News Column

RINGCENTRAL INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

August 4, 2014

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed on February 26, 2014 under the Securities Act of 1934, as amended (the "Securities Act") with the SEC. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included under Part II, Item 1A below. Overview We are a leading provider of software-as-a-service, or SaaS, solutions for business communications. We believe that our innovative, cloud-based approach disrupts the large market for business communications solutions by providing flexible and cost-effective services that support distributed workforces, mobile employees and the proliferation of "bring-your-own" communications devices. We enable convenient and effective communications for our customers, across all their locations, all their employees, all the time, thus enabling a more productive and dynamic workforce. RingCentral Office, our flagship service, is a multi-user, enterprise-grade communications solution that enables our customers and their employees to communicate via different channels and on multiple devices, including smartphones, tablets, PCs and desk phones. We sell RingCentral Office in three editions: Standard, Premium and Enterprise. Our Standard Edition of RingCentral Office includes call management, mobile applications, voice, business SMS, integration with Dropbox, Box, Google Drive and Microsoft Office and Outlook, and conferencing capabilities. Our Premium Edition includes the Standard Edition functionality together with Salesforce CRM integration, automatic call recording and premium support. Our Enterprise Edition was launched in 2013 which includes the Premium Edition functionality together with multipoint HD video and web conferencing and online meetings functionality. During May 2014, these new features (multipoint HD video and web conferencing and online meetings) were added to our Standard and Premium editions, where all editions vary in the number of toll-free minutes and number of attendees. We primarily generate revenues by selling subscriptions for our RingCentral Office, RingCentral Professional, and RingCentral Fax offerings. RingCentral Office is offered at monthly subscription rates, varying with the specific functionalities and services and the number of users. RingCentral Office customers generally pay higher monthly subscription rates than customers of our other service offerings. RingCentral Professional is offered at monthly subscription rates that vary based on the desired number of minutes usage and extensions allotted to the plan. RingCentral Fax is offered at monthly subscription rates that vary based on the desired number of pages and phone numbers allotted to the plan. Our subscription plans have historically had monthly or annual contractual terms and approximately 90% of our current customers are on monthly contractual terms, although we also have subscription plans with multi-year contractual terms, generally with larger customers. We believe that this flexibility in contract duration is important to meet the different needs of our customers. Generally, our fees for subscription plans have been billed in advance via credit card. However, as the number of RingCentral Office customers with more users grows, we expect to bill more customers through commercial invoices with customary payment terms and, accordingly, our levels of accounts receivable may increase. A significant component of our accounts receivable is derived from resellers. For the three and six months ended June 30, 2014 and 2013, services revenues accounted for more than 90% of our total revenues. The remainder of our revenues is primarily comprised of product revenues from the sale of pre-configured office phones, which we offer as a convenience to our customers in connection with subscriptions to our services. Beginning in 2009, in connection with our introduction of RingCentral Office, we established a direct, inside sales force. Since then, we have continued investing in our direct, inside sales force while also developing indirect sales channels to market our brand and our service offerings. Our indirect sales channel consists of a network of over 1,500 sales agents and resellers, including AT&T, which we refer to collectively as resellers. We intend to continue to foster this network and to expand our network with other resellers. In 2014, we entered into agreements with TELUS Communications Company, or TELUS, and British Telecommunications plc, or BT, to expand our indirect sales channel in Canada and the United Kingdom, respectively. 17 -------------------------------------------------------------------------------- Since its launch, our revenue growth has primarily been driven by our flagship RingCentral Office service offering, which has resulted in an increased number of customers, increased average subscription revenues per customer, and increased retention of our existing customer and user base. We define a "customer" as one individual billing relationship for the subscription to our services, which generally correlates to one company account per customer. We define a user as one person within a customer who has been granted a subscription license to use our services, such that the number of users per customer generally correlates closely to the number of employees within a customer account. As of June 30, 2014, we had over 300,000 customers from industries including advertising, finance, healthcare, legal services, non-profit organizations, real estate, retail and technology, and ranging in size from businesses with fewer than 10 users to more than 1,200 users. In October of 2013, we launched RingCentral Office in the United Kingdom. For the three and six months ended June 30, 2014 and 2013, 99% of our total revenues were generated in the U.S. and Canada, although we expect the percentage of our total revenues derived outside of the U.S. and Canada to grow as we expand internationally in the United Kingdom and beyond. The growth of our business and our future success depend on many factors, including our ability to expand our customer base to medium-sized and larger customers, continue to innovate, grow revenues from our existing customer base, expand our distribution channels and scale internationally. For example, as a result of our efforts to expand our customer base to target medium-sized and larger businesses, we expect to incur additional research and development and support and professional services costs and may experience longer sales cycles that may delay revenues associated with these costs. Furthermore, because we have limited experience selling to larger businesses and international customers, our investment in marketing our services to these potential customers may not be successful, which could materially and adversely affect our results of operations and our overall ability to grow our customer base. While these areas represent significant opportunities for us, they also pose risks and challenges that we must successfully address in order to sustain the growth of our business and improve our operating results. In addition, there has been and may be in the future substantial litigation in the areas in which we operate regarding intellectual property rights, including third parties claiming patent infringement, to which we have been subjected in the past and may be subjected in the future. We cannot assure you that we will be successful in defending against any such claims or that we will be able to settle any such claims or that any such settlement would be on terms that are favorable to us. We have experienced significant growth in recent periods, with total revenues of $78.9 million, $114.5 million and $160.5 million in 2011, 2012 and 2013, respectively, generating year-over-year increases of 45% and 40%, respectively. We have continued to make significant expenditures and investments, including those in research and development, infrastructure and operations and incurred net losses of $13.9 million, $35.4 million and $46.1 million, in 2011, 2012 and 2013, respectively. For the three months ended June 30, 2014 and 2013, our total revenues were $52.8 million and $37.7 million, respectively, representing a year-over-year increase of 40%. For the six months ended June 30, 2014 and 2013, our total revenues were $101.0 million and $73.2 million, respectively, representing a year-over-year increase of 38%. For the three months ended June 30, 2014 and 2013, our net losses were $13.3 million and $13.6 million, respectively, and for the six months ended June 30, 2014 and 2013, our net losses were $26.2 million and $23.9 million, respectively. 18 --------------------------------------------------------------------------------



