8x8 2007 Annual Report Download - page 65

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Standby letter of credit
At March 31, 2007 and 2006, the Company had certain restricted deposits totaling $250,000 which were recorded in the other
assets line item on the consolidated balance sheets. This deposit was made in order to obtain a standby letter of credit in
accordance with certain contractual obligations, and is collateralized by a cash deposit at the Company’s bank.
Leases
The Company leases its primary facility in Santa Clara, California under a non-cancelable operating lease agreement that
expires in August 2009. The Company also has leased facilities in France and Canada. The facility leases include rent
escalation clauses, and require the Company to pay taxes, insurance and normal maintenance costs. At March 31, 2007, future
minimum annual lease payments under non-cancelable operating leases, net of sublease income, were as follows (in
thousands):
Year Ending March 31,
2008 $ 490
2009 493
2010 206
Total minimum payments $ 1,189
Rent expense for the years ended March 31, 2007, 2006 and 2005 was $434,000, $478,000 and $394,000, respectively.
The Company subleases office space under an operating lease agreement expiring in 2007. The total future minimum rentals to
be received under this noncancelable sublease agreement approximates $12,000 in fiscal 2008.
Capital Leases
In April 2005, June 2006 and March 2007, we entered into a series of non-cancelable five year capital lease agreements for
office equipment bearing interest at various rates. At March 31, 2007, future minimum annual lease payments under
noncancelable capital leases were as follows (in thousands):
Year ending March 31:
2008 $ 46
2009 42
2010 42
2011 26
2012 22
Total minimum payments 178
Less: Amount representing interes
t
(17)
161
Less: Short-term portion of capital lease obligations (39)
Long-term portion of capital lease obligations $ 122
Capital leases included in office equipment were $182,000 at March 31, 2007. Total accumulated amortization was $28,000 at
March 31, 2007. Amortization expense for assets recorded under capital leases is included in depreciation expense.
Minimum Third Party Network Service Provider Commitments
In July 2006, the Company entered into a contract with one of its third party network service providers containing a minimum
monthly commitment of $400,000 effective June 1, 2006 for 24 months. At March 31 2007, the total remaining obligation
under the contract was $5,600,000. In March 2007, the Company entered into an additional agreement with this provider to
purchase a minimum of $1,000,000 in international usage between March 1, 2007 and May 31, 2008. As of March 31, the total
remaining obligation under this agreement was $817,000.
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