CVLT » Topics » Liquidity and Capital Resources

These excerpts taken from the CVLT 10-K filed May 19, 2009.
Liquidity and Capital Resources
 
As of March 31, 2009, our cash and cash equivalents balance of $105.2 million primarily consisted of money market funds. In recent fiscal years, our principal sources of liquidity have been cash provided by operations and cash provided from our public offerings of common stock. Historically, our principle source of liquidity had been cash provided by private placements of preferred equity securities and common stock.
 
In July 2008, we entered into a credit facility in which we can borrow up to $40.0 million over the initial 12 months of the credit facility. Borrowings under the facility are available to repurchase our common stock under the share repurchase program and to provide for working capital and general corporate purposes. The credit facility contains financial covenants that require us to maintain a quick ratio and minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the credit agreement. Repayments of amounts borrowed under the credit facility will occur over a 2-year amortization period with a maximum maturity date of July 2011. Borrowings under the credit facility bear interest, at our option, at either a rate equal to LIBOR plus 1.5% or the bank’s base rate, as defined in the credit agreement. The credit facility also contains a quarterly commitment fee based on the unused portion of the credit facility. As of March 31, 2009, we were in compliance with all required covenants, and there were no outstanding balances on the credit facility. We are currently evaluating our options related to borrowing under the credit facility before its expiration date in July 2009.
 
In January 2008, our Board of Directors approved a stock repurchase program under which we were authorized to repurchase up to $40.0 million of our common stock. In July 2008, our Board of Directors authorized an additional $40.0 million increase to the existing share repurchase program. In the year ending March 31, 2009, we repurchased approximately 1.8 million shares with a total cost of approximately $25.2 million. The average price of the common stock repurchased during the year ended March 31, 2009 was $13.83 per share. Under our share repurchase program, repurchased shares are constructively retired and returned to unissued status. As of March 31, 2009, we have repurchased approximately $40.2 million under the share repurchase authorization. As a result, we


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may repurchase an additional $39.8 million of our common stock under the current program, which has been extended by the Board of Directors until March 31, 2010.
 
In June 2007, we completed our follow-on public offering in which we sold 300,000 shares and certain of our stockholders sold 7,570,000 shares of common stock to the public at a price of $17.00 per share. After deducting the underwriting discounts, commissions and other offering costs, our net proceeds from the offering were approximately $4.3 million. During fiscal 2008, we used the net proceeds from our follow-on public offering, together with approximately $3.2 million of our existing cash, to pay approximately $7.5 million in satisfaction of the outstanding principal on our term loan.
 
In September 2006, we completed our initial public offering and related concurrent private placement and generated net proceeds of approximately $81.7 million. We used the net proceeds, together with net borrowings of $10.0 million under a term loan and $10.1 million of our existing cash and cash equivalents, to pay $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock.
 
Net cash provided by operating activities was $43.1 million in fiscal 2009, $34.4 million in fiscal 2008 and $30.6 million in fiscal 2007. In fiscal 2009, cash generated by operating activities was primarily due to net income adjusted for the impact of non-cash charges and an increase in deferred services revenue as a result of customer support agreements from new customers and renewal agreements with our installed software base. These increases in operating cash flows were partially offset by an increase in accounts receivable as a result of higher overall revenues and timing of cash receipts during fiscal 2009. In fiscal 2008 and 2007, cash generated by operating activities was primarily due to net income adjusted for the impact of non-cash charges and an increase in deferred services revenue and accrued liabilities, partially offset by an increase in accounts receivable due to higher revenues. We anticipate that as our revenues continue to grow, accounts receivable and deferred services revenue balances should continue to grow as well.
 
Net cash used in investing activities was $4.5 million in fiscal 2009, $4.3 million in fiscal 2008 and $4.2 million in fiscal 2007. Cash used in investing activities in each period was due to purchases of property and equipment related to the growth in our business as we continue to invest in and enhance our global infrastructure. We anticipate that as our business grows we will continue to explore opportunities to invest in our global infrastructure.
 
Net cash used in financing activities was $22.1 million in fiscal 2009, $4.4 million in fiscal 2008 and $9.0 million in fiscal 2007. The cash used in financing activities in fiscal 2009 was primarily due to $25.2 million used to repurchase shares of our common stock under our share repurchase program, partially offset by $2.7 million of proceeds from the exercise of stock options and $0.5 million of excess tax benefits recognized as a result of the stock option exercises. The cash used in financing activities in fiscal 2008 was primarily due to $15.0 million used to repurchase shares of our common stock under our share repurchase program and $7.5 million in principal repayment on our term loan, partially offset by $8.8 million of proceeds from the exercise of stock options, $5.1 million of excess tax benefits recognized as a result of the stock option exercises and $4.3 million of net proceeds generated from our follow-on public offering. The cash used in financing activities in fiscal 2007 was primarily due to the cash use of $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock, partially offset by net proceeds of $82.2 million from our initial public offering and concurrent private placement. In addition, we incurred net borrowings of $7.5 million in fiscal 2007 under our term loan in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering.
 
Working capital increased $7.1 million from $77.5 million as of March 31, 2008 to $84.6 million as of March 31, 2009. The increase in working capital is primarily due to a $13.5 million increase in cash and cash equivalents and a $4.2 million decrease in accrued liabilities, partially offset by a $9.0 million increase in deferred revenue. The increase in cash and cash equivalents is primarily due to net income generated during the period, cash received from the exercise of stock options and the increase in deferred revenue, partially offset by cash used to repurchase approximately 1.8 million shares of our common stock under our share repurchase program. The decrease in accrued liabilities is primarily due to lower income tax payable balances as a result of higher estimated payments made throughout fiscal 2009.


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Working capital increased $42.6 million from $34.9 million as of March 31, 2007 to $77.5 million as of March 31, 2008. The increase in working capital is primarily due to a $26.7 million increase in cash and cash equivalents and a $22.2 million increase in accounts receivable, partially offset by a $16.1 million increase in deferred revenue. The increase in cash and cash equivalents is primarily due to net income generated during the period adjusted for the impact of noncash charges, cash received from the exercise of stock options and the increase in deferred revenue, partially offset by cash used to repurchase approximately 1.0 million shares of our common stock under our share repurchase program. The increase in accounts receivable is primarily due to