Ross 2011 Annual Report Download - page 43

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41
Store pre-opening. Store pre-opening costs are expensed in the period incurred.
Advertising. Advertising costs are expensed in the period incurred. Advertising costs for fiscal 2011, 2010, and 2009 were
$59.9 million, $54.3 million, and $53.5 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 also 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 and 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.
In fiscal 2011, 2010, and 2009 there were 5,900, 6,400, and 39,600 weighted average shares, respectively, that could potentially
dilute basic EPS in the future 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:
Effect of dilutive
Basic common stock Diluted
Shares in (000s) EPS equivalents EPS
2011
Shares 225,915 4,067 229,982
Amount $ 2.91 $ (0.05) $ 2.86
2010
Shares 235,641 4,164 239,805
Amount $ 2.35 $ (0.04) $ 2.31
2009
Shares 245,774 4,254 250,028
Amount $ 1.80 $ (0.03) $ 1.77