iRobot 2015 Annual Report Download - page 147

iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
64
Options granted under the Plans are subject to terms and conditions as determined by the compensation committee of the
board of directors, including vesting periods. Options granted under the Plans are exercisable in full at any time subsequent to
vesting, generally vest over four years, and expire five or ten years from the date of grant or, if earlier, 90 days from employee
termination. The exercise price of stock options is typically equal to the closing price on the NASDAQ Global Market on the
date of grant. Other awards granted under the Plans generally vest over periods from three to four years.
In conjunction with the acquisition of Evolution Robotics, Inc. on October 1, 2012, each outstanding and unvested
incentive stock option held by Evolution employees as of the acquisition date was automatically converted into stock options of
the Company under the same terms and conditions as were applicable to the original Evolution grants. The number of
replacement options granted and the associated exercise prices were determined utilizing a conversion ratio as defined in the
merger agreement. There were 114,248 incentive stock options issued by the Company as a result of this automatic conversion
with exercise prices ranging from $2.55 to $4.81. All of these options were granted from the 2007 Plan, which was assumed by
the Company as a result of the acquisition.
The Company recognized $3.4 million of stock-based compensation expense during the fiscal year ended January 2, 2016
for stock options. The unamortized fair value as of January 2, 2016 associated with these grants was $6.4 million with a
weighted-average remaining recognition period of 2.83 years. The Company expects to recognize associated stock-based
compensation expense of $2.6 million, $1.9 million, $1.3 million and $0.6 million in 2016, 2017, 2018 and 2019, respectively.
The fair value of each option grant for the fiscal years ended January 2, 2016, December 27, 2014 and December 28,
2013 was computed on the grant date using the Black-Scholes option-pricing model with the following assumptions:
Fiscal Year Ended
January 2,
2016
December 27,
2014 December 28,
2013
Ris
k
-free interest rate 1.47%
—
1.75% 1.65%
—
1.69% 0.90%
—
1.77%
Expected dividend yield — — —
Expected life 3.98 — 4.02 years 3.91 — 4.00 years 4.03 — 4.21 years
Expected volatility 46.5% — 52.4% 52.8% — 56.0% 54.0% — 58.0%
The risk-free interest rate is derived from the average U.S. Treasury constant maturity rate, which approximates the rate in
effect at the time of grant, commensurate with the expected life of the instrument. The dividend yield is zero based upon the
fact the Company has never paid and has no present intention to pay cash dividends. The Company utilizes company specific
historical data for purposes of establishing expected volatility and expected term.
Based upon the above assumptions, the weighted average fair value of each stock option granted for the fiscal years
ended January 2, 2016, December 27, 2014 and December 28, 2013 was $13.21, $15.87 and $11.17, respectively.
Form 10-K