Stamps.com 2009 Annual Report Download - page 62

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TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – (continued)
The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in
thousands):
We use the Black-Scholes option valuation model to estimate the fair value of share-based payment awards on the date of
grant, which requires us to make a number of highly complex and subjective assumptions, including stock price volatility,
expected term, risk-free interest rates and actual and projected employee stock option exercise behaviors. In the case of options
we grant, our assumption of expected volatility is based on the historical volatility of our stock price over the term equal to the
expected life. We base the risk-free interest rate on U.S. Treasury zero-coupon issues with a remaining term equal to the
expected life assumed at the date of grant. The estimated expected life represents the weighted-average period the stock options
are expected to remain outstanding determined based on an analysis of historical exercise behavior.
The following are the weighted average assumptions used in the Black-Scholes valuation model for the periods indicated:
2009
2008
2007
Stock-based compensation expense relating to:
Employee and director stock options
$
3,044
$
3,220
$
2,623
Employee stock purchases
53
124
84
Total stock-based compensation expense
$
3,097
$
3,344
$
2,707
Stock-based compensation expense relating to:
Cost of revenues
$
275
$
289
$
291
Sales and marketing
769
754
495
Research and development
651
631
617
General and administrative
1,402
1,670
1,304
Total stock-based compensation expense
$
3,097
$
3,344
$
2,707
Treasury Stock
During 2009, 2008 and 2007, we repurchased 1.6 million shares for $13.7 million, 2.7 million shares for $26.9 million and
2.5 million shares for $33.3 million, respectively.
Segment Information
We operate in a single segment. We are a provider of Internet-based postage solutions located in a single geographic location
from which substantially all of our revenue is generated. While components of revenue include both services and products
associated with our postage solutions, our Chief Executive Officer, which is the chief operating decision maker, evaluates
performance, makes operating decisions and allocates resources based on the financial data provided in our financial statements
as a single operating segment. In addition, discrete financial information is not generated, prepared or reviewed at any level that
allow for the creation of an additional operating segment.
2009
2008
2007
Expected dividend yield
—
—
—
Risk-free interest rate
2.00
%
2.90
%
4.45
%
Expected volatility
53
%
51
%
48
%
Expected life (in years)
4.5
5
5
Expected forfeiture rate
20
%
17
%
16
%
F-11