Digital River 2006 Annual Report Download - page 103

common stock. A summary of the changes in restricted stock under our 1998 Plan as of December 31, 2006 is
as follows:
Restricted
Stock
Weighted
Average
Fair Value
Non-Vested Balance, December 31, 2005 ................................... — $ —
Granted ........................................................... 89,500 39.96
Vested ............................................................ — —
Forfeited ........................................................... — —
Non-Vested Balance, December 31, 2006 ................................... 89,500 $39.96
Employee Stock Purchase Plan
We also sponsor an employee stock purchase plan under which 1,200,000 shares have been reserved for
purchase by employees. The purchase price of the shares under the plan is the lesser of 85% of the fair market
value on the first or last day of the offering period. Offering periods are currently every six months ending on
June 30 and December 31. Employees may designate up to ten percent of their compensation for the purchase
of shares under the plan. Total shares purchased by employees under the plan were 71,000, 83,000 and 51,000
in the years ended December 31, 2006, 2005 and 2004, respectively. There are 556,853 shares still reserved
under the plan as of December 31, 2006.
Inducement Equity Incentive Plan
Effective on December 14, 2005, in connection with our acquisition of Commerce5, Inc., we adopted an
Inducement Equity Incentive Plan (the “Inducement Plan”) initially for Commerce5 executives who joined
Digital River as a result of the acquisition, or other personnel who join us after the date of the Inducement
Plan adoption. A total of 87,500 restricted shares of Digital River stock may be issued under the Inducement
Plan, subject to vesting. In December 2005, we issued 63,750 shares under the plan. In January 2006, we
issued the remaining 23,750 shares. In accordance with the NASDAQ rules, no stockholder approval was
required for the Inducement Plan.
Employee Benefit Plan
We have a defined contribution 401(k) retirement plan for eligible employees. Employees may contribute
up to 15% of their pretax compensation to the plan, with us providing a discretionary match of up to 50% of
the total employee contribution. Amounts charged to expense related to our matching contributions were
$1.4 million in 2006, $1.1 million in 2005 and $0.7 million in 2004.
12. Segment Information:
We view our operations and manage our business as one reportable segment, providing outsourced
e-commerce solutions globally to a variety of companies, primarily in the software and high-tech products
markets. Factors used to identify our single operating segment include the financial information available for
evaluation by the chief operating decision maker in making decisions about how to allocate resources and
assess performance. We market our products and services through our offices in the United States and our
wholly-owned branches and subsidiaries operating in the United Kingdom, Germany, Japan and Taiwan.
Prior to January 1, 2004, we managed our physical goods clients through a division (formerly our
E-Business Services Division) that was separate from our Software and Digital Commerce Services Division.
Beginning in January 2004, this divisional structure was consolidated, and we announced that we would no
longer report our activities as separate business segments.
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DIGITAL RIVER, INC.
Notes to Consolidated Financial Statements — (Continued)