Support.com 2006 Annual Report Download - page 43

These obligations are for noncancelable operating leases which relate primarily to the lease of our headquarters office in Redwood
City, California and international offices to carry out sales, marketing, research and development, and services operations.
Working Capital and Capital Expenditure Requirements
At December 31, 2006, we had stockholders’ equity of $132.5 million and working capital of $118.2 million. Included as a
reduction to working capital is short−term deferred revenue of $13.4 million, which will not require 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.
As noted above, we plan to make substantial investments in our business during 2007, including but not limited to such areas as
(i) cost of services, (ii) sales and marketing, (iii) research and development, and (iv) capital expenditures. We believe these
investments and others are essential to creating sustainable growth in our business in the future. Because these investments will likely
precede any associated revenues, we expect our working capital to decrease in the near term.
Recent Accounting Pronouncements
In June 2006, the FASB issued FASB Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes−an
Interpretation of FASB Statement No. 109. FIN No. 48 clarifies the accounting for uncertainty in income taxes by creating a
framework for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions
that they have taken or expect to take in a tax return. FIN No. 48 is effective for fiscal years beginning after December 15, 2006 and is
required to be adopted by the Company beginning in the first quarter of fiscal 2007. We are currently evaluating the impact of FIN
No. 48 on our results of operations and financial position.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, provides a framework
for measuring fair value, and expands the disclosures required for fair value measurements. SFAS No. 157 applies to other accounting
pronouncements that require fair value measurements; it does not require any new fair value measurements. SFAS No. 157 is effective
for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company beginning in the first quarter of
fiscal 2008. Although the Company will continue to evaluate the application of SFAS No. 157, management does not currently believe
adoption will have a material impact on the Company’s results of operations or financial position.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS
No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard
requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS
No. 159 is effective for the Company beginning in the first quarter of fiscal year 2008, although earlier adoption is permitted. The
Company is currently evaluating the impact of adopting SFAS No. 159 on its consolidated financial statements.
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Source: SUPPORTSOFT INC, 10−K, March 16, 2007