Support.com 2007 Annual Report Download - page 67

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SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Organization and Summary of Significant Accounting Policies (Continued)
Stock-based Compensation Expense
The Company recorded the following stock-based compensation expense for the fiscal years ended December 31, 2007 and 2006, (in thousands). There was
no stock-based compensation expense recognized for the year ended December 31, 2005.
For the Year Ended
December 31,
2007
2006
Stock option compensation expense recognized in:
Cost of services $ 717 $ 256
Cost of maintenance 76 36
Research and development 484 316
Sales and marketing 1,838 774
General and administrative 1,688 1,572
4,803 2,954
ESPP compensation expense recognized in:
Cost of services 40 80
Cost of maintenance 4 7
Research and development 25 106
Sales and marketing 48 125
General and administrative 23 66
140 384
Stock-based compensation expense included in total costs and expenses $ 4,943 $ 3,338
For the year ended December 31, 2006, there was $238,000, of stock-based compensation expense related to the acceleration of the stock options awarded to
the Company's former chief executive officer in connection with a transition agreement dated March 12, 2006. Pursuant to the terms of this agreement, provided
the former CEO remained an employee of the Company, on the date the Board of Directors appointed a new CEO, all then outstanding and unvested options
would be immediately vested. A new CEO was appointed on April 6, 2006 and vesting of 115,625 shares was accelerated. As a result of adopting SFAS 123R,
the Company's loss before income taxes and net loss for the year ended December 31, 2006 was $3.3 million higher than if it had continued to account for
share-based compensation under APB 25. Basic and diluted loss per share for the year ended December 31, 2006 would have been $0.08 lower if the Company
had not adopted SFAS 123R.
Net cash proceeds from the exercise of stock options were $4.3 million, $2.6 million and $2.2 million for the years ended December 31, 2007, 2006 and
2005, respectively. No income tax benefit was realized from stock option exercises during the year ended December 31, 2007. In accordance with SFAS 123R,
we present excess tax benefits from the exercise of stock options, if any, as financing cash flow.
63
Source: SUPPORTSOFT INC, 10-K, March 13, 2008