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SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Organization and Summary of Significant Accounting Policies (Continued)
The table below reflects the net loss and loss per share for the year ended December 31, 2007 and 2006 compared with the pro-forma information for the
years ended December 31, 2005 (in thousands):
2007
2006
2005
Net income—as reported for the prior period(1) $ N/A $ N/A $ 4,425
Stock-based compensation expense relating to:
Stock options(2) (4,803) (2,953) (20,540)
ESPP stock purchases(2) (140) (385) (575)
Net income (loss), including the effect of stock-based
compensation expense(3) $ (21,369) $ (8,235) $ (16,690)
Basic net income per share—as reported for the prior period N/A N/A $ 0.10
Basic net income (loss) per share—pro-forma, including the
effect of stock-based compensation $ (0.47) $ (0.19) $ (0.39)
Diluted net income per share—as reported for the prior period N/A N/A $ 0.10
Diluted net income (loss) per share—pro-forma, including the
effect of stock-based compensation $ (0.47) $ (0.19) $ (0.39)
(1)
Net income and net income per share prior to January 1, 2006 did not include stock-based compensation expense for stock
options and employee stock purchases under SFAS 123R because the Company had not adopted the recognition provisions of
SFAS 123R.
(2)
Stock-based compensation expense prior to January 1, 2006 is calculated based on the pro-forma application of SFAS 123R.
(3)
Net income and net income (loss) per share prior to fiscal 2006 represents pro-forma information based on SFAS 123.
Prior to the adoption of SFAS 123R, our Board of Directors approved the acceleration of vesting of certain unvested and out-of-money stock options with
exercise prices equal to or greater than $5.00 per share previously awarded to employees, including executive officers, under our equity compensation plans. The
acceleration of vesting was effective for stock options outstanding as of December 21, 2005. Options to purchase approximately 3.0 million shares of common
stock or 32% of our then outstanding unvested stock options were subject to this acceleration. The weighted average price of the options that were accelerated
was $7.02. The options accelerated excluded options previously granted to Board of Directors, employees who had terminations pending and foreign employees
who opted out of the acceleration for tax reasons. For all officers and vice-presidents (non-officers) the acceleration was accompanied by restrictions imposed on
any shares that may in the future be purchased through the exercise of accelerated stock options. Those restrictions prevent the sale of any such shares prior to the
date such shares would have originally vested had the optionee been employed on such date (whether or not the optionee is actually an employee at that time).
The purpose of the acceleration was to enable us to avoid recognizing compensation expense associated with these options in our Consolidated Statements of
Operations upon the adoption of SFAS 123R on January 1, 2006. The acceleration of the
64
Source: SUPPORTSOFT INC, 10-K, March 13, 2008