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SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Organization and Summary of Significant Accounting Policies (Continued)
vesting of these stock options resulted in an approximate total savings of $12.0 million of future compensation expense that would have impacted expenses
through the third quarter of 2009.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases, and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
consolidated statements of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of
deferred tax assets, if it is more likely than not, that such assets will not be realized.
Warranties and Indemnifications
The Company generally provides a warranty for its software products and services to its customers and accounts for its warranties under the FASB's
Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies" ("FAS No. 5"). Our standard warranty period is 90 days, but warranty
periods can sometimes be longer and vary from customer to customer. In the event there is a breach of such warranties, SupportSoft generally is obligated to
correct the product or service to conform to the warranty provision or, if SupportSoft is unable to do so, the customer is entitled to seek a refund of the purchase
price of the product or service. In certain contracts a material breach of warranty may involve penalties payable to the customer. SupportSoft did not provide for
a warranty accrual as of December 31, 2007 and 2006. To date, SupportSoft's product warranty expense has not been significant.
The Company generally agrees to indemnify its customers against legal claims that its software products infringe certain third-party intellectual property
rights and accounts for its indemnification obligations under FAS No. 5. To date, SupportSoft has not been required to make any payment resulting from
infringement claims asserted against our customers and has not recorded any related accruals.
Segment Information
Through December 31, 2007, the Company conducted its business in one segment: providing software and related services that automate the resolution of
technology problems. Revenue from customers located outside the United States was approximately $11.4 million, $10.3 million, and $12.9 million for the years
ended December 31, 2007, 2006, and 2005, respectively.
65
Source: SUPPORTSOFT INC, 10-K, March 13, 2008