Enom 2012 Annual Report Download - page 73

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Contractual Obligations
The following table summarizes our outstanding contractual obligations as of December 31, 2012:
Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years
(in thousands)
Operating lease obligations $ 26,944 $ 4,044 $ 9,040 $ 6,995 $ 6,865
Capital lease obligations 1,528 735 793 — —
Purchase obligations(1) 466 466 — — —
Total contractual obligations $ 28,938 $ 5,245 $ 9,833 $ 6,995 $ 6,865
(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 2013 and April 2019.
We have no debt obligations, other than our $105.0 million revolving credit facility for general corporate purposes, which
currently has no outstanding principal borrowings. At December 31, 2012, we had outstanding standby letters of credit for
approximately $9.6 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.