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Off Balance Sheet Arrangements
As of December 31, 2013 , we did not have any off balance sheet arrangements.
Capital Expenditures
For the years ended December 31, 2013 , 2012 and 2011, we used $26.7 million, $17.7 million and $18.2 million, respectively, in cash to
fund capital expenditures to create internally developed software and purchase equipment. We currently anticipate making capital expenditures
of between $10 million and $20 million during the year ending December 31, 2014.
Contractual Obligations
The following table summarizes our outstanding contractual obligations as of December 31, 2013 (in thousands):
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 April 2014 and April 2019.
We have $96.3 m
illion of outstanding term loan obligations, and a $125.0 million revolving credit facility for general corporate purposes,
which currently has no principal balance outstanding. At December 31, 2013, we had outstanding standby letters of credit for approximately
$11.2 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 our Notes to Consolidated Financial Statements included in Part III, Item 15, “Exhibits, Financial Statement Schedules” of
this Annual Report on Form 10-K.
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 an d 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
66
Less than
1
-
3
3
-
5
More than
1 year
years
years
5 years
Total
Debt
$
17,191
$
34,545
$
51,327
$
-
$
103,063
Operating lease obligations
4,425
6,970
5,866
1,509
18,770
Capital lease obligations
728
61
-
-
789
Purchase obligations
(1)
932
-
-
-
932
Total contractual obligations
$
23,276
$
41,576
$
57,193
$
1,509
$
123,554
(1)
Consists of minimum contractual purchase obligations for undeveloped websites with one of our partners.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk