false--02-01Q220190000745732211900000P1YP6Y2M12D0.2250.2250.2550.2250.2250.2250.2550.2550.010.010.011000000000100000000010000000003738680003682420003621660003738680003682420003621660000.033750.06380.0653P5YP10YP3YP11YP3YP2YP5YP3Y 0000745732 2019-02-03 2019-08-03 0000745732 2019-08-21 0000745732 2019-05-05 2019-08-03 0000745732 2018-02-04 2018-08-04 0000745732 2018-05-06 2018-08-04 0000745732 2019-08-03 0000745732 2018-08-04 0000745732 2019-02-02 0000745732 2018-02-04 2018-05-05 0000745732 us-gaap:CommonStockMember 2018-05-05 0000745732 us-gaap:RetainedEarningsMember 2018-02-03 0000745732 us-gaap:CommonStockMember 2018-02-04 2018-05-05 0000745732 us-gaap:CommonStockMember 2018-05-06 2018-08-04 0000745732 us-gaap:AdditionalPaidInCapitalMember 2018-05-06 2018-08-04 0000745732 us-gaap:RetainedEarningsMember 2018-08-04 0000745732 us-gaap:AccountingStandardsUpdate201409Member 2018-02-04 0000745732 us-gaap:TreasuryStockMember 2018-05-06 2018-08-04 0000745732 2018-05-05 0000745732 us-gaap:CommonStockMember 2018-08-04 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-02-03 0000745732 us-gaap:AdditionalPaidInCapitalMember 2018-05-05 0000745732 us-gaap:TreasuryStockMember 2018-05-05 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-08-04 0000745732 us-gaap:RetainedEarningsMember 2018-02-04 2018-05-05 0000745732 us-gaap:AdditionalPaidInCapitalMember 2018-02-03 0000745732 us-gaap:TreasuryStockMember 2018-02-04 2018-05-05 0000745732 us-gaap:AccountingStandardsUpdate201409Member us-gaap:RetainedEarningsMember 2018-02-04 0000745732 us-gaap:RetainedEarningsMember 2018-05-05 0000745732 us-gaap:RetainedEarningsMember 2018-05-06 2018-08-04 0000745732 us-gaap:AdditionalPaidInCapitalMember 2018-02-04 2018-05-05 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-05-06 2018-08-04 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-05-05 0000745732 2018-02-03 0000745732 us-gaap:TreasuryStockMember 2018-08-04 0000745732 us-gaap:CommonStockMember 2018-02-03 0000745732 us-gaap:TreasuryStockMember 2018-02-03 0000745732 us-gaap:AdditionalPaidInCapitalMember 2018-08-04 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-02-04 2018-05-05 0000745732 us-gaap:RetainedEarningsMember 2019-02-02 0000745732 us-gaap:TreasuryStockMember 2019-02-03 2019-05-04 0000745732 us-gaap:CommonStockMember 2019-02-02 0000745732 us-gaap:RetainedEarningsMember 2019-02-03 2019-05-04 0000745732 us-gaap:CommonStockMember 2019-08-03 0000745732 us-gaap:AccountingStandardsUpdate201602Member 2019-02-03 0000745732 2019-02-03 2019-05-04 0000745732 us-gaap:CommonStockMember 2019-02-03 2019-05-04 0000745732 us-gaap:AdditionalPaidInCapitalMember 2019-02-02 0000745732 us-gaap:TreasuryStockMember 2019-05-04 0000745732 us-gaap:AdditionalPaidInCapitalMember 2019-08-03 0000745732 us-gaap:RetainedEarningsMember 2019-05-05 2019-08-03 0000745732 us-gaap:TreasuryStockMember 2019-02-02 0000745732 us-gaap:AdditionalPaidInCapitalMember 2019-05-05 2019-08-03 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-02-02 0000745732 us-gaap:AdditionalPaidInCapitalMember 2019-02-03 2019-05-04 0000745732 us-gaap:CommonStockMember 2019-05-05 2019-08-03 0000745732 us-gaap:AccountingStandardsUpdate201602Member us-gaap:RetainedEarningsMember 2019-02-03 0000745732 us-gaap:RetainedEarningsMember 2019-05-04 0000745732 us-gaap:TreasuryStockMember 2019-05-05 2019-08-03 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-05-04 0000745732 us-gaap:RetainedEarningsMember 2019-08-03 0000745732 us-gaap:CommonStockMember 2019-05-04 0000745732 us-gaap:AdditionalPaidInCapitalMember 2019-05-04 0000745732 us-gaap:TreasuryStockMember 2019-08-03 0000745732 2019-05-04 0000745732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-08-03 0000745732 2019-03-01 2019-03-31 0000745732 2018-03-01 2018-03-31 0000745732 us-gaap:SubsequentEventMember 2019-08-01 2019-08-31 0000745732 us-gaap:PropertyPlantAndEquipmentMember 2018-02-04 2018-08-04 0000745732 us-gaap:PropertyPlantAndEquipmentMember 2019-02-03 2019-08-03 0000745732 rost:AccessoriesLingerieFineJewelryandFragrancesMember 2019-05-05 2019-08-03 0000745732 rost:LadiesMember 2018-05-06 2018-08-04 0000745732 rost:ShoesMember 2019-05-05 2019-08-03 0000745732 rost:LadiesMember 2018-02-04 2018-08-04 0000745732 rost:MensMember 2018-02-04 2018-08-04 0000745732 rost:HomeAccentsandBedandBathMember 2019-05-05 2019-08-03 0000745732 rost:HomeAccentsandBedandBathMember 2018-05-06 2018-08-04 0000745732 rost:HomeAccentsandBedandBathMember 2018-02-04 2018-08-04 0000745732 rost:LadiesMember 2019-02-03 2019-08-03 0000745732 rost:ChildrensMember 2019-05-05 2019-08-03 0000745732 rost:MensMember 2019-02-03 2019-08-03 0000745732 