Enom 2013 Annual Report Download - page 98

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We incurred r ent expense of $6.7 million, $5.0 million and $4.9 million, respectively, for the years ended December 31, 2013, 2012 and
2011. As of December 31, 2013 and 2012, accrued expenses and other current liabilities include a deferred rent liability of $2.6 million and $0.9
million, respectively, and $2.4 million and $0.6 million was included in other long-term liabilities as of December 31, 2013 and 2012,
respectively.
Letters of Credit
We issue letters of credit under our Revolving Loan Facility, and as of December 31, 2013, the total letters of credit outstanding under
these arrangements was approximately $11.2 million, primarily associated with certain payment arrangements with domain name registries as
well as security agreements related to real estate leases.
Litigation
In December 2013, we entered into a settlement agreement with one of our insurance carriers in connection with a subrogation and
reimbursement claim made with respect to payments previously paid to us under an insurance policy. We agreed to settle the matter for $1.85
million and paid the settl ement amount in December 2013, and this matter is now resolved.
In addition, from time to time we are a party to various legal matters incidental to the conduct of our business. Certain of our outstanding
legal matters include speculative claims for indete rminate amounts of damages. We record a liability when we believe that it is probable that a
loss has been incurred and the amount can be reasonably estimated. Based on our current knowledge, we do not believe that there is a reasonable
possibility that the final outcome of the pending or threatened legal proceedings to which we are a party, either individually or in the aggregate,
will have a material adverse effect on our future financial results. However, the outcome of such legal matters is subject to significant
uncertainties.
Taxes
From time to time, various federal, state and other jurisdictional tax authorities undertake reviews of the Company and its filings. In
evaluating the exposure associated with various tax filing positions, we accrue charges for possible exposures. We believe any adjustments that
may ultimately be required as a result of any of these reviews will not be material to our consolidated financial statements.
Domain Name Agreement
On April 1, 2011, we entered into an agreement with a customer to provide domain name registration services and manage certain domain
names owned and operated by the customer (the "Domain Agreement"). In December 2013, we amended the Domain Agreement (as amended,
the "Amended Domain Agreement").
The term of the Amended Domain Agreement expires on December 31, 2014, but will automatically renew
for an additional one-year period unless terminated by either party. Pursuant to the Amended Domain Agreement, we are committed to purchase
approximately $0.2 million of expired domain names every calendar quarter over the remaining term of the agreement.
Indemnifications
In the normal course of business, we have provided certain indemnities, commitments and guarantees under which we may be required to
make payments in relation to certain transactions. These 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 our lease
agreements. In addition, 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 not recorded any liability for these indemnities, commitments and
guarantees in the accompanying balance sheets.
9. Income Taxes
Income/(loss) before income taxes consisted of the following (in thousands):
F-22
2013
2012
2011
Domestic
$
(11,101
)
$
9,405
$
(13,820
)
Foreign
(4,832
)
(1,446
)
(527
)
Income (loss) before income taxes
$
(15,933
)
$
7,959
$
(14,347
)