Dell 2007 Annual Report Download - page 77

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average fair value of stock options and purchase rights under the employee stock purchase plan was determined based on
the Black-Scholes option pricing model weighted for all grants during Fiscal 2008, 2007, and 2006 utilizing the assumptions in the
following table:
Fiscal Years Ended
February 1, February 2, February 3,
2008 2007 2006
Expected term:
Stock options 3.5 years 3.6 years 3.8 years
Employee stock purchase plan N/A(a) 3 months 3 months
Risk-free interest rate (U.S. Government Treasury Note) 4.4% 4.8% 3.9%
Volatility 27% 26% 25%
Dividends 0% 0% 0%
(a) No purchase rights were granted under the ESPP in Fiscal 2008 due to Dell suspending the ESPP on April 4, 2007, and subsequently discontinuing the plan
effective the first quarter of Fiscal 2009 as a part of an overall assessment of its benefits strategy.
401(k) Plan — Dell has a defined contribution retirement plan (the "401(k) Plan") that complies with Section 401(k) of the Internal
Revenue Code. Substantially all employees in the U.S. are eligible to participate in the Plan. Effective January 1, 2008, Dell matches
100% of each participant's voluntary contributions, subject to a maximum contribution of 5% of the participant's compensation, and
participants vest immediately in all Dell contributions to the Plan. From January 1, 2005 to December 31, 2007, Dell matched 100% of
each participant's voluntary contributions, subject to a maximum contribution of 4% of the participant's compensation. Prior to January 1,
2005, Dell matched 100% of each participant's voluntary contributions, subject to a maximum contribution of 3% of the participant's
compensation. Dell's contributions during Fiscal 2008, 2007, and 2006 were $76 million, $70 million, and $66 million, respectively.
Dell's contributions are invested according to each participant's elections in the investment options provided under the Plan. Investment
options include Dell stock, but neither participant nor Dell contributions are required to be invested in Dell stock. As a result of Dell's
failure to file its Annual Report on Form 10-K for fiscal 2007 by the original due date, April 3, 2007, Dell suspended the right of Plan
participants to invest additional contributions in Dell stock on April 4, 2007. Effective December 7, 2007, with the filing of a registration
statement on Form S-8, Dell ended the suspension and began allowing Plan participants to invest contributions in Dell stock.
Deferred Compensation Plan — Dell has a nonqualified deferred compensation plan (the "Deferred Compensation Plan") for the benefit
of certain management employees and non-employee directors. The Deferred Compensation Plan permits the deferral of base salary and
annual incentive bonus. The deferrals are held in a separate trust, which has been established by Dell to administer the Plan. The assets of
the trust are subject to the claims of Dell's creditors in the event that Dell becomes insolvent. Consequently, the trust qualifies as a grantor
trust for income tax purposes (i.e. a "Rabbi Trust"). In accordance with the provisions of EITF No. 97-14, Accounting for Deferred
Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested ("EITF 97-14"), the assets and liabilities of
the Plan are presented in investments and accrued and other liabilities in the accompanying Consolidated Statements of Financial
Position, respectively. The assets held by the trust are classified as trading securities with changes recorded to investment and other
income, net, and changes in the deferred compensation liability recorded to compensation expense.
Employee Stock Purchase Plan — Dell discontinued its shareholder approved employee stock purchase plan during the first quarter of
Fiscal 2009. Prior to discontinuance, the ESPP allowed participating employees to purchase common stock through payroll deductions at
the end of each three-month participation period at a purchase price equal to 85% of the fair market value of the common stock at the end
of the participation period. Upon adoption of SFAS 123(R) in Fiscal 2007, Dell began recognizing compensation expense for the 15%
discount received by the participating employees. No common stock was issued under this plan in Fiscal 2008 due to Dell suspending the
73