Support.com 2005 Annual Report Download - page 39

Financing Activities
Net cash generated by financing activities was $2.1 million for 2005, $4.0 million for 2004, and $80.9 million in 2003. For
2005, net cash generated by financing activities was primarily due to the exercise of employee stock options and the purchase of
common stock under the employee stock purchase plan of $3.1 million, offset by $0.9 million of common stock repurchases by the
Company. Net cash generated by financing activities in 2004, was primarily due to the exercise of employee stock options and the
purchase of common stock under the employee stock purchase plan. For 2003, cash generated by financing activities was primarily
attributable to approximately $77.7 million in net proceeds from the issuance of our common stock in our follow-on public offering in
November 2003 and to a lesser extent the exercise of employee stock options and the purchase of common stock under the employee
stock purchase plan offset by principal repayments under capital lease obligations.
Commitments
The following summarizes our contractual obligations at December 31, 2005 and the effect these contractual obligations are
expected to have on our liquidity and cash flows in future periods (in thousands).
Working Capital and Capital Expenditure Requirements
Payments Due By Period
Total
1 Year
or Less
1–3
Years
After
3 Years
Operating leases $2,519 $1,219 $943 $357
Total $2,519 $1,219 $943 $357
At December 31, 2005, we had stockholders’ equity of $134.4 million and working capital of $119.8 million. Included as a
reduction to working capital is short-term deferred revenue of $14.1 million, which will not require dollar-for-dollar settlement in
cash, but will be recognized as revenue in the future. We believe that our existing cash balances will be sufficient to meet our working
capital and capital expenditure requirements for at least the next 12 months.
If we require additional capital resources to grow our business internally or to acquire complementary technologies and
businesses at any time in the future, we may seek to sell additional equity or debt securities. The sale of additional equity or debt
securities could result in more dilution to our stockholders. Financing arrangements may not be available to us, or may not be
available in amounts or on terms acceptable to us.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R), which replaces
SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) and supercedes APB Opinion No. 25, “Accounting for
Stock Issued to Employees.” SFAS 123R also amends SFAS No. 95, “Statement of Cash Flows,” to require that tax benefits from
stock option exercises be classified as a financing activity, instead of an operating activity, on the statement of cash flows. SFAS
123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial
statements based on their fair values beginning January 1, 2006. We plan to use the modified prospective transition method and the
Black-Scholes model to adopt this new standard.
For all periods through December 31, 2005, we account for share-based payments to employees using the intrinsic value method
under APB Opinion No. 25, as permitted by SFAS 123, and, as such, generally recognized no compensation cost for employee stock
options during 2005. Accordingly, the adoption of SFAS 123R will cause our reported stock compensation cost to materially increase
beginning in our first quarter of 2006 and will
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