Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Statements of Earnings

		Year Ended				Year Ended				Year Ended
($000, except per share data)		January 31, 2015				February 1, 2014				February 2, 2013
Sales		$	11,041,677			$	10,230,353			$	9,721,065
Costs and Expenses
Cost of goods sold		7,937,956				7,360,924				7,011,428
Selling, general and administrative		1,615,371				1,526,366				1,437,886
Interest expense (income), net		2,984				(247		)		6,907
Total costs and expenses		9,556,311				8,887,043				8,456,221
Earnings before taxes		1,485,366				1,343,310				1,264,844
Provision for taxes on earnings		560,642				506,006				478,081
Net earnings		$	924,724			$	837,304			$	786,763
Earnings per share
Basic		$	4.47			$	3.93			$	3.59
Diluted		$	4.42			$	3.88			$	3.53
Weighted average shares outstanding (000)
Basic		206,777				212,881				219,130
Diluted		209,039				215,805				222,784
The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Comprehensive Income

		Year Ended				Year Ended				Year Ended
($000)		January 31, 2015				February 1, 2014				February 2, 2013
Net earnings		$	924,724			$	837,304			$	786,763
Other comprehensive income:
Change in unrealized loss on investments, net of tax		(59		)		(196		)		(50		)
Comprehensive income		$	924,665			$	837,108			$	786,713
The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Balance Sheets

($000, except share data)	January 31, 2015				February 1, 2014
Assets
Current Assets
Cash and cash equivalents	$	696,608			$	423,168
Short-term investments	500				12,006
Accounts receivable	73,278				62,612
Merchandise inventory	1,372,675				1,257,155
Prepaid expenses and other	106,778				101,991
Deferred income taxes	12,951				10,227
Total current assets	2,262,790				1,867,159
Property and Equipment
Land and buildings	952,428				478,973
Fixtures and equipment	1,933,383				1,678,397
Leasehold improvements	854,572				813,972
Construction-in-progress	293,715				510,221
	4,034,098				3,481,563
Less accumulated depreciation and amortization	1,760,346				1,606,264
Property and equipment, net	2,273,752				1,875,299
Long-term investments	3,110				3,710
Other long-term assets	163,482				150,629
Total assets	$	4,703,134			$	3,896,797
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	1,000,700			$	779,455
Accrued expenses and other	385,325				359,929
Accrued payroll and benefits	256,141				235,324
Income taxes payable	17,202				18,349
Total current liabilities	1,659,368				1,393,057
Long-term debt	398,375				150,000
Other long-term liabilities	279,500				287,567
Deferred income taxes	86,681				58,871
Commitments and contingencies
Stockholders’ Equity
Common stock, par value $.01 per share	2,075				2,134
Authorized 600,000,000 shares
Issued and outstanding 207,470,000 and
213,420,000 shares,respectively
Additional paid-in capital	1,015,681				935,591
Treasury stock	(160,600		)		(121,559		)
Accumulated other comprehensive income	330				389
Retained earnings	1,421,724				1,190,747
Total stockholders’ equity	2,279,210				2,007,302
Total liabilities and stockholders’ equity	$	4,703,134			$	3,896,797
The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Stockholders' Equity

									Additional paid-in capital								Accumulated other comprehensive income (loss)
		Common stock								Treasury stock					Retained earnings
(000)		Shares			Amount								Total
Balance at January 28, 2012		226,864			$	2,269			$	788,895			$	(62,262	)		$635			$	763,475			$	1,493,012
Net earnings		—			—				—				—				—			786,763				786,763
Unrealized investment loss, net		—			—				—				—				(50	)		—				(50		)
Common stock issued under stock
plans, net of shares
used for tax withholding		1,315			13				19,030				(29,446		)		—			—				(10,403		)
Tax benefit from equity issuance		—			—				29,989				—				—			—				29,989
Stock-based compensation		—			—				48,952				—				—			—				48,952
Common stock repurchased		(7,458	)		(75		)		(20,347		)		—				—			(429,578		)		(450,000		)
Dividends declared ($0.59 per share)		—			—				—				—				—			(131,400		)		(131,400		)
Balance at February 2, 2013		220,721			$	2,207			$	866,519			$	(91,708	)		$585			$	989,260			$	1,766,863
Net earnings		—			—				—				—				—			837,304				837,304
Unrealized investment loss, net		—			—				—				—				(196	)		—				(196		)
Common stock issued under stock
plans, net of shares
used for tax withholding		878			9				19,065				(29,851		)		—			—				(10,777		)
Tax benefit from equity issuance		—			—				27,661				—				—			—				27,661
Stock-based compensation		—			—				46,847				—				—			—				46,847
Common stock repurchased		(8,179	)		(82		)		(24,501		)		—				—			(525,417		)		(550,000		)
Dividends declared ($0.51 per share)		—			—				—				—				—			(110,400		)		(110,400		)
Balance at February 1, 2014		213,420			$	2,134			$	935,591			$	(121,559	)		$389			$	1,190,747			$	2,007,302
Net earnings		—			—				—				—				—			924,724				924,724
Unrealized investment loss, net		—			—				—				—				(59	)		—				(59		)
Common stock issued under stock
plans, net of shares
used for tax withholding		1,453			15				21,963				(39,041		)		—			—				(17,063		)
Tax benefit from equity issuance		—			—				29,759				—				—			—				29,759
Stock-based compensation		—			—				53,001				—				—			—				53,001
Common stock repurchased		(7,403	)		(74		)		(24,633		)		—				—			(525,293		)		(550,000		)
Dividends declared ($0.80 per share)		—			—				—				—				—			(168,454		)		(168,454		)
Balance at January 31, 2015		207,470			$	2,075			$	1,015,681			$	(160,600	)		$330			$	1,421,724			$	2,279,210
The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flows

