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SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 6. Restructuring Obligations and Other Charges
In 2006, in connection with a business review conducted by SupportSoft’s new Chief Executive Officer, the Company reduced its
workforce by 25 employees, or approximately 10% of its workforce at that time, designed to match staffing with its new initiatives. As
a result, the Company recorded a restructuring charge of $817,000 in 2006. The restructuring charge was comprised of severance costs
and other personnel−related termination costs. Restructuring expenses included in the Consolidated Statements of Operations were
$33,000 for cost of maintenance, $163,000 for cost of services, $40,000 for research and development, $386,000 for sales and
marketing and $195,000 for general and administrative. Cash payments of $689,000 were made against those obligations.
In 2005, the Company’s management performed a review of its business operations and realigned its resources and go−to−market
strategies to help maximize future revenue opportunities. As a result of this business review, the Company implemented a
restructuring plan that included the termination of 27 employees, or approximately 10% of its workforce at that time, and closure of
various offices worldwide. All of the employees were terminated as of December 31, 2005. As a result of the restructuring plan, the
Company recorded a restructuring charge of $645,000 for severance costs and lease termination−related costs in 2005.
The following table summarizes activity associated with the restructuring and related expenses incurred for the years ended
December 31, 2006 and 2005 (in thousands):
Severance(1) Facilities(2) Total
Restructuring costs incurred in 2005 $ 456 $ 189 $ 645
Cash payments (346) (34) (380)
Restructuring obligations, December 31,
2005 $ 110 $ 155 $ 265
Restructuring costs incurred in 2006 $ 817 $ — $ 817
Cash payments (799) (155) (954)
Restructuring obligations, December 31,
2006 $ 128 $ 0 $ 128
(1) Severance costs include those expenses related to severance pay and related employee benefit obligations.
(2) Facilities costs include obligations under non−cancelable leases for facilities that we will no longer occupy, as well as penalties
associated with early terminations of leases and disposal of fixed assets. The related leases are short term in nature expiring in less
than one year. No sublease income has been included.
Note 7. Stockholders’ Equity
Common Stock
At December 31, 2006, SupportSoft has reserved 14,922,969 and 1,908,164 shares of common stock for issuance pursuant to stock
option and employee stock purchase plans, respectively.
On April 27, 2005, the Company’s board of directors authorized the repurchase of up to 2,000,000 outstanding shares of the
Company’s common stock. In the second quarter of 2005, the Company repurchased 192,598 shares of outstanding common stock at a
cost of $922,294 or an average cost of $4.76 per share, excluding commissions. There were no repurchases in 2006. Therefore, as of
December 31,
64
Source: SUPPORTSOFT INC, 10−K, March 16, 2007