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 AUGUST 2, 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, 94560-3433
Newark, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number,
including area code (510) 505-4400
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
August 30, 1997 was 49,041,095.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000) August 2, February 1, August 3,
ASSETS 1997 1997 1996
(Unaudited) (Note A) (Unaudited)
Current Assets
Cash and cash equivalents $ 31,770 $ 44,777 $ 35,080
Accounts receivable 9,250 7,832 9,153
Merchandise inventory 427,114 373,689 357,778
Prepaid expenses and other 14,253 13,289 12,489
________ ________ ________
Total Current Assets 482,387 439,587 414,500
Property and Equipment
Land and buildings 24,115 24,115 24,115
Fixtures and equipment 180,521 164,980 155,084
Leasehold improvements 141,235 135,810 123,672
Construction-in-progress 10,196 23,798 20,035
________ ________ ________
356,067 348,703 322,906
Less accumulated depreciation and amortization 164,458 156,056 144,685
________ ________ ________
191,609 192,647 178,221
Deferred income taxes and other assets 30,191 27,244 22,473
________ ________ ________
$704,187 $659,478 $615,194
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $196,444 $184,101 $175,821
Accrued expenses and other 66,618 61,761 45,840
Accrued payroll and benefits 33,944 36,356 27,442
Income taxes payable 11,608 22,567 16,427
_______ _______ _______
Total Current Liabilities 308,614 304,785 265,530
Long-term debt 9,665
Deferred income taxes and other liabilities 29,592 25,850 24,905
Stockholders' Equity
Capital stock 496 493 504
Additional paid-in capital 170,803 164,166 153,493
Retained earnings 194,682 164,184 161,097
________ ________ ________
365,981 328,843 315,094
________ ________ ________
$704,187 $659,478 $615,194
See notes to condensed consolidated financial statements.
3
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Six Months Ended
____________________ __________________
($000 except per share data, unaudited) August 2, August 3, August 2, August 3,
1997 1996 1997 1996
Sales $490,679 $405,656 $933,520 $776,604
Costs and Expenses
Cost of goods sold and occupancy 341,109 285,618 650,622 549,675
General, selling and administrative 95,556 81,762 182,220 157,982
Depreciation and amortization 7,635 7,164 14,910 14,425
Interest expense (income) (283) 31 (483) 215
_________ _________ _________ _________
444,017 374,575 847,269 722,297
Earnings before taxes 46,662 31,081 86,251 54,307
Provision for taxes on earnings 18,664 12,432 34,500 21,723
_________ _________ _________ _________
Net earnings $ 27,998 $ 18,649 $ 51,751 $ 32,584
Net earnings per share:
Primary $ .55 $ .36 $ 1.02 $ .63
Fully diluted $ .55 $ .36 $ 1.02 $ .63
Weighted average shares outstanding:
Primary 50,851 51,858 50,666 51,612
Fully diluted 50,888 51,860 50,766 51,630
Stores open at end of period 318 299
See notes to condensed consolidated financial statements.
4
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
($000, unaudited) August 2, August 3,
1997 1996
Cash Flows From Operating Activities
Net earnings $51,751 $ 32,584
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and equipment 14,910 14,425
Other amortization 4,060 3,100
Change in current assets and current liabilities:
Merchandise inventory (53,425) (61,814)
Other current assets - net (2,382) (570)
Accounts payable 14,563 39,904
Other current liabilities - net (8,694) 12,727
Other 1,276 1,162
________ ________
Net cash provided by operating activities 22,059 41,518
Cash Flows From Investing Activities
Additions to property and equipment (19,202) (16,335)
________ ________
Net cash used in investing activities (19,202) (16,335)
Cash Flows From Financing Activities
Borrowing under line of credit agreement 4,600
Repayment of long-term debt (59) (170)
Issuance of common stock related to stock plan 5,693 24,413
Repurchase of common stock (21,642) (34,252)
Dividends paid (4,456) (3,520)
________ ________
Net cash used in financing activities (15,864) (13,529)
________ ________
Net Increase (Decrease) In Cash (13,007) 11,654
Cash
Beginning of year 44,777 23,426
________ ________
End of quarter $ 31,770 $ 35,080
Interest Paid $ 83 $ 570
Income Taxes Paid $ 45,671 $ 15,851
See notes to condensed consolidated financial statements.
5
ROSS STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended August 2, 1997 and August 3, 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
August 2, 1997 and August 3, 1996; the interim results of operations for
the three and six months ended August 2, 1997 and August 3, 1996; and
changes in cash flows for the six 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 and six month periods herein
presented are not necessarily indicative of the results to be expected for
the full year.
The condensed consolidated financial statements at August 2, 1997 and
August 3, 1996, and for the three and six months then ended have been
reviewed, prior to filing, by the registrant's independent auditors 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 Six Months Ended
_______________________ ______________________
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
Pro forma EPS:
Basic $ .56 $ .37 $1.04 $ .65
Diluted $ .55 $ .36 $1.02 $ .63
6
INDEPENDENT AUDITORS' 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 August 2, 1997 and August 3, 1996,
and the related condensed consolidated statements of earnings for the three-
month and six-month periods then ended and the related condensed
consolidated statements of cash flows for the six-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 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, California
August 22, 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 Six Months Ended
___________________ ______________________
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
SALES
Sales ($000) $490,679 $405,656 $933,520 $776,604
Sales growth 21.0% 15.5% 20.2% 19.7%
Comparable store sales growth 12 % 9 % 12 % 11 %
COSTS AND EXPENSES
Cost of goods sold and occupancy 69.5% 70.4% 69.7% 70.8%
General, selling and administrative 19.5% 20.2% 19.5% 20.3%
Depreciation and amortization 1.6% 1.8% 1.6% 1.9%
Interest (0.1)% 0.0% (0.1)% 0.0%
NET EARNINGS 5.7% 4.6% 5.5% 4.2%
Sales
The results of operations for the three and six months ended August 2,
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 prior year in the cost of goods sold and occupancy as
a percentage of sales for the three and six month periods was primarily due
to (i) leverage on occupancy costs; (ii) lower markdowns as a percentage of
sales; and (iii) a modest increase in the initial mark-up from purchasing
more opportunistically.
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
combined with leverage on both store and advertising expenses realized from
the strong comparable store sales gain of 12%, partially offset by higher
expenses related to the company's incentive plan and slightly higher
distribution costs.
Net earnings for the three months ended August 2, 1997, totaled $28.0
million, or $.55 per share, compared to net earnings of $18.6 million, or
$.36 per share, for the three months ended August 3, 1996.
8
Taxes on Earnings
The company's effective tax rate for the second quarter of 1997 and 1996
was 40%. The rate for both periods reflects the applicable statutory tax
rates.
LIQUIDITY AND CAPITAL RESOURCES
The primary uses of cash, other than for operating expenses, during the
first six months of fiscal 1997 were for (i) purchase of inventory, (ii)
repurchase of the company's common stock, and (iii) capital expenditures
for new stores, improvements to existing locations and improvements in
operating systems.
Total consolidated inventories were up 19% at the end of the second 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 the decline in borrowings which
resulted primarily from higher earnings levels combined with lower capital
spending and a temporary slowdown in stock repurchase activity during the
second quarter of 1997.
On June 30, 1997, the company allowed its $60 million revolving term
facility to expire to re-negotiate a new revolving credit facility for $160
million plus a separate $30 million letter of credit facility (the
"Facilities"). The closing on the Facilities is expected to be in mid-
September 1997.
The company believes it can fund its capital needs for the remainder of the
fiscal year and complete the current stock repurchase program through
internally generated cash, trade credit, established bank lines and lease
financing.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held on July 16, 1997 (the "1997
Annual Meeting"), the stockholders of the company voted on and approved the
following proposals:
Proposal 1 to reelect two Class II Directors for a three-year term.
Proposal 2 to ratify the appointment of Deloitte & Touche LLP as the
company's certified public accountants for the fiscal year ending January
31, 1998.