	Year Ended				Year Ended				Year Ended
($000)	January 31, 2015				February 1, 2014				February 2, 2013
Cash Flows From Operating Activities
Net earnings	$	924,724			$	837,304			$	786,763
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	232,959				206,111				185,491
Stock-based compensation	53,001				46,847				48,952
Deferred income taxes	25,086				(15,250		)		(39,028		)
Tax benefit from equity issuance	29,759				27,661				29,989
Excess tax benefit from stock-based compensation	(29,415		)		(26,906		)		(29,103		)
Change in assets and liabilities:
Merchandise inventory	(115,520		)		(47,918		)		(79,167		)
Other current assets	(16,410		)		(9,875		)		(14,474		)
Accounts payable	204,158				(4,104		)		40,109
Other current liabilities	69,568				(18,562		)		18,146
Other long-term, net	(5,045		)		26,695				31,966
Net cash provided by operating activities	1,372,865				1,022,003				979,644
Cash Flows From Investing Activities
Additions to property and equipment	(646,691		)		(550,515		)		(424,434		)
Increase in restricted cash and investments	(4,329		)		(2,895		)		(2,107		)
Purchases of investments	—				(12,012		)		(5,430		)
Proceeds from investments	12,021				1,614				6,247
Net cash used in investing activities	(638,999		)		(563,808		)		(425,724		)
Cash Flows From Financing Activities
Excess tax benefit from stock-based compensation	29,415				26,906				29,103
Net proceeds from issuance of long-term debt	245,676				—				—
Issuance of common stock related to stock plans	21,978				19,074				19,043
Treasury stock purchased	(39,041		)		(29,851		)		(29,446		)
Repurchase of common stock	(550,000		)		(550,000		)		(450,000		)
Dividends paid	(168,454		)		(147,917		)		(125,694		)
Net cash used in financing activities	(460,426		)		(681,788		)		(556,994		)
Net increase (decrease) in cash and cash equivalents	273,440				(223,593		)		(3,074		)
Cash and cash equivalents:
Beginning of year	423,168				646,761				649,835
End of year	$	696,608			$	423,168			$	646,761
Supplemental Cash Flow Disclosures
Interest paid	$	9,668			$	9,668			$	9,668
Income taxes paid	$	510,145			$	506,182			$	435,808
The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements

Note A: Summary of Significant Accounting Policies

Business. Ross Stores, Inc. and its subsidiaries (the “Company”) is an off-price retailer of first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family. At the end of fiscal 2014, the Company operated 1,210 Ross Dress for Less® (“Ross”) locations in 33 states, the District of Columbia and Guam, and 152 dd’s DISCOUNTS® stores in 15 states. The Ross and dd's DISCOUNTS stores are supported by five distribution centers. The Company’s headquarters, one buying office, two operating distribution centers, two warehouses, and 25% of its stores are located in California.

Segment reporting. The Company has one reportable segment. The Company’s operations include only activities related to off-price retailing in stores throughout the United States.

Basis of presentation and fiscal year. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. Intercompany transactions and accounts have been eliminated. The Company follows the National Retail Federation fiscal calendar and utilizes a 52-53 week fiscal year whereby the fiscal year ends on the Saturday nearest to January 31. The fiscal years ended January 31, 2015, February 1, 2014 and February 2, 2013 are referred to as fiscal 2014, fiscal 2013, and fiscal 2012, respectively. Fiscal 2014 and 2013 were each 52-week years. Fiscal 2012 was a 53-week year.

Use of accounting estimates. The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant accounting estimates include valuation reserves for inventory shortage, packaway inventory costs, useful lives of fixed assets, insurance reserves, and reserves for uncertain tax positions.

Purchase obligations. As of January 31, 2015, the Company had purchase obligations of approximately $1,953 million. These purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, store fixtures and supplies, and information technology service, transportation, and maintenance contracts.

Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original maturity of three months or less.

Restricted cash, cash equivalents, and investments. The Company has restricted cash, cash equivalents, and investments that 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 following table summarizes total restricted cash, cash equivalents, and investments which were included in Prepaid expenses and other and Other long-term assets in the Consolidated Balance Sheets as of January 31, 2015 and February 1, 2014:

Restricted Assets ($000)		2014				2013
Prepaid expenses and other		$	19,713			$	20,734
Other long-term assets		56,107				50,763
Total		$	75,820			$	71,497

The classification between current and long-term is based on the timing of expected payments of the insurance obligations.

Estimated fair value of financial instruments. 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. See Note B and Note D for additional fair value information.

Cash and cash equivalents were $696.6 million and $423.2 million, at January 31, 2015 and February 1, 2014, respectively, and include bank deposits and money market funds for which the fair value was determined using quoted prices for identical assets in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosures guidance.

Investments. The Company’s investments are comprised of various debt securities. At January 31, 2015 and February 1, 2014, these investments were classified as available-for-sale and are stated at fair value. Investments are classified as either short- or long-term based on their original maturities and the Company’s intent. Investments with an original maturity of less than one year are classified as short-term. See Note B for additional information.

Merchandise inventory. Merchandise inventory is stated at the lower of cost (determined using a weighted average basis) or net realizable value. The Company purchases manufacturer overruns and canceled orders both during and at the end of a season which are referred to as "packaway" inventory. Packaway inventory is purchased with the intent that it will be stored in the Company's warehouses until a later date. The timing of the release of packaway inventory to the stores is principally driven by the product mix and seasonality of the merchandise, and its relation to the Company’s store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage less than six months. Merchandise inventory includes acquisition, processing, and storage costs related to packaway inventory. The cost of the Company’s merchandise inventory is reduced by valuation reserves for shortage based on historical shortage experience from the Company’s physical merchandise inventory counts and cycle counts.

Cost of goods sold. In addition to product costs, the Company includes in cost of goods sold its buying, distribution and freight expenses as well as occupancy costs, and depreciation and amortization related to the Company’s retail stores, buying, and distribution facilities. Buying expenses include costs to procure merchandise inventories. Distribution expenses include the cost of operating the Company’s distribution centers and warehouse facilities.

Prepaid expenses and other. Prepaid expenses and other as of January 31, 2015 and February 1, 2014 consisted of the following:

($000)		2014				2013
Restricted cash and investments		$	19,713			$	20,734
Prepaid expenses		87,065				81,257
Total		$	106,778			$	101,991

Property and equipment. Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful life of the asset, typically ranging from three to 12 years for equipment and 20 to 40 years for land improvements and buildings. Depreciation and amortization expense on property and equipment was $233.0 million, $206.1 million, and $185.5 million for fiscal 2014, 2013, and 2012, respectively. The cost of leasehold improvements is amortized over the useful life of the asset or the applicable lease term, whichever is less. The Company capitalizes interest during the construction period. Interest capitalized was $10.8 million, $10.8 million, and $3.9 million in fiscal 2014, fiscal 2013, and fiscal 2012, respectively. As of January 31, 2015, February 1, 2014, and February 2, 2013 the Company had $58.6 million, $61.3 million, and $23.7 million, respectively, of property and equipment purchased but not yet paid. These purchases are included in Property and Equipment and in Accounts payable and Accrued expenses and other in the accompanying Consolidated Balance Sheets.

In September 2014, the Company completed the purchase of its previously leased New York buying office for $222 million.

Other long-term assets. Other long-term assets as of January 31, 2015 and February 1, 2014 consisted of the following:

($000)		2014				2013
Deferred compensation (Note B)		$	94,054			$	88,269
Restricted cash and investments		56,107				50,763
Deposits		3,285				3,285
Goodwill		2,889				2,889
Other		7,147				5,423
Total		$	163,482			$	150,629

Property and other long-term assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets that are not subject to amortization, including goodwill, are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. Based on the Company’s evaluation during fiscal 2014, 2013, and 2012, no impairment charges were recorded.

Store closures. The Company continually reviews the operating performance of individual stores. For stores that are closed, the Company records a liability for future minimum lease payments net of estimated sublease recoveries and related ancillary costs at the time the liability is incurred. In 2014, the Company closed nine stores. In 2013, the Company closed 11 stores. The lease loss liability was $2.7 million and $6.3 million, as of January 31, 2015 and February 1, 2014, respectively. Operating costs, including depreciation, of stores to be closed are expensed during the period they remain in use.

Accounts payable. Accounts payable represents amounts owed to third parties at the end of the period. Accounts payable includes book cash overdrafts (checks issued under zero balance accounts not yet presented for payment) in excess of cash balances in such accounts of approximately $123.8 million and $75.7 million at January 31, 2015 and February 1, 2014, respectively. The Company includes the change in book cash overdrafts in operating cash flows.

Insurance obligations. The Company uses a combination of insurance and self-insurance for a number of risk management activities, including workers’ compensation, general liability, and employee-related health care benefits. The self-insurance and deductible liability is determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported. Self-insurance and deductible reserves as of January 31, 2015 and February 1, 2014 consisted of the following:

($000)		2014				2013
Workers’ compensation		$	87,388			$	82,223
General liability		37,253				34,524
Medical plans		3,159				3,537
Total		$	127,800			$	120,284

Workers’ compensation and self-insured medical plan liabilities are included in Accrued payroll and benefits, and accruals for general liability are included in Accrued expenses and other in the accompanying Consolidated Balance Sheets.

Other long-term liabilities. Other long-term liabilities as of January 31, 2015 and February 1, 2014 consisted of the following:

($000)		2014				2013
Income taxes (Note F)		$	101,696			$	104,944
Deferred compensation (Note G)		94,054				88,269
Deferred rent		59,465				64,671
Tenant improvement allowances		19,562				19,744
Other		4,723				9,939
Total		$	279,500			$	287,567

Lease accounting. When a lease contains “rent holidays” or requires fixed escalations of the minimum lease payments, the Company records rental expense on a straight-line basis over the term of the lease and the difference between the average rental amount charged to expense and the amount payable under the lease is recorded as deferred rent. The Company begins recording rent expense on the lease possession date. Tenant improvement allowances are included in Other long-term liabilities and are amortized over the lease term. Changes in tenant improvement allowances are included as a component of operating activities in the Consolidated Statements of Cash Flows.

Revenue recognition. The Company recognizes revenue at the point of sale and maintains an allowance for estimated future returns. Sales of stored value cards are deferred until they are redeemed for the purchase of Company merchandise. The Company’s stored value cards do not have expiration dates. Based upon historical redemption rates, a small percentage of stored value cards will never be redeemed, which represents breakage. The Company recognizes income from stored value card breakage as a reduction of operating expenses when redemption by a customer is considered to be remote. Income recognized from breakage was not significant in fiscal 2014, 2013, and 2012.

Sales tax collected is not recognized as revenue and is included in Accrued expenses and other.

Sales mix. The Company’s sales mix is shown below for fiscal 2014, 2013, and 2012:

	2014			2013			2012
Ladies	29	%		29	%		29	%
Home Accents and Bed and Bath	24	%		24	%		24	%
Accessories, Lingerie, Fine Jewelry, and Fragrances	13	%		13	%		13	%
Men's	13	%		13	%		13	%
Shoes	13	%		13	%		13	%
Children's	8	%		8	%		8	%
Total	100	%		100	%		100	%

Allowance for sales returns. An allowance for the gross margin loss on estimated sales returns is included in Accrued expenses and other in the Consolidated Balance Sheets. The allowance for sales returns consists of the following:

($000)		Beginning Balance				Additions				Returns				Ending Balance
Year ended:
January 31, 2015		$	7,431			$	717,040			$	(715,877	)		$	8,594
February 1, 2014		$	7,165			$	699,835			$	(699,569	)		$	7,431
February 2, 2013		$	6,426			$	680,058			$	(679,319	)		$	7,165

Store pre-opening. Store pre-opening costs are expensed in the period incurred.

Advertising. Advertising costs are expensed in the period incurred and are included in Selling, general and administrative expenses. Advertising costs for fiscal 2014, 2013, and 2012 were $72.1 million, $70.2 million, and $67.7 million, respectively.

Stock-based compensation. The Company recognizes compensation expense based upon the grant date fair value of all stock-based awards, typically over the vesting period. See Note C for more information on the Company’s stock-based compensation plans.

Taxes on earnings. The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than changes in the tax law or tax rates. ASC 740 clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s consolidated financial statements. ASC 740 prescribes a recognition threshold of more-likely-than-not, and a measurement standard for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the consolidated financial statements. See Note F.

Treasury stock. The Company records treasury stock at cost. Treasury stock includes shares purchased from employees for tax withholding purposes related to vesting of restricted stock grants.

Earnings per share (“EPS”). The Company computes and reports both basic 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 and restricted stock units.

In fiscal 2014, 2013, and 2012 there were 2,500, 2,900, and 53,900 weighted average shares, respectively, that were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for those years.

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

Shares in (000s)		Basic EPS				Effect of dilutive common stock equivalents				Diluted EPS
2014
Shares		206,777				2,262				209,039
Amount		$	4.47			$	(0.05	)		$	4.42
2013
Shares		212,881				2,924				215,805
Amount		$	3.93			$	(0.05	)		$	3.88
2012
Shares		219,130				3,654				222,784
Amount		$	3.59			$	(0.06	)		$	3.53

Comprehensive income. Comprehensive income includes net earnings and components of other comprehensive income (loss), net of tax, consisting of unrealized investment gains or losses.

Recently issued accounting standards. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue when the customer obtains control of promised goods or services in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. ASU 2014-09 is effective for the Company’s annual and interim reporting periods beginning in fiscal 2017. The Company is currently evaluating the effect that adoption of this new guidance will have on its consolidated financial statements.

Note B: Investments and Restricted Investments

The amortized cost and fair value of the Company’s available-for-sale securities as of January 31, 2015 were:

($000)	Amortized cost				Unrealized gains				Unrealized losses				Fair value					Short-term				Long-term
Investments
Corporate securities	$	3,298			$	243			$	(5	)		$	3,536				$	500			$	3,036
Mortgage-backed securities	69				5				—				74					—				74
Total investments	3,367				248				(5		)		3,610					500				3,110
Restricted Investments
U.S. government and agency securities	3,563				265				—				3,828					—				3,828
Total restricted investments	3,563				265				—				3,828					—				3,828
Total	$	6,930			$	513			$	(5	)		$	7,438				$	500			$	6,938

The amortized cost and fair value of the Company's available-for-sale securities as of February 1, 2014 were:

($000)	Amortized cost				Unrealized gains				Unrealized losses				Fair value					Short-term				Long-term
Investments
Corporate securities	$	3,298			$	325			$	(4	)		$	3,619				$	—			$	3,619
U.S. government and agency securities	12,005				1				—				12,006					12,006				—
Mortgage-backed securities	86				5				—				91					—				91
Total investments	15,389				331				(4		)		15,716					12,006				3,710
Restricted Investments
Corporate securities	110				5				—				115					115				—
U.S. government and agency securities	3,728				266				—				3,994					145				3,849
Total restricted investments	3,838				271				—				4,109					260				3,849
Total	$	19,227			$	602			$	(4	)		$	19,825				$	12,266			$	7,559

The change in fair value of investment securities for fiscal years 2014, 2013, and 2012 was a decrease of $0.1 million, $0.3 million, and $0.1 million, respectively.

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. This fair value hierarchy also requires the Company to 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.

