InterDigital Inc (IDCC)

[rmarchma]

Buldzr re Colson's insider sale and tax calculations

Mr. Colson exercised on 50,448 options and immediately sold all 50,448 shares at $25.835 per share = $1,303,324 total proceeds.

The strike price cost to Mr. Colson of these 50,448 shares was as follows:

18,448 shares @ $5.6875 stike price = $104,923 (options expired in 2008)

32,000 shares @ $4.8125 strike price = $154,000 (options expired in 2009)

Total stike price cost = $258,923 divided by $25.835 sale price per share = 10,022 shares needed to be sold to obtain the strike money.

The gain on the sale of 10,000 shares at about $20 per share average = $200,000 x 35% assumed tax bracket = $70,000.

The number of aditional shares needed to be sold to raise the $70,000 taxes divided by $25.835 sale price per share = 2,700 more shares. Providing for some more taxes, let's just say 3,000 more shares needed to be sold to raise the tax money.

Therefore, I calculate that Mr. Colson could have sold only 13,022 shares (10,022 + 3,000) of his 50,448 exercised shares to have raised the needed money to pay the strike price and taxes. He could have kept the difference of 37,426 shares (50,448 - 13,002) for future price appreciation and possible long-term capital gain treatment, if held for more than a year. This would represent a net purchase of shares, and would be much more bullish than immediately selling ALL the exercised shares as the insiders are actually doing.