ServiceMagic 2014 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2014 ServiceMagic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the information about stock options outstanding and exercisable at December 31, 2014 :
The fair value of each stock option award is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes
option pricing model incorporates various assumptions, including expected volatility and expected term. During 2014 , 2013 and 2012 , expected
stock price volatilities were estimated based on the Company's historical volatility. The risk-free interest rates are based on U.S. Treasury yields for
notes with comparable terms as the awards, in effect at the grant date. Expected term is based upon the historical exercise behavior of our
employees and the dividend yields are based on IAC's historical dividend payments. The following are the weighted average assumptions used in
the Black-Scholes option pricing model:
Approximately 0.7 million , 0.7 million and 3.6 million stock options were granted by the Company during the years ended December 31,
2014 , 2013 and 2012 , respectively. The weighted average fair value of stock options granted during the years ended December 31, 2014 , 2013
and 2012 with exercise prices equal to the market prices of IAC's common stock on the date of grant are $16.67 , $10.67 and $10.69 , respectively.
There are no stock options issued during the years ended December 31, 2014 and 2013 with exercise prices greater than the market value of IAC's
common stock on the date of grant. The weighted average exercise price and weighted average fair value of stock options granted during the year
ended December 31, 2012 with exercise prices greater than the market value of IAC's common stock on the date of grant are $ 60.00 and $ 7.61 ,
respectively.
Cash received from stock option exercises and the related tax benefit realized for the years ended December 31, 2014 , 2013 and 2012 are:
$39.1 million and $25.5 million ; $40.7 million and $17.2 million ; and $58.2 million and $28.2 million , respectively. In December 2013, the
Company's former Chief Executive Officer (the "Executive") became the Chairman of The Match Group; in connection with the Executive's
compensation arrangement, the Executive exercised 0.5 million stock options, which were settled by the Company for $9.2 million in cash. In
January 2014, a portion of the Executive's outstanding IAC stock options were canceled and replaced with equity denominated in various
subsidiaries of The Match Group. The incremental expense associated with this modification is $7.4 million .
76
Options Outstanding
Options Exercisable
Range of Exercise Prices
Outstanding at
December 31,
2014
Weighted-
Average
Remaining
Contractual
Life in Years
Weighted-
Average
Exercise
Price
Exercisable at
December 31,
2014
Weighted-
Average
Remaining
Contractual
Life
Weighted-
Average
Exercise
Price
(Shares in thousands)
$10.01 to $20.00
431
4.5
$
17.91
431
4.5
$
17.91
$20.01 to $30.00
905
4.3
22.14
905
4.3
22.14
$30.01 to $40.00
1,148
6.3
31.84
749
6.2
31.60
$40.01 to $50.00
2,913
5.7
45.16
1,426
4.0
44.05
$50.01 to $60.00
381
7.3
58.51
136
7.3
58.44
$60.01 to $70.00
492
9.3
66.14
—
—
—
$70.01 to $80.00
250
9.3
71.55
—
—
—
6,520
6.0
$
41.19
3,647
4.7
$
33.50
Years Ended December 31,
2014
2013
2012
Expected volatility
31
%
29
%
31
%
Risk-free interest rate
1.5
%
1.0
%
0.6
%
Expected term
4.8 years
6.2 years
4.4 years
Dividend yield
1.5
%
2.0
%
1.2
%