Support.com 2006 Annual Report Download - page 42

These two customers accounted for approximately $4.9 million in the aggregate, or 51% of net accounts receivable.
Total deferred revenue decreased to $13.6 million at December 31, 2006 from $15.0 million at December 31, 2005 due primarily
to lower deferred maintenance revenue. Customers typically purchase maintenance contracts when they purchase our products.
Therefore, the decrease in deferred maintenance revenue is consistent with the lower level of license revenue in 2006 as compared to
2005. Total deferred revenue decreased to $16.7 million at December 31, 2004 from $20.9 million at December 31, 2003. The
decrease in total deferred revenue was primarily due to a decrease in deferred license revenue from term−based arrangements,
partially offset by an increase in deferred maintenance revenue, as our business has transitioned to more perpetual−based
arrangements from term−based arrangements.
In 2007, we expect to make substantial investments in support of business initiatives that we believe are essential to creating long
term revenue growth. We expect that these investments will precede any material revenue from our new business initiatives. We
therefore expect to use a significantly higher level of cash from operations in 2007 than in 2006.
Investing Activities
Net cash provided by (used in) investing activities was $(8.0) million in 2006, $5.5 million in 2005, and $(24.2) million in 2004.
Net cash used in investing activities in 2006 was primarily due to the purchase of $92.4 million in marketable securities and to a lesser
extent the purchase of $964,000 in property and equipment offset by the sale and maturity of $85.3 million in marketable securities.
Net cash provided by investing activities in 2005 was primarily due to sales and maturities of $98.0 million of marketable securities
largely offset by the purchase of $91.5 million of marketable securities and the purchase of $963,000 of property and equipment. Net
cash used in investing activities in 2004 was also primarily due to the purchase of $94.0 million in marketable securities, payments for
a business acquisition of $17.6 million and to a lesser extent the purchase of $791,000 in property and equipment offset by the sale
and maturity of $88.3 million in marketable securities. In 2007, we expect our capital expenditures to be significantly higher than
historical levels due primarily to the build out of our new headquarters office under a lease that was entered into in November 2006.
See Note 5 to the Consolidated Financial Statements.
Financing Activities
Net cash generated by financing activities was $3.1 million for 2006, $2.1 million for 2005, and $4.0 million for 2004. In 2006,
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. In 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. In 2004, net cash generated by financing activities of $4.0 million was
primarily due to the exercise of employee stock options and the purchase of common stock under the employee stock purchase plan.
Commitments
The following summarizes our contractual obligations at December 31, 2006 and the effect these contractual obligations are
expected to have on our liquidity and cash flows in future periods (in thousands).
Payments Due By Period
Total 1 Year or Less 1—3 Years After 3 Years
Operating leases $ 5,777 $ 1,557 $ 1,988 $ 2,232
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Source: SUPPORTSOFT INC, 10−K, March 16, 2007