Ferber, effective as of
April 15, 1997.
10.21 Employment Agreement 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.
12
Exhibit
Number Exhibit
10.22 Amendment to Employment and Stock Grant Agreements by and
between Ross Stores and Melvin A. Wilmore, effective as of
March 16, 1995, incorporated by reference to Exhibit 10.20 to
the Form 10-Q filed by Ross Stores for its quarter ended
October 28, 1995.
10.23 Second Amendment to Employment Agreement by and between Ross
Stores and Melvin A. Wilmore, effective as of June 1, 1995,
incorporated by reference to Exhibit 10.21 to the Form 10-Q
filed by Ross Stores for its quarter ended October 28, 1995.
10.24 Third Amendment to Employment Agreement by and between Ross
Stores and Melvin A. Wilmore, entered into July 29, 1996,
incorporated by reference to Exhibit 10.22 to the Form 10-Q
filed by Ross Stores for its quarter ended August 3, 1996.
10.25 Employment Agreement 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.
10.26 Amendment to Employment Agreement between Ross Stores and
Michael Balmuth, effective as of June 1, 1995, incorporated by
reference to Exhibit 10.24 to the Form 10-Q filed by Ross
Stores for its quarter ended October 28, 1995.
10.27 Second Amendment to Employment Agreement between Ross Stores
and Michael Balmuth, entered into July 29, 1996, incorporated
by reference to Exhibit 10.26 to the Form 10-Q filed by Ross
Stores for its quarter ended August 3, 1996.
10.28 Employment Agreement between Ross Stores and Barry S. Gluck,
effective as of March 1, 1996, incorporated by reference to
Exhibit 10.23 to the Form 10-Q filed by Ross Stores for its
quarter ended May 4, 1996.
10.29 First Amendment to Employment Agreement between Ross Stores
and Barry S. Gluck, dated September 1, 1996, incorporated by
reference to Exhibit 10.28 to the Form 10-Q filed by Ross
Stores for its quarter ended October 2, 1996.
10.30 Employment Agreement between Ross Stores and Irene A.
Jamieson, effective as of March 1, 1996, incorporated by
reference to Exhibit 10.24 to the Form 10-Q filed by Ross
Stores for its quarter ended May 4, 1996.
10.31 First Amendment to Employment Agreement between Ross Stores
and Irene A. Jamieson, dated September 1, 1996, incorporated
by reference to Exhibit 10.30 to the Form 10-Q filed by Ross
Stores for its quarter ended October 2, 1996.
10.32 Employment Agreement between Ross Stores and Barbara Levy,
effective as of March 1, 1996, incorporated by reference to
Exhibit 10.25 to the Form 10-Q filed by Ross Stores for its
quarter ended May 4, 1996.
13
Exhibit
Number Exhibit
10.33 First Amendment to Employment Agreement between Ross Stores
and Barbara Levy, dated September 1, 1996, incorporated by
reference to Exhibit 10.32 to the Form 10-Q filed by Ross
Stores for its quarter ended October 2, 1996.
10.34 Consulting Agreement between Ross Stores and Stuart G. Moldaw,
effective as of April 1, 1997.
11 Statement re: Computation of Per Share Earnings.
15 Letter re: Unaudited Interim Financial Information.
27 Financial Data Schedules (submitted for SEC use only).
AMENDMENT TO AMENDED RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into this 20 day of March, 1997, by
and between ROSS STORES, INC. (the "Company") and NORMAN A. FERBER
(the "Executive"). The Executive and the Company previously entered
into an Amended and Restated Employment Agreement as of June 1, 1995,
as amended thereafter (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.
