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Table of Contents
SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In accordance with SFAS No. 157, the following table represents our fair value hierarchy for our financial assets (cash equivalents and investments) and
the UBS put contract measured at fair value on a recurring basis as of December 31, 2008 (in thousands):
Level 1 Level 2 Level 3 Total
Money market funds $ 55,058 $ — $ — $ 55,058
Commercial paper — 7,781 — 7,781
Corporate bonds — 2,999 — 2,999
Auction-rate securities — — 15,766 15,766
Auction-rate securities put option — — 7,148 7,148
Level 3 assets consist of auction-rate debt securities with various state student loan authorities and the auction-rate securities put option. Beginning in
February 2008 and through March 2009, all auctions for these securities have failed. Based on the continued failure of these auctions and the underlying
maturities of the securities, we have classified auction-rate securities as long-term assets on our 2008 balance sheet. The fair value of the auction-rate securities
and the related put option as of December 31, 2008 was estimated by management. The following table provides a summary of changes in fair value of our
Level 3 financial assets as of December 31, 2008 (in thousands):
Twelve Months Ended
December 31, 2008
Auction-Rate
Securities
Auction Rate Security
Put Option
Beginning balance $ — $ —
Transfer into Level 3 25,300 —
Sales (800) —
Auction rate securities put option — 7,148
Total gains/(losses):
Included in earnings (7,148) —
Included in other comprehensive income (1,586)
Ending balance $ 15,766 $ 7,148
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R will significantly change the accounting
for business combinations in a number of areas, including the measurement of assets and liabilities acquired and the treatment of contingent consideration,
contingencies, acquisition costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in deferred tax asset
valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will affect the income tax provision. SFAS
No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after
December 15, 2008, which means that it will be effective for our fiscal year beginning January 1, 2009. Early adoption is prohibited. SFAS 141R will impact the
accounting for any acquisitions completed subsequent to December 31, 2008.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” which establishes accounting and
reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for business
arrangements entered into in fiscal years beginning on or after December 15, 2008, which means that it will be effective for our
65
Source: SUPPORTSOFT INC, 10-K, March 11, 2009