Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Statements of Earnings

		Year Ended				Year Ended				Year Ended
($000, except per share data)		January 30, 2016				January 31, 2015				February 1, 2014
Sales		$	11,939,999			$	11,041,677			$	10,230,353
Costs and Expenses
Cost of goods sold		8,576,873				7,937,956				7,360,924
Selling, general and administrative		1,738,755				1,615,371				1,526,366
Interest expense (income), net		12,612				2,984				(247		)
Total costs and expenses		10,328,240				9,556,311				8,887,043
Earnings before taxes		1,611,759				1,485,366				1,343,310
Provision for taxes on earnings		591,098				560,642				506,006
Net earnings		$	1,020,661			$	924,724			$	837,304
Earnings per share
Basic		$	2.53			$	2.24			$	1.97
Diluted		$	2.51			$	2.21			$	1.94
Weighted average shares outstanding (000)
Basic		403,034				413,553				425,761
Diluted		406,405				418,077				431,610
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 30, 2016				January 31, 2015				February 1, 2014
Net earnings		$	1,020,661			$	924,724			$	837,304
Other comprehensive income (loss):
Change in unrealized loss on investments, net of tax		(148		)		(59		)		(196		)
Comprehensive income		$	1,020,513			$	924,665			$	837,108
The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Balance Sheets