rost:ChildrensMember 2019-02-03 2019-08-03 0000745732 rost:MensMember 2019-05-05 2019-08-03 0000745732 rost:ChildrensMember 2018-02-04 2018-08-04 0000745732 rost:ShoesMember 2018-02-04 2018-08-04 0000745732 rost:ChildrensMember 2018-05-06 2018-08-04 0000745732 rost:HomeAccentsandBedandBathMember 2019-02-03 2019-08-03 0000745732 rost:ShoesMember 2019-02-03 2019-08-03 0000745732 rost:ShoesMember 2018-05-06 2018-08-04 0000745732 rost:MensMember 2018-05-06 2018-08-04 0000745732 rost:AccessoriesLingerieFineJewelryandFragrancesMember 2019-02-03 2019-08-03 0000745732 rost:AccessoriesLingerieFineJewelryandFragrancesMember 2018-02-04 2018-08-04 0000745732 rost:AccessoriesLingerieFineJewelryandFragrancesMember 2018-05-06 2018-08-04 0000745732 rost:LadiesMember 2019-05-05 2019-08-03 0000745732 2018-08-01 2018-08-31 0000745732 2018-11-01 2018-11-30 0000745732 2018-05-01 2018-05-30 0000745732 2019-05-01 2019-05-31 0000745732 us-gaap:FairValueInputsLevel2Member 2019-08-03 0000745732 us-gaap:FairValueInputsLevel2Member 2019-02-02 0000745732 us-gaap:FairValueInputsLevel1Member 2019-02-02 0000745732 us-gaap:FairValueInputsLevel1Member 2019-08-03 0000745732 us-gaap:FairValueInputsLevel1Member 2018-08-04 0000745732 us-gaap:FairValueInputsLevel2Member 2018-08-04 0000745732 us-gaap:RestrictedStockMember 2019-02-03 2019-08-03 0000745732 us-gaap:RestrictedStockMember 2019-02-02 0000745732 us-gaap:RestrictedStockMember 2019-08-03 0000745732 us-gaap:RestrictedStockMember 2018-08-04 0000745732 us-gaap:RestrictedStockMember 2019-05-05 2019-08-03 0000745732 us-gaap:RestrictedStockMember 2018-02-04 2018-08-04 0000745732 us-gaap:RestrictedStockMember 2018-05-06 2018-08-04 0000745732 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-05-06 2018-08-04 0000745732 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-02-04 2018-08-04 0000745732 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-05-05 2019-08-03 0000745732 us-gaap:CostOfSalesMember 2018-02-04 2018-08-04 0000745732 us-gaap:CostOfSalesMember 2018-05-06 2018-08-04 0000745732 us-gaap:CostOfSalesMember 2019-02-03 2019-08-03 0000745732 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-02-03 2019-08-03 0000745732 us-gaap:CostOfSalesMember 2019-05-05 2019-08-03 0000745732 rost:PerformanceAwardsMember 2018-05-06 2018-08-04 0000745732 us-gaap:EmployeeStockMember 2019-05-05 2019-08-03 0000745732 rost:PerformanceAwardsMember 2018-02-04 2018-08-04 0000745732 us-gaap:EmployeeStockMember 2019-02-03 2019-08-03 0000745732 us-gaap:EmployeeStockMember 2018-05-06 2018-08-04 0000745732 rost:PerformanceAwardsMember 2019-05-05 2019-08-03 0000745732 rost:PerformanceAwardsMember 2019-02-03 2019-08-03 0000745732 us-gaap:EmployeeStockMember 2018-02-04 2018-08-04 0000745732 srt:MaximumMember us-gaap:RestrictedStockMember 2019-02-03 2019-08-03 0000745732 srt:MinimumMember us-gaap:PerformanceSharesMember 2019-02-03 2019-08-03 0000745732 srt:MaximumMember us-gaap:PerformanceSharesMember 2019-02-03 2019-08-03 0000745732 srt:MinimumMember us-gaap:RestrictedStockMember 2019-02-03 2019-08-03 0000745732 rost:LosAngelesMember 2019-08-03 0000745732 srt:WarehouseMember srt:AffiliatedEntityMember 2019-08-03 0000745732 srt:WarehouseMember 2019-08-03 0000745732 rost:BostonMember 2019-08-03 0000745732 srt:MaximumMember 2019-02-03 2019-08-03 0000745732 srt:MinimumMember 2019-02-03 2019-08-03 0000745732 srt:MaximumMember 2019-08-03 0000745732 srt:MinimumMember 2019-08-03 0000745732 rost:SeriesAUnsecuredSeniorNotesMember 2019-02-02 0000745732 rost:SeriesBUnsecuredSeniorNotesMember 2018-08-04 0000745732 rost:SeriesBUnsecuredSeniorNotesMember 2019-02-02 0000745732 rost:SeniorNotesdue2024Member 2019-08-03 0000745732 rost:SeriesBUnsecuredSeniorNotesMember 2019-08-03 0000745732 rost:SeniorNotesdue2024Member 2018-08-04 0000745732 rost:SeniorNotesdue2024Member 2019-02-02 0000745732 rost:SeriesAUnsecuredSeniorNotesMember 2018-08-04 0000745732 rost:SeriesAUnsecuredSeniorNotesMember 2019-08-03 0000745732 rost:UnsecuredRevolvingCreditFacilityMember 2019-02-03 2019-08-03 0000745732 rost:UnsecuredRevolvingCreditFacilityMember 2019-08-03 0000745732 rost:SeniorNotesdue2021Member rost:SeriesBUnsecuredSeniorNotesMember 2019-08-03 0000745732 rost:SeniorNotesdue2024Member 2019-08-03 0000745732 rost:UnsecuredRevolvingCreditFacilityMember 2019-07-31 0000745732 rost:SeniorNotesdue2018Member 2018-12-13 2018-12-13 0000745732 2019-07-31 0000745732 rost:SeniorNotesdue2018Member 2018-12-13 0000745732 rost:UnsecuredRevolvingCreditFacilityMember 2019-06-30 0000745732 2019-07-01 2019-07-31 utreg:sqft rost:stores xbrli:shares iso4217:USD xbrli:shares rost:warehouse iso4217:USD xbrli:pure rost:renewal_option


