Support.com 2007 Annual Report Download - page 48

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$25.3 million of auction-rate securities we held as of March 11, 2008, and as a result our ability to liquidate our investment and fully recover the carrying value
of our investment in the near term may be limited or not exist. If future auctions fail and we believe we will not hold the security to maturity, we may in the
future be required to record an impairment charge on these investments. We may similarly be required to record impairment charges if the ratings on any of these
securities are reduced or if any of the issuers default on their obligations. In addition to impairment charges, any of these events could cause us to lose part or all
of our investment in these securities. Any of these events could materially affect our results of operations and our financial condition. We currently believe these
securities are not significantly impaired, primarily due to the AAA credit rating of the issuers and the government backing of the loans made by the issuers;
however, it could take until the final maturity of the underlying notes (up to 30 years) to realize our investments' recorded value. Based on our expected operating
cash flows, and our other sources of cash, we do not anticipate the potential lack of liquidity on these investments will affect our ability to execute our current
business plan.
Contractual Obligations
The following summarizes our contractual obligations at December 31, 2007 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 $ 6,401 $ 1,791 $ 3,151 $ 1,459
These obligations are for noncancelable operating leases which relate primarily to the lease of our headquarters office in Redwood City, California and other
offices to carry out sales, marketing, research and development, and services operations.
Due to the uncertainty with respect to the timing of future cash flows associated with the Company's unrecognized tax benefits at December 31, 2007, the
Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Therefore, $422,000 of
unrecognized tax benefits have been excluded from the contractual obligations table. See Note 7 to the Consolidated Financial Statements for a discussion on
income taxes.
Off-Balance Sheet Arrangements
At December 31, 2007, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
Recent Accounting Pronouncements
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 us 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
44
Source: SUPPORTSOFT INC, 10-K, March 13, 2008