Classmates.com 2010 Annual Report Download - page 139

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. STOCK-BASED COMPENSATION PLANS (Continued)
In 2010, the Company adopted the 2010 Employee Stock Purchase Plan to replace the 2001 Employee Stock Purchase Plan. The 2010
Employee Stock Purchase Plan had 4.5 million shares of the Company's common stock reserved and available for issuance at December 31,
2010.
Under the employee stock purchase plans, each eligible employee may authorize payroll deductions of up to 15% of his or her
compensation to purchase shares of common stock on two purchase dates each year at a purchase price per share equal to 85% of the lower of
(i) the closing market price per share of the Company's common stock on the employee's entry date into the two-year offering period in which
the purchase date occurs or (ii) the closing market price per share of the Company's common stock on the purchase date. Each offering period
has a 24-month duration and purchase intervals of six months.
The fair value of employee stock purchase plan shares was estimated using the Black-Scholes option pricing model with the following
weighted-average assumptions:
The assumptions presented in the table above represent the weighted average of the applicable assumptions used to value employee stock
purchase plan shares. The Company calculates expected volatility based on historical volatility of the Company's common stock. The expected
term represents the amount of time remaining in the 24-month offering period. The risk-free interest rate assumed in valuing the employee stock
purchase plan shares is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term. The Company determines the
expected dividend yield percentage by dividing the expected annual dividend by the closing market price of United Online, Inc. common stock at
the date of grant.
For the years ended December 31, 2010, 2009 and 2008, the Company recognized $1.4 million, $2.8 million and $1.1 million, respectively,
of stock-based compensation related to the employee stock purchase plans. Total unrecognized compensation cost related to the employee stock
purchase plans at December 31, 2010 was approximately $0.6 million and was expected to be recognized over a weighted-average period of
0.6 years.
9. INCOME TAXES
Income (loss) before income taxes was comprised of the following (in thousands):
F-33
Year Ended December 31,
2010 2009 2008
Risk
-
free interest rate
0.7
%
0.8
%
2.4
%
Expected term (in years)
0.5
-
2.0
0.5
-
2.0
0.5
-
2.0
Dividend yield
7.3
%
6.9
%
6.3
%
Volatility
57.6
%
58.5
%
43.8
%
Year Ended December 31,
2010 2009 2008
Domestic
$
63,059
$
94,973
$
(60,061
)
Foreign
26,856
23,256
(11,309
)
Income (loss) before
income taxes
$
89,915
$
118,229
$
(71,370
)