TeleNav 2015 Annual Report Download - page 57

Table of Contents
to exceed our market capitalization, we may be required to record an impairment loss related to our goodwill. We have not recognized any
impairment of goodwill in the three year period ended June 30, 2015. As of June 30, 2015, we had goodwill of $31.3 million.
Stock-based compensation expense . We account for stock-based employee compensation arrangements under the fair value recognition
method, which requires us to measure the stock-based compensation costs of share-based compensation arrangements based on the grant date
fair value, and recognize the costs in the financial statements over the employees’ requisite service period. We recognize compensation expense
for the fair value of these awards with time based vesting on a straight-line basis over an employee’s requisite service period of each of these
awards, net of estimated forfeitures.
Our stock-based compensation expense was as follows:
As of June 30, 2015 , there was $1.8 million of unrecognized stock-based compensation expense related to unvested stock option awards,
net of estimated forfeitures, that we expect to be recognized over a weighted average period of 2.2 years. At June 30, 2015 , the total
unrecognized stock-based compensation cost related to restricted stock units was $17.9 million , net of estimated forfeitures, and will be
amortized over a weighted average period of 2.5 years.
We generally utilize the Black-Scholes option-pricing model to determine the fair value of our stock option awards, which requires a
number of estimates and assumptions. In valuing share-based awards under the fair value accounting method, significant judgment is required in
determining the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to
exercising. The expected volatility of our stock is based on the historical volatility of various comparable companies, as we do not have
sufficient historical data with regards to the volatility of our own stock. The expected term of options granted represents the period of time that
options granted are expected to be outstanding. The expected term was based on an analysis of our historical exercise and cancellation activity.
In the future, as we gain historical data for volatility in our own stock, the expected volatility and expected term may change which could
substantially change the grant date fair value of future awards of stock options and ultimately the expense we record. In addition, the estimation
of stock awards that will ultimately vest requires judgment, and to the extent actual results differ from our estimates, such amounts will be
recorded as an adjustment in the period estimates are revised.
For fiscal 2015 , 2014 and 2013 , we calculated the fair value of options granted to employees with the following weighted average
assumptions:
We recognize the estimated stock-based compensation cost of restricted stock units, net of estimated forfeitures, over the vesting term. The
estimated stock-based compensation cost is based on the fair value of our common stock on the date of grant.
Provision (benefit) for income taxes . We use the liability method of accounting for income taxes. Under this method, income tax expense
(benefit) is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are
recognized for the expected future tax effect of temporary differences between the financial reporting and tax bases of assets and liabilities, and
for operating losses and tax credit carryforwards. We must make assumptions, judgments and estimates to determine our current provision for
income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset.
46
Fiscal Year Ended June 30,
2015 2014 2013
(in thousands)
Cost of revenue
$
98
$
100
$
149
Research and development
5,275
4,490
3,509
Selling and marketing
2,943
3,306
2,290
General and administrative
3,112
3,639
2,699
Total stock-based compensation expense
$
11,428
$
11,535
$
8,647
Fiscal Year Ended June 30,
2015 2014 2013
Expected volatility
54
%
62
%
72
%
Expected term (in years)
4.38
4.45
4.79
Risk-free interest rate
1.60
%
1.44
%
0.67
%
Dividend yield
—
—
—