($000, except share data)	January 30, 2016				January 31, 2015
Assets
Current Assets
Cash and cash equivalents	$	761,602			$	696,608
Short-term investments	1,737				500
Accounts receivable	73,627				73,278
Merchandise inventory	1,419,104				1,372,675
Prepaid expenses and other	116,125				106,778
Total current assets	2,372,195				2,249,839
Property and Equipment
Land and buildings	1,084,328				952,428
Fixtures and equipment	2,244,790				1,933,383
Leasehold improvements	920,392				854,572
Construction-in-progress	90,399				293,715
	4,339,909				4,034,098
Less accumulated depreciation and amortization	1,997,003				1,760,346
Property and equipment, net	2,342,906				2,273,752
Long-term investments	1,331				3,110
Other long-term assets	152,687				160,669
Total assets	$	4,869,119			$	4,687,370
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	945,559			$	1,000,700
Accrued expenses and other	376,522				385,325
Accrued payroll and benefits	280,766				256,141
Income taxes payable	—				17,202
Total current liabilities	1,602,847				1,659,368
Long-term debt	396,025				395,562
Other long-term liabilities	268,168				279,500
Deferred income taxes	130,088				73,730
Commitments and contingencies
Stockholders’ Equity
Common stock, par value $.01 per share	4,023				4,149
Authorized 1,000,000,000 shares
Issued and outstanding 402,339,000 and
414,939,000 shares,respectively
Additional paid-in capital	1,122,329				1,013,607
Treasury stock	(229,525		)		(160,600		)
Accumulated other comprehensive income	182				330
Retained earnings	1,574,982				1,421,724
Total stockholders’ equity	2,471,991				2,279,210
Total liabilities and stockholders’ equity	$	4,869,119			$	4,687,370
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 February 2, 2013		441,442			$	4,414			$	864,312			$	(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		1,756			18				19,056				(29,851		)		—			—				(10,777		)
Tax benefit from equity issuance		—			—				27,661				—				—			—				27,661
Stock-based compensation		—			—				46,847				—				—			—				46,847
Common stock repurchased		(16,358	)		(164		)		(24,419		)		—				—			(525,417		)		(550,000		)
Dividends declared ($0.255 per share)		—			—				—				—				—			(110,400		)		(110,400		)
Balance at February 1, 2014		426,840			$	4,268			$	933,457			$	(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		2,904			29				21,949				(39,041		)		—			—				(17,063		)
Tax benefit from equity issuance		—			—				29,759				—				—			—				29,759
Stock-based compensation		—			—				53,001				—				—			—				53,001
Common stock repurchased		(14,805	)		(148		)		(24,559		)		—				—			(525,293		)		(550,000		)
Dividends declared ($0.400 per share)		—			—				—				—				—			(168,454		)		(168,454		)
Balance at January 31, 2015		414,939			$	4,149			$	1,013,607			$	(160,600	)		$330			$	1,421,724			$	2,279,210
Net earnings		—			—				—				—				—			1,020,661				1,020,661
Unrealized investment loss, net		—			—				—				—				(148	)		—				(148		)
Common stock issued under stock
plans, net of shares
used for tax withholding		1,053			11				20,175				(68,925		)		—			—				(48,739		)
Tax benefit from equity issuance		—			—				42,382				—				—			—				42,382
Stock-based compensation		—			—				70,937				—				—			—				70,937
Common stock repurchased		(13,653	)		(137		)		(24,772		)		—				—			(675,091		)		(700,000		)
Dividends declared ($0.470 per share)		—			—				—				—				—			(192,312		)		(192,312		)
Balance at January 30, 2016		402,339			$	4,023			$	1,122,329			$	(229,525	)		$182			$	1,574,982			$	2,471,991
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 30, 2016				January 31, 2015				February 1, 2014
Cash Flows From Operating Activities
Net earnings	$	1,020,661			$	924,724			$	837,304
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	274,828				232,959				206,111
Stock-based compensation	70,937				53,001				46,847
Deferred income taxes	56,358				25,086				(15,250		)
Tax benefit from equity issuance	42,382				29,759				27,661
Excess tax benefit from stock-based compensation	(42,302		)		(29,415		)		(26,906		)
Change in assets and liabilities:
Merchandise inventory	(46,429		)		(115,520		)		(47,918		)
Other current assets	(13,496		)		(16,410		)		(9,875		)
Accounts payable	(41,464		)		204,158				(4,104		)
Other current liabilities	7,796				69,568				(18,562		)
Other long-term, net	(3,019		)		(5,045		)		26,695
Net cash provided by operating activities	1,326,252				1,372,865				1,022,003
Cash Flows From Investing Activities
Additions to property and equipment	(366,960		)		(646,691		)		(550,515		)
Increase in restricted cash and investments	4,065				(4,329		)		(2,895		)
Purchases of investments	(718		)		—				(12,012		)
Proceeds from investments	1,104				12,021				1,614
Net cash used in investing activities	(362,509		)		(638,999		)		(563,808		)
Cash Flows From Financing Activities
Excess tax benefit from stock-based compensation	42,302				29,415				26,906
Net proceeds from issuance of long-term debt	—				245,676				—
Issuance of common stock related to stock plans	20,186				21,978				19,074
Treasury stock purchased	(68,925		)		(39,041		)		(29,851		)
Repurchase of common stock	(700,000		)		(550,000		)		(550,000		)
Dividends paid	(192,312		)		(168,454		)		(147,917		)
Net cash used in financing activities	(898,749		)		(460,426		)		(681,788		)
Net increase (decrease) in cash and cash equivalents	64,994				273,440				(223,593		)
Cash and cash equivalents:
Beginning of year	696,608				423,168				646,761
End of year	$	761,602			$	696,608			$	423,168
Supplemental Cash Flow Disclosures
Interest paid	$	18,035			$	9,668			$	9,668
Income taxes paid	$	523,597			$	510,145			$	506,182
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 2015, the Company operated 1,274 Ross Dress for Less® (“Ross”) locations in 34 states, the District of Columbia and Guam, and 172 dd’s DISCOUNTS® stores in 15 states. The Ross and dd's DISCOUNTS stores are supported by six distribution centers. The Company’s headquarters, one buying office, three operating distribution centers, two warehouses, and 24% 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 30, 2016, January 31, 2015 and February 1, 2014 are referred to as fiscal 2015, fiscal 2014, and fiscal 2013, respectively, and were 52-week years.

Stock dividend. In March 2015, the Company’s Board of Directors declared a two-for-one stock split of the Company’s common stock issued in the form of a stock dividend. Stockholders of record as of April 22, 2015 were issued one additional share of common stock on June 11, 2015 for each share held. All share and per share amounts have been adjusted to reflect the stock split.

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 30, 2016, the Company had purchase obligations of approximately $1,721 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 30, 2016 and January 31, 2015:

Restricted Assets ($000)		2015				2014
Prepaid expenses and other		$	15,770			$	19,713
Other long-term assets		55,913				56,107
Total		$	71,683			$	75,820

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 $761.6 million and $696.6 million, at January 30, 2016 and January 31, 2015, 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 30, 2016 and January 31, 2015, 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 inventory that can either be shipped to stores or processed as packaway merchandise with the intent that it will be warehoused and released to stores at 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.