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 2019
 
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 incorporation or
 
(I.R.S. Employer Identification No.)
organization)
 
 
 
 
 5130 Hacienda Drive,
Dublin,
California
 
94568-7579
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code
 
                   (925)
965-4400
 
Former name, former address and former
N/A
   fiscal year, if changed since last report.
 
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol
 
Name of each exchange on which registered
 Common stock,
par value $.01
 
ROST
 
Nasdaq Global Select Market

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 ý No o
    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ý    No o
     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý     Accelerated filer o Non-accelerated filer o Smaller reporting company Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No ý

The number of shares of Common Stock, with $.01 par value, outstanding on August 21, 2019 was 361,730,420.

1



Ross Stores, Inc.
Form 10-Q
Table of Contents

 
 
Page
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
Item 3.
 
 
Item 4.
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 
 
 


2



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Earnings

 
Three Months Ended
 
Six Months Ended
($000, except stores and per share data, unaudited)
August 3, 2019


August 4, 2018

 
August 3, 2019

 
August 4, 2018

Sales
$
3,979,869

 
$
3,737,926

 
$
7,776,511

 
$
7,326,545

 
 
 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
 
 
Cost of goods sold
2,843,850

 
2,666,983

 
5,545,518

 
5,189,202

Selling, general and administrative
591,970

 
554,581

 
1,150,220

 
1,079,004

Interest income, net
(4,782
)
 
(1,393
)
 
(10,417
)
 
(1,896
)
Total costs and expenses
3,431,038

 
3,220,171

 
6,685,321

 
6,266,310

 
 
 
 
 
 
 
 
Earnings before taxes
548,831

 
517,755

 
1,091,190

 
1,060,235

Provision for taxes on earnings
136,110

 
128,351

 
257,327

 
252,579

Net earnings
$
412,721

 
$
389,404

 
$
833,863

 
$
807,656

 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
Basic
$
1.15

 
$
1.05

 
$
2.31

 
$
2.17

Diluted
$
1.14

 
$
1.04

 
$
2.29

 
$
2.15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding (000)
 
 
 
 
 
 
 
Basic
359,794

 
371,031

 
361,439

 
372,414

Diluted
362,074

 
373,717

 
364,007

 
375,336

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stores open at end of period
1,772

 
1,680

 
1,772

 
1,680

The accompanying notes are an integral part of these condensed consolidated financial statements.

3



Condensed Consolidated Statements of Comprehensive Income

 
Three Months Ended
 
Six Months Ended
($000, unaudited)
August 3, 2019

 
August 4, 2018

 
August 3, 2019

 
August 4, 2018

Net earnings
$
412,721

 
$
389,404

 
$
833,863

 
$
807,656

 
 
 
 
 
 
 
 
Other comprehensive (loss) income:
 
 
 
 
 
 
 
Change in unrealized gain (loss) on investments, net of tax

 
(3
)
 

 
(23
)
Comprehensive income
$
412,721

 
$
389,401

 
$
833,863

 
$
807,633

The accompanying notes are an integral part of these condensed consolidated financial statements.

4



Condensed Consolidated Balance Sheets
($000, except share data, unaudited)
August 3, 2019

 
February 2, 2019

 
August 4, 2018

Assets
 
 
 
 
 
Current Assets
 
 
 
 
 
Cash and cash equivalents
$
1,382,025

 
$
1,412,912

 
$
1,386,935

Accounts receivable
130,439

 
96,711

 
121,508

Merchandise inventory
1,835,869

 
1,750,442

 
1,698,390

Prepaid expenses and other
167,585

 
143,954

 
172,822

Total current assets
3,515,918

 
3,404,019

 
3,379,655

 
 
 
 
 
 
Property and Equipment
 
 
 
 
 
Land and buildings
1,162,269

 
1,126,051

 
1,117,895

Fixtures and equipment
2,886,275

 
2,783,198

 
2,660,388

Leasehold improvements
1,162,935

 
1,175,921

 
1,117,648

Construction-in-progress
200,012

 
171,538

 
142,708

  
5,411,491

 
5,256,708

 
5,038,639

Less accumulated depreciation and amortization
2,906,451

 
2,781,507

 
2,654,338

Property and equipment, net
2,505,040

 
2,475,201

 
2,384,301

 
 
 
 
 
 
Operating lease assets
2,932,199

 

 

