Support.com 2008 Annual Report Download - page 45

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Table of Contents
Working Capital and Capital Expenditure Requirements
At December 31, 2008, we had stockholders’ equity of $105.4 million and working capital of $68.4 million. Included as a reduction to working capital is
short-term deferred revenue of $9.1 million, which will not require settlement in cash, but will be recognized as revenue in the future. We believe that our
existing cash balances will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.
If we require additional capital resources to grow our business internally or to acquire complementary technologies and businesses at any time in the
future, we may seek to sell additional equity or debt securities. The sale of additional equity could result in more dilution to our stockholders. Financing
arrangements that are available to us include the right to a loan from UBS at no net cost for up to the amount of the par value of our eligible auction-rate
securities. This loan option is part of the rights offer we signed with UBS in November, 2008, and is available until June 30, 2010. As of December 31, 2008, we
had not exercised our right to obtain this loan.
As noted above, we plan to make substantial investments in our business during 2009, including in our Consumer segment. We believe these investments
and others are essential to create sustainable growth in our business in the future. Because these investments will likely precede any associated revenues, we
expect our working capital balance to decrease in the near term. Additionally, we may choose to acquire other businesses or complimentary technologies to
enhance our product capabilities and such acquisitions would likely require the use of cash.
Acquisition
On May 2, 2008, we acquired all of the stock of YourTechOnline.com (YTO). In connection with the acquisition, we used approximately $2.8 million in
cash, including purchase consideration of approximately $2.7 million and direct transaction costs of approximately $0.1 million. Accordingly, the operations of
YTO are included in our accompanying Consolidated Statements of Operations from May 2, 2008, the acquisition date. YTO’s service delivery methodology
involves technical support agents who view and control a computer screen remotely. We acquired YTO to bolster our remote consumer service delivery
capabilities utilizing home-based technical support agents.
Contractual Obligations
The following summarizes our contractual obligations at December 31, 2008 and the effect these contractual obligations are expected to have on our
liquidity and cash flows in future periods (in thousands).
Payments Due By Period
Total
1 Year
or Less
1–3
Years
After
3 Years
Operating leases $ 4,726 $ 1,624 $ 2,606 $ 496
These obligations are for noncancelable operating leases including our headquarters office and offices to carry out sales, marketing, research and
development, and services operations globally. These obligations also include the Company’s outstanding liabilities for payment of leases for facilities that have
been impaired.
Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2008, we are unable
to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Therefore, $456,000 of unrecognized tax benefits have
been excluded from the contractual obligations table. See Note 9 to the Consolidated Financial Statements for a discussion on income taxes.
42
Source: SUPPORTSOFT INC, 10-K, March 11, 2009