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 information systems and 20 to 40 years for land improvements and buildings. Depreciation and amortization expense on property and equipment was $274.8 million, $233.0 million, and $206.1 million for fiscal 2015, 2014, and 2013, 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 $6.5 million, $10.8 million, and $10.8 million in fiscal 2015, fiscal 2014, and fiscal 2013, respectively. As of January 30, 2016, January 31, 2015, and February 1, 2014 the Company had $35.8 million, $58.6 million, and $61.3 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.

Other long-term assets. Other long-term assets as of January 30, 2016 and January 31, 2015 consisted of the following:

($000)		2015				2014
Deferred compensation (Note B)		$	86,073			$	94,054
Restricted cash and investments		55,913				56,107
Other		10,701				10,508
Total		$	152,687			$	160,669

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 2015, 2014, and 2013, 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. The lease loss liability was $1.8 million and $2.7 million, as of January 30, 2016 and January 31, 2015, respectively. Operating costs, including depreciation, of stores to be closed are expensed during the period they remain in use. In 2015, the Company closed six stores. In 2014, the Company closed nine stores.

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 $100.3 million and $123.8 million at January 30, 2016 and January 31, 2015, 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 30, 2016 and January 31, 2015 consisted of the following:

($000)		2015				2014
Workers’ compensation		$	93,452			$	87,388
General liability		39,895				37,253
Medical plans		4,155				3,159
Total		$	137,502			$	127,800

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 30, 2016 and January 31, 2015 consisted of the following:

($000)		2015				2014
Income taxes (Note F)		$	94,194			$	101,696
Deferred compensation (Note G)		86,073				94,054
Deferred rent		63,241				59,465
Tenant improvement allowances		20,300				19,562
Other		4,360				4,723
Total		$	268,168			$	279,500

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 2015, 2014, and 2013.

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

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 30, 2016		$	8,594			$	737,727			$	(738,366	)		$	7,955
January 31, 2015		$	7,431			$	717,040			$	(715,877	)		$	8,594
February 1, 2014		$	7,165			$	699,835			$	(699,569	)		$	7,431

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 2015, 2014, and 2013 were $77.1 million, $72.1 million, and $70.2 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 2015, 2014, and 2013 there were 25,000, 5,100, and 5,700 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
2015
Shares		403,034				3,371				406,405
Amount		$	2.53			$	(0.02	)		$	2.51
2014
Shares		413,553				4,524				418,077
Amount		$	2.24			$	(0.03	)		$	2.21
2013
Shares		425,761				5,849				431,610
Amount		$	1.97			$	(0.03	)		$	1.94

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 2018. The Company is currently evaluating the effect that adoption of this new guidance will have on its consolidated financial statements.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The guidance requires balance sheet recognition of the following 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. ASU 2016-02 is effective for the Company's annual and interim reporting periods beginning in fiscal 2019. The Company is currently evaluating the effect adoption of this new guidance will have on its consolidated financial statements.

Recently issued and adopted accounting standards. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The standard amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of as an asset. ASU 2015-03 is effective for annual and interim reporting periods after December 15, 2015, with early adoption permitted. The Company early adopted ASU 2015-03 retrospectively in its first fiscal quarter ended May 2, 2015. As a result of the retrospective adoption, the Company reclassified unamortized debt issuance costs of $2.8 million as of January 31, 2015, from Other long-term assets to a reduction in Long-term debt on the Consolidated Balance Sheet. Adoption of this standard did not impact results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. See Note D.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for annual and interim reporting periods after December 15, 2016, with early adoption permitted. The Company early adopted ASU 2015-17 retrospectively, as of January 30, 2016. As a result, $13.0 million of its deferred tax assets previously presented in current assets have been reclassified to long term deferred tax liabilities in the Consolidated Balance Sheet as of January 31, 2015. Adoption of this standard did not impact results of operations, retained earnings, or cash flows in the current or previous annual reporting periods. See Note F.

Note B: Investments and Restricted Investments

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 fiscal year ended January 30, 2016. The fair value of the Company’s financial instruments are as follows:

($000)		January 30, 2016				January 31, 2015
Cash and cash equivalents
Level 1		$	761,602			$	696,608
Investments
Level 2		$	3,068			$	3,610
Restricted cash and cash equivalents
Level 1		$	67,947			$	71,992
Restricted investments
Level 1		$	3,736			$	3,828

The underlying assets in the Company’s non-qualified deferred compensation program as of January 30, 2016 and January 31, 2015 (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)	2015				2014
Level 1	$	73,633			$	81,926
Level 2	12,440				12,128
Total	$	86,073			$	94,054

Note C: Stock-Based Compensation

For fiscal 2015, 2014, and 2013, the Company recognized stock-based compensation expense as follows:

($000)	2015				2014				2013
Restricted stock	$	37,204			$	34,729			$	30,921
Performance awards	31,056				16,003				13,812
ESPP	2,677				2,269				2,114
Total	$	70,937			$	53,001			$	46,847

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

No stock options were granted during fiscal 2015, 2014, and 2013. At January 30, 2016, the Company had one active stock-based compensation plan, which is further described in Note H. The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.

Total stock-based compensation recognized in the Company's Consolidated Statements of Earnings for fiscal 2015, 2014, and 2013 is as follows:

Statements of Earnings Classification ($000)	2015				2014				2013
Cost of goods sold	$	32,922			$	27,088			$	24,432
Selling, general and administrative	38,015				25,913				22,415
Total	$	70,937			$	53,001			$	46,847

Note D: Debt

Senior notes. Unsecured senior debt, net of unamortized discounts and debt issuance costs, as of January 30, 2016 and January 31, 2015 consisted of the following:

($000)		2015				2014
6.38% Series A Senior Notes due 2018		$	84,906			$	84,873
6.53% Series B Senior Notes due 2021		64,882				64,861
3.375% Senior Notes due 2024		246,237				245,828
Total		$	396,025			$	395,562

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. Interest on the 2024 Notes is payable semi-annually.

As of January 30, 2016, the Company also had outstanding two other 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 30, 2016, the Company was in compliance with these covenants.

As of January 30, 2016 and January 31, 2015, total unamortized discount and debt issuance costs were $4.0 million and $4.4 million, respectively, and were classified as a reduction of Long-term debt.

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 $423 million and $442 million as of January 30, 2016 and January 31, 2015, respectively. 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)
2016			$	—
2017			$	—
2018			$	85,000
2019			$	—
2020			$	—
Thereafter			$	315,000

The table below shows the components of interest expense and income for fiscal 2015, 2014, and 2013:

($000)		2015				2014				2013
Interest expense on long-term debt		$	18,568			$	12,990			$	9,721
Other interest expense		1,252				1,230				1,350
Capitalized interest		(6,530		)		(10,825		)		(10,799		)
Interest income		(678		)		(411		)		(519		)
Interest expense (income), net		$	12,612			$	2,984			$	(247	)

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 30, 2016 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 Company plans to renew the revolving credit facility in 2016.

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 30, 2016, 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 30, 2016 and January 31, 2015, the Company had $15.3 million and $19.5 million, respectively, in standby letters of credit and $56.4 million and $56.3 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 $32.0 million and $32.8 million in trade letters of credit outstanding at January 30, 2016 and January 31, 2015, 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, including the ground lease related to the New York buying office, in effect at January 30, 2016 are as follows:

($000)		Total operating leases
2016		$	465,085
2017		485,753
2018		422,480
2019		343,645
2020		265,830
Thereafter		1,433,049
Total minimum lease payments		$	3,415,842

Rent expense, including contingent rent and net of sublease income, was $473.2 million, $451.9 million, and $431.8 million in fiscal 2015, 2014, and 2013, respectively. Contingent rent and sublease income was not significant in any year.