Results of Operations

The following tables show our results of operations in dollars and as a percentage of our total revenues. The historical results presented below are not necessarily indicative of the results that may be expected for any future period (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 Revenues: Services $ 47,867$ 34,471$ 91,717$ 66,744 Product 4,920 3,233 9,332 6,485 Total revenues 52,787 37,704 101,049 73,229 Cost of revenues: Services 14,792 11,389 28,506 22,098 Product 4,751 3,273 8,940 6,301 Total cost of revenues 19,543 14,662 37,446 28,399 Gross profit 33,244 23,042 63,603 44,830 Operating expenses: Research and development 10,874 8,606 20,547 16,110 Sales and marketing 25,688 16,324 49,645 33,466 General and administrative 9,492 11,231 18,459 17,781 Total operating expenses 46,054 36,161 88,651 67,357 Loss from operations (12,810 ) (13,119 ) (25,048 ) (22,527 )



Other income (expense), net:

Interest expense (476 ) (588 )



(1,077 ) (1,227 )

Other income (expense), net 93 (44 ) 56 (247 ) Other income (expense), net (383 ) (632 )



(1,021 ) (1,474 )

Loss before provision (benefit) for

income taxes (13,193 ) (13,751 )



(26,069 ) (24,001 )

Provision (benefit) for income

taxes 137 (132 ) 165 (120 ) Net loss $ (13,330 )$ (13,619 )$ (26,234 )$ (23,881 ) 19

