TeleNav 2014 Annual Report Download - page 57

Table of Contents
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, 2014 , there was $3.2 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 1.5 years. At June 30, 2014, the total
unrecognized stock-based compensation cost related to restricted stock units was $21.5 million , net of estimated forfeitures, and will be
amortized over a weighted average period of 3.1 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 2014 , 2013 and 2012 , 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.
Our assumptions, judgments and estimates relative to the current provision (benefit) for income taxes take into account current tax laws,
our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. We
have established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. In
addition, we are subject to the periodic examination of our income tax returns by the Internal Revenue Service, or IRS, and other domestic and
foreign tax authorities. Although we believe our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation
of tax laws and the resolution of
47
Fiscal Year Ended June 30,
2014 2013 2012
(in thousands)
Cost of revenue
$
100
$
149
$
91
Research and development
4,489
3,509
2,509
Selling and marketing
3,306
2,290
1,168
General and administrative
3,640
2,699
1,354
Total stock-based compensation expense
$
11,535
$
8,647
$
5,122
Fiscal Year Ended June 30,
2014 2013 2012
Expected volatility
62
%
72
%
64
%
Expected term (in years)
4.45
4.79
4.50
Risk-free interest rate
1.44
%
0.67
%
0.77
%
Dividend yield
—
—
—