INFORMATION ON THE BOARD OF DIRECTORS
The following are the company's directors who were not up for reelection
and whose terms of office continue after the 1997 Annual Meeting:
Incumbent Class I Directors whose terms expire in 1999:
Stuart G. Moldaw, Donald H. Seiler and George P. Orban
Incumbent Class III Directors whose terms expire in 1998:
Norman A. Ferber, Philip Schlein and Melvin A. Wilmore
9
Nominees reelected at the 1997 Annual Meeting as the company's Class II
Directors whose terms expire in 2000:
Michael Balmuth and Donna L. Weaver
1997 ANNUAL MEETING ELECTION RESULTS
PROPOSAL 1: ELECTION OF DIRECTORS
BROKER
DIRECTOR IN FAVOR WITHHELD NON-VOTES
Michael Balmuth 45,351,750 661,243 n/a
Donna L. Weaver 45,377,914 635,079 n/a
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
BROKER
FOR AGAINST ABSTAIN NON-VOTES
Appointment of 45,813,987 7,077 191,929 n/a
Deloitte & Touch LLP
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 11 of this Report.
(b) Reports on Form 8-K
None.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
ROSS STORES, INC.
___________________________________
Registrant
Date: September 15, 1997 /s/John G. Call
John G. Call, Senior Vice President,
Chief Financial Officer, Corporate Secretary
and Principal Accounting Officer
11
INDEX TO EXHIBITS
Exhibit
Number Exhibit
3.1 Certificate of Incorporation, as amended, incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form
8-B (the "Form 8-B") filed September 1, 1989 by Ross Stores,
Inc., a Delaware corporation ("Ross Stores").
3.2 Amended By-laws, dated August 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.
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
(EXHIBITS 10.9 - 10.36)
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, incorporated by reference to Exhibit 10.19 to the Form
10-Q filed by Ross Stores for its quarter ended May 3, 1997.
10.20 Third Amendment to Amended and Restated Employment Agreement
between Ross Stores and Norman A. Ferber, effective as of
April 15, 1997, incorporated by reference to Exhibit 10.20 to
the Form 10-Q filed by Ross Stores for its quarter ended May 3, 1997.
13
Exhibit
Number Exhibit
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.
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 Fourth Amendment to Employment Agreement by and between Ross
Stores and Melvin A. Wilmore, entered into May 19, 1997.
10.26 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.
10.27 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.
10.28 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.
10.29 Third Amendment to Employment Agreement between Ross Stores
and Michael Balmuth, entered into May 19, 1997.
10.30 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.
10.31 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.
10.32 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.
14
Exhibit
Number Exhibit
10.33 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.
10.34 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.
10.35 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.
10.36 Consulting Agreement between Ross Stores and Stuart G. Moldaw,
effective as of April 1, 1997, incorporated by reference to
Exhibit 10.34 to the Form 10-Q filed by Ross Stores for its
quarter ended May 3, 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).
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into this 19th day of May, 1997,
by and between ROSS STORES, INC. (the "Company") and Melvin A.
Wilmore (the "Executive").
A. The Company and the Executive have previously
entered into an Employment Agreement as of March 15, 1994, as
amended (the "Agreement").
B. It is now the intention of the Company and the
Executive to further amend the Agreement.
1. Accordingly, the Company and the Executive hereby
amend the Agreement to add the following to the end of
paragraph 4(a):
"In the event of the occurrence of a Change of
Control (as defined in paragraph 7(f) hereof),
then during the period commencing on the effective
date of the Change of Control and expiring two
years thereafter (the "Remaining Term"), the
Executive shall receive as additional salary the
aggregate amount of $1,500,000 per year (the
"Additional Salary") which shall be payable in
equal installments during the Remaining Term in
accordance with the Company's normal payroll
policies applicable for senior officers. The
provisions of Section 1 ("Term") of the Agreement,
notwithstanding the Executive's employment by the
Company under this Agreement shall continue until
the later of (a) the expiration of the Remaining
Term and (b) the expiration of any extension
pursuant to Section 1. If any portion of the
Additional Salary is subject to the tax ("Excise
Tax") imposed by Section 4999 of the Internal
Revenue Code, the Company shall reimburse the
Executive in such amounts so that, after deduction
of any Excise Taxes paid by the Executive and any
federal, state or local income tax and Excise
Taxes paid as a result of such reimbursements, the
net amounts retained by the Executive are equal to
the Additional Salary. For all purposes of
Section 9 hereof ("Compensation and Benefits Upon
Termination"), the Additional Salary shall be
included within the term "salary" as used in such
Section. The Executive's entitlement to this
Additional Salary is expressly conditional upon
the Executive's compliance with the terms of this
Agreement."