--------------------------------------------------------------------------------

Percentage of Total Revenues: Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 Revenues: Services 91 % 91 % 91 % 91 % Product 9 9 9 9 Total revenues 100 100 100 100 Cost of revenues: Services 28 30 28 30 Product 9 9 9 9 Total cost of revenues 37 39 37 39 Gross margin 63 61 63 61 Operating expenses: Research and development 21 23 20 22 Sales and marketing 49 43 49 46 General and administrative 18 30 18 24 Total operating expenses 88 96 87 92 Loss from operations (25 ) (35 ) (24 ) (31 ) Other income (expense), net: Interest expense (1 ) (2 ) (1 ) (2 ) Other income (expense), net - - - - Other income (expense), net (1 ) (2 ) (1 ) (2 ) Loss before provision (benefit) for income taxes (26 ) (37 ) (25 ) (33 ) Provision (benefit) for income taxes - - - - Net loss (26 )% (37 )% (25 )% (33 )% Comparison of the Three and Six Months Ended June 30, 2014 and 2013 (dollars in thousands): Revenues Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change

2014 2013 $ Change % Change Revenues: Services $ 47,867$ 34,471$ 13,396 39 % $ 91,717$ 66,744$ 24,973 37 % Product 4,920 3,233 1,687 52 % 9,332 6,485 2,847 44 % Total revenues $ 52,787$ 37,704$ 15,083 40 % $ 101,049$ 73,229$ 27,820 38 % Percentage of revenues: Services 91 % 91 % 91 % 91 % Product 9 9 9 9 Total 100 % 100 % 100 % 100 % Service revenues increased for the three and six months ended June 30, 2014 primarily due to the acquisition of new customers and an increase in the number of users within our existing customer base. In addition, our services revenues mix contained a higher proportion of RingCentral Office customers for the three and six months ended June 30, 2014 compared to the three and six months ended June 30, 2013, which carry a higher monthly subscription rate versus our other service offerings. While the acquisition of new customers and the increase in the number of users within our existing customer base were the primary reasons for the increase, the trends for these factors have varied from period to period as some customers made a small initial user subscription followed by a larger additional user subscription, while other customers made a large initial user subscription followed by a smaller additional user subscription. In addition, the period of time between a customer's initial subscription and the purchase of additional subscriptions varied significantly, ranging from one month to a few years. The overall growth in our customer base was primarily driven by increased brand awareness of our services, driven by increases in our sales and marketing expenditures of 57% and 48% for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year, which include advertising and sales personnel expenditures that we believe helped to facilitate increased customer acceptance of our services. 20 --------------------------------------------------------------------------------



Product revenues increased for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year primarily due to increased phone sales driven by the growth of new customers of RingCentral Office, to whom we sell more phones compared to customers that purchase our other service offerings.

Cost of Revenues and Gross Margin

Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change



2014 2013 $ Change % Change Cost of revenues: Services

$ 14,792$ 11,389$ 3,403 30 % $ 28,506$ 22,098$ 6,408 29 % Product 4,751 3,273 1,478 45 % 8,940 6,301 2,639 42 % Total cost of revenues $ 19,543$ 14,662$ 4,881 33 % $ 37,446$ 28,399$ 9,047 32 % Gross margin: Gross margin % 63 % 61 % 63 % 61 % Cost of services revenues increased for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year primarily due to increases of $1.0 million and $2.0 million in personnel costs for employees and contractors, respectively; and increases of $1.6 million and $3.1 million in third-party telecommunications service provider fees, respectively. The higher personnel costs for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year were primarily due to a 6% and 4% increase in ending average headcount, respectively. The increases in headcount and other expense categories described herein were driven primarily by investments in our infrastructure and capacity to improve the availability of our service offerings, while also supporting the growth in new customers and increased usage of our services by our customer base. Cost of product revenues increased for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year due to an increase in phone sales, which was primarily driven by the growth in new RingCentral Office customers. Phone sales for the three and six months ended June 30, 2014 increased by 52% and 44%, respectively, compared to the similar respective periods of the prior year. Our gross margin was 63% for the three and six months ended June 30, 2014 and 61% for the three and six months ended June 30, 2013. The change in gross margin for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year was primarily due to a reduction in per usage fees that we paid to third-party telecommunications service providers as a result of increased call traffic and economies of scale obtained in our operations personnel and infrastructure, partially offset by increased product sales which carry low to negative gross margin percentages.