Other long-term assets
198,790

 
194,471

 
199,800

Total assets
$
9,151,947

 
$
6,073,691

 
$
5,963,756

 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
Current Liabilities
 
 
 
 
 
Accounts payable
$
1,359,829

 
$
1,177,104

 
$
1,184,422

Accrued expenses and other
474,273

 
431,596

 
427,875

Current operating lease liabilities
549,841

 

 

Accrued payroll and benefits
295,465

 
363,035

 
280,861

Income taxes payable

 
37,749

 

Current portion of long-term debt

 

 
84,989

Total current liabilities
2,679,408

 
2,009,484

 
1,978,147

 
 
 
 
 
 
Long-term debt
312,665

 
312,440

 
312,217

Non-current operating lease liabilities
2,496,230

 

 

Other long-term liabilities
227,842

 
321,713

 
374,587

Deferred income taxes
139,538

 
124,308

 
114,195

 
 
 
 
 
 
Commitments and contingencies


 


 


 
 
 
 
 
 
Stockholders’ Equity
 
 
 
 
 
Common stock, par value $.01 per share
Authorized 1,000,000,000 shares
Issued and outstanding 362,166,000, 368,242,000
and 373,868,000 shares, respectively
3,622

 
3,682

 
3,739

Additional paid-in capital
1,412,976

 
1,375,965

 
1,333,329

Treasury stock
(425,012
)
 
(372,663
)
 
(369,340
)
Accumulated other comprehensive income

 

 
4

Retained earnings
2,304,678

 
2,298,762

 
2,216,878

Total stockholders’ equity
3,296,264

 
3,305,746

 
3,184,610

Total liabilities and stockholders’ equity
$
9,151,947

 
$
6,073,691

 
$
5,963,756

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



Condensed Consolidated Statements of Stockholders' Equity
 
 
Six Months Ended August 3, 2019
 
 
 
 
 
 
Additional paid-in capital

 
 
 
Accumulated other comprehensive income (loss)

 
 
 
 
 
 
Common stock
 
 
Treasury stock

 
 
Retained earnings

 
 
(000)
 
Shares  

 
Amount

 
 
 
 
 
Total

Balance at February 2, 2019
 
368,242

 
$
3,682

 
$
1,375,965

 
$
(372,663
)
 
$

 
$
2,298,762

 
$
3,305,746

Net earnings
 

 

 

 

 

 
421,142

 
421,142

Cumulative effect of adoption of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting standard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(leases), net
 

 

 

 

 

 
(19,614
)
 
(19,614
)
Common stock issued under stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
plans, net of shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
used for tax withholding
 
390

 
4

 
5,291

 
(50,880
)
 

 

 
(45,585
)
Stock-based compensation
 

 

 
19,689

 

 

 

 
19,689

Common stock repurchased
 
(3,372
)
 
(33
)
 
(9,387
)
 

 

 
(310,710
)
 
(320,130
)
Dividends declared ($0.255 per share)
 

 

 

 

 

 
(93,722
)
 
(93,722
)
Balance at May 4, 2019
 
365,260

 
$
3,653

 
$
1,391,558

 
$
(423,543
)
 
$

 
$
2,295,858

 
$
3,267,526

Net earnings
 

 

 

 

 

 
412,721

 
412,721

Common stock issued under stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
plans, net of shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
used for tax withholding
 
98

 
1

 
5,610

 
(1,469
)
 

 

 
4,142

Stock-based compensation
 

 

 
24,924

 

 

 

 
24,924

Common stock repurchased
 
(3,192
)
 
(32
)
 
(9,116
)
 

 

 
(310,981
)
 
(320,129
)
Dividends declared ($0.255 per share)
 

 

 

 

 

 
(92,920
)
 
(92,920
)
Balance at August 3, 2019
 
362,166

 
$
3,622

 
$
1,412,976

 
$
(425,012
)
 
$

 
$
2,304,678

 
$
3,296,264


 
 
Six Months Ended August 4, 2018
 
 
 
 
 
 
Additional paid-in capital

 
 
 
Accumulated
other comprehensive income (loss)

 
 
 
 
 
 
Common stock
 
 
Treasury stock

 
 
Retained earnings

 
 
(000)
 
Shares  

 
Amount

 
 
 
 
 
Total

Balance at February 3, 2018
 
379,618

 
$
3,796

 
$
1,292,364

 
$
(318,279
)
 
$
27

 
$
2,071,400

 
$
3,049,308

Net earnings
 

 

 

 

 

 
418,252

 
418,252

Cumulative effect of adoption of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting standard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(revenue recognition), net
 

 

 

 

 

 
19,884

 
19,884

Unrealized investment loss, net

 

 

 

 

 
(20
)
 

 
(20
)
Common stock issued under stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
plans, net of shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
used for tax withholding
 
732

 
8

 
4,674

 
(44,798
)
 

 

 
(40,116
)
Stock-based compensation
 

 

 
23,760

 

 

 

 
23,760

Common stock repurchased
 
(3,271
)
 
(33
)
 
(8,093
)
 

 

 
(247,244
)
 
(255,370
)
Dividends declared ($0.225 per share)
 

 

 

 

 

 
(85,410
)
 
(85,410
)
Balance at May 5, 2018
 
377,079

 
$
3,771

 
$
1,312,705

 
$
(363,077
)
 
$
7

 
$
2,176,882

 
$
3,130,288

Net earnings
 

 

 

 

 

 
389,404

 
389,404

Unrealized investment loss, net
 

 

 

 

 
(3
)
 

 
(3
)
Common stock issued under stock
 
 
 
 
 
 
 
 
 
 
 
 
 


plans, net of shares
 
 
 
 
 
 
 
 
 
 
 
 
 


used for tax withholding
 
20

 

 
5,135

 
(6,263
)
 

 

 
(1,128
)
Stock-based compensation
 

 

 
23,820

 

 

 

 
23,820

Common stock repurchased
 
(3,231
)
 
(32
)
 
(8,331
)
 

 

 
(264,847
)
 
(273,210
)
Dividends declared ($0.225 per share)
 

 

 

 

 

 
(84,561
)
 
(84,561
)
Balance at August 4, 2018
 
373,868


$
3,739


$
1,333,329


$
(369,340
)

$
4


$
2,216,878


$
3,184,610

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 

6



Condensed Consolidated Statements of Cash Flows
 
Six Months Ended
($000, unaudited)
August 3, 2019

 
August 4, 2018

Cash Flows From Operating Activities
 
 
 
Net earnings
$
833,863

 
$
807,656

Adjustments to reconcile net earnings to net cash provided
by operating activities:
 
 
 
Depreciation and amortization
166,898

 
162,403

Stock-based compensation
44,613

 
47,580

Deferred income taxes
21,868

 
21,664

Change in assets and liabilities:
 
 
 
Merchandise inventory
(85,427
)
 
(56,654
)
Other current assets
(55,309
)
 
(64,754
)
Accounts payable
187,050

 
122,008

Other current liabilities
(8,529
)
 
(29,348
)
Income taxes
(31,193
)
 
(1,619
)
Operating lease assets and liabilities, net
8,276

 

Other long-term, net
1,353

 
5,248

Net cash provided by operating activities
1,083,463

 
1,014,184

 
 
 
 
Cash Flows From Investing Activities
 
 
 
Additions to property and equipment
(250,314
)
 
(178,635
)
Proceeds from investments
517

 
505

Net cash used in investing activities
(249,797
)
 
(178,130
)
 
 
 
 
Cash Flows From Financing Activities
 
 
 
Issuance of common stock related to stock plans
10,906

 
9,817

Treasury stock purchased
(52,349
)
 
(51,061
)
Repurchase of common stock
(640,259
)
 
(528,580
)
Dividends paid
(186,642
)
 
(169,971
)
Net cash used in financing activities
(868,344
)
 
(739,795
)
 
 
 
 
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents
(34,678
)
 
96,259

 
 
 
 
Cash, cash equivalents, and restricted cash and cash equivalents:
 
 
 
Beginning of period
1,478,079

 
1,353,272

End of period
$
1,443,401

 
$
1,449,531

 
 
 
 
Supplemental Cash Flow Disclosures
 
 
 
Interest paid
$
6,341

 
$
9,053

Income taxes paid
$
266,653

 
$
232,528


The accompanying notes are an integral part of these condensed consolidated financial statements.




7



Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended August 3, 2019 and August 4, 2018
(Unaudited)

Note A: Summary of Significant Accounting Policies

Basis of presentation. The accompanying unaudited interim condensed consolidated financial statements have been prepared from the records of Ross Stores, Inc. and subsidiaries (the “Company”) without audit and, in the opinion of management, include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the Company’s financial position as of August 3, 2019 and August 4, 2018, the results of operations, comprehensive income, and stockholders' equity for the three and six month periods ended August 3, 2019 and August 4, 2018, and cash flows for the six month periods ended August 3, 2019 and August 4, 2018. The Condensed Consolidated Balance Sheet as of February 2, 2019, presented herein, has been derived from the Company’s audited consolidated financial statements for the fiscal year then ended.

Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted for purposes of these 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, contained in the Company’s Annual Report on Form 10-K for the year ended February 2, 2019.

The results of operations, comprehensive income, and stockholders' equity for the three and six month periods ended August 3, 2019 and August 4, 2018 and cash flows for the six month periods ended August 3, 2019 and August 4, 2018 presented herein are not necessarily indicative of the results to be expected for the full fiscal year.

Recently adopted accounting standards. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Accounting Standards Codification "ASC" 842), which along with subsequent amendments, supersedes the lease accounting requirements in ASC 840, Leases. The updated guidance requires balance sheet recognition for all leases with lease terms greater than one year including a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

The Company adopted ASC 842 as of February 3, 2019 (the "effective date"), using the optional transition method on a modified retrospective basis. The Company did not elect the transitional package of practical expedients or the use of hindsight upon adoption of the ASC. The Company elected to not record a lease liability and corresponding right-of-use asset for leases with terms of 12 months or less, and to account for lease and non-lease components as a single lease component. Upon adoption, the Company recorded lease liabilities based on the present value of the remaining minimum rental payments, using discount rates as of the effective date, of $2.9 billion, and the corresponding right-of-use assets of $2.9 billion. The Company also recorded a cumulative-effect adjustment to decrease beginning retained earnings of $19.6 million, primarily related to the write-off of previously capitalized initial direct costs that are no longer capitalized under ASC 842, partially offset by the write-off of the deferred gain on a previous sale-leaseback transaction that meets the sale definition under ASC 842. Reporting periods beginning on or after February 3, 2019 are presented under ASC 842, while prior period amounts and disclosures were not adjusted and continue to be reported under ASC 840. ASC 842 did not have a significant impact to the Company’s condensed consolidated statements of earnings or to the condensed consolidated statements of cash flows.