Investments and restricted investments measured at fair value at January 31, 2015 are summarized below:

	Fair Value Measurements at Reporting Date
	January 31, 2015				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs
($000)		(Level 1)				(Level 2)				(Level 3)
Investments
Corporate securities	$	3,536			$	—			$	3,536			$	—
Mortgage-backed securities	74				—				74				—
Total investments	3,610				—				3,610				—
Restricted Investments
U.S. government and agency securities	3,828				3,828				—				—
Total restricted investments	3,828				3,828				—				—
Total	$	7,438			$	3,828			$	3,610			$	—

Investments and restricted investments measured at fair value at February 1, 2014 are summarized below:

	Fair Value Measurements at Reporting Date
	February 1, 2014				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs
($000)		(Level 1)				(Level 2)				(Level 3)
Investments
Corporate securities	$	3,619			$	—			$	3,619			$	—
U.S. government and agency securities	12,006				12,006				—				—
Mortgage-backed securities	91				—				91				—
Total investments	15,716				12,006				3,710				—
Restricted Investments
Corporate securities	115				—				115				—
U.S. government and agency securities	3,994				3,994				—				—
Total restricted investments	4,109				3,994				115				—
Total	$	19,825			$	16,000			$	3,825			$	—

The future maturities of investment and restricted investment securities at January 31, 2015 were:

	Investments								Restricted Investments
($000)	Cost basis				Estimated fair value				Cost basis				Estimated fair value
Maturing in one year or less	$	500			$	500			$	—			$	—
Maturing after one year through five years	2,867				3,110				3,563				3,828
Total	$	3,367			$	3,610			$	3,563			$	3,828

The underlying assets in the Company’s non-qualified deferred compensation program as of January 31, 2015 and February 1, 2014 (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)	2014				2013
Level 1	$	81,926			$	76,913
Level 2	12,128				11,356
Total	$	94,054			$	88,269

Fair market value for Level 2 funds is considered to be the sum of participant funds invested under a group annuity contract plus accrued interest.

Note C: Stock-Based Compensation

For fiscal 2014, 2013, and 2012, the Company recognized stock-based compensation expense as follows:

($000)	2014				2013				2012
Restricted stock	$	34,729			$	30,921			$	29,191
Performance awards	16,003				13,812				17,872
ESPP	2,269				2,114				1,889
Total	$	53,001			$	46,847			$	48,952

Capitalized stock-based compensation cost was not significant in any year.

No stock options were granted during fiscal 2014, 2013, and 2012. The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date. At January 31, 2015, the Company had one active stock-based compensation plan, which is further described in Note H.

Total stock-based compensation recognized in the Company's Consolidated Statements of Earnings for fiscal 2014, 2013, and 2012 is as follows:

Statements of Earnings Classification ($000)	2014				2013				2012
Cost of goods sold	$	27,088			$	24,432			$	22,915
Selling, general and administrative	25,913				22,415				26,037
Total	$	53,001			$	46,847			$	48,952

Note D: Debt

Senior notes. Unsecured senior debt, net of unamortized discounts, as of January 31, 2015 and February 1, 2014 consisted of the following:

($000)		2014				2013
6.38% Series A Senior Notes due 2018		$	85,000			$	85,000
6.53% Series B Senior Notes due 2021		65,000				65,000
3.375% Senior Notes due 2024¹		248,375				—
Total		$	398,375			$	150,000

¹Net of unamortized discount of $1.6 million at January 31, 2015.

In September 2014, the Company issued unsecured 3.375% Senior Notes due September 2024 (the “2024 Notes”) with an aggregate principal amount of $250 million at a price equal to 99.329% of the principal amount. Cash proceeds, net of discount and other issuance fees and expenses, were approximately $246 million and were used to purchase the Company’s New York buying office for $222 million and for other general corporate purposes. Interest on the 2024 Notes is payable semi-annually beginning March 2015.

At January 31, 2015, the Company also had outstanding two series of unsecured senior notes in the aggregate principal amount of $150 million, held by various institutional investors. The Series A notes totaling $85 million are due in December 2018 and bear interest at a rate of 6.38%. The Series B notes totaling $65 million are due in December 2021 and bear interest at a rate of 6.53%. Borrowings under these senior notes are subject to certain financial covenants, including interest coverage and other financial ratios. As of January 31, 2015, the Company was in compliance with these covenants.

The 2024 Notes, Series A, and Series B senior notes are all subject to prepayment penalties for early payment of principal.

The aggregate fair value of the three outstanding senior note issuances was approximately $442 million as of January 31, 2015 and the aggregate fair value of the Series A and Series B notes was $182 million as of February 1, 2014. The fair value is estimated by obtaining comparable market quotes which are considered to be Level 1 inputs under the fair value measurements and disclosures guidance.

The following table shows scheduled annual principal payments on Long-term debt:

($000)
2015				2016				2017				2018				2019				Thereafter
$	—			$	—			$	—			$	85,000			$	—			$	315,000

The table below shows the components of interest expense and income for fiscal 2014, 2013, and 2012:

($000)		2014				2013				2012
Interest expense on long-term debt		$	12,990			$	9,721			$	9,721
Other interest expense		1,230				1,350				1,665
Capitalized interest		(10,825		)		(10,799		)		(3,851		)
Interest income		(411		)		(519		)		(628		)
Total interest expense (income), net		$	2,984			$	(247	)		$	6,907

Revolving credit facility. The Company's $600 million unsecured revolving credit facility expires in June 2017 and contains a $300 million sublimit for issuance of standby letters of credit. Interest on this facility is based on LIBOR plus an applicable margin (currently 100 basis points) and is payable quarterly and upon maturity. As of January 31, 2015 the Company had no borrowings or standby letters of credit outstanding under this facility and the $600 million credit facility remains in place and available.

