Support.com 2005 Annual Report Download - page 34

Download and view the complete annual report

Please find page 34 of the 2005 Support.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 83

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83

flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Such impairment loss
would be measured as the difference between the carrying amount of the asset and its fair value. The estimate of cash flow is based
upon, among other things, certain assumptions about expected future operating performance and an appropriate discount rate
determined by our management. Our estimates of discounted cash flows may differ from actual cash flows due to, among other
things, economic conditions, changes to the business model or changes in operating performance. If we made different estimates,
material differences may result in write-downs of net long-lived and intangible assets, which would be reflected by charges to our
operating results for any period presented. At September 30, 2005, management concluded its annual evaluation for impairment of
goodwill and no impairment was recognized. Since then, there have not been any events or changes in circumstances to indicate that
the carrying value may not be recoverable. We will test for impairment during the third quarter of each year, or earlier if indicators of
impairment exist.
Results of Operations
The following table presents certain consolidated statement of income data for the periods indicated as a percentage of total
revenue.
Years ended December 31, 2005, 2004 and 2003
Years Ended
December 31,
2005
2004
2003
Revenue:
License fees
53%
63%
77%
Services
47
37
23
Total revenue
100
100
100
Costs and expenses:
Cost of license fees
1
0
1
Cost of services
23
16
13
Amortization of intangible assets
2
1
0
Research and development
18
16
17
Sales and marketing
40
40
41
General and administrative
14
11
10
In-process research and development
0
3
0
Amortization of deferred compensation
0
0
0
Total costs and expenses
98
87
82
Income from operations
2
13
18
Interest income and other, net
6
4
1
Income before income taxes
8
17
19
Provision for income taxes
(1)
0
(1)
Net income
7%
17%
18%
Revenue
($ in thousands)
32
2005
% Change
2004 to 2005
2004
% Change
2003 to 2004
2003
License fees
$32,737
(14)%
$37,923
(7)%
$40,885
Services
29,194
29%
22,694
83%
12,386
Total net revenue
$61,931
2%
$60,617
14%
$53,271