The Executive and the Company hereby amend the Agreement
effective as of March 20, 1997 as follows:
Other Benefits: The following sentence is added at the end of
Paragraph 5(d)(i): "For purposes of this Paragraph 5(d), in the event
of a Change of Control, as defined in Paragraph 8(f) of the Agreement,
the "Company" shall include any other entity that is a successor to
the Company, whether by merger, consolidation, liquidation, as a
result of this sale, exchange or transfer of all or substantially all
of the Company's assets, or otherwise, and the provisions of this
Paragraph 5(d) shall continue to be binding on and shall be performed
by such successor for the benefit of the Executive and his heirs and
successors. Further, in the event of any such change of control the
"senior executives of the Company" referred to in the second sentence
of this Paragraph shall mean the senior executives who are members of
its executive committee, or equivalent, or if there is no such
committee who hold the most senior rank in the successor entity.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Amended and Restated Employment Agreement 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
THIRD AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT
AGREEMENT is made and entered into this 15th day of April, 1997,
by and between ROSS STORES, INC. (the "Company") and
NORMAN A. FERBER (the "Executive").
A. The Company and the Executive have previously
entered into an Amended and Restated Employment Agreement as of
June 1, 1995, as amended (the "Agreement").
B. The Company and the Executive now desire to
further amend the Agreement to provide for additional consulting
fees in the event of a Change of Control to reflect payment for
additional counseling services that may be required of the
Executive.
1. Accordingly, the Company and the Executive hereby
further amend the Agreement to add a new subparagraph 5(a)(iv) as
follows:
"(iv) Upon the consummation of a Change of Control and
provided that the Board of Directors of the Company has
requested that the Executive provide consulting services in
connection with any such Change of Control, the Company shall pay
to the Executive an additional lump sum consulting fee in the
amount of $1,500,000 (the "Lump Sum Fee"). The Executive shall
be entitled to payment of a Lump Sum Fee with respect to any
Change of Control transaction for which Executive provided
consulting services during the term of the Agreement
notwithstanding that the consummation thereof occurred after the
expiration or termination of the Agreement. If the Lump Sum Fee
is subject to the tax ("Excise Tax") imposed by Section 4999 of
the Internal Revenue Code, the Company shall reimburse the
Executive in an amount such that, after deduction of any Excise
Tax payments paid by the Executive, and any federal, state or
local income tax and Excise Taxes paid as a result of such
reimbursement, the net funds retained by the Executive shall be
equal to the Lump Sum Fee."
2. Except as modified by this Amendment, the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Third
Amendment to the Amended and Restated Employment Agreement as of
the date and year first above written.
ROSS STORES, INC. EXECUTIVE
By: /s/G. Orban /s/Norman A. Ferber
Its: Chairman, Compensation Committee Norman A. Ferber
CONSULTING AGREEMENT
BETWEEN
ROSS STORES, INC.
AND STUART G. MOLDAW
This Agreement is made as of April 1, 1997 (the "Effective Date")
through March 31, 1999 (the Completion Date"), by and between Ross
Stores, Inc., a Delaware corporation ("Ross") and Stuart G. Moldaw
("Consultant"). This Agreement amends and restates the prior
agreement, dated March 16, 1995, and any subsequent oral
modifications.
RECITAL
Consultant desires to perform, and Ross desires to have Consultant
perform, consulting services as an independent contractor to Ross.
NOW, THEREFORE, the parties agree as follows:
1. SERVICES
1.1 Performance. Consultant agrees to perform consulting services
for Ross as deemed necessary.
1.2 Payment.
(a) Ross agrees to pay Consultant $20,000 per calendar quarter,
payable on the first day of each calendar quarter.
(b) Ross agrees to pay the salary and benefits for a Financial
Administrator for the period in which consulting services are
rendered.
(c) Ross agrees to pay the premiums of the Split-Dollar Life
Insurance Policy No. L86920003 with AIG Life Insurance Company (the
"Policy") through the Completion Date of this Agreement.
(d) Consultant and his spouse will be eligible to participate in
Ross' medical plan and supplemental medical plan. Ross agrees to pay
the annual premiums of the medical plans for consultant and his
spouse.
2. RELATIONSHIP OF PARTIES
2.1 Independent Contractor. Consultant is an independent
contractor and not an agent or employee of Ross. Consultant will
perform consulting services specified by Ross, but Consultant will
determine, in Consultant's sole discretion, the manner and means by
which the services are accomplished, subject to the requirement that
Consultant shall at all times comply with applicable law. Ross has no
right or authority to control the manner or means by which the
2
services are accomplished. Consultant may represent, perform services
for, or be employed by such additional clients, persons or companies
as Consultant sees fit.