The revolving credit facility is subject to certain financial covenants, including interest coverage and other financial ratios. In addition, the interest rates under the revolving credit facility may vary depending on actual interest coverage ratios achieved. As of January 31, 2015, the Company was in compliance with these covenants.

Standby letters of credit and collateral trust. The Company uses standby letters of credit outside of its revolving credit facility in addition to a funded trust to collateralize its insurance obligations. As of January 31, 2015 and February 1, 2014, the Company had $19.5 million and $24.3 million, respectively, in standby letters of credit and $56.3 million and $47.2 million, respectively, in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash, cash equivalents, and investments.

Trade letters of credit. The Company had $32.8 million and $31.6 million in trade letters of credit outstanding at January 31, 2015 and February 1, 2014, respectively.

Note E: Leases

The Company currently leases all but three 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. Most store leases also provide for minimum annual rentals and for payment of certain expenses. In addition, some store leases also have provisions for additional rent based on a percentage of sales.

The Company leases three warehouses. Two of the warehouses are in Carlisle, Pennsylvania with leases expiring in 2016 and 2017. The third warehouse is in Fort Mill, South Carolina, with a lease expiring in 2019. The leases for the two Carlisle, Pennsylvania warehouses contain renewal provisions.

The Company leases approximately 68,000 square feet of office space for its Los Angeles buying office. The lease term for this facility expires in 2017 and contains renewal provisions. In addition, the Company has a ground lease related to its New York buying office.

The aggregate future minimum annual lease payments under leases in effect at January 31, 2015 are as follows:

($000)		Total operating leases
2015		$	438,423
2016		462,606
2017		405,809
2018		340,607
2019		261,768
Thereafter		1,434,485
Total minimum lease payments		$	3,343,698

Total rent expense was $457.0 million, $434.9 million, and $406.6 million in fiscal 2014, 2013, and 2012, respectively.

Note F: Taxes on Earnings

The provision for income taxes consisted of the following:

($000)		2014				2013				2012
Current
Federal		$	499,009			$	486,203			$	485,882
State		36,547				35,053				31,227
		535,556				521,256				517,109
Deferred
Federal		23,452				(11,055		)		(37,178		)
State		1,634				(4,195		)		(1,850		)
		25,086				(15,250		)		(39,028		)
Total		$	560,642			$	506,006			$	478,081

In fiscal 2014, 2013, and 2012, the Company realized tax benefits of $29.8 million, $27.7 million and $30.0 million, respectively, related to employee equity programs that were recorded in additional paid-in capital.

The provision for taxes for financial reporting purposes is different from the tax provision computed by applying the statutory federal income tax rate. The differences are reconciled below:

		2014			2013			2012
Federal income taxes at the statutory rate		35	%		35	%		35	%
State income taxes (net of federal benefit) and other, net		3	%		3	%		3	%
Total		38	%		38	%		38	%

The components of deferred income taxes at January 31, 2015 and February 1, 2014 are as follows:

($000)		2014				2013
Deferred Tax Assets
Accrued liabilities		$	77,791			$	87,835
Deferred compensation		33,456				31,034
Stock-based compensation		35,332				33,048
Deferred rent		26,370				17,888
California franchise taxes and credits		18,478				16,479
Employee benefits		23,136				16,177
Other		4,927				4,992
		219,490				207,453
Deferred Tax Liabilities
Depreciation		(252,013		)		(212,383		)
Merchandise inventory		(26,668		)		(28,558		)
Supplies		(11,616		)		(10,730		)
Prepaid expenses		(2,923		)		(4,426		)
		(293,220		)		(256,097		)
Net Deferred Tax Liabilities		$	(73,730	)		$	(48,644	)
Classified as:
Current net deferred tax asset		$	12,951			$	10,227
Long-term net deferred tax liability		(86,681		)		(58,871		)
Net Deferred Tax Liabilities		$	(73,730	)		$	(48,644	)

At the end of fiscal 2014 and 2013, the Company's state tax credit carryforwards for income tax purposes were approximately $12.1 million and $11.0 million, respectively. The state tax credit carryforwards will begin to expire in fiscal 2023.

The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest and penalties) at fiscal 2014, 2013, and 2012 are as follows:

($000)		2014				2013				2012
Unrecognized tax benefits - beginning of year		$	80,323			$	65,667			$	56,524
Gross increases:
Tax positions in current period		15,441				15,591				11,009
Tax positions in prior period		—				2,418				4,167
Gross decreases:
Tax positions in prior periods		(9,432		)		(519		)		(1,476		)
Lapse of statute limitations		(5,732		)		(2,274		)		(1,312		)
Settlements		(2,484		)		(560		)		(3,245		)
Unrecognized tax benefits - end of year		$	78,116			$	80,323			$	65,667

At the end of fiscal 2014, 2013, and 2012, the reserves for unrecognized tax benefits were $101.7 million, $104.9 million, and $82.5 million inclusive of $23.6 million, $24.6 million, and $16.8 million of related interest and penalties, respectively. The Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for taxes on earnings. If recognized, $51.0 million would impact the Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amounts that would impact the effective tax rate relates to amounts attributable to deferred income tax assets and liabilities. These amounts are net of federal and state income taxes.

