8x8 2008 Annual Report Download - page 42

Cash provided by investing activities of $10.1 million for fiscal 2007 was primarily attributable to $13.8 million of proceeds
received from sales and maturities of investments, partially offset by purchases of investments of $2.3 million and $1.4 million
of purchases of fixed assets. The purchases of fixed assets were primarily attributable to equipment required by the growth of
the Packet8 subscriber base and expenditures for implementation fees related to third party customer relationship management
software.
Cash provided by financing activities of approximately $0.3 million in fiscal 2007 consisted primarily of proceeds received
from the sale of our common stock to employees through our employee stock purchase and stock option plans.
Contractual Obligations
Future operating lease payments, net of sublease income, capital lease payments and purchase obligations at March 31, 2008
for the next five years were as follows (in thousands):
2009 2010 2011 2012 2013 Total
Capital leases $ 42 $ 42 $ 26 $ 22 $ - $ 132
Office leases 493 206 - - - 699
Purchase obligations
Third party network service providers 800 - - - - 800
Third party customer support provider 5,232 - - - - 5,232
Open purchase orders 3,788 - - - - 3,788
$ 10,355 $ 248 $ 26 $ 22 $ - $ 10,651
Year Ending March 31,
In April 2005, June 2006 and March 2007, we entered into a series of noncancelable five year capital lease agreements for
office equipment bearing interest at various rates. Assets under capital lease at March 31, 2008 totaled $182,000 with
accumulated amortization of $65,000.
We lease our primary facility in Santa Clara, California under a non-cancelable operating lease that expires in fiscal 2010. The
Company also has a leased facility in France. The facility leases include rent escalation clauses, which require the Company to
pay taxes, insurance and normal maintenance costs. Rent expense is reflected in our consolidated financial statements on a
straight-line basis over the term of the leases.
We entered into a 24 month contract with one of our third party network service providers containing a minimum monthly
commitment of $400,000 effective June 1, 2006. At March 31, the total remaining obligation under the contract was $800,000.
We entered into a 15 month contract with one of our third party customer support vendors containing a minimum monthly
commitment of approximately $436,000 effective January 1, 2008 through March 31, 2009. The total remaining obligation
under the contract is $5.2 million.
At March 31, 2008 we had open purchase orders related to our contract manufacturers and other contractual obligations of
approximately $3.8 million primarily related to inventory purchases. These purchase commitments are reflected in our
consolidated financial statements once goods or services have been received or at such time when we are obligated to make
payments related to these goods or services.
At March 31, 2008, we have a $335,000 liability related to warrants issued to two investors in an equity financing transaction
in fiscal 2006. We account for these warrants as liabilities because of the possibility, however likely or unlikely, that we would
be unable to deliver registered shares upon a future exercise of these warrants. The required accounting for a warrant with an
assumed "net cash settlement" provision under EITF 00-19 is to estimate the fair value on the date of issuance and to record a
liability equal to that value with subsequent changes in the fair value recorded as income or expense at the end of each
reporting period under EITF 00-19 . The amount we record as a liability under EITF 00-19 is not, nor do we intend for it to be,
an admission or stipulation of the amount that we would owe or be obligated to pay the warrant holder in the event that we are
unable to deliver registered shares to the warrant holder. In fact, we have made no determination of the amount of liability, if
any, that we would owe to the warrant holder in the event of such a breach.
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