Ross 2007 Annual Report Download - page 53

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51
SFAS No. 123(R) requires companies to estimate future expected forfeitures at the date of grant and revise those estimates
in subsequent periods if actual forfeitures differ from those estimates. In previous fiscal years, the Company had recognized
the impact of forfeitures as they occurred. Now, the Company uses historical data to estimate pre-vesting forfeiture rates
in determining the amount of stock-based compensation expense to recognize. All stock-based compensation awards are
amortized on a straight-line basis over the requisite service periods of the awards.
At February 2, 2008, the Company had two stock-based compensation plans, which are further described in Note H. The fair
value of stock options and ESPP rights granted during the respective periods under these plans were estimated using the Black-
Scholes option pricing model and the following weighted average assumptions:
Stock Options
2007 2006 2005
Expected life from grant date (years) 3.9 4.2 3.5
Expected volatility 28.4% 32.5% 33.7%
Risk-free interest rate 4.7% 4.6% 3.9%
Dividend yield 0.9% 0.8% 0.7%
Employee Stock Purchase Plan
2007 2006 2005
Expected life from grant date (years) 1.0 1.0 1.0
Expected volatility 26.4% 26.7% 32.9%
Risk-free interest rate 5.0% 4.5% 4.5%
Dividend yield 0.9% 0.8% 0.8%
Total stock-based compensation recognized in the Company’s consolidated Statements of Earnings for fiscal 2007, 2006 and
2005 is as follows:
Statements of Earnings Classification ($000)
2007 2006 2005
Cost of goods sold $ 10,736 $ 11,475 $ 7,984
Selling, general and administrative 14,429 15,205 8,684
Total $ 25,165 $ 26,680 $ 16,668