UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended AUGUST 1, 1998 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 0-14678 ROSS STORES, INC. (Exact name of registrant as specified in its charter) Delaware 94-1390387 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8333 Central Avenue, Newark, 94560-3433 California (Zip Code) (Address of principal executive offices) Registrant's telephone number, (510) 505-4400 including area code Former name, former address and N/A former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No__ The number of shares of Common Stock, with $.01 par value, outstanding on August 28, 1998 was 46,951,511.
2 PART I. FINANCIAL INFORMATION <TABLE> <CAPTION> ITEM 1. FINANCIAL STATEMENTS ROSS STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($000) August 1, January 31, August 2, ASSETS 1998 1998 1997 (Unaudited) (Note A) (Unaudited) <S> <C> <C> <C> Current Assets Cash and cash equivalents $ 31,972 $ 56,369 $ 31,770 Accounts receivable 11,722 8,122 9,250 Merchandise inventory 468,952 418,825 427,114 Prepaid expenses and other 15,440 15,108 14,253 _____________________________________ Total Current Assets 528,086 498,424 482,387 Property and Equipment Land and buildings (Note B) 48,748 24,115 24,115 Fixtures and equipment 197,679 190,186 180,521 Leasehold improvements 132,306 144,247 141,235 Construction-in-progress 32,856 25,763 10,196 _____________________________________ 411,589 384,311 356,067 Less accumulated depreciation and amortization 177,271 179,590 164,458 _____________________________________ 234,318 204,721 191,609 Other assets 40,318 34,808 30,191 $802,722 $737,953 $704,187 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $212,249 $201,998 $196,444 Accrued expenses and other 96,068 82,290 78,226 Accrued payroll and benefits 29,699 39,458 33,944 Short-term debt 37,500 _____________________________________ Total Current Liabilities 375,516 323,746 308,614 Other liabilities 41,119 33,526 29,592 Stockholders' Equity Capital stock 472 479 496 Additional paid-in capital 200,688 195,562 170,803 Retained earnings 184,927 184,640 194,682 _____________________________________ 386,087 380,681 365,981 _____________________________________ $802,722 $737,953 $704,187 </TABLE> See notes to condensed consolidated financial statements.
3 <TABLE> <CAPTION> ROSS STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Six Months Ended ($000 except per share data, unaudited) August 1, August 2, August 1, August 2, 1998 1997 1998 1997 <S> <C> <C> <C> <C> Sales $536,975 $490,679 $1,021,251 $933,520 Costs and Expenses Cost of goods sold and occupancy 371,996 341,109 708,812 650,622 General, selling and administrative 103,355 95,556 197,412 182,220 Depreciation and amortization 8,230 7,635 16,112 14,910 Interest expense (income) 265 (283) 130 (483) __________________ __________________________ 483,846 444,017 922,466 847,269 Earnings before taxes 53,129 46,662 98,785 86,251 Provision for taxes on earnings 20,720 18,664 38,526 34,500 __________________ _________________________ Net earnings $ 32,409 $ 27,998 $ 60,259 $ 51,751 Net earnings per share: Basic $ .68 $ .56 $ 1.26 $ 1.04 Diluted $ .67 $ .55 $ 1.24 $ 1.02 Weighted average shares outstanding: Basic 47,455 49,791 47,652 49,594 Diluted 48,358 50,851 48,582 50,666 Stores open at end of period 339 318 339 318 </TABLE> See notes to condensed consolidated financial statements.
4 <TABLE> <CAPTION> ROSS STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended ($000, unaudited) August 1, August 2, 1998 1997 <S> <C> <C> Cash Flows From Operating Activities Net earnings $ 60,259 $ 51,751 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 16,112 14,910 Other amortization 4,663 4,060 Change in assets and liabilities: Merchandise inventory (50,127) (53,425) Other current assets - net (3,931) (2,382) Accounts payable 12,886 14,563 Other current liabilities - net 6,668 (8,694) Other 3,172 1,276 ____________________ Net cash provided by operating activities 49,702 22,059 Cash Flows From Investing Activities Additions to property and equipment (49,825) (19,202) _____________________ Net cash used in investing activities (49,825) (19,202) Cash Flows From Financing Activities Borrowing under lines of credit 37,500 4,600 Repayment of long-term debt (63) (59) Issuance of common stock related to stock plans 6,347 5,693 Repurchase of common stock (62,825) (21,642) Dividends paid (5,233) (4,456) _____________________ Net cash used in financing activities (24,274) (15,864) _____________________ Net Decrease In Cash (24,397) (13,007) Cash and cash equivalents: Beginning of year 56,369 44,777 ___________________ End of quarter $ 31,972 $ 31,770 Interest Paid $ 307 $ 83 Income Taxes Paid $ 21,947 $ 45,671 </TABLE> See notes to condensed consolidated financial statements.