Significant accounting policies. Except for the updates to accounting policies for leases as a result of adopting ASC 842 described below, there have been no significant changes to the accounting policies followed by the Company as described in Note A to the audited consolidated financial statements for the fiscal year ended February 2, 2019.


8



Leases. As the Company’s leases generally do not provide an implicit discount rate, the Company uses the estimated collateralized incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments for use in the calculation of the lease liabilities and right-of-use assets. This rate is determined using a portfolio approach based on the risk-adjusted rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar lease term. Operating lease liabilities and corresponding right-of-use assets include options to extend lease terms that are reasonably certain of being exercised. The Company does not record a lease liability and corresponding right-of-use asset for leases with terms of 12 months or less, and accounts for lease and non-lease components as a single lease component. The Company's lease portfolio is comprised of operating leases with the lease cost recorded on a straight-line basis over the lease term.

Prior to the adoption of ASC 842, when a lease contained “rent holidays” or required fixed escalations of the minimum lease payments, the Company recorded rental expense on a straight-line basis over the term of the lease and the difference between the average rental amount was charged to expense and the amount payable under the lease was recorded as deferred rent. The Company began recording rent expense on the lease possession date. Tenant improvement allowances were amortized over the lease term. Changes in deferred rent and tenant improvement allowances were included as a component of operating activities in the Condensed Consolidated Statements of Cash Flows.

Revenue recognition. The following sales mix table disaggregates revenue by merchandise category for the three and six month periods ended August 3, 2019 and August 4, 2018:

 
Three Months Ended
 
Six Months Ended
 
August 3, 2019

 
August 4, 2018

 
August 3, 2019

 
August 4, 2018

Ladies
27
%
 
28
%
 
27
%
 
28
%
Home Accents and Bed and Bath
23
%
 
24
%
 
24
%
 
24
%
Shoes
14
%
 
14
%
 
14
%
 
14
%
Men's
15
%
 
14
%
 
14
%
 
13
%
Accessories, Lingerie, Fine Jewelry, and Fragrances
13
%
 
12
%
 
13
%
 
13
%
Children's
8
%
 
8
%
 
8
%
 
8
%
Total
100
%
 
100
%
 
100
%
 
100
%


Cash, restricted cash, and restricted investments. Restricted cash, cash equivalents, and investments serve as collateral for certain insurance obligations of the Company. These restricted funds are invested in bank deposits, money market mutual funds, U.S. Government and agency securities, and corporate securities and cannot be withdrawn from the Company’s account without the prior written consent of the secured parties. The classification between current and long-term is based on the timing of expected payments of the insurance obligations.

The following table provides a reconciliation of cash, cash equivalents, restricted cash and equivalents in the Condensed Consolidated Balance Sheets that reconcile to the amounts shown on the Condensed Consolidated Statements of Cash Flows:
($000)
August 3, 2019

 
February 2, 2019

 
August 4, 2018

Cash and cash equivalents
$
1,382,025

 
$
1,412,912

 
$
1,386,935

Restricted cash and cash equivalents included in:
 
 
 
 
 
  Prepaid expenses and other
11,048

 
11,402

 
8,961

  Other long-term assets
50,328

 
53,765

 
53,635

Total restricted cash and cash equivalents
61,376

 
65,167

 
62,596

Total cash, cash equivalents, and restricted cash and equivalents
$
1,443,401

 
$
1,478,079

 
$
1,449,531



9



In addition to the restricted cash and equivalents in the table above, the Company had restricted investments included in the Condensed Consolidated Balance Sheets as shown below:

($000)
August 3, 2019

 
February 2, 2019

 
August 4, 2018

Prepaid expenses and other
$

 
$
400

 
$
2,812

Total restricted investments
$

 
$
400

 
$
2,812



Property and equipment. As of August 3, 2019 and August 4, 2018, the Company had $13.0 million and $10.0 million, respectively, of property and equipment purchased but not yet paid. These purchases are included in Property and Equipment, Accounts payable, and Accrued expenses and other in the accompanying Condensed Consolidated Balance Sheets.

Cash dividends. Dividends included in the Condensed Consolidated Statements of Cash Flows reflect cash dividends paid during the periods shown. Dividends per share reported on the Condensed Consolidated Statements of Earnings reflect cash dividends declared during the periods shown.

The Company’s Board of Directors declared a cash dividend of $0.255 per common share in March and May 2019, and $0.225 per common share in March, May, August, and November 2018, respectively.

In August 2019, the Company’s Board of Directors declared a cash dividend of $0.255 per common share, payable on September 30, 2019.

Litigation, claims, and assessments. Like many retailers, the Company has been named in class action lawsuits, primarily in California, alleging violation of wage and hour/employment laws and consumer protection laws. Class action litigation remains pending as of August 3, 2019.

The Company is also party to various other legal and regulatory proceedings arising in the normal course of business. Actions filed against the Company may include commercial, product and product safety, consumer, intellectual property, environmental, and labor and employment-related claims, including lawsuits in which private plaintiffs or governmental agencies allege that the Company violated federal, state, and/or local laws. Actions against the Company are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties.

In the opinion of management, the resolution of pending class action litigation and other currently pending legal and regulatory proceedings will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Recently issued accounting standards. The Company considers the applicability and impact of all ASUs issued by the FASB. For the three and six month periods ended August 3, 2019, the ASUs issued by the FASB were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.

Reclassifications. Certain items related to income taxes in the prior year’s condensed consolidated statements of cash flows have been reclassified to conform to the current year's presentation.






10



Note B: Fair Value Measurements

The carrying value of cash and cash equivalents, short- and long-term investments, restricted cash and cash equivalents, restricted investments, accounts receivable, other long-term assets, accounts payable, and other long-term liabilities approximates their estimated fair value.

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The inputs used to measure fair value include: Level 1, observable inputs such as quoted prices in active markets; Level 2, inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, unobservable inputs in which little or no market data exists. This fair value hierarchy requires the Company to develop its own assumptions and maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Corporate, U.S. government and agency, and mortgage-backed securities are classified within Level 1 or Level 2 because these securities are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

There were no transfers between Level 1 and Level 2 categories during the three and six month periods ended August 3, 2019. The fair value of the Company’s financial instruments are as follows:

($000)
 
August 3, 2019

 
February 2, 2019

 
August 4, 2018

Cash and cash equivalents (Level 1)
 
$
1,382,025

 
$
1,412,912

 
$
1,386,935

 
 
 
 
 
 
 
Restricted cash and cash equivalents (Level 1)
 
$
61,376

 
$
65,167

 
$
62,596

 
 
 
 
 
 
 
Investments (Level 2)
 
$
8

 
$
125

 
$
709

 
 
 
 
 
 
 
Restricted investments (Level 2)
 
$

 
$
400

 
$
2,812



The underlying assets in the Company’s non-qualified deferred compensation program as of August 3, 2019, February 2, 2019, and August 4, 2018 (included in Other long-term assets and in Other long-term liabilities) primarily consist of participant-directed money market, stable value, stock, and bond funds. The fair value measurement for funds with quoted market prices in active markets (Level 1) and for funds without quoted market prices in active markets (Level 2) are as follows:

($000)
August 3, 2019

 
February 2, 2019

 
August 4, 2018

Level 1
$
126,377

 
$
114,181

 
$
117,274

Level 2
7,411

 
10,377

 
11,836

Total
$
133,788

 
$
124,558

 
$
129,110




Note C: Stock-Based Compensation

Stock-based compensation. For the three and six month periods ended August 3, 2019 and August 4, 2018, the Company recognized stock-based compensation expense as follows:

 
Three Months Ended
 
 
Six Months Ended
($000)
August 3, 2019

 
August 4, 2018

 
 
August 3, 2019

 
August 4, 2018

Restricted stock
$
14,909

 
$
12,428

 
 
$
24,358

 
$
23,936

Performance awards
9,025

 
10,487

 
 
18,329

 
21,911

Employee stock purchase plan
990

 
905

 
 
1,926

 
1,733

Total
$
24,924

 
$
23,820

 
 
$
44,613

 
$
47,580




11



Total stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Earnings for the three and six month periods ended August 3, 2019 and August 4, 2018, is as follows:

 
Three Months Ended
 
Six Months Ended
Statements of Earnings Classification ($000)
August 3, 2019

 
August 4, 2018

 
August 3, 2019

 
August 4, 2018

Cost of goods sold
$
13,812

 
$
11,011

 
$
26,934

 
$
22,047

Selling, general and administrative
11,112

 
12,809

 
17,679

 
25,533

Total
$
24,924

 
$
23,820

 
$
44,613

 
$
47,580



The tax benefits related to stock-based compensation expense for the three and six month periods ended August 3, 2019 were $5.0 million and $8.7 million, respectively. The tax benefits related to stock-based compensation expense for the three and six month periods ended August 4, 2018 were $5.0 million and $9.9 million, respectively.

Restricted stock awards. The Company grants shares of restricted stock to directors, officers, and key employees. The market value of shares of restricted stock at the date of grant is amortized to expense over the vesting period of generally three to five years.

During the three and six month periods ended August 3, 2019 and August 4, 2018, shares purchased by the Company for tax withholding totaled 14,627 and 570,624, and 78,151 and 661,379, respectively, and are considered treasury shares which are available for reissuance.

Performance share awards. The Company has a performance share award program for senior executives. A performance share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s attainment of a profitability-based performance goal during the performance period, which is the Company’s fiscal year. If attained, the restricted stock then vests over a service period, generally two to three years from the date the performance award was granted.
 
As of August 3, 2019, shares related to unvested restricted stock and performance share awards totaled 4.3 million shares. A summary of restricted stock and performance share award activity for the six month period ended August 3, 2019, is presented below:

(000, except per share data)
Number of
shares

 
Weighted
average
grant date
fair value

Unvested at February 2, 2019
5,130

 
$
62.50

Awarded
1,052

 
91.26

Released
(1,609
)
 
52.53

Forfeited
(310
)
 
70.17

Unvested at August 3, 2019
4,263

 
$
72.80



The unamortized compensation expense at August 3, 2019, was $165.2 million, which is expected to be recognized over a weighted-average remaining period of 2.3 years. The unamortized compensation expense at August 4, 2018, was $148.3 million, which was expected to be recognized over a weighted-average remaining period of 2.2 years.

Employee stock purchase plan. Under the Employee Stock Purchase Plan (“ESPP”), eligible employees participating in the quarterly offering period can choose to have up to the lesser of 10% of their annual base earnings or the IRS annual share purchase limit of $25,000 in aggregate market value to purchase the Company’s common stock. The purchase price of the stock is 85% of the closing market price on the date of purchase. Purchases occur on a quarterly basis (on the last trading day of each calendar quarter). The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.



12



Note D: Earnings Per Share

The Company computes and reports both basic earnings per share ("EPS") and diluted EPS. Basic EPS is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net earnings by the sum of the weighted average number of common shares and dilutive common stock equivalents outstanding during the period. Diluted EPS reflects the total potential dilution that could occur from outstanding equity plan awards, including unexercised stock options, and unvested shares of both performance and non-performance based awards of restricted stock.

For the three and six month periods ended August 3, 2019, approximately 10,500 and 5,300 weighted average shares were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for the periods presented. For the three month period ended August 4, 2018, no weighted average shares were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for the period presented. For the six month period ended August 4, 2018, approximately 730 weighted average shares were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for the period presented.

The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations:

 
Three Months Ended
 
 
Six Months Ended
Shares in (000s)
Basic EPS

 
Effect of
dilutive
common stock
equivalents

 
Diluted
EPS

 
 
Basic EPS

 
Effect of
dilutive
common
stock
equivalents

 
Diluted
EPS

August 3, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Shares
359,794

 
2,280

 
362,074

 
 
361,439

 
2,568

 
364,007

Amount
$
1.15

 
$
(0.01
)
 
$
1.14

 
 
$
2.31

 
$
(0.02
)
 
$
2.29

 
 
 
 
 
 
 
 
 
 
 
 
 
August 4, 2018
 
 
 
 
 
 
 
 
 
 
 
 
     Shares
371,031

 
2,686

 
373,717

 
 
372,414

 
2,922

 
375,336

     Amount
$
1.05

 
$
(0.01
)
 
$
1.04

 
 
$
2.17

 
$
(0.02
)
 
$
2.15





13



Note E: Leases
The Company currently leases all but two of its store locations with original, non-cancelable terms that in general range from three to ten years. Store leases typically contain provisions for three to four renewal options of five years each. The exercise of lease renewal options is at the sole discretion of the Company. Most store leases also provide for minimum annual rentals and for payment of variable lease costs. In addition, some store leases also have provisions for additional rent based on a percentage of sales (“percentage rent”) and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company does not have any financing leases.
The Company leases five warehouses, and has four third-party warehousing arrangements. All of these contain renewal provisions, except for the third-party warehouse in Fort Mill, South Carolina. The following table summarizes the location and expiration date of the Company’s leased warehouses:
Location
 
Lease Expiration Date
Leased Warehouses
 
 
Carlisle, Pennsylvania
 
2020
Carlisle, Pennsylvania
 
2021
Fort Mill, South Carolina
 
2024
Rock Hill, South Carolina
 
2028
Shafter, California
 
2029
 
 
 
Third-Party Warehouses
 
 
Fort Mill, South Carolina
 
2020
Moreno Valley, California
 
2023
Moreno Valley, California
 
2029
Shafter, California
 
2020


The Company leases approximately 103,000 and 5,000 square feet of office space for its Los Angeles and Boston buying offices, respectively. The lease term for these facilities expire in 2022 and 2020, respectively, and contain renewal provisions. In addition, the Company has a ground lease related to its New York buying office.

The following table presents operating lease costs included in the Condensed Consolidated Statement of Earnings for the three and six month periods ended August 3, 2019:

 
 
Three Months Ended
Six Months Ended
($000)
 
August 3, 2019

August 3, 2019

Operating lease cost 1
 
$
159,648

$
315,214

Variable lease costs 2
 
43,872

86,786

Net lease cost 3
 
$
203,520

$
402,000

 
 
 
 
1  Net of sublease income which was immaterial.
 
 
 
2  Includes property and rent taxes, insurance, common area maintenance, and percentage rent.
 
3  Excludes short-term lease costs which were immaterial.
 
 
 



14



The maturity of operating lease liabilities, including the ground lease related to the New York buying office as of August 3, 2019, are as follows:

($000)
 
Operating Leases 1

2020
 
$
593,543

2021
 
600,160

2022
 
521,350

2023
 
438,964

2024
 
338,686

Thereafter
 
1,631,666

Total lease payments
 
4,124,369

Less: interest
 
1,078,298

Present value of lease liabilities
 
$
3,046,071

Less: current operating lease liabilities
 
549,841

Non-current operating lease liabilities
 
$
2,496,230

 
 
 
1 Operating lease payments exclude $211.9 million of minimum lease payments for leases signed that have not yet commenced.


At August 3, 2019, the weighted-average remaining lease term and the weighted average discount rate for operating leases is 11.0 years and 3.6%, respectively. The weighted-average remaining lease term and the weighted average discount rate, excluding the long-term ground lease related to the New York buying office, were 6.2 years and 3.3%, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $153.6 million and $301.8 million, respectively, for the three and six month periods ended August 3, 2019 and is included in Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

Operating lease assets obtained in exchange for new operating lease liabilities (includes new leases and remeasurements or modifications of existing leases) during the three and six month periods ended August 3, 2019 were $127.6 million and $335.4 million, respectively.
In accordance with ASC 840, the aggregate undiscounted future minimum annual lease payments under leases, including the ground lease related to the New York buying office, in effect at February 2, 2019 were as follows:
($000)
 
Total operating leases
2019
 
$
555,812

2020
 
580,712

2021
 
499,678

2022
 
424,695

2023
 
339,340

Thereafter
 
1,575,673

Total minimum lease payments
 
$
3,975,910






15



Note F: Debt

Senior notes. Unsecured senior debt, net of unamortized discounts and debt issuance costs, consisted of the following:

($000)
 
August 3, 2019

 
February 2, 2019

 
August 4, 2018

6.38% Series A Senior Notes due 2018
 
$

 
$

 
$
84,989

6.53% Series B Senior Notes due 2021