Research and Development

Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change 2014 2013 $ Change % Change Research and development $ 10,874$ 8,606$ 2,268 26 %

$ 20,547$ 16,110$ 4,437 28 % Percentage of total revenues 21 % 23 % 20 % 22 % Research and development expenses increased for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year primarily due to increases in personnel costs for employees and contractors of $2.3 million and $4.4 million, including increased share-based compensation expenses of $0.6 million and $1.0 million, respectively. The higher personnel costs for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year were primarily due to 20% and 12% increases in ending average headcount, respectively. The increases in research and development headcount were in support of the development of additional software development projects for our cloud-based and mobile applications. 21 --------------------------------------------------------------------------------

Sales and Marketing Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change



2014 2013 $ Change % Change Sales and marketing $ 25,688$ 16,324$ 9,364

57 % $ 49,645$ 33,466$ 16,179 48 % Percentage of total revenues 49 % 43 % 49 % 46 % Sales and marketing expenses increased for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year primarily due to: increases in personnel costs for employees and contractors of $4.3 million and $7.6 million, including higher share-based compensation expenses of $1.1 million and $1.9 million, respectively; and increases in other sales and marketing related activities of $4.0 million and $6.7 million, respectively. The higher personnel costs for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year were primarily due to 21% and 18% increases in ending average headcount, respectively. We hired additional sales personnel to focus on adding new customers and increasing penetration within our existing customer base. The increases in other sales and marketing related activities for the three and six months ended June 30, 2014 compared to the similar respective periods of the prior year relate primarily due to increases in third-party sales commissions of $1.6 million and $2.7 million and increases in internet advertising costs of $1.1 million and $1.5 million, respectively. The increases in sales and marketing headcount and other expense categories described herein were necessary to support our growth strategy to acquire new customers and establish brand recognition to achieve greater penetration into the North American and United Kingdom markets.



General and Administrative

Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change 2014 2013 $ Change % Change General and administrative $ 9,492$ 11,231$ (1,739 ) (15 )% $

18,459 $ 17,781$ 678 4 % Percentage of total revenue 18 % 30 % 18 % 24 % General and administrative expenses for the three months ended June 30, 2014 decreased compared to the similar period in the prior year primarily due to legal contingency charges of $4.3 million recorded in the three months ended June 30, 2013 that did not recur in the current period offset by higher personnel costs for employees and contractors of $2.5 million in the current period. The legal contingency charges primarily relate to the CallWave Communications, LLC, or CallWave legal settlement matter, in which we were named as a defendant in a patent infringement lawsuit by CallWave, which settlement was accrued for in the three months ended June 30, 2013 and paid out in the three months ended September 30, 2013. There are no legal contingency liabilities recorded at June 30, 2014. The $2.5 million increase in personnel costs for employees and contractors, including share-based compensation expenses of $0.8 million were primarily due to an increase of 35% in ending average headcount. The increase in headcount is a result of our operations as a public company, including costs incurred to comply with the rules and regulations applicable to companies listed on a national securities exchange and compliance and reporting obligations pursuant to the rules and regulations of the SEC. General and administrative expenses for the six months ended June 30, 2014 increased compared to the similar period in the prior year primarily due to higher personnel costs for employees and contractors of $5.0 million in the current period offset by legal contingency charges of $4.3 million recorded in the six months ended June 30, 2013 that did not recur in the current period. The legal contingency charges primarily relate to the CallWave legal settlement matter, which was accrued for in the three months ended June 30, 2013 and paid out in the three months ended September 30, 2013. There are no legal contingency liabilities recorded at June 30, 2014. The $5.0 million increase in personnel costs for employees and contractors, including share-based compensation expenses of $1.5 million were primarily due to an increase of 34% in ending average headcount. The increase in headcount is a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. 22

