Enom 2011 Annual Report Download - page 70

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Total Less Than
1 Year 1-3
Years More Than
3 Years
(in thousands)
Operating lease obligations $ 8,548 $ 3,851 $ 4,424 $ 273
Capital lease obligations 17 7 10 —
Purchase obligations (1) 875 700 175 —
Total contractual obligations $ 9,440 $ 4,558 $ 4,609 $ 273
(1) consists of minimum contractual purchase obligations for undeveloped websites with one of our partners.
Included in operating lease obligations are agreements to lease our primary office space in Santa Monica, California and other locations under various
non-cancelable operating leases that expire between January 2012 and April 2016.
We have no debt obligations, other than our $105.0 million revolving credit facility for general corporate purposes, which currently has no borrowings
under it. At December 31, 2011, we had outstanding standby letters of credit for approximately $7.0 million primarily associated with certain payment
arrangements with domain name registries and landlords.
Indemnifications
In the normal course of business, we have made certain indemnities under which we may be required to make payments in relation to certain
transactions. Those indemnities include intellectual property indemnities to our customers, indemnities to our directors and officers to the maximum extent
permitted under the laws of the State of Delaware and indemnifications related to lease agreements. In addition, certain of our advertiser and distribution
partner agreements contain certain indemnification provisions, which are generally consistent with those prevalent in our industry. We have not incurred
significant obligations under indemnification provisions historically, and do not expect to incur significant obligations in the future. Accordingly, we have no
recorded liability for any of these indemnities.
Recent Accounting Pronouncements
See Note 2 of notes to the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange, inflation, and
concentration of credit risk. To reduce and manage these risks, we assess the financial condition of our large advertising network providers, large direct
advertisers and their agencies, large Registrar resellers and other large customers when we enter into or amend agreements with them and limit credit risk by
collecting in advance when possible and setting and adjusting credit limits where we deem appropriate. In addition, our recent investment strategy has been to
invest in high credit quality financial instruments, which are highly liquid, are readily convertible into cash and that mature within three months from the date
of purchase.
Foreign Currency Exchange Risk
While relatively small, we have operations and generate revenue from sources outside the United States. We have foreign currency risks related to our
revenue being denominated in currencies other than the U.S. dollar, principally in the Euro and British Pound Sterling and a relatively smaller percentage of
our expenses being denominated in such currencies. We do not believe movements in the foreign currencies in which we transact will significantly affect
future net earnings or losses. Foreign currency risk can be quantified by estimating the change in cash flows resulting from a hypothetical 10% adverse change
in foreign exchange rates. We believe such a change would not currently have a material impact on our results of operations. However, as our international
operations grow, our risks associated with fluctuation in currency rates will become greater, and we intend to continue to assess our approach to managing this
risk.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject
to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm
our business, financial condition and results of operations.
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