Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company recognizes compensation costs for equity awards granted to its employees based on each award's grant-date fair value. Most of the Company's equity awards contain vesting conditions dependent upon the completion of specified service periods or achievement of established sets of performance criteria. Compensation cost for service-based equity awards is recognized ratably over the requisite service period. Compensation cost for certain performance-based awards is recognized using a graded expense-attribution method and is adjusted to reflect the estimated probability of vesting. The Company has granted performance-based awards where the value of the award upon vesting will vary depending on the level of performance ultimately achieved. The Company recognizes compensation cost for these awards based on the level of performance expected to be achieved. The Company will recognize the impact of any change in estimate in the period of the change.

Generally, equity awards are forfeited by employees who terminate prior to vesting. However, employment contracts for certain executive officers and other employees provide for the acceleration of vesting in the event of a change in control or specified termination events. The Company currently satisfies exercises of stock options and stock appreciation rights, the vesting of restricted stock and the delivery of shares upon the vesting of restricted stock units with the issuance of new shares.

The impact of stock-based compensation awards on net income (excluding amounts capitalized) for the three- and six-month periods ended June 30, 2016 and 2015 were as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016			2015		2016			2015
Total stock-based compensation	$	7,236		$	6,328	$	12,097		$	10,727
Tax impact(1)	(3,517		)	1,854		(1,863		)	1,448
Reduction in net income, net of tax	$	3,719		$	8,182	$	10,234		$	12,175

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⁽¹⁾  Tax impact is determined at the Company's combined effective tax rate, which includes the statements of operations line item "Increase in income tax benefit payable to former stockholder" (see Note 10).

Stock-based compensation cost capitalized as a part of film costs was $2.4 million and $2.5 million for the three-month periods ended June 30, 2016 and 2015, respectively, and $4.8 million and $4.8 million for the six-month periods ended June 30, 2016 and 2015, respectively.

The following table sets forth the number and weighted average grant-date fair value of equity awards granted during the three- and six-month periods ended June 30, 2016 and 2015:

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	Number Granted	Weighted Average Grant-Date Fair Value		Number Granted	Weighted Average Grant-Date Fair Value
	(in thousands)			(in thousands)
2016
Restricted stock units	183	$	40.07	488	$	30.60
2015
Restricted stock units	132	$	25.76	909	$	22.04

As of June 30, 2016, the total compensation cost related to unvested equity awards granted to employees (excluding equity awards with performance objectives not probable of achievement) but not yet recognized was approximately $60.8 million and will be amortized on a straight-line basis, or using a graded-attribution method for certain performance-based awards, over a weighted average period of 1.7 years. As previously described in Note 1, there is a pending acquisition of the Company by Comcast. The Company expects that, upon closing of the Merger, any unamortized stock-based compensation expense (including the expense for equity awards with performance objectives that are outstanding at the time of the closing) will be accelerated and recorded as a general and administrative expense at that time.