TiVo 2011 Annual Report Download - page 91

Table of Contents
such performance goals are not probable of achieving, no compensation expense is recognized. The remaining 74,250 shares are tied to the market value of
the Company's common stock. The fair value of 74,250 shares of market-based restricted stock awards was estimated using a Monte-Carlo analysis. The
probability of satisfying a market condition is also considered in the estimate of grant-date fair value when the Monte Carlo simulation is used. Total
compensation cost recognized was $1.1 million for the fiscal year ended January 31, 2012. As of January 31, 2012, $1.0 million of total unrecognized
compensation cost related to these awards is expected to be recognized over the remaining vesting period of 2.00 years.
Performance-Based Awards
In fiscal 2011, the Company granted 640,000 options with performance-based vesting to certain executive officers. These options would vest only if
specific performance goals set forth for each optionee are achieved. Each quarterly period, the Company estimates the probability of the achievement of these
performance goals and recognizes any related stock-based compensation expense. If such performance goals are not probable of achieving, no compensation
expense is recognized. The estimated fair value of these performance-based stock options was $3.8 million using the Black-Scholes option pricing model.
Total compensation cost recognized related to these performance-based stock options was $1.2 million and $0 for the fiscal years ended January 31, 2012 and
2011, respectively. The remaining weighted-average period over which these performance-based stock options may vest is 3.04 years.
12. STOCK-BASED COMPENSATION
Total stock-based compensation for the twelve months ended January 31, 2012, 2011, and 2010, respectively is as follows:
Fiscal Year Ended January 31,
2012 2011 2010
(In thousands)
Cost of service revenues $ 830 $ 792 $ 1,098
Cost of technology revenues 1,666 2,260 2,319
Research and development 10,975 8,531 8,604
Sales and marketing 3,962 3,683 2,567
General and administrative 11,854 10,176 10,766
Change in deferred cost of technology revenues 559 287 —
Stock-based compensation before income taxes $ 29,846 $ 25,729 $ 25,354
Income tax benefit — — —
Total stock-based compensation $ 29,846 $ 25,729 $ 25,354
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, 2012, $9.0 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-
average period of 2.61. As of January 31, 2012, $31.6 millionn of total unrecognized compensation costs related to unvested restricted stock is expected to be
recognized over a weighted-average period of 1.98 years.
The Company used the alternative transition method which included a simplified method to establish the beginning balance of the additional paid in
capital pool (“the APIC pool”) related to the tax effects of employee share-based compensation, which is available to absorb tax deficiencies recognized
subsequent to stock option expensing.
The Company is required to use a valuation model to calculate the fair value of stock-based awards and 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 after January 1, 2008 is based on historical employee exercise patterns associated with prior similar option grants. The interest rate is
based on the average of the U.S. Treasury yield curve on investments with terms approximating the expected life during the fiscal quarter an option is granted.
The Company has not and has no current plan to declare a dividend.
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