Digital River 2006 Annual Report Download - page 9

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content of the email indicates action by the Stock Option Committee; (ii) beginning in 2003, the last trading
day of the month of the grant in accordance with our policy adopted in early 2003; or (iii) the date a grant
was ratified by the Board of Directors if no other relevant documentation existed.
Based on the findings of the Special Committee, after accounting for forfeitures, we calculated stock-
based compensation expense (under APB 25 for 1998 through 2005 and under SFAS 123(R) for 2006) of
approximately $11.9 million over the respective awards’ vesting terms for the periods from 1998 through
2006. We recorded $85,000, after-tax, of stock-based compensation in the 2006 financial statements related to
the foregoing options. Due to its insignificance, the full year amount was recorded in the fourth quarter of
2006. In addition, the Company included unrecorded charges related to option grants to consultants not
expensed in the relevant periods under EITF 96-18 ($427,862) and charges of ($70,008) related to option
grants to employees prior to their dates of hire.
The incremental impact from recognizing stock-based compensation expense resulting from the investiga-
tion of past stock option grants is as follows (dollars in thousands):
Fiscal Year
Pre-Tax
Expense
(Income)
After Tax
Expense
(Income)
1998 ....................................................... $ 172 $ 172
1999 ....................................................... 3,211 3,211
2000 ....................................................... 2,238 2,238
2001 ....................................................... 2,114 2,114
2002 ....................................................... 1,679 1,679
2003 ....................................................... 1,241 1,241
Total 1998-2003 impact ......................................... 10,655 10,655
2004 ....................................................... 817 817
2005 ....................................................... 293 (2,169)
2006 ....................................................... 135 85
Total ....................................................... $11,900 $ 9,388
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