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SOHU » Topics » Pro Forma Information under SFAS 123 for Prior Periods

This excerpt taken from the SOHU 10-K filed Mar 8, 2007.

Pro Forma Information under SFAS 123 for Prior Periods

The following table illustrates the effect on net income and net income per share if the Company had applied the fair value recognition provisions of SFAS No.123 to stock-based employee compensation for the years ended December 31, 2005 and 2004 (in thousands except per share data):

 

     Year Ended December 31,  
     2005     2004  

Net income as reported:

    $ 29,781     $ 35,637  

Add: Stock-based compensation expense included in reported net income

      2       7  

Deduct: Stock-based compensation expense determined under fair value based method

      (7,660 )     (6,119 )
                

Pro forma net income

    $ 22,123     $ 29,525  
                

Basic net income per share:

     

As reported

    $ 0.82     $ 0.98  
                

Pro forma

    $ 0.61     $ 0.81  
                

Diluted net income per share:

     

As reported

    $ 0.77     $ 0.89  
                

Pro forma

    $ 0.59     $ 0.74  
                

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. For the years ended December 31, 2005 and 2004, the fair value of options granted was estimated with the following assumptions:

 

     Year Ended December 31,
     2005    2004

Risk-free interest rate

      2.7-4.5%    1-1.3%

Expected life (years)

      1-5.2    2.5

Expected dividend yield

      —      —  

Volatility

      51%-92%    94%

Fair value of options at grant date

    $ 6.07-$10.84    $9.24-$17.27

 

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