Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Earnings


	Three Months Ended				Nine Months Ended
($000, except stores and per share data, unaudited)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Sales	$	4,924,849	$	4,565,489	$	14,354,440	$	13,481,598

Costs and Expenses
Cost of goods sold	3,564,268		3,424,046		10,426,241		10,020,027
Selling, general and administrative	810,470		693,367		2,364,590		2,029,926
Interest (income) expense, net	(43,319)		(2,802)		(111,930)		25,561
Total costs and expenses	4,331,419		4,114,611		12,678,901		12,075,514

Earnings before taxes	593,430		450,878		1,675,539		1,406,084
Provision for taxes on earnings	146,103		108,842		410,702		341,086
Net earnings	$	447,327	$	342,036	$	1,264,837	$	1,064,998

Earnings per share
Basic	$	1.34	$	1.00	$	3.76	$	3.09
Diluted	$	1.33	$	1.00	$	3.74	$	3.08


Weighted-average shares outstanding (000)
Basic	334,282		342,120		336,187		344,686
Diluted	336,261		343,720		338,107		346,212

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

Condensed Consolidated Statements of Comprehensive Income


	Three Months Ended				Nine Months Ended
($000, unaudited)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net earnings	$	447,327	$	342,036	$	1,264,837	$	1,064,998

Other comprehensive income	—		—		—		—

Comprehensive income	$	447,327	$	342,036	$	1,264,837	$	1,064,998

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

Condensed Consolidated Balance Sheets


($000, except share data, unaudited)	October 28, 2023		January 28, 2023		October 29, 2022
Assets
Current Assets
Cash and cash equivalents	$	4,499,497	$	4,551,876	$	3,906,490

Accounts receivable	171,915		145,694		168,483
Merchandise inventory	2,613,808		2,023,495		2,494,002
Prepaid expenses and other	206,725		183,654		192,214

Total current assets	7,491,945		6,904,719		6,761,189

Property and Equipment
Land and buildings	1,491,023		1,495,006		1,491,927
Fixtures and equipment	4,109,947		3,961,733		3,882,127
Leasehold improvements	1,503,769		1,433,647		1,402,653
Construction-in-progress	569,995		319,319		171,185
	7,674,734		7,209,705		6,947,892
Less accumulated depreciation and amortization	4,277,215		4,028,178		3,939,154
Property and equipment, net	3,397,519		3,181,527		3,008,738

Operating lease assets	3,160,017		3,098,134		3,101,882
Other long-term assets	221,139		232,083		228,286
Total assets	$	14,270,620	$	13,416,463	$	13,100,095

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	2,280,278	$	2,009,924	$	1,927,757
Accrued expenses and other	665,279		638,561		616,753
Current operating lease liabilities	680,088		655,976		656,837
Accrued payroll and benefits	509,484		279,710		251,479
Income taxes payable	20,960		52,075		11,404

Current portion of long-term debt	249,598		—		—
Total current liabilities	4,405,687		3,636,246		3,464,230

Long-term debt	2,210,073		2,456,510		2,455,460
Non-current operating lease liabilities	2,640,068		2,593,961		2,596,221
Other long-term liabilities	218,970		224,104		223,162
Deferred income taxes	212,866		217,059		214,022

Commitments and contingencies

Stockholders’ Equity
Common stock, par value $.01 per share Authorized 1,000,000,000 shares Issued and outstanding 336,952,000, 342,753,000 and 344,808,000 shares, respectively	3,370		3,428		3,448
Additional paid-in capital	1,920,908		1,820,249		1,793,265
Treasury stock	(633,318)		(584,750)		(581,267)

Retained earnings	3,291,996		3,049,656		2,931,554
Total stockholders’ equity	4,582,956		4,288,583		4,147,000
Total liabilities and stockholders’ equity	$	14,270,620	$	13,416,463	$	13,100,095