5 ROSS STORES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three and Six Months Ended August 1, 1998 and August 2, 1997 (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared from the records of the company without audit and, in the opinion of management, include all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at August 1, 1998 and August 2, 1997; the interim results of operations for the three and six months ended August 1, 1998 and August 2, 1997; and changes in cash flows for the six months then ended. The balance sheet at January 31, 1998, presented herein, has been derived from the audited financial statements of the company for the fiscal year then ended. Accounting policies followed by the company are described in Note A to the audited consolidated financial statements for the fiscal year ended January 31, 1998. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted for purposes of the condensed consolidated interim financial statements. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, for the year ended January 31, 1998. The results of operations for the three and six month periods herein presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements at August 1, 1998 and August 2, 1997, and for the three and six months then ended have been reviewed, prior to filing, by the registrant's independent auditors whose report covering their review of the financial statements is included in this report on page 6. NOTE B - PURCHASE OF CENTRAL OFFICE AND WEST COAST DISTRIBUTION CENTER The company exercised its right to purchase its West Coast distribution center and central office, both of which are located in Newark, California. This transaction was closed on June 3, 1998 with funding provided by cash generated by operations and bank borrowings under the company's existing credit agreement.
6 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholders of Ross Stores, Inc. Newark, California We have reviewed the accompanying condensed consolidated balance sheets of Ross Stores, Inc. (the "Company") as of August 1, 1998 and August 2, 1997, and the related condensed consolidated statements of earnings for the three-month and six-month periods then ended and the related condensed consolidated statements of cash flows for the six-month periods then ended. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Ross Stores, Inc. as of January 31, 1998, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated March 17, 1998, 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 31, 1998 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Deloitte & Touche LLP San Francisco, California August 21, 1998
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. The Company's actual results may vary significantly from the results discussed in the forward looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled "Forward Looking Statements and Factors That May Affect Future Performance" below. The following discussion should be read in conjunction with the condensed financial statements and notes thereto included elsewhere in this Form 10-Q and in the Company's 1997 Form 10- K. All information is based on the Company's fiscal calendar. <TABLE> RESULTS OF OPERATIONS <CAPTION> PERCENTAGE OF SALES Three Months Ended Six Months Ended August 1, August 2, August 1, August 2, 1998 1997 1998 1997 <S> <C> <C> <C> <C> SALES Sales ($000) $536,975 $490,679 $1,021,251 $933,520 Sales growth 9.4% 21.0% 9.4% 20.2% Comparable store sales growth 4% 12% 4% 12% COSTS AND EXPENSES Cost of goods sold and occupancy 69.3% 69.5% 69.4% 69.7% General, selling and administrative 19.2% 19.5% 19.3% 19.5% Depreciation and amortization 1.5% 1.6% 1.6% 1.6% Interest expense (income) 0.0% (0.1)% 0.0% (0.1)% NET EARNINGS 6.0% 5.7% 5.9% 5.5% </TABLE> Sales The results of operations for the three and six months ended August 1, 1998, over the same period last year, reflect a greater number of open stores during the current period and positive comparable store sales. Costs and Expenses The decreases from the prior year in cost of goods sold and occupancy as a percentage of sales for the three and six month periods were primarily due to leverage on occupancy costs realized from the comparable store sales gain of 4%. General, selling and administrative expenses as a percentage of sales also declined from the comparable quarter in the prior year and the comparable six-month period. This improvement was due to the company's continued focus on strict expense controls combined with leverage on store expenses realized from the comparable store sales gain of 4%, lower advertising costs, and lower costs related to the company's incentive compensation plan, partially offset by slightly higher distribution costs and by costs associated with the company's year 2000 remediation efforts.
8 Net earnings for the three months ended August 1, 1998 totaled $32.4 million, or $.67 per share, compared to net earnings of $28.0 million, or $.55 per share, for the three months ended August 2, 1997. Taxes on Earnings The company paid $21.9 million in income taxes in the first six months of 1998, compared to $45.7 million in the first six months of 1997. This $23.8 million decrease in income taxes paid in the first six months of 1998 compared to the same period in the prior year is attributable principally to the timing of tax deductions taken by the company primarily related to the company's stock option plans. The company's effective tax rate for the second quarter of 1998 was 39%, compared to 40% in the same period in 1997. The rate for both periods reflects the applicable statutory tax rates. LIQUIDITY AND CAPITAL RESOURCES The primary uses of cash, other than for operating expenses, during the first six months of fiscal 1998 were for (i) the repurchase of the company's common stock, (ii) the purchase of inventory, (iii) the purchase of the company's Newark, California distribution center and corporate headquarters and (iv) capital expenditures for new stores, improvements to existing locations and improvements in management information systems. Total consolidated inventories were up 10% at the end of the second quarter from the same quarter last year driven by (i) a planned increase in packaway inventories and (ii) a larger number of open stores (339) over the prior year (318). In January 1998, the company announced a $110 million common stock repurchase program. For the six months ended August 1, 1998, the company spent $62.8 million to repurchase 1,464,700 shares of common stock compared to the $21.6 million spent for 789,000 shares of common stock for the six months ended August 2, 1997. The company exercised its right to purchase its Newark, California distribution center and corporate headquarters for $24.6 million. The company closed this transaction on June 3, 1998 with funding provided by internally generated cash and bank borrowings under its existing credit agreement. The increase in interest expense in the second quarter of fiscal 1998 compared to the comparable period in the prior year reflects increased short-term borrowings to finance operations and the June 1998 real estate purchase. The company believes it can fund its operating cash requirements and capital needs on a short-term and long-term basis and complete the current stock repurchase program through internally generated cash, trade credit, established bank lines and lease financing.
9 YEAR 2000 MATTERS The year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Certain information technology systems and their associated software ("IT Systems"), and certain equipment that utilizes programmable logic chips to control aspects of their operation ("embedded chip equipment"), may recognize "00" as a year other than the year 2000. Some IT Systems and embedded chip equipment of the company and of third parties who do business with the company contain two-digit programming to define a year. The year 2000 issue could result, at the company and elsewhere, in system failures or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or to engage in other normal business activities. Readiness for Year 2000 The company is addressing the year 2000 issue, including efforts relating to IT Systems and embedded chip equipment used within the company, efforts to assess issues the company faces if third parties who do business with the company are not prepared for the year 2000, and contingency planning. In 1997 the company created a corporation-wide year 2000 project team representing all business and staff units with the goal of achieving an uninterrupted transition into the year 2000. For IT Systems and embedded chip equipment used within the company, the company has divided its year 2000 efforts into four phases: (i) identification and inventorying of IT Systems and embedded chip equipment with potential year 2000 problems; (ii) assessment of scope of year 2000 issues for, and assigning priorities to, each item based on its importance to the company's operations; (iii) remediation of year 2000 issues in accordance with assigned priorities, by correction, upgrade, replacement or retirement; (iv) testing for and validation of year 2000 compliance. Because the company uses a variety of IT Systems, internally-developed and third-party provided software and embedded chip equipment, depending upon business function and location, various aspects of the company's year 2000 efforts are in different phases and are proceeding in parallel. The company's operations are also dependent on the year 2000 readiness of third parties who do business with the company. In particular, the company's IT Systems interact with commercial electronic transaction processing systems to handle customer credit card purchases and other point of sale transactions, and the company is dependent on third-party suppliers of such infrastructure elements as, but not limited to, telephone service, electric power, water and banking facilities. The company does not depend to any significant degree on any single merchandise vendor or upon electronic transaction processing with individual vendors for merchandise purchases. The company has begun to identify and initiate formal communications