Share-based Compensation

9 Months Ended

Jun. 30, 2011

Share-based Compensation

Share-based Compensation

Note 11. Share-based Compensation

Our 2007 Equity Incentive Plan ("Equity Plan") provides for grants of stock options, restricted stock, stock bonuses, stock appreciation rights and restricted stock units ("RSUs"). As of June 30, 2011, we had 5.9 million shares of common stock reserved for future grants under our Equity Plan, excluding shares of common stock reserved for future issue under our Employee Stock Purchase Plan. We recognize compensation expense for equity awards on a straight line basis over the requisite service period of the award.

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 income statements. Excess tax benefits or tax deficiencies, to the extent realized, are a factor in the calculation of diluted shares used in computing dilutive income per share.

The following table presents our share-based compensation resulting from equity awards that we recorded in our income statements for the three and nine months ended June 30, 2011 and 2010:

	Three Months Ended June  30,				Nine Months Ended June 30,
	2011		2010		2011		2010
Cost of operations	$	621	$	692	$	1,955	$	1,773
Sales and marketing		3,046		2,916		13,582		6,409
Systems development and programming		1,091		637		4,267		1,713
General and administrative		1,393		1,365		5,050		3,080
Total share-based compensation	$	6,151	$	5,610	$	24,854	$	12,975

Net cash proceeds from the exercise of stock options were $0.3 million and $1.6 million for the three and nine months ended June 30, 2011, and $3.9 million and $6.6 million for the same periods in 2010. We present excess tax benefits from the exercise of stock options and vesting of RSUs, if any, as financing cash flows and a corresponding reduction in operating cash flows.

The following table presents our stock option activity for the nine months ended June 30, 2011:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding as of September 30, 2010		1,389		$	8.65
Exercised		(292	)		5.59
Forfeited or expired		—			—
Outstanding as of June 30, 2011		1,097			9.65		3.22	$	44,337
Exercisable as of June 30, 2011		1,097			9.65		3.22		44,322

For the nine months ended June 30, 2011, the total intrinsic value of options exercised was $13.5 million.

RSUs are awards that entitle the holder to shares of our common stock as the awards vest. RSUs generally vest over four years, but may accelerate in certain circumstances. The compensation expense incurred for RSUs is based on the closing market price of our common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period.

The following table presents a summary of RSU award activity for the nine months ended June 30, 2011:

	Shares			Weighted Average  Share Value
Outstanding as of September 30, 2010		1,807		$	33.67
Granted		692			49.79
Vested and released		(651	)		35.25
Cancelled		(40	)		44.72
Outstanding as of June 30, 2011		1,808			39.02

As of June 30, 2011, we expected $40.1 million of total unrecognized share-based compensation costs related to non-vested stock options and RSUs to be recognized over a weighted average period of 1.5 years.