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Table of Contents
SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of the Company’s stock-based awards was estimated using the following assumptions for the years ended December 31, 2008, 2007 and
2006:
Stock Option Plan Employee Stock Purchase Plan
2008 2007 2006 2008 2007 2006
Risk-free interest rate 2.0% 4.1% 4.8% 1.5% 4.7% 4.7%
Expected term (in years) 4.3 4.0 3.9 0.5 0.5 to 2.0 0.5 to 2.0
Volatility 53.2% 51.3% 53.5% 53.1% 54.1% 54.1%
Estimated forfeitures 14.0% 8.4% 8.0% 8.0% 8.0% 8.0%
Expected dividend 0% 0% 0% 0% 0% 0%
Weighted average fair value $ 1.33 $ 2.14 $ 2.01 $ 1.08 $ 1.66 $ 1.66
The Company recorded the following stock-based compensation expense for the fiscal years ended December 31, 2008, 2007 and 2006, (in thousands).
For the Year Ended
December 31,
2008 2007 2006
Stock option compensation expense recognized in:
Cost of services $ 646 $ 717 $ 256
Cost of maintenance 77 76 36
Cost of consumer 92 — —
Research and development 559 484 316
Sales and marketing 1,812 1,838 774
General and administrative 1,772 1,688 1,572
4,958 4,803 2,954
ESPP compensation expense recognized in:
Cost of services 19 40 80
Cost of maintenance 5 4 7
Cost of consumer 25 — —
Research and development 25 25 106
Sales and marketing 28 48 125
General and administrative 18 23 66
120 140 384
Stock-based compensation expense included in total costs and expenses $ 5,078 $ 4,943 $ 3,338
Net cash proceeds from the exercise of stock options were $0.1 million, $4.3 million and $2.6 million for the years ended December 31, 2008, 2007 and
2006, respectively. No income tax benefit was realized from stock option exercises during the year ended December 31, 2008. In accordance with SFAS 123R,
we present excess tax benefits from the exercise of stock options, if any, as net cash generated in financing activities.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases, and operating
63
Source: SUPPORTSOFT INC, 10-K, March 11, 2009