with key third parties and suppliers and with significant merchandise vendors to determine the extent to which the company will be vulnerable to such parties' failure to resolve their own year 2000 issues. Although the company has not been put on notice that any known third party problem will not be resolved, the company has limited information and no assurance of additional information concerning the year 2000 readiness of third parties. The resulting risks to the company's business are very difficult to assess. Where commercially reasonable to do so, the company intends to assess its risks with respect to failure by third parties to be year 2000 compliant and to seek to mitigate those risks. The company is at an early stage in those efforts. The company is using both internal and external resources to identify, correct, upgrade or replace and test internally deployed IT Systems and embedded chip equipment for year 2000 compliance. Costs The company estimates that its internally-deployed IT Systems and embedded chip equipment will be year 2000 compliant by mid-1999. Aggregate costs for work related to year 2000 efforts in fiscal 1998 and 1999 currently are anticipated to total approximately $12.0 million, including about $6.0 million for capital investments in IT Systems and embedded chip equipment, and are expected to be funded through operating cash flows. Operating costs related to year 2000 compliance
10 projects will be incurred over several quarters and will be expensed as incurred. They include $732,000 in costs reported in fiscal 1998 first quarter results. In the second quarter of fiscal 1998, the company incurred $1.1 million in expenses related to year 2000 compliance, with an estimated $2.2 million expected in the second half of fiscal 1998 and approximately $2.0 million expected in fiscal 1999. Approximately $4.0 million of the expected capital outlay will be incurred in fiscal 1998, with another $2.0 million in capital expenditures expected in fiscal 1999. Risks The company intends and expects to implement the changes necessary to address the year 2000 issue for IT Systems and embedded chip equipment used within the company. The company presently believes that, with modifications to existing software, conversions to new software, and appropriate remediation of embedded chip equipment, the year 2000 issue is not reasonably likely to pose significant operational problems for the company's IT Systems and embedded chip equipment as so modified and converted. However, if unforeseen difficulties arise or such modifications, conversions and replacements are not completed timely, or if the company's vendors' or suppliers' systems are not modified to become year 2000 compliant, the year 2000 issue may have a material impact on the results of operations and financial condition of the company. The company is presently unable to assess the likelihood that the company will experience significant operational problems due to unresolved year 2000 problems of third parties who do business with the company. There can be no assurance that other entities will achieve timely year 2000 compliance; if they do not, year 2000 problems could have a material impact on the company's operations. Similarly, there can be no assurance that the company can timely mitigate its risks related to a supplier's failure to resolve its year 2000 issues. If such mitigation is not achievable, year 2000 problems could have a material impact on the company's operations. The company's estimates of the costs of achieving year 2000 compliance and the date by which year 2000 compliance will be achieved are based on management's best estimates, which were derived using numerous assumptions about future events including the continued availability of certain resources, third party modification plans and other factors. However, there can be no assurance that these estimates will be achieved, and actual results could differ materially from these estimates. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in year 2000 remediation work, the ability to locate and correct all relevant computer codes, the success achieved by the company's suppliers in reaching year 2000-readiness, the timely availability of necessary replacement items and similar uncertainties. Contingency Plans The company presently believes that the most reasonably likely worst- case scenarios that the company might confront with respect to year 2000 issues have to do with the possible failure in one or more geographic regions of third party systems over which the company has no control, such as, but not limited to, power and telephone service. For example, if such services were to fail, it could be necessary for the company to temporarily close stores in the affected geographic areas. The company has in place a business resumption plan that addresses recovery from various kinds of disasters, including recovery from significant interruptions to data flows and distribution capabilities at the company's major data systems centers and major distribution centers. The company is using that plan as a starting point for developing specific year 2000 contingency plans, which the company expects to complete by approximately the first quarter of fiscal year 1999. However, there can be no assurance that the company will be able to complete its contingency planning on that schedule.
11 FORWARD LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE PERFORMANCE This report includes a number of forward looking statements, which reflect the company's current beliefs and estimates with respect to future events and the company's future financial performance, operations and competitive strengths. The words "expect," "anticipate," "estimate," "believe" and similar expressions identify forward looking statements. The company's continued success depends, in part, upon its ability to increase sales at existing locations, to open new stores and to operate stores on a profitable basis. There can be no assurance that the company's existing strategies and store expansion program will result in a continuation of revenue and profit growth. Future economic and industry trends that could potentially impact revenue and profitability remain difficult to predict. As a result, the forward looking statements that are contained herein are subject to certain risks and uncertainties that could cause the company's actual results to differ materially from historical results or current expectations. These factors include, without limitation, ongoing competitive pressures in the apparel industry, obtaining acceptable store locations, the company's ability to continue to purchase attractive name brand merchandise at desirable discounts, the company's ability to successfully implement its merchandise diversification strategy, the company's ability to successfully expand its geographic reach, unseasonable weather trends, changes in the level of consumer spending on or preferences in apparel or home-related merchandise and greater than planned costs, including those that could be related to necessary modifications to or replacements of the company's IT Systems and embedded chip equipment to enable them to process information with dates or date ranges spanning the year 2000 and beyond. If unforeseen difficulties arise or such modifications and replacements are not completed timely, or if the company's vendors' or suppliers' IT Systems, software and embedded chip equipment are not modified to become year 2000 compliant, the year 2000 issue may have a material impact on the operations of the company. In addition, the company's corporate headquarters, one distribution center and 44% of its stores are located in California. Therefore, a downturn in the California economy or a major natural disaster could significantly impact the company's operating results and financial condition. In addition to the above factors, the apparel industry is highly seasonal. The combined sales of the company for the third and fourth (holiday) fiscal quarters are higher than the combined sales for the first two fiscal quarters. The company has realized a significant portion of its profits in each fiscal year during the fourth quarter. Intensified price competition, lower than anticipated consumer demand or other factors, if they were to occur during the third and fourth quarters, and in particular during the fourth quarter, could adversely affect the company's fiscal year results. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders held on May 28, 1998 (the "1998 Annual Meeting"), the stockholders of the company voted on and approved the following proposals: Proposal 1 to elect three Class III Directors for a three-year term. Proposal 2 to amend the 1992 Stock Option Plan to increase the share reserve by 2,300,000 shares of common stock. Proposal 3 to amend the company's certificate of incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 shares to 170,000,000 shares.
12 Proposal 4 to ratify the appointment of Deloitte & Touche LLP as the company's certified public accountants for the fiscal year ending January 30, 1999. INFORMATION ON THE BOARD OF DIRECTORS The following directors were elected at the 1998 Annual Meeting to serve three-year terms expiring in 2001 as Class III Directors: Norman A. Ferber, Philip Schlein and Melvin A. Wilmore The following directors are continuing to serve their three-year terms of office: Incumbent Class I Directors whose terms expire in 1999: Stuart G. Moldaw, Donald H. Seiler and George P. Orban Incumbent Class II Directors whose terms expire in 2000: Michael Balmuth and Donna L. Weaver 1998 ANNUAL MEETING ELECTION RESULTS PROPOSAL 1: ELECTION OF DIRECTORS Broker Director In Favor Withheld Non-Votes Norman A. Ferber 42,334,568 624,981 n/a Philip Schlein 42,433,274 526,275 n/a Melvin A. Wilmore 42,333,483 626,066 n/a PROPOSAL 2: INCREASE SHARE RESERVE OF THE 1992 STOCK OPTION PLAN Broker For Against Abstain Non-Votes 24,685,313 17,849,563 424,672 1 PROPOSAL 3: INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK Broker For Against Abstain Non-Votes 40,009,818 2,352,465 410,874 186,392
13 PROPOSAL 4: RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Broker For Against Abstain Non-Votes 42,908,322 24,582 26,644 1 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Incorporated herein by reference to the list of Exhibits contained in the Exhibit Index which begins on page 14 of this Report. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. ROSS STORES, INC. Registrant Date: September 14, 1998 /s/John G. Call John G. Call, Senior Vice President, Chief Financial Officer, Corporate Secretary and Principal Accounting Officer INDEX TO EXHIBITS
14 Exhibit Number Exhibit 3.1 First Restated Certificate of Incorporation, dated May 28, 1998, filed with the Delaware Secretary of State on June 4, 1998 by Ross Stores, Inc., a Delaware corporation ("Ross Stores"), incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by Ross Stores for its quarter ended May 2, 1998. 3.2 Amended By-laws, dated August 25, 1994, incorporated by reference to Exhibit 3.2 to the Form 10-Q filed by Ross Stores for its quarter ended July 30, 1994. 10.1 Amended and Restated 1992 Stock Option Plan. 10.2 Fifth Amendment to Employment Agreement by and between Ross Stores and Melvin A. Wilmore, effective as of June 29, 1998. 15 Letter re: Unaudited Interim Financial Information 27 Financial Data Schedule (submitted for SEC use only)