Stockholders' Equity

3 Months Ended

Mar. 31, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Option Plan

In June 2011, the Company adopted the 2011 Stock Plan. The 2011 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants. As of March 31, 2012, 5.5 million shares were reserved for future grants under the 2011 Stock Plan.

In February 2002, the Company adopted the 2002 Stock Plan, which was amended and restated in May 2006. The 2002 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options and stock purchase rights to employees, directors and consultants. In the first quarter of 2012, 1.2 million shares reserved for future grants under the 2002 Stock Plan expired.

A summary of the activity related to the Company’s stock option plans during the three months ended March 31, 2012 is as follows:

			Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Balances as of December 31, 2011	7,013,508		2,957,754		$	66.59
Granted	(347,367	)	347,367		97.75
Exercised	—		(117,016	)	10.47
Canceled	48		(48	)	35.95
Expired	(1,160,721	)	—		—
Balances as of March 31, 2012	5,505,468		3,188,057		72.04		6.61	$	183,361
Vested and exercisable at March 31, 2012			3,188,057		72.04		6.61	$	183,361

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the first quarter of 2012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2012. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised for the three months ended March 31, 2012 and 2011 was $11.7 million and $44.1 million, respectively.

Cash received from option exercises for the three months ended March 31, 2012 and 2011 was $1.2 million and $6.8 million, respectively.

Stock Option Expense

Vested stock options granted before June 30, 2004 can be exercised up to three months following termination of employment. Vested stock options granted after June 30, 2004 and before January 1, 2007 can be exercised up to one year following termination of employment. Vested stock options granted after January 2007 will remain exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the assumptions used to value stock option grants using the lattice-binomial model:

	Three Months Ended
	March 31, 2012		March 31, 2011
Dividend yield	—	%	—	%
Expected volatility	65	%	52	%
Risk-free interest rate	1.97	%	3.42	%
Suboptimal exercise factor	2.26 - 3.65		2.17 – 3.39

The Company bifurcates its option grants into two employee groupings (executive and non-executive) based on exercise behavior and considers several factors in determining the estimate of expected term for each group, including the historical option exercise behavior, the terms and vesting periods of the options granted.

The weighted-average fair value of employee stock options granted during the three months ended March 31, 2012 and 2011 was $55.65 and $109.21 per share, respectively.

The following table summarizes stock-based compensation expense, net of tax, related to stock option plans which was allocated as follows:

	Three Months Ended
	March 31, 2012			March 31, 2011
	(in thousands)
Fulfillment expenses	$	67		$	560
Marketing	1,404			1,249
Technology and development	10,600			5,292
General and administrative	7,261			5,163
Stock-based compensation expense before income taxes	19,332			12,264
Income tax benefit	(6,708		)	(4,744		)
Stock-based compensation after income taxes	$	12,624		$	7,520

Stock Repurchases

Under the Company’s current stock repurchase plan, announced on June 11, 2010, the Company is authorized to repurchase up to $300.0 million of its common stock through the end of 2012. During the three months ended March 31, 2012, the Company did not repurchase stock. As of March 31, 2012, $41.0 million of this authorization remained. The timing and actual number of shares repurchased is at management’s discretion and will depend on various factors including price, corporate and regulatory requirements, debt covenant requirements, alternative investment opportunities and other market conditions.