Support.com 2008 Annual Report Download - page 44

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Table of Contents
amortization of premiums and discounts on marketable securities, stock-based compensation expense, realized loss on our auction-rate securities and
corresponding realized gain on the auction rate security put option. The sum of these items totaled $6.2 million, $7.8 million, and $5.5 million in 2008, 2007 and
2006, respectively. Net cash used in operating activities during 2008 was primarily the result of the net loss of $19.1 million, an increase in accounts receivable
of $252,000, gain on the auction-rate security put option of $7.1 million and offset by a corresponding loss on our auction-rate securities of $7.2 million and a
decrease in deferred revenue of $454,000. Net cash used in operating activities during 2007 was primarily the result of the net loss of $21.4 million and a
decrease in deferred revenue of $3.1 million, offset by a decrease in accounts receivable of $5.1 million. Net cash used in operating activities during 2006 was
the result of the net loss of $8.2 million and a decrease in deferred revenue of $1.4 million, offset by a decrease in accounts receivable of $2.3 million.
Our accounts receivable and deferred revenue balances fluctuate from period to period and are primarily dependent on (i) the timing of the closure of our
license arrangements, especially larger contracts concluded late in the period, (ii) the related invoicing and payment provisions under those contracts, (iii) the
timing of maintenance renewals and consulting billings, and (iv) collections.
Accounts receivable were $10.4 million, $10.1 million and $15.1 million at December 31 2008, 2007 and 2006, respectively. Accounts receivable from
2007 to 2008 remained fairly consistent. The decrease in accounts receivable from 2006 to 2007 was primarily due to fewer large customer balances in accounts
receivable as we have sold fewer large license transactions (and related maintenance renewals) in recent years. There were four customers who each had accounts
receivable balances greater than $500,000 and who together accounted for approximately $4.2 million of our aggregate accounts receivable as of December 31,
2007. By comparison, at December 31, 2006 there were ten customers who each had accounts receivable balances greater than $500,000 and who together
accounted for approximately $9.7 million of our aggregate accounts receivable.
Total deferred revenue was $10.1 million, $10.5 million and $13.6 million at December 31, 2008, 2007 and 2006 respectively. Deferred revenue decreased
in each of the last three years. Customers typically purchase maintenance contracts when they license our products. The decrease in deferred maintenance
revenue is consistent with the lower level of license revenue over the same three year period. Additionally, deferred revenue has decreased due to the ongoing
amortization of term-based licenses originally recorded in deferred revenue at the outset of those arrangements.
Investing Activities
Net cash provided by (used in) investing activities was $63.4 million for the year ended December 31, 2008, $3.2 million for the year ended December 31,
2007, and $(8.0) million for the year ended December 31, 2006. Net cash provided by investing activities in 2008 was primarily due to sales and maturities of
$109.4 million of marketable securities largely offset by the purchase of $41.3 million of marketable securities, the purchase of $1.4 million of technology, $2.8
million used for the acquisition of YTO and expenditures of $566,000 for property and equipment. Net cash provided by investing activities in 2007 was
primarily due to sales and maturities of $112.5 million in marketable securities offset by the purchase of $106.9 million in marketable securities and $2.4 million
in property and equipment purchases, primarily related to the build out of our new headquarters office. The amount of net cash used in investing activities for the
year ended December 31, 2006 was primarily to the result of the purchase of $92.4 million in marketable securities and to a lesser extent the purchase of
$964,000 in property and equipment, offset by the sale and maturity of $85.3 million in marketable securities.
Financing Activities
Net cash generated by financing activities was $381,000 for the year ended December 31, 2008, $4.8 million for the year ended December 31, 2007, and
$3.1 million for the year ended December 31, 2006. In 2008, 2007 and 2006, cash generated by financing activities was primarily attributable to the exercise of
employee stock options and the purchase of common stock under the employee stock purchase plan.
41
Source: SUPPORTSOFT INC, 10-K, March 11, 2009