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

Condensed Consolidated Statements of Stockholders’ Equity


	Nine Months Ended October 28, 2023


	Common stock			Additional paid-in capital		Treasury stock			Retained earnings
(000)	Shares	Amount						Total
Balance at January 28, 2023	342,753	$	3,428	$	1,820,249	$	(584,750)		$	3,049,656	$	4,288,583
Net earnings	—	—		—		—			371,191		371,191
Common stock issued under stock plans, net of shares

used for tax withholding	461	4		6,145		(37,522)			—		(31,373)
Stock-based compensation	—	—		33,063		—			—		33,063
Common stock repurchased, inclusive of excise tax	(2,169)	(22)		(9,729)		—			(226,523)		(236,274)
Dividends declared ($0.335 per share)	—	—		—		—			(114,794)		(114,794)
Balance at April 29, 2023	341,045	$	3,410	$	1,849,728	$	(622,272)		$	3,079,530	$	4,310,396
Net earnings	—	—		—		—			446,319		446,319
Common stock issued under stock plans, net of shares
used for tax withholding	89	1		6,208		(913)			—		5,296
Stock-based compensation	—	—		39,429		—			—		39,429
Common stock repurchased, inclusive of excise tax	(2,152)	(21)		(9,959)		—			(222,713)		(232,693)
Dividends declared ($0.335 per share)	—	—		—		—			(114,005)		(114,005)
Balance at July 29, 2023	338,982	$	3,390	$	1,885,406	$	(623,185)		$	3,189,131	$	4,454,742

Net earnings	—	—		—		—			447,327		447,327
Common stock issued under stock plans, net of shares
used for tax withholding	34	1		6,231		(10,133)			—		(3,901)
Stock-based compensation	—	—		38,877		—			—		38,877
Common stock repurchased, inclusive of excise tax	(2,064)	(21)		(9,606)		—			(231,129)		(240,756)
Dividends declared ($0.335 per share)	—	—		—		—			(113,333)		(113,333)
Balance at October 28, 2023	336,952	$	3,370	$	1,920,908	$	(633,318)		$	3,291,996	$	4,582,956
The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity


	Nine Months Ended October 29, 2022


	Common stock			Additional paid-in capital		Treasury stock			Retained earnings
(000)	Shares	Amount						Total
Balance at January 29, 2022	351,720	$	3,517	$	1,717,530	$	(535,895)		$	2,874,898	$	4,060,050
Net earnings	—	—		—		—			338,445		338,445
Common stock issued under stock plans, net of shares

used for tax withholding	1,131	11		5,906		(38,113)			—		(32,196)
Stock-based compensation	—	—		36,071		—			—		36,071
Common stock repurchased	(2,524)	(25)		(10,266)		—			(229,274)		(239,565)
Dividends declared ($0.310 per share)	—	—		—		—			(108,908)		(108,908)
Balance at April 30, 2022	350,327	$	3,503	$	1,749,241	$	(574,008)		$	2,875,161	$	4,053,897
Net earnings	—	—		—		—			384,517		384,517
Common stock issued under stock plans, net of shares
used for tax withholding	153	1		5,974		(521)			—		5,454
Stock-based compensation	—	—		26,803		—			—		26,803
Common stock repurchased	(2,928)	(29)		(12,594)		—			(222,812)		(235,435)
Dividends declared ($0.310 per share)	—	—		—		—			(108,285)		(108,285)
Balance at July 30, 2022	347,552	$	3,475	$	1,769,424	$	(574,529)		$	2,928,581	$	4,126,951
Net earnings	—	—		—		—			342,036		342,036
Common stock issued under stock plans, net of shares
used for tax withholding	47	1		6,405		(6,738)			—		(332)
Stock-based compensation	—	—		29,493		—			—		29,493
Common stock repurchased	(2,791)	(28)		(12,057)		—			(231,608)		(243,693)
Dividends declared ($0.310 per share)	—	—		—		—			(107,455)		(107,455)
Balance at October 29, 2022	344,808	$	3,448	$	1,793,265	$	(581,267)		$	2,931,554	$	4,147,000
The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows


	Nine Months Ended
($000, unaudited)	October 28, 2023		October 29, 2022
Cash Flows From Operating Activities
Net earnings	$	1,264,837	$	1,064,998
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	300,366		290,565

Stock-based compensation	111,369		92,367
Deferred income taxes	(4,193)		76,380


Change in assets and liabilities:
Merchandise inventory	(590,313)		(231,729)
Other current assets	(48,803)		(72,079)
Accounts payable	259,105		(452,968)
Other current liabilities	284,989		(308,202)
Income taxes	(25,524)		3,397
Operating lease assets and liabilities, net	8,336		8,634
Other long-term, net	5,566		1,304
Net cash provided by operating activities	1,565,735		472,667

Cash Flows From Investing Activities
Additions to property and equipment	(540,458)		(417,901)


Net cash used in investing activities	(540,458)		(417,901)

Cash Flows From Financing Activities
Issuance of common stock related to stock plans	18,590		18,298
Treasury stock purchased	(48,568)		(45,372)
Repurchase of common stock	(703,400)		(718,693)
Dividends paid	(342,132)		(324,648)





Net cash used in financing activities	(1,075,510)		(1,070,415)

Net decrease in cash, cash equivalents, and restricted cash and cash equivalents	(50,233)		(1,015,649)

Cash, cash equivalents, and restricted cash and cash equivalents:
Beginning of period	4,612,241		4,982,382
End of period	$	4,562,008	$	3,966,733

Supplemental Cash Flow Disclosures
Interest paid	$	80,316	$	80,316
Income taxes paid	$	440,419	$	261,309

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

Notes to Condensed Consolidated Financial Statements

Three and Nine Months Ended October 28, 2023 and October 29, 2022

(Unaudited)

Note A: Summary of Significant Accounting Policies

Basis of presentation. The accompanying unaudited interim condensed consolidated financial statements have been prepared from the records of Ross Stores, Inc. and subsidiaries (the “Company”) without audit and, in the opinion of management, include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the Company’s financial position as of October 28, 2023 and October 29, 2022, and the results of operations, comprehensive income, and stockholders’ equity for the three and nine month periods ended October 28, 2023 and October 29, 2022, and the cash flows for the nine month periods ended October 28, 2023 and October 29, 2022. The Condensed Consolidated Balance Sheet as of January 28, 2023, presented herein, has been derived from the Company’s audited consolidated financial statements for the fiscal year then ended.

Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, contained in the Company’s Annual Report on Form 10-K for the year ended January 28, 2023.

The results of operations, comprehensive income, and stockholders’ equity for the three and nine month periods ended October 28, 2023 and October 29, 2022, and the cash flows for the nine month periods ended October 28, 2023 and October 29, 2022 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. The fiscal year ending February 3, 2024 is referred to as fiscal 2023 and is a 53-week year. The fiscal year ended January 28, 2023 is referred to as fiscal 2022 and was a 52-week year.

Recently adopted accounting standards. In September 2022, the FASB issued Accounting Standards Update (ASU) 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, to enhance transparency about an entity’s use of supplier finance programs. The ASU requires enhanced and additional disclosures about the key terms of supplier finance programs including a description of where in the financial statements any related amounts are presented. The Company adopted ASU 2022-04 in the first quarter of fiscal 2023 on a retrospective basis, excluding the rollforward requirements which will be adopted in fiscal 2024 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements for the three and nine month periods ended October 28, 2023 and is not expected to have a material impact on the Company’s fiscal 2023 financial statements.

Use of accounting estimates. The preparation of financial statements in conformity with 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 condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the Company’s estimates. The Company’s significant accounting estimates include valuation reserves for inventory, packaway and other inventory carrying costs, useful lives of fixed assets, insurance reserves, reserves for uncertain tax positions, and legal claims.

Revenue recognition. The following sales mix table disaggregates revenue by merchandise category for the three and nine month periods ended October 28, 2023 and October 29, 2022:


	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Home Accents and Bed and Bath	25	%	25	%	25	%	25	%
Ladies	23	%	25	%	24	%	25	%
Men’s	16	%	15	%	15	%	15	%
Accessories, Lingerie, Fine Jewelry, and Cosmetics	14	%	13	%	14	%	13	%
Shoes	13	%	13	%	13	%	13	%
Children’s	9	%	9	%	9	%	9	%
Total	100	%	100	%	100	%	100	%

Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original maturity of three months or less. The institutions where these instruments are held could potentially subject the Company to concentrations of credit risk. The Company manages its risk associated with these instruments primarily by holding its cash and cash equivalents across a highly diversified set of banks and other financial institutions.

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

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


($000)	October 28, 2023		January 28, 2023		October 29, 2022
Cash and cash equivalents	$	4,499,497	$	4,551,876	$	3,906,490
Restricted cash and cash equivalents included in:
Prepaid expenses and other	13,127		12,677		11,446
Other long-term assets	49,384		47,688		48,797
Total restricted cash and cash equivalents	62,511		60,365		60,243
Total cash, cash equivalents, and restricted cash and cash equivalents	$	4,562,008	$	4,612,241	$	3,966,733

Property and equipment. As of October 28, 2023 and October 29, 2022, the Company had $47.0 million and $30.2 million, respectively, of property and equipment purchased but not yet paid. These purchases are included in Property and equipment, Accounts payable, and Accrued expenses and other in the accompanying Condensed Consolidated Balance Sheets.

Operating leases. Supplemental cash flow disclosures related to operating lease assets obtained in exchange for operating lease liabilities (includes new leases and remeasurements or modifications of existing leases) were as follows:


	Three Months Ended				Nine Months Ended
($000)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Operating lease assets obtained in exchange for operating lease liabilities	$	159,616	$	235,186	$	550,467	$	549,267

Cash dividends. On November 15, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.335 per common share, payable on December 29, 2023. The Company’s Board of Directors declared a cash dividend of $0.335 per common share in February, May, and August 2023, and $0.310 per common share in March, May, August, and November 2022.

Stock repurchase program. In March 2022, the Company’s Board of Directors approved a two-year program to repurchase up to $1.9 billion of the Company’s common stock through fiscal 2023. During the nine month period ended October 28, 2023, the Company repurchased 6.4 million shares of common stock for $703.4 million, excluding excise tax due under the Inflation Reduction Act of 2022. The Company repurchased 8.2 million shares of common stock for $718.7 million during the nine month period ended October 29, 2022.

Litigation, claims, and assessments. Like many retailers, the Company has been named in class/representative action lawsuits, primarily in California, alleging violations by the Company of wage and hour laws. Class/representative action litigation remains pending as of October 28, 2023.

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

In the opinion of management, the resolution of currently pending class/representative 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.

Supply chain finance program. The Company facilitates a voluntary supply chain finance program (the “program”) to provide certain suppliers with the opportunity to sell receivables due from the Company to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third-party bank administers the program. The Company’s responsibility is limited to making payment on the terms originally negotiated with each supplier, regardless of whether a supplier sells its receivable to a financial institution. The Company is not a party to the agreements between the participating financial institutions and the suppliers in connection with the program and receives no financial incentives from the suppliers or the financial institutions. No guarantees are provided by the Company under the program and the Company’s rights and obligations to its suppliers are not affected by the program. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the program.

All outstanding payments owed under the program are recorded within Accounts payable in the Condensed Consolidated Balance Sheets. The Company accounts for all payments made under the program as a reduction to operating cash flows in Accounts payable within the Condensed Consolidated Statements of Cash Flows. The amounts owed to a participating financial institution under the program and included in Accounts payable were $141.0 million, $119.2 million, and $128.0 million at October 28, 2023, January 28, 2023, and October 29, 2022, respectively.

Note B: Fair Value Measurements

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, 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.

The fair value of the Company’s financial instruments are as follows:


($000)	October 28, 2023		January 28, 2023		October 29, 2022
Cash and cash equivalents (Level 1)	$	4,499,497	$	4,551,876	$	3,906,490
Restricted cash and cash equivalents (Level 1)	$	62,511	$	60,365	$	60,243

The underlying assets in the Company’s nonqualified deferred compensation program as of October 28, 2023, January 28, 2023, and October 29, 2022 (included in Other long-term assets and in Other long-term liabilities) primarily consist of participant-directed money market, stock, and bond funds. The fair value measurement for funds with quoted market prices in active markets (Level 1) are as follows:


($000)	October 28, 2023		January 28, 2023		October 29, 2022
Level 1	$	145,003	$	155,496	$	148,849

Note C: Stock-Based Compensation

For the three and nine month periods ended October 28, 2023 and October 29, 2022, the Company recognized stock-based compensation expense as follows:


	Three Months Ended				Nine Months Ended
($000)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Restricted stock	$	23,546	$	22,177	$	69,094	$	63,337
Performance awards	14,232		6,186		38,994		25,800
Employee stock purchase plan	1,099		1,130		3,281		3,230
Total	$	38,877	$	29,493	$	111,369	$	92,367

Total stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Earnings for the three and nine month periods ended October 28, 2023 and October 29, 2022 is as follows:


	Three Months Ended				Nine Months Ended
($000)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Cost of goods sold	$	20,254	$	16,547	$	58,885	$	50,768
Selling, general and administrative	18,623		12,946		52,484		41,599
Total	$	38,877	$	29,493	$	111,369	$	92,367

The tax benefits related to stock-based compensation expense for the three and nine month periods ended October 28, 2023 were $7.9 million and $23.2 million, respectively. The tax benefits related to stock-based compensation expense for the three and nine month periods ended October 29, 2022 were $6.1 million and $18.9 million, respectively.

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

Performance share awards. The Company has a performance share award program for senior executives. A performance share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s attainment of a performance goal during the performance period, which is the Company’s fiscal year. If attained, the restricted stock then vests over a service period, generally three years from the date the performance award was granted.

As of October 28, 2023, shares related to unvested restricted stock, restricted stock units, and performance share awards totaled 4.0 million shares. A summary of restricted stock, restricted stock units, and performance share award activity for the nine month period ended October 28, 2023, is presented below:


(000, except per share data)	Number of shares	Weighted-average grant date fair value
Unvested at January 28, 2023	3,943	$	99.69
Awarded	1,276	109.52
Released	(1,139)	95.98
Forfeited	(68)	101.63
Unvested at October 28, 2023	4,012	$	103.97

The unamortized compensation expense at October 28, 2023 was $199.0 million which is expected to be recognized over a weighted-average remaining period of 2.0 years. The unamortized compensation expense at October 29, 2022 was $213.6 million which was expected to be recognized over a weighted-average remaining period of 2.0 years.

Shares repurchased for tax withholding are considered treasury shares which are available for reissuance. During the three and nine month periods ended October 28, 2023, shares purchased by the Company for tax withholding totaled 85,761 and 461,889, respectively. During the three and nine month periods ended October 29, 2022, shares purchased by the Company for tax withholding totaled 74,844 and 490,060, respectively.

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 withheld 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.

Note D: Earnings Per Share

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

For the three and nine month periods ended October 28, 2023, approximately 14,000 and 17,000 weighted-average shares were excluded from the calculation of diluted EPS, respectively, because their effect would have been anti-dilutive for the periods presented. For the three and nine month periods ended October 29, 2022, approximately 85,000 and 492,000 weighted-average shares were excluded from the calculation of diluted EPS, respectively, because their effect would have been anti-dilutive for the periods presented.

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


	Three Months Ended						Nine Months Ended
Shares in (000s)	Basic EPS		Effect of dilutive common stock equivalents		Diluted EPS		Basic EPS		Effect of dilutive common stock equivalents		Diluted EPS
October 28, 2023
Shares	334,282		1,979		336,261		336,187		1,920		338,107
Amount	$	1.34	$	(0.01)	$	1.33	$	3.76	$	(0.02)	$	3.74

October 29, 2022
Shares	342,120		1,600		343,720		344,686		1,526		346,212
Amount	$	1.00	$	—	$	1.00	$	3.09	$	(0.01)	$	3.08

Note E: Debt

Senior Notes. Unsecured senior debt (the “Senior Notes”), net of unamortized discounts and debt issuance costs, consisted of the following:


($000)	October 28, 2023		January 28, 2023		October 29, 2022





3.375% Senior Notes due 2024	$	249,598	$	249,257	$	249,144
4.600% Senior Notes due 2025	698,120		697,161		696,841
0.875% Senior Notes due 2026	496,960		496,038		495,732
4.700% Senior Notes due 2027	240,225		239,899		239,791
4.800% Senior Notes due 2030	132,732		132,602		132,559
1.875% Senior Notes due 2031	495,678		495,254		495,113
5.450% Senior Notes due 2050	146,358		146,299		146,280
Total long-term debt1	$	2,459,671	$	2,456,510	$	2,455,460

Less: current portion	249,598		—		—
Total due beyond one year	$	2,210,073	$	2,456,510	$	2,455,460

1 Net of unamortized discount and debt issuance costs of $15.3 million, $18.5 million, and $19.5 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively.

Interest on all Senior Notes is payable semi-annually and the Senior Notes are subject to prepayment penalties for early payment of principal.

The aggregate fair value of the seven outstanding series of Senior Notes was approximately $2.2 billion as of October 28, 2023 and October 29, 2022, and approximately $2.3 billion as of January 28, 2023. 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.

Revolving credit facilities. The Company’s $1.3 billion senior unsecured revolving credit facility (“Credit Facility”) expires in February 2027 and may be extended at the Company’s request for up to two additional one-year periods subject to customary conditions. The Credit Facility contains a $300 million sublimit for issuance of standby letters of credit. It also contains an option allowing the Company to increase the size of its Credit Facility by up to an additional $700 million, with the agreement of the committing lenders. Interest on borrowings under this Credit Facility is a term rate based on the Secured Overnight Financing Rate (“Term SOFR”) (or an alternate benchmark rate, if Term SOFR is no longer available) plus an applicable margin and is payable quarterly and upon maturity.

The Credit Facility is subject to a quarterly Consolidated Adjusted Debt to Consolidated EBITDAR financial leverage ratio covenant. As of October 28, 2023, the Company was in compliance with the financial covenant, had no borrowings or standby letters of credit outstanding under the Credit Facility, and the $1.3 billion Credit Facility remained in place and available.

The table below shows the components of interest expense and income for the three and nine month periods ended October 28, 2023 and October 29, 2022:


	Three Months Ended				Nine Months Ended
($000)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Interest expense on long-term debt	$	21,159	$	21,150	$	63,458	$	63,429

Other interest expense	424		448		1,169		1,242
Capitalized interest	(3,342)		(663)		(8,268)		(4,489)
Interest income	(61,560)		(23,737)		(168,289)		(34,621)
Interest (income) expense, net	$	(43,319)	$	(2,802)	$	(111,930)	$	25,561

Note F: Taxes on Earnings

The Company’s effective tax rate for the three and nine month periods ended October 28, 2023 was approximately 25% compared to approximately 24% for the three and nine month periods ended October 29, 2022. The Company’s effective tax rate is impacted by changes in tax law and accounting guidance, location of new stores, level of earnings, tax effects associated with stock-based compensation, and uncertain tax positions.

As of October 28, 2023, January 28, 2023, and October 29, 2022, the reserves for unrecognized tax benefits were $65.3 million, $60.6 million, and $70.7 million, inclusive of $8.4 million, $7.1 million, and $9.1 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, $52.2 million would impact the Company’s effective tax rate. It is reasonably possible that certain federal and state tax matters may be concluded or statutes of limitations may lapse during the next 12 months. Accordingly, the total amount of unrecognized tax benefits may decrease by up to $12.9 million. 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.

The Company is open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2019 through 2022. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2018 through 2022. Certain federal and state tax returns are currently under audit by various tax authorities. The Company does not expect the results of these audits to have a material impact on the condensed consolidated financial statements.

Report of Independent Registered Public Accounting Firm

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

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheets of Ross Stores, Inc. and subsidiaries (the “Company”) as of October 28, 2023 and October 29, 2022, the related condensed consolidated statements of earnings, comprehensive income, and stockholders’ equity, for the three and nine month periods ended October 28, 2023 and October 29, 2022, and cash flows for the nine month periods ended October 28, 2023 and October 29, 2022, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of January 28, 2023, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 27, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 28, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

San Francisco, California

December 5, 2023

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