-------------------------------------------------------------------------------- Other Income and Expense, net Three Months Six Months Ended June 30, Ended June 30, (in thousands, except percentages) 2014 2013 $ Change % Change 2014 2013 $ Change % Change Other income (expense), net: Interest expense $ (476 )$ (588 )$ (112 ) (19 )% $ (1,077 )$ (1,227 )$ (150 ) (12 )% Other income (expense), net $ 93$ (44 )$ 137 311 % $ 56$ (247 )$ 303 123 % Other income (expense), net for all periods presented decreased for the periods presented primarily due to lower exchange losses on foreign currency transactions period over period and lower interest expense. Interest expense is lower as a result of lower debt balances period over period and refinancing some of our debt obligations to a lower interest rate on December 31, 2013.



Liquidity and Capital Resources

To date, we have financed our operations primarily through sales to our customers, private placements of our preferred stock, proceeds from issuance of debt and proceeds from our initial and secondary public offerings. We believe that our existing liquidity sources will satisfy our cash requirements for at least the next 12 months. As of June 30, 2014 and December 31, 2013, we had $151.4 million and $116.4 million, respectively, of cash and cash equivalents. On March 11, 2014, we closed our secondary public offering in which 7,991,551 shares of Class A common stock, which included 2,791,551 shares of Class A common stock sold by us and 5,200,000 shares of Class A common stock sold by the selling stockholders, were sold at a price of $21.50 per share. The offer and sale of all of the shares in the secondary public offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-194132). We did not receive any proceeds from the sales of shares by the selling stockholders. The total gross proceeds from the offering to us after deducting underwriting discounts and commissions of $2.9 million and offering expenses payable by us of $1.1 million, were $56.1 million. A significant majority of our customers are on 30-day subscription periods and billed at the beginning of each subscription period via credit card. Some of our customers enter into subscription periods longer than 30 days. A small number of our customers are invoiced net 30 days. Therefore, a substantial source of our cash provided by operating activities is our deferred revenue, which is included on our consolidated balance sheets as a liability. Deferred revenue primarily consists of the unearned portion of billed fees for our software subscriptions, which we recognize as revenue in accordance with our revenue recognition policy. As of June 30, 2014 and December 31, 2013, we had deferred revenue of $20.2 million and $16.6 million, respectively. We will recognize this deferred revenue when all of the revenue recognition criteria are met. As of June 30, 2014, the carrying value of notes payable totaled $29.6 million. The balance consists of $15.4 million in term loans under an amended loan and security agreement with Silicon Valley Bank, or SVB, $10.5 million under a revolving line of credit pursuant to an amended loan and security agreement with SVB, and $3.7 million from TriplePoint Capital LLC, or TriplePoint, under an equipment term loan. The table below, for the periods indicated, provides selected cash flow information (in thousands): Six months ended June 30, 2014 2013 Net cash used in operating activities $ (10,982 ) $



(12,357 )

Net cash used in investing activities (10,506 )



(6,081 )

