TiVo 2008 Annual Report Download - page 84

Table of Contents
The Rights were not being distributed in response to any specific effort to acquire control of TiVo. The Rights are designed to assure that all TiVo
stockholders receive fair and equal treatment in the event of any proposed takeover of TiVo and to guard against partial tender offers, open market
accumulations and other abusive tactics to gain control of TiVo without paying all stockholders a control premium.
If a person becomes an Acquiring Person, each Right will entitle its holder to purchase, at the Right's then-current exercise price, a number of common
shares of TiVo having a market value at that time of twice the Right's exercise price. Rights held by the Acquiring Person will become void and will not be
exercisable to purchase shares at the bargain purchase price. If TiVo is acquired in a merger or other business combination transaction which has not been
approved by the Board of Directors, each Right will entitle its holder to purchase, at the Right's then-current exercise price, a number of the acquiring
company's common shares having a market value at that time of twice the Right's exercise price.
The dividend distribution to establish the new Rights Plan was paid to stockholders of record on January 31, 2001. The Rights distribution is not taxable
to stockholders.
16. STOCK-BASED COMPENSATION
Total stock-based compensation recognized in the consolidated statements of operations for the twelve months ended January 31, 2009, 2008, and
2007, respectively is as follows:
SARs/Option Grants/Restricted Stock Grants and EmployeeStock Purchase Rights
Fiscal Year Ended January 31,
2009 2008 2007
(In thousands, except per share amount)
Cost of service revenues $ 903 $ 729 $ 470
Cost of technology revenues 2,071 2,422 1,020
Research and development 8,805 7,326 5,596
Sales and marketing 2,089 2,205 1,649
General and administrative 9,552 10,157 5,977
Stock-based compensation expense before income taxes $ 23,420 $ 22,839 $ 14,712
Income tax benefit — — —
Total stock-based compensation $ 23,420 $ 22,839 $ 14,712
No income tax benefit was realized from stock option exercises during the twelve months ended January 31, 2009, 2008, and 2007, respectively. In
accordance with SFAS 123R, the Company presents excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than
operating cash flows.
As of January 31, 2009, $26.6 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-
average period of 2.06 years. As of January 31, 2009, $9.4 million of total unrecognized compensation costs related to unvested restricted stock is expected to
be recognized over a weighted-average period of 2.66 years.
On November 10, 2005, the FASB issued FASB Staff Position No. FAS 123R-3, Transition Election Related to Accounting for Tax Effects of Share-
Based Payment Awards. The Company has elected to adopt the alternative transition method provided in the FASB Staff Position. The alternative transition
method includes a simplified method to establish the beginning balance of the additional paid in capital pool (APIC pool) related to the tax effects of
employee share-based compensation, which is available to absorb tax deficiencies recognized subsequent to the adoption of SFAS 123R.
SFAS No. 123R requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-
Scholes option-pricing model, which incorporates various assumptions including volatility, expected life, and interest rate. The expected volatility is based on
a combination of historical volatility of the Company's common stock and implied volatility of market traded options on the Company's common stock. The
expected life of stock options granted prior to December 31, 2007 was based on the simplified calculation of expected life as
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