2.2 Employment Taxes and Benefits. Consultant will report as
self-employment income all compensation received by Consultant
pursuant to this Agreement. Consultant will indemnify Ross and hold
it harmless from and against all claims, damages, losses and expenses,
including reasonable fees and expenses of attorneys and other
professionals, relating to any obligation imposed by law on Ross to
pay any withholding taxes, social security, unemployment or disability
insurance, or similar items in connection with compensation received
by Consultant pursuant to this Agreement. Consultant will not be
entitled to receive any vacation or illness payments, or to
participate in any plans, arrangements, or distributions by Company
pertaining to any bonus, stock option, profit sharing, insurance or
similar benefits for Company's employees except as expressly provided
in this Agreement.
3. TERMINATION
3.1 Termination. Either Ross or Consultant may terminate this
Agreement at any time, for any reason or no reason, by giving 30 days'
prior written notice to the other party.
3.2 Confidential Information. Consultant agrees during the term
of his consultancy and thereafter to take all steps necessary to hold
Ross' confidential information in strict confidence and not to
disclose such confidential information. Upon the termination of this
Agreement for any reason, Consultant will promptly notify Ross of all
confidential information in Consultant's possession and, in accordance
with Ross' instructions, will promptly deliver to Ross all such
confidential information.
4. GENERAL
4.1 Governing Law: Severability. This Agreement will be
governed by and construed in accordance with laws of the State of
California excluding that body of law pertaining to conflict of laws.
If any provision of this Agreement is for any reason found to be
unenforceable, the remainder of this Agreement will continue in full
force and effect.
4.2 Successors and Assigns. Neither this Agreement nor any of
the rights or obligations of Consultant arising under this Agreement
may be assigned or transferred without Ross' prior written consent.
This Agreement will be for the benefit of Ross' successors and
assigns, and will be binding on Consultant's heirs and legal
representatives.
4.3 Notices. Any notices under this Agreement will be sent by
certified or registered mail, return receipt requested, to the address
specified below or such other address as the party specifies in
writing. Such notice will be effective upon its mailing as specified.
3
4.4 Complete Understanding: Modification. This Agreement,
together with the Policy, constitutes the complete and exclusive
understanding and agreement of the parties and supersedes all prior
understandings and agreement, whether written or oral, with respect to
the subject matter hereof. Any waiver, modification or amendment of
any provision of this Agreement will be effective only if in writing
and signed by the parties hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
Effective Date.
ROSS STORES, INC. CONSULTANT
By: /s/Michael Balmuth /s/Stuart G. Moldaw
Michael Balmuth Stuart G. Moldaw
Vice Chairman and
Chief Executive Officer
Address: Address:
8333 Central Avenue c/o Gymboree Corporation
Newark, CA 94560-3433 700 Airport Blvd., Suite 200
Burlingame, CA 94010
EXHIBIT 11
ROSS STORES, INC.
________________________________________
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
Three Months Ended
May 3, 1997 May 4, 1996
Fully Fully
Primary Diluted Primary Diluted
Net earnings $23,753 $23,753 $13,936 $13,936
======= ======= ======= =======
Weighted average shares outstanding:
Common shares 49,399 49,399 50,058 50,058
Common equivalent shares:
Stock options 1,087 1,111 1,236 1,558
______ ______ ______ ______
Weighted average common and common
equivalent shares outstanding 50,486 50,510 51,294 51,616
======= ======= ======= =======
Earnings per common and common
equivalent share $.47 $.47 $.27 $.27
EXHIBIT 15
June 13, 1997
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 periods ended May 3, 1997 and May 4, 1996, as
indicated in our independent accountants' report dated May 23, 1997;
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 May 3, 1997
is incorporated by reference in Registration Statements Nos. 333-
06119, 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
3-MOS
JAN-31-1998
FEB-02-1997
MAY-03-1997
26,879
0
9,583
0
409,014
458,881
351,239
157,806
683,156
305,149
0
0
0
496
348,155
683,156
442,841
442,841
309,513
403,252
93,939
0
(200)
39,589
15,836
23,753
0
0
0
23,753
$0.47
$0.47
