(3) Stock-based Compensation Plans

Stock-based compensation expense has been included in the same lines as compensation paid to the same employees in the consolidated statement of operations. Stock-based compensation expense was included in the following operating expense categories as follows (in thousands):


	Nine months ended September 30,				Three months ended September 30,
	2012		2013		2012		2013
Service costs	$	1,545	$	818	$	554	$	455
Sales and marketing		2,008		474		153		211
Product development		860		1,127		203		361
General and administrative		7,982		4,456		2,792		1,338

Total stock-based compensation	$	12,395	$	6,875	$	3,702	$	2,365

Income tax benefit related to stock-based compensation included in net income (loss)	$	3,750	$	1,937	$	1,088	$	686

FASB ASC 718 requires the benefits of tax deductions in excess of the stock-based compensation cost to be classified as financing cash inflows rather than operating cash inflows. This amount is shown as “Excess tax benefit related to stock-based compensation” on the consolidated statement of cash flows.

The Company uses the Black-Scholes option pricing model to estimate the per share fair value of stock option grants with time-based vesting. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. For the quarters ended September 30, 2012 and 2013, the expected life of each award granted was determined based on historical experience with similar awards, giving consideration to contractual terms, anticipated exercise patterns, vesting schedules and forfeitures. Expected volatility is based on historical volatility levels of the Company’s Class B common stock and the expected volatility of companies in similar industries that have similar vesting and contractual terms. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury issues with terms approximately equal to the expected life of the option. The Company uses an expected annual dividend yield in consideration of the Company’s common stock dividend payments.

The following weighted average assumptions were used in determining the fair value of time-vested stock option grants for the periods presented:


	Nine months ended September 30,						Three months ended September 30,
	2012			2013			2012			2013
Expected life (in years)		4.0-6.25			4.0-6.25			4.0			4.0-6.25
Risk-free interest rate		0.60	%		1.09	%		0.47	%		1.52	%
Expected volatility		70	%		56	%		69	%		61	%
Expected dividend yield		2.00	%		1.74	%		3.11	%		1.00	%

Stock option activity during the nine months ended September 30, 2013 is summarized as follows:


	Shares			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Balance at December 31, 2012		7,029,360		$	7.67		6.28	$	506
Options granted		1,729,922			4.97
Options forfeited		(269,792	)		5.64
Options expired		(630,903	)		5.82
Options exercised		(206,299	)		5.12

Balance at September 30, 2013		7,652,288		$	7.35		6.72	$	11,392

The Company issues restricted stock awards and restricted stock units to employees for future services and/or in connection with acquisitions. Restricted stock units entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain vesting conditions. Restricted stock award and restricted stock unit grants are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock. Restricted shares issued are accounted for under FASB ASC 718 using the straight-line method net of estimated forfeitures.

Restricted stock awards and restricted stock units activity during the nine months ended September 30, 2013 is summarized as follows:


	Shares/ Units			Weighted average grant date fair value
Unvested balance at December 31, 2012		2,563,511		$	5.12
Granted		1,093,724			4.20
Vested		(559,505	)		4.13
Forfeited		(187,136	)		4.90

Unvested balance at September 30, 2013		2,910,594		$	4.98

On December 31, 2012, the Company repurchased 336,000 shares from certain executives for minimum withholding taxes on 1,050,000 restricted stock awards that vested on December 31, 2012. During 2013, the Company repurchased 51,079 shares from certain executives for minimum withholding taxes on 183,750 restricted stock awards that vested during 2013. The number of shares repurchased was based on the value on the vesting date of the restricted stock awards equivalent to the value of the executives’ minimum withholding taxes of $1.6 million, which was remitted in cash to the appropriate taxing authorities during 2013. The payments are reflected as a financing activity within the condensed consolidated statement of cash flows when paid.