Note F: Taxes on Earnings

The provision for income taxes consisted of the following:

($000)		2015				2014				2013
Current
Federal		$	497,710			$	499,009			$	486,203
State		37,030				36,547				35,053
		534,740				535,556				521,256
Deferred
Federal		55,404				23,452				(11,055		)
State		954				1,634				(4,195		)
		56,358				25,086				(15,250		)
Total		$	591,098			$	560,642			$	506,006

In fiscal 2015, 2014, and 2013, the Company realized tax benefits of $42.4 million, $29.8 million and $27.7 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:

		2015			2014			2013
Federal income taxes at the statutory rate		35	%		35	%		35	%
State income taxes (net of federal benefit) and other, net		2	%		3	%		3	%
Total		37	%		38	%		38	%

The components of deferred taxes at January 30, 2016 and January 31, 2015 are as follows:

($000)		2015				2014
Deferred Tax Assets
Accrued liabilities		$	69,144			$	77,791
Deferred compensation		29,932				33,456
Stock-based compensation		41,388				35,332
Deferred rent		23,903				26,370
California franchise taxes and credits		21,973				18,478
Employee benefits		22,156				23,136
Other		6,835				4,927
		215,331				219,490
Deferred Tax Liabilities
Depreciation		(304,191		)		(252,013		)
Merchandise inventory		(28,085		)		(26,668		)
Supplies		(12,559		)		(11,616		)
Prepaid expenses		(584		)		(2,923		)
		(345,419		)		(293,220		)
Net Deferred Tax Liabilities		$	(130,088	)		$	(73,730	)

At the end of fiscal 2015 and 2014, the Company's state tax credit carryforwards for income tax purposes were approximately $16.1 million and $12.1 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 2015, 2014, and 2013 are as follows:

($000)		2015				2014				2013
Unrecognized tax benefits - beginning of year		$	78,116			$	80,323			$	65,667
Gross increases:
Tax positions in current period		14,990				15,441				15,591
Tax positions in prior period		—				—				2,418
Gross decreases:
Tax positions in prior periods		(10,589		)		(9,432		)		(519		)
Lapse of statute limitations		(4,216		)		(5,732		)		(2,274		)
Settlements		(2,929		)		(2,484		)		(560		)
Unrecognized tax benefits - end of year		$	75,372			$	78,116			$	80,323

At the end of fiscal 2015, 2014, and 2013, the reserves for unrecognized tax benefits were $94.2 million, $101.7 million, and $104.9 million inclusive of $18.8 million, $23.6 million, and $24.6 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, $45.9 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 tax assets and liabilities. These amounts are net of federal and state income taxes.

The Company believes it is reasonably possible that certain federal and state tax matters may be concluded or statutes of limitations may lapse during the next twelve months. Accordingly, the total amount of unrecognized tax benefits may decrease, reducing the provision for taxes on earnings by up to $3.7 million.

The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2012 through 2015. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2011 through 2015. 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 $12.7 million, $11.4 million, and $10.4 million in fiscal 2015, 2014, and 2013, 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 $86.1 million and $94.1 million at January 30, 2016 and January 31, 2015, 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 $86.1 million and $94.1 million at January 30, 2016 and January 31, 2015, 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 $13.2 million and $9.7 million is included in Accrued expenses and other in the accompanying Consolidated Balance Sheets as of January 30, 2016 and January 31, 2015, 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 2015, 2014, and 2013:

Fiscal Year		Shares repurchased (in millions)			Average repurchase price		Repurchased (in millions)
2015		13.7			$51.27		$700
2014		14.8			$37.15		$550
2013		16.4			$33.62		$550

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. On March 1, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.1350 per common share, payable on March 31, 2016. The Company’s Board of Directors declared cash dividends of $0.1175 per common share in February, May, August, and November 2015, cash dividends of $0.1000 per common share in February, May, August, and November 2014, and cash dividends of $0.0850 per common share in May, August, and November 2013.

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 33.0 million shares of the Company’s common stock, of which 24.0 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 30, 2016, there were 12.7 million shares that remained available for grant under the 2008 Plan.