2
2. Except as modified by this Amendment, the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this
Fourth Amendment to Employment Agreement as of the date and year
first above written.
ROSS STORES, INC. EXECUTIVE
By: /s/G. Orban /s/M. Wilmore
Its: Chairman, Compensation Committee Melvin A. Wilmore
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (the
"Amendment") is made and entered into this 19th day of May, 1997,
by and between ROSS STORES, INC. (the "Company") and Michael
Balmuth (the "Executive").
A. The Company and the Executive have previously
entered into an Employment Agreement as of February 1, 1995, as
amended (the "Agreement").
B. It is now the intention of the Company and the
Executive to further amend the Agreement.
1. Accordingly, the Company and the Executive hereby
amend the Agreement to add the following to the end of
paragraph 4(a):
"In the event of the occurrence of a Change of
Control (as defined in paragraph 7(f) hereof),
then during the period commencing on the effective
date of the Change of Control and expiring two
years thereafter (the "Remaining Term"), the
Executive shall receive as additional salary the
aggregate amount of $1,500,000 per year (the
"Additional Salary") which shall be payable in
equal installments during the Remaining Term in
accordance with the Company's normal payroll
policies applicable for senior officers. The
provisions of Section 1 ("Term") of the Agreement,
notwithstanding the Executive's employment by the
Company under this Agreement shall continue until
the later of (a) the expiration of the Remaining
Term and (b) the expiration of any extension
pursuant to Section 1. If any portion of the
Additional Salary is subject to the tax ("Excise
Tax") imposed by Section 4999 of the Internal
Revenue Code, the Company shall reimburse the
Executive in such amounts so that, after deduction
of any Excise Taxes paid by the Executive and any
federal, state or local income tax and Excise
Taxes paid as a result of such reimbursements, the
net amounts retained by the Executive are equal to
the Additional Salary. For all purposes of
Section 9 hereof ("Compensation and Benefits Upon
Termination"), the Additional Salary shall be
included within the term "salary" as used in such
Section. The Executive's entitlement to this
Additional Salary is expressly conditional upon
the Executive's compliance with the terms of this
Agreement."
2
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 Employment Agreement as of the date and year
first above written.
ROSS STORES, INC. EXECUTIVE
By: /s/G. Orban /s/Michael Balmuth
Its: Chairman, Compensation Committee Michael Balmuth
EXHIBIT 11
ROSS STORES, INC.
________________________________________
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
Three Months Ended
______________________________________
August 2, 1997 August 3, 1996
Fully Fully
Primary Diluted Primary Diluted
_______________________________________
Net earnings $27,998 $27,998 $18,649 $18,649
======= ======= ======= =======
Weighted average shares outstanding:
Common shares 49,791 49,791 50,594 50,594
Common equivalent shares:
Stock options 1,060 1,097 1,264 1,266
_____ _____ _____ _____
Weighted average common and common
equivalent shares outstanding 50,851 50,888 51,858 51,860
====== ====== ====== ======
Earnings per common and common $ .55 $ .55 $.36 $.36
equivalent share
Six Months Ended
______________________________________
August 2, 1997 August 3, 1996
Fully Fully
Primary Diluted Primary Diluted
______________________________________
Net earnings $ 51,751 $ 51,751 $ 32,584 $ 32,584
======== ======== ======== ========
Weighted average shares outstanding:
Common shares 49,595 49,594 50,326 50,326
Common equivalent shares:
Stock options 1,071 1,172 1,286 1,304
_____ _____ _____ _____
Weighted average common and common
equivalent shares outstanding 50,666 50,766 51,612 51,630
====== ====== ====== ======
Earnings per common and common
equivalent share $1.02 $1.02 $ .63 $ .63
===== ===== ===== =====
EXHIBIT 15
September 11, 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 and six-month periods ended
August 2, 1997 and August 3, 1996, as indicated in our
independent accountants' report dated August 21, 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
August 2, 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, California
5
0000745732
ROSS STORES, INC.
1,000
6-MOS
JAN-31-1997
MAY-04-1997
AUG-02-1997
31,770
0
9,250
0
427,114
482,387
356,067
164,458
704,187
308,614
0
0
0
496
0
704,187
490,679
490,679
341,109
444,017
0
0
(283)
46,662
18,664
27,998
0
0
0
27,998
.55
.55
