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SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 3. Business Combinations (Continued)
The results of operations of Core Networks were included in our consolidated statements of operations from September 2, 2004,
the date of the Acquisition. If we had acquired the assets of Core Networks at the beginning of the periods presented, our unaudited
pro forma net revenue, net income and net income per share would have been as follows (in thousands, except per share information):
For the year ended December 31, 2004 (unaudited):
Revenue $ 61,858
Net income 5,780
Basic net income per share 0.14
Diluted net income per share 0.13
Note 4. Intangible assets
As a result of the Acquisition, we recorded $5.4 million of amortizable intangible assets with useful lives of 5 years. Amortization
expense related to amortizable intangible assets was $1.1 million, $1.1 million, and $363,000 for the years ended December 31, 2006,
2005, and 2004, respectively. Amortization expense for the next five years and thereafter, as of December 31, 2006, is expected to be
as follows (in thousands):
Years ending December 31,
Amortizable
Intangible
Assets
2007 $ 1,124
2008 1,124
2009 657
Total expected amortization expense $ 2,905
In December 2006, the Company acquired the use of a toll−free telephone number for cash consideration of $250,000. This asset
has an indefinite useful life. The intangible asset will be tested for impairment annually or more often if events or changes in
circumstances indicate that the carrying value may not be recoverable.
The following table summarized the components of intangible assets (in thousands).
Years as of December 31,
2006 2005
Amortizable intangible assets $ 5,519 $ 5,484
Accumulated amortization (2,614) (1,490)
Indefinite−life intangible assets 250 —
Total intangible assets, net $ 3,155 $ 3,994
Note 5. Commitments and Contingencies
Headquarters office lease. In November 2006, the Company entered into a noncancelable lease agreement for its new
headquarters office facility located in Redwood City, California. The lease commences on January 1, 2007 and ends on July 31, 2012.
The annual fixed rent will be $738,000, $760,000, $783,000, $783,000, $805,000 and $483,000 for the years ended 2007, 2008, 2009,
2010, 2011 and 2012, respectively, as long as the Company is not in default under the term of the lease. In addition to base rent,
commencing on the first anniversary of the lease and for each year thereafter, the Company will pay as
61
Source: SUPPORTSOFT INC, 10−K, March 16, 2007