Note 13. Equity Plans and Share-Based Compensation

Our Equity Plan provides for grants of stock options, restricted stock, stock bonuses, stock appreciation rights and RSUs. During the second quarter of 2013, our Equity Plan was amended and restated to increase the shares of common stock reserved under our Equity Plan by 4.6 million. As of September 30, 2013, we had 4.2 million shares of common stock reserved for future grants under our Equity Plan. Based on our Equity Plan design, the 4.2 million shares of common stock equates to approximately 2.8 million RSUs reserved for future grants, which we generally use as long-term employee incentive and retention tools.

Under the Equity Plan, we granted selected executives and certain key employees performance-based RSUs, whose vesting was contingent upon meeting certain Company-wide performance goals. We estimate the probable number of performance-based RSUs that will be vested until the achievement of the performance goals is known. In order to vest, the low end of the predetermined Company-wide goals had to be met. Further, the number of 2013 Performance-based RSUs was determined based on the level of achievement. Therefore, participants in the 2013 Performance-based RSUs could have received a range of 0 shares to approximately 0.5 million shares. Based on the actual level of performance achievement through September 30, 2013, the 2013 Performance-based RSU participants received approximately 0.4 million shares.

The following table presents our share-based compensation resulting from equity awards that we recorded in our consolidated statements of operations:



	Year Ended September 30,
	2013		2012		2011
Cost of operations	$	8,485	$	7,489	$	3,440
Sales and marketing	31,190		27,744		19,273
Systems development and programming	7,062		6,126		5,747
General and administrative	18,365		15,834		7,514
Total share-based compensation	$	65,102	$	57,193	$	35,974

During the years 2013, 2012, and 2011, we capitalized $4.3 million, $3.4 million, and $1.9 million, respectively, of share-based compensation expense related to internal-use software development. Net cash proceeds from the exercise of stock options for 2013, 2012, and 2011 were $2.3 million, $2.8 million, and $2.0 million, respectively.

We have calculated an additional paid in capital (“APIC”) pool that represents the excess tax benefits related to share-based compensation that are available to absorb future tax deficiencies. We include those excess tax benefits in APIC only when they have been realized. If the amount of future tax deficiencies is greater than the available APIC pool, we will record the excess deficiencies as income tax expense in our consolidated statements of operations. Excess tax benefits or tax deficiencies, to the extent realized, are a factor in the calculation of diluted shares used in computing dilutive income (loss) per share. During 2013, 2012, and 2011, we realized an excess tax benefit in APIC from the exercise of stock options and the vesting of RSUs, which we present as financing cash flows with a corresponding reduction in operating cash flows in the consolidated statements of cash flows.

The following table presents our stock option activity for 2013:



	Shares		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Term (in years)	Aggregate Intrinsic value
Outstanding as of September 30, 2012	627		$	11.98
Exercised	(208	)	11.16
Outstanding as of September 30, 2013	419		12.39		1.82	$	41,115
Exercisable as of September 30, 2013	419		$	12.39	1.82	$	41,115

Total intrinsic value of options exercised for 2013, 2012, and 2011 was $13.1 million, $18.5 million, and $17.6 million, respectively.

Information regarding the weighted average remaining contractual life and weighted average exercise price of options outstanding and options exercisable as of September 30, 2013, for selected exercise price ranges, is as follows (in thousands, except weighted average remaining contractual life (in years) and weighted average exercise price):



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$ 7.86 - $ 7.99	16	1.31	$	7.87	16	$	7.87
8.50 - 9.81	5	0.70	9.67		5	9.67
10.14 - 10.67	54	0.94	10.55		54	10.55
11.20 - 12.89	296	1.93	12.44		296	12.44
16.00 - 16.17	48	2.45	16.01		48	16.01
$ 7.86 - $ 16.17	419	1.82	$	12.40	419	$	12.40

The following table presents a summary of RSUs award activity (in thousands, except weighted average share value):



	Shares		Weighted Average Share Value
Balance as of September 30, 2012	2,954		$	49.32
Granted	1,244		87.28
Vested and released	(1,090	)	45.34
Canceled	(83	)	48.78
Balance as of September 30, 2013	3,025		$	66.38

We granted 0.4 million, 0.9 million, and 0.8 million shares of performance-based RSUs during the years 2013, 2012, and 2011, respectively. The performance criteria have been fully achieved in 2013, 2012, and 2011.

Total fair value of RSUs vested during 2013, 2012, and 2011 was $49.4 million, $48.4 million, and $37.9 million, respectively. As of September 30, 2013, we had $112.1 million of total unrecognized share-based compensation costs net of estimated forfeitures that is expected to be recognized over a weighted average period of 1.4 years.