A summary of the stock option activity for fiscal 2015 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 January 31, 2015		1,038			$7.05
Granted		—			—
Exercised		(728	)		6.92
Forfeited		—			—
Outstanding at January 30, 2016, all vested		310			$7.34			0.55		$15,168

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 30, 2016 (number of shares in thousands):

											Options outstanding and exercisable
Exercise price range											Number of shares			Remaining life		Exercise price
$	6.08			to		$	6.89				45			0.35		$6.77
6.95				to		6.95					148			0.13		6.95
7.04				to		7.35					14			0.24		7.24
7.66				to		7.66					6			0.71		7.66
8.19				to		8.19					97			1.31		8.19
$	6.08			to		$	8.19				310			0.55		$7.34

A summary of restricted stock and performance share award activity for fiscal 2015 is presented below:

(000, except per share data)		Number of shares			Weighted average grant date fair value
Unvested at January 31, 2015		6,982			$24.01
Awarded		2,239			51.95
Released		(2,726	)		17.32
Forfeited		(391	)		31.04
Unvested at January 30, 2016		6,104			$34.87

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 30, 2016 and January 31, 2015 was $94.5 million and $87.4 million, respectively, which is expected to be recognized over a weighted average remaining period of 1.8 years. Intrinsic value for restricted stock, defined as the closing market value on the last business day of fiscal year 2015 (or $56.26), was $343.4 million. A total of 12.7 million, 13.3 million, and 14.0 million shares were available for new restricted stock awards at the end of fiscal 2015, 2014, and 2013, respectively. During fiscal 2015, 2014, and 2013, shares purchased by the Company for tax withholding totaled 1.3 million, 1.1 million, and 1.0 million shares, respectively, and are considered treasury shares which are available for reissuance. As of January 30, 2016 and January 31, 2015, the Company held 11.1 million and 9.8 million 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 601,000, 607,000, and 481,000 shares in settlement of the fiscal 2015, 2014, and 2013 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 2015, 2014, and 2013, employees purchased approximately 0.4 million shares, in each year, of the Company’s common stock under the plan at weighted average per share prices of $43.16, $32.18, and $28.79, respectively. Through January 30, 2016, approximately 39.0 million shares had been issued under this plan and 6.0 million 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 2015, 2014, and 2013, 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. The Company paid Robert Ferber compensation including salary and bonus of approximately $131,000, $133,000, and $134,000 in fiscal 2015, 2014, and 2013, respectively.

Note J: 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 laws and consumer protection laws. Class action litigation remains pending as of January 30, 2016.

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, 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 2015 and 2014 is presented in the tables below.

Year ended January 30, 2016:

		Quarter Ended
($000, except per share data)		May 2, 2015				August 1, 2015				October 31, 2015				January 30, 2016
Sales		$	2,938,148			$	2,968,270			$	2,782,855			$	3,250,726
Cost of goods sold		2,067,455				2,119,480				2,003,347				2,386,591
Selling, general and administrative		409,298				435,226				443,354				450,877
Interest expense, net		2,003				1,652				4,427				4,530
Total costs and expenses		2,478,756				2,556,358				2,451,128				2,841,998
Earnings before taxes		459,392				411,912				331,727				408,728
Provision for taxes on earnings		177,187				153,273				116,071				144,567
Net earnings		$	282,205			$	258,639			$	215,656			$	264,161
Earnings per share – basic1,2		$	0.69			$	0.64			$	0.54			$	0.66
Earnings per share – diluted1,2		$	0.69			$	0.63			$	0.53			$	0.66
Cash dividends declared per share
on common stock2		$	0.1175			$	0.1175			$	0.1175			$	0.1175
Stock price2
High		$	53.73			$	53.28			$	56.53			$	56.26
Low		$	45.93			$	47.79			$	47.22			$	44.81

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.

2 All per share amounts have been adjusted for the two-for-one stock split effective June 11, 2015.

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 – basic1,2		$	0.58			$	0.58			$	0.47			$	0.61
Earnings per share – diluted1,2		$	0.58			$	0.57			$	0.46			$	0.60
Cash dividends declared per share
on common stock2		$	0.1000			$	0.1000			$	0.1000			$	0.1000
Stock price2
High		$	37.05			$	34.83			$	40.42			$	48.47
Low		$	32.89			$	31.08			$	32.32			$	40.22

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.

2 All per share amounts have been adjusted for the two-for-one stock split effective June 11, 2015.

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 30, 2016 and January 31, 2015, 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 30, 2016. We also have audited the Company's internal control over financial reporting as of January 30, 2016, 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 consolidated 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 30, 2016 and January 31, 2015, and the results of their operations and their cash flows for each of the three years in the period ended January 30, 2016, 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 30, 2016, 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 29, 2016