Home Shopping Network 2015 Annual Report Download - page 58

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For the years ended December 31, 2015 and 2014, HSNi granted approximately 40,000 and 44,000 options, respectively,
under the ESPP. The fair value of each option granted under the ESPP is determined on the grant date using the Black-Scholes
option pricing model. The following are the weighted average assumptions used in the valuation of the ESPP options for the
years ended December 31, 2015 and 2014:
Year Ended December 31,
2015 2014
Volatility factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.7% 22.0%
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12% 0.08%
Expected term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.5
Dividend yield. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9% 1.7%
For the years ended December 31, 2015, 2014 and 2013, approximately $0.6 million, $0.5 million and $0.5 million,
respectively, of expenses related to the ESPP were included in the consolidated statements of operations. For the years ended
December 31, 2015, 2014 and 2013, HSNi received cash proceeds from the participating employees of approximately $2.4
million, $2.0 million and $1.9 million, respectively.
Restricted Common Equity in Cornerstone Brands
In connection with the acquisition of Cornerstone Brands by IAC in 2005 certain members of Cornerstone Brand’s
management were granted restricted common equity in Cornerstone Brands. These awards were granted on April 1, 2005 and
were initially measured at fair value, which was amortized to expense over the vesting period. These awards vested ratably over
4 years, or earlier based upon the occurrence of certain prescribed events. The awards vested in non-voting restricted common
shares of Cornerstone Brands. As of December 31, 2015, these awards were significantly out of the money and are not
expected to result in any cost should HSNi exercise its call right.
NOTE 12—INCOME TAXES
The components of the provision for income taxes are as follows (in thousands):
Year Ended December 31,
2015 2014 2013
Current income tax (provision) benefit:
Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (98,496) $ (96,269) $ (81,521)
State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,829) (10,289) (9,990)
Current income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (110,325) (106,558) (91,511)
Deferred income tax benefit (provision):
Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,188 1,468 (6,489)
State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,522 547 308
Deferred income tax benefit (provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,710 2,015 (6,181)
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (99,615) $ (104,543) $ (97,692)
Current income taxes payable has been reduced by $17.5 million, $12.9 million, and $19.8 million for the years ended
December 31, 2015, 2014 and 2013, respectively, for tax deductions attributable to stock-based compensation. The related
income tax benefits of this stock-based compensation were recorded as amounts charged or credited to the income tax provision
and additional paid-in capital.