Incredimail 2011 Annual Report Download - page 22

We completed the initial public offering of our ordinary shares in the United States on February 3, 2006, whereby we became a "limited liability public
company" under the Israeli Companies Law. The registration statement on Form F-1 relating to our initial public offering became effective on January 30, 2006.
Since November 20, 2007 the Company’s ordinary shares are also traded on the Tel Aviv Stock Exchange.
On August 31, 2011 we completed the purchase of Smilebox Inc., a Washington corporation, through our Delaware subsidiary. See “Recent Developments”
below.
Principal Capital Expenditures
We had capital expenditures of $31.8 million in 2011, $0.7 million in 2010 and $0.5 million in 2009. We currently expect that outside of possible acquisition
of products and companies, our capital expenditures will be approximately $1.5 million in 2012. To date, we have financed our general capital expenditures with cash
generated from operations.
Our capital expenditures during 2009 and 2010 consisted primarily of; leasehold improvements and furnishings, as well as investments in computer hardware
and software, in Israel. In 2011, capital expenditures consisted of $31.5 million for the acquisition of Smilebox, including approximately $7 million to be paid in 2012,
and $0.3 million for investment in computer hardware and software, leasehold improvements and furnishings.
In 2012, we expect to continue our growth strategy for acquiring products and businesses, in addition to organic capital investments. Our organic investments
are expected to consist primarily of acquiring computer hardware, software, peripheral equipment and installation, all which are expected to be financed by the
Company’
s resources. To the extent we acquire new products and businesses these acquisitions may be financed by any of, or a combination of, cash generated from
operations, the credit facility currently available to the Company from Israeli banks, in an amount up to $20 million, and\or issuances of securities or debt.
Recent Developments
On August 1, 2011 we signed a definitive agreement to acquire (via our Delaware Subsidiary) Smilebox Inc., a U.S. consumer focused photo sharing and
social expression company.
Smilebox is an Internet photo sharing service available for the desktop and smart-phone, with an easy-to-
use, downloadable desktop application that allows
consumers to use personal photos and videos to construct unique creations, including: greeting cards, invitations, slideshows, scrapbooks and photo albums. On the
desktop, Smilebox can be used both on the PC and the Mac, in order to create digital creations from personal photos using a range of digital designs including
Invitations, Greetings, Collages, Scrapbooks, Photo Albums and slideshows. These creations can then be shared free of charge via email, Facebook, Twitter, Print,
DVD or Photo Frames. Revenues are generated from subscriptions for premium content and features, advertising from creations that are shared for free, printing
revenues from creations that are printed to store or printed and shipped to home and search revenues for consumers that elect to have Smilebox provide their default
search results.
Smilebox is also available for the iPhone making easy to personalize and share photos in the moment directly from the device. Personalization options
include captions, stickers and frames and sharing options include email, Facebook or SMS. Revenues are generated via subscriptions for premium content
The acquisition added another major product to the Perion portfolio of products, significantly diversifying its revenue mix. Under the terms of the agreement,
Perion paid $25 million
substantially in cash at closing which occurred on August 31, 2011, with additional payments of up to $15 million, if certain milestones and
performance based conditions are met, payable in two installments on the seven and fourteen months anniversary from closing. Approximately 10% of the acquisition
consideration is being held in escrow until 18 months after closing.
Smilebox continues to operate from its Redmond, Washington, based offices, which employs approximately 50 people, as of the date of this annual report.
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