During the next twelve months, it is reasonably possible that the statute of limitations may lapse pertaining to positions taken by the Company in prior year tax returns. If this occurs, the total amount of unrecognized tax benefits may decrease, reducing the provision for taxes on earnings by up to $6.3 million.

The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2011 through 2014. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2010 through 2014. Certain state tax returns are currently under audit by state tax authorities. The Company does not expect the results of these audits to have a material impact on the consolidated financial statements.

Note G: Employee Benefit Plans

The Company has a defined contribution plan that is available to certain employees. Under the plan, employee and Company contributions and accumulated plan earnings qualify for favorable tax treatment under Section 401(k) of the Internal Revenue Code. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. The Company matches up to 4% of the employee’s salary up to the plan limits. Company matching contributions to the 401(k) plan were $11.4 million, $10.4 million, and $9.4 million in fiscal 2014, 2013, and 2012, respectively.

The Company also has an Incentive Compensation Plan which provides cash awards to key management and employees based on Company and individual performance.

The Company also makes available to management a Non-qualified Deferred Compensation Plan which allows management to make payroll contributions on a pre-tax basis in addition to the 401(k) plan. Other long-term assets include $94.1 million and $88.3 million at January 31, 2015 and February 1, 2014, respectively, of long-term plan investments, at market value, set aside or designated for the Non-qualified Deferred Compensation Plan (See Note B). Plan investments are designated by the participants, and investment returns are not guaranteed by the Company. The Company has a corresponding liability to participants of $94.1 million and $88.3 million at January 31, 2015 and February 1, 2014, respectively, included in Other long-term liabilities in the Consolidated Balance Sheets.

In addition, the Company has certain individuals who receive or will receive post-employment medical benefits. The estimated liability for these benefits of $9.7 million and $6.8 million is included in Accrued expenses and other in the accompanying Consolidated Balance Sheets as of January 31, 2015 and February 1, 2014, respectively.

Note H: Stockholders' Equity

Common stock. In February 2015, the Company’s Board of Directors approved a two-year $1.4 billion stock repurchase program for fiscal 2015 and 2016.

The following table summarizes the Company’s stock repurchase activity in fiscal 2014, 2013, and 2012:

Fiscal Year		Shares repurchased (in millions)			Average repurchase price		Repurchased (in millions)
2014		7.4			$74.30		$550
2013		8.2			$67.24		$550
2012		7.5			$60.34		$450

Preferred stock. The Company has four million shares of preferred stock authorized, with a par value of $.01 per share. No preferred stock is issued or outstanding.

Dividends. In February 2015, the Company’s Board of Directors declared a quarterly cash dividend of $0.235 per common share, payable on March 31, 2015. The Company’s Board of Directors declared cash dividends of $0.20 per

common share in February, May, August, and November 2014, cash dividends of $0.17 per common share in January, May, August, and November 2013, and cash dividends of $0.14 per common share in January, May, August, and November 2012.

In March 2015, the Company’s Board of Directors approved a two-for-one stock split in the form of a 100 percent stock dividend, to be paid on June 11, 2015 to stockholders of record as of April 22, 2015. The stock split will not have an impact on the Company’s consolidated financial position or results of operations. Share and per share amounts have not been restated to reflect the pending stock split.

2008 Equity Incentive Plan. In 2008, the Company’s stockholders approved the adoption of the Ross Stores, Inc. 2008 Equity Incentive Plan (the “2008 Plan”) with an initial share reserve of 16.5 million shares of the Company’s common stock, of which 12.0 million shares can be issued as full value awards. The 2008 Plan provides for various types of incentive awards, which may potentially include the grant of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance units, and deferred compensation awards. As of January 31, 2015, there were 6.6 million shares that remained available for grant under the 2008 Plan.

A summary of the stock option activity for fiscal 2014 is presented below:

(000, except per share data)		Number of shares			Weighted average exercise price			Weighted average remaining contractual term		Aggregate intrinsic value
Outstanding at February 1, 2014		1,169			$14.07
Granted		—			—
Exercised		(650	)		14.05
Forfeited		—			—
Outstanding at January 31, 2015, all vested		519			$14.09			0.99		$40,285

The following table summarizes information about the weighted average remaining contractual life (in years) and the weighted average exercise prices for stock options both outstanding and exercisable as of January 31, 2015 (number of shares in thousands):

											Options outstanding and exercisable
Exercise price range											Number of shares			Remaining life		Exercise price
$	11.47			to		$	13.77				116			0.98		$13.28
13.84				to		13.89					56			0.29		13.85
13.91				to		13.91					185			1.11		13.91
13.92				to		14.65					106			0.52		14.32
14.70				to		16.39					56			2.19		16.22
$	11.47			to		$	16.39				519			0.99		$14.09

A summary of the restricted stock activity for fiscal 2014 is presented below:

(000, except per share data)		Number of shares			Weighted average grant date fair value
Unvested at February 1, 2014		3,914			$37.14
Awarded		967			67.15
Released		(1,316	)		29.29
Forfeited		(74	)		55.46
Unvested at January 31, 2015		3,491			$48.02

The market value of shares of restricted stock and of the stock underlying restricted stock units at the date of grant is amortized to expense over the vesting period of generally three to five years. The unamortized compensation expense at January 31, 2015 and February 1, 2014 was $87.4 million and $74.9 million, respectively, which is expected to be recognized over a weighted average remaining period of 1.7 years. Intrinsic value for restricted stock, defined as the closing market value on the last business day of fiscal year 2014 (or $91.71), was $320.2 million. A total of 6,628,000, 6,986,000, and 7,202,000 shares were available for new restricted stock awards at the end of fiscal 2014, 2013, and 2012, respectively. During fiscal 2014, 2013, and 2012, shares purchased by the Company for tax withholding totaled 534,000, 496,000, and 505,000 shares, respectively, and are considered treasury shares which are available for reissuance. As of January 31, 2015 and February 1, 2014, the Company held 4,888,000 and 4,354,000 shares of treasury stock, respectively.

