Annual Report 2007 - LivePerson

LIVEPERSON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Share and per Share Data)
(5) Stock Options and Employee Stock Purchase Plan − (continued)
The total intrinsic value of stock options exercised during the years ended December 31, 2007 and 2006
was approximately $4.9 and $5.3 million, respectively. The total intrinsic value of options exercisable at
December 31, 2007 and 2006 was approximately $13.8 and $15.0 million, respectively. The total intrinsic
value of options expected to vest at December 31, 2007 and 2006 is approximately $3.2 and $4.6 million,
respectively. A summary of the status of the Company’s nonvested shares as of December 31, 2005, and
changes during the years ended December 31, 2007 and 2006 is as follows:
Shares
Weighted
Average
Grant-Date
Fair Value
Nonvested Shares at January 1, 2006 ....................... 3,827,250 $1.65
Granted ........................................... 1,238,000 $3.21
Vested ............................................ (1,532,625) $2.25
Cancelled .......................................... (271,875) $3.24
Nonvested Shares at December 31, 2006. .................... 3,260,750 $3.81
Nonvested Shares at January 1, 2007 ....................... 3,260,750 $3.81
Granted and Assumed ................................. 2,917,982 $3.76
Vested ............................................ (1,303,949) $2.80
Cancelled .......................................... (525,700) $3.23
Nonvested Shares at December 31, 2007. .................... 4,349,083 $3.18
(6) Valuation and Qualifying Accounts
Balance at
Beginning of
Period
Additions
Charged to
Costs and
Expenses
Deductions/
Write-offs
Balance at
End of
Period
For the year ended December 31, 2007 Allowance
for doubtful accounts ................... $105 $103 $ — $208
For the year ended December 31, 2006 Allowance
for doubtful accounts ................... $ 67 $ 38 $— $105
For the year ended December 31, 2005 Allowance
for doubtful accounts ................... $ 54 $ 30 $(17) $ 67
(7) 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 future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods
in which those temporary differences are expected to become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this
assessment.
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