DIRECTV 2012 Annual Report Download - page 114

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
the option is based on the U.S. Treasury yield curve in effect at the time of grant. calculations. Expected stock volatility is based primarily on the historical volatility
The expected option life is based on historical exercise behavior and other factors. of our common stock. The risk-free rates for periods within the contractual lives of
the options are based on the U.S. Treasury yield curve in effect at the measurement
2012 2010 date. The expected option life is based on the contractual life of the awards.
Estimated grant-date fair value ................. $15.83 $12.36 December 31, December 31, December 31,
Expected stock volatility ..................... 29.0% 26.9% 2012 2011 2010
Risk-free interest rate ....................... 1.08% - 1.41% 3.35% Estimated fair value ............ $34.59 $26.63 $22.52
Expected option life (in years) ................. 7.0 7.0 Expected stock volatility ......... 22.8% 27.5% 26.5%
There were no stock options granted under the DIRECTV Plan during the Range of risk-free interest rates .... 0.02 - 0.36% 0.06 - 0.83% 0.07 - 2.01%
year ended December 31, 2011. Range of expected option lives (in
years) ................... 0.2 - 4.4 0.5 - 5.4 0.1 - 6.4
As part of the Liberty Transaction on November 19, 2009, we assumed
16.7 million stock options and stock appreciation rights, and issued 1.1 million The intrinsic value of awards assumed as part of the Liberty Transaction
shares of common stock to holders of restricted stock units. The holders of the carried as a liability that were exercised was $3 million during the year ended
majority of the equity instruments assumed as a result of the Liberty Transaction December 31, 2012, $8 million during the year ended December 31, 2011 and
did not become DIRECTV employees or directors. Accordingly, we recognize those $145 million during the year ended December 31, 2010, based on the intrinsic
equity instruments as a liability that is subject to fair value measurement at each value of individual awards on the date of exercise.
reporting date pursuant to accounting rules for non-employee awards. We include Beginning in 2009, we implemented a net exercise plan pursuant to which we
that liability within ‘‘Other liabilities and deferred credits’’ in our Consolidated only issue new shares in connection with employee option exercises equal to the
Balance Sheets. Of the 16.7 million equity instruments assumed, 8.8 million were intrinsic value of the exercised award on the exercise date reduced by the sum of
held by persons other than employees or directors. As of December 31, 2012, (i) the amount of statutory employee withholding taxes and (ii) the option exercise
0.4 million non-employee awards remained outstanding with a fair value of price, divided by the current market price of the our common stock. As a result, we
approximately $12 million. As of December 31, 2011, there were 0.6 million no longer receive cash in connection with the exercise of most stock options, but
non-employee awards outstanding with a fair value of approximately $15 million. rather issue significantly fewer shares. We do receive cash for the exercise of certain
We recorded net losses of $4 million during the year ended December 31, 2012, non-employee stock options. We received cash for the settlement of stock options
$4 million during the year ended December 31, 2011 and $11 million during the of $3 million during the year ended December 31, 2012 and $38 million during
year ended December 31, 2010 to ‘‘Other, net’’ in the Consolidated Statements of the year ended December 31, 2010, and did not receive any cash for the settlement
Operations for gains and losses recognized for exercised options and the adjustment of stock options during the year ended December 31, 2011. In addition, the
of the liability to fair value. company is required to pay the employee withholding taxes to taxing authorities,
The following table presents the estimated weighted-average fair value as of the cash payments for which are reported in ‘‘Taxes paid in lieu of shares issued for
December 31, 2012, 2011 and 2010 for the equity instruments issued to persons share-based compensation’’ in the Consolidated Statements of Cash Flows.
other than employees and directors carried as a liability using the Black-Scholes
valuation model along with the weighted-average assumptions used in the fair value
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