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 or restricted stock units 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 or units then vest over a service period, generally two to three years from the date the performance award was granted. The release of shares related to restricted stock units earned is deferred generally for one year from the date earned. The Company issued approximately 303,000, 240,000, and 280,000 shares in settlement of the fiscal 2014, 2013, and 2012 awards.

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.

During fiscal 2014, 2013, and 2012, employees purchased approximately 200,000, 208,000, and 211,000 shares, respectively, of the Company’s common stock under the plan at weighted average per share prices of $64.35, $57.57, and $50.67, respectively. Through January 31, 2015, approximately 19,342,000 shares had been issued under this plan and 658,000 shares remained available for future issuance.

Note I: Related Party Transactions

The Company has a consulting agreement with Norman Ferber, its Chairman Emeritus of the Board of Directors, under which the Company pays him an annual consulting fee of $1.5 million through May 2018. In addition, the agreement provides for administrative support and health and other benefits for the individual and his dependents, which totaled approximately $0.3 million in fiscal 2014, 2013, and 2012, along with amounts to cover premiums through May 2018 on a life insurance policy with a death benefit of $2.0 million. On termination of Mr. Ferber’s consultancy with the Company, the Company will pay Mr. Ferber $75,000 per year for a period of 10 years.

Robert Ferber, the son of Norman Ferber, is a buyer with the Company. For fiscal 2014, the Company paid Robert Ferber compensation including salary and bonus of approximately $133,000.

Note J: Litigation, Claims, and Assessments

Like many California retailers, the Company has been named in class action lawsuits alleging violation of wage and hour and other employment laws. Class action litigation remains pending as of January 31, 2015.

The Company is also party to various other legal and regulatory proceedings arising in the normal course of business. Actions filed against the Company include commercial, product and product safety, customer, intellectual property, 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.

Note K: Quarterly Financial Data (Unaudited)

Summarized quarterly financial information for fiscal 2014 and 2013 is presented in the tables below.

Year ended January 31, 2015:

		Quarter Ended
($000, except per share data)		May 3, 2014				August 2, 2014				November 1, 2014				January 31, 2015
Sales		$	2,680,593			$	2,729,566			$	2,598,820			$	3,032,698
Cost of goods sold		1,908,184				1,944,017				1,882,185				2,203,570
Selling, general and administrative		379,802				395,225				410,002				430,342
Interest (income) expense, net		(104		)		(95		)		777				2,406
Total costs and expenses		2,287,882				2,339,147				2,292,964				2,636,318
Earnings before taxes		392,711				390,419				305,856				396,380
Provision for taxes on earnings		148,798				150,858				113,136				147,850
Net earnings		$	243,913			$	239,561			$	192,720			$	248,530
Earnings per share – basic1		$	1.17			$	1.15			$	0.94			$	1.21
Earnings per share – diluted1		$	1.15			$	1.14			$	0.93			$	1.20
Cash dividends declared per share
on common stock		$	0.20			$	0.20			$	0.20			$	0.20
Stock price
High		$	74.09			$	69.66			$	80.83			$	96.94
Low		$	65.78			$	62.15			$	64.64			$	80.44

1 EPS is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding.

Year ended February 1, 2014:

		Quarter Ended
($000, except per share data)		May 4, 2013				August 3, 2013				November 2, 2013				February 1, 2014
Sales		$	2,539,914			$	2,551,277			$	2,398,122			$	2,741,040
Cost of goods sold		1,798,811				1,823,777				1,746,235				1,992,101
Selling, general and administrative		361,968				381,193				381,860				401,345
Interest expense (income), net		209				(175		)		(152		)		(129		)
Total costs and expenses		2,160,988				2,204,795				2,127,943				2,393,317
Earnings before taxes		378,926				346,482				270,179				347,723
Provision for taxes on earnings		144,314				133,361				98,561				129,770
Net earnings		$	234,612			$	213,121			$	171,618			$	217,953
Earnings per share – basic1		$	1.09			$	1.00			$	0.81			$	1.04
Earnings per share – diluted1		$	1.07			$	0.98			$	0.80			$	1.02
Cash dividends declared per share
on common stock		$	—			$	0.17			$	0.17			$	0.17
Stock price
High		$	66.07			$	69.20			$	77.63			$	81.64
Low		$	55.23			$	63.29			$	64.76			$	67.66

1 EPS is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Ross Stores, Inc.:

We have audited the accompanying consolidated balance sheets of Ross Stores, Inc. and subsidiaries (the "Company") as of January 31, 2015 and February 1, 2014, and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2015. We also have audited the Company's internal control over financial reporting as of January 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ross Stores, Inc. and subsidiaries as of January 31, 2015 and February 1, 2014, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/DELOITTE & TOUCHE LLP

San Francisco, California

March 31, 2015