Net cash provided by (used in) financing activities 56,550

(50 ) 23

--------------------------------------------------------------------------------



Net Cash Used in Operating Activities

Cash used in operating activities is significantly influenced by the amount of cash we invest in personnel, marketing, and infrastructure to support the anticipated growth of our business, the increase in the number of customers using our cloud-based software, and the amount and timing of customer payments. For all of the periods presented, we experienced increases in customer acquisition costs combined with increases in investments in personnel and infrastructure, all of which have significantly exceeded the growth in our customer base, driving net losses from operations. Cash used in operating activities has historically come from net losses offset by non-cash expense items, such as depreciation and amortization of property and equipment, and share-based compensation, as well as working capital sources of cash driven by increases in accounts payable, accrued liabilities and deferred revenue. As we continue to invest in personnel, marketing, and infrastructure to support the anticipated growth of our business, we expect to continue to use cash in our operating activities. Net cash used in operating activities decreased by $1.4 million from the six months ended June 30, 2013 to the six months ended June 30, 2014, primarily due to increases in sources of cash from operations of $8.2 million offset by decreases in sources of cash from operations of $7.1 million. The increases in sources of cash are composed of: $1.9 million from accrued liabilities; $1.2 million from deferred revenue; and $5.1 million in non-cash charges, including depreciation, amortization, and share based compensation expenses. These decreases in sources of cash are composed of: $1.9 million from prepaid expenses and other current assets; $2.8 million from accounts receivable; and an increase in net loss of $2.4 million. The changes in accrued liabilities and prepaid and other current assets result primarily from the timing of payments to our vendors. The higher net loss and non-cash charges reflect the investments we have made in our business and infrastructure to support expected future growth. The higher deferred revenue and higher accounts receivable balances reflect the overall growth in our business with larger customers and resellers.



Net Cash Used in Investing Activities

Our primary financing activities have consisted of capital expenditures to purchase equipment necessary to support our data center facilities and our network and other operations. As our business grows, we expect our capital expenditures to continue to increase.

Net cash used in investing activities increased by $4.4 million from the six months ended June 30, 2013 to the six months ended June 30, 2014, primarily due to a $4.6 million increase in use of cash related to purchases of property and equipment. Additional investments in capital equipment are necessary to support additional capacity in our platform to support our increasing customer base, as well to support the increase in headcount levels in all functions of our business.



Net Cash Provided by Financing Activities

Our primary financing activities have consisted of private placements of our preferred stock, proceeds from issuance of debt, as well as proceeds from our IPO and secondary public offering completed in October 2013 and March 2014, respectively. Net cash provided by financing activities increased by $56.6 million from the six months ended June 30, 2013 to the six months ended June 30, 2014, primarily due to $56.1 million in proceeds from our secondary public offering in March 2014 (net of underwriters' discounts and commissions and offering expenses paid by us) and a $5.0 million increase in proceeds from the exercise of stock options and common stock warrants. These sources of cash were offset by a $3.7 million decrease in source of cash from borrowings and a $0.8 million increase in use of cash for repayment of debt.



Backlog

We have generally signed monthly and annual subscription contracts for our services. The timing of our invoices to our customers is a negotiated term and thus varies among our service contracts. For multiple-year agreements, it is common to invoice an initial amount at contract signing followed by subsequent annual invoices. At any point in the contract term, there can be amounts that we have not yet been contractually able to invoice. Our subscription plans have monthly, annual, and multiple-year contractual terms, however approximately 90% of our current customers are on monthly contractual terms. Accordingly, the vast majority of our customers have average non-cancelable terms of 30 days or less. The change in backlog that results from changes in the average non-cancelable term of our subscription arrangements may not be an indicator of the likelihood of renewal or expected future revenues and therefore we do not utilize backlog as a key management metric internally and do not believe that it is a meaningful measurement of our future revenues. 24 --------------------------------------------------------------------------------



Contractual Obligations and Commitments

Except as set forth below and in Note 5, there were no material changes in our commitments under contractual obligations, as disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2013. In March 2014, the Company entered into a new lease for its office in Denver, Colorado for approximately 40,000 square feet for a total lease commitment of $4.7 million through 2019 and lease incentives totaling $1.2 million. In May 2014, we entered into a new lease for our office in London, England for approximately 8,500 square feet for a total lease commitment of approximately $1.9 million through 2019. Contingencies There has been and may be in the future substantial litigation in the areas in which we operate regarding intellectual property rights, including third parties claiming patent infringement. We record a provision for a liability when we believe that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. Such legal proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows.



Off-balance Sheet Arrangements

During the six months ended June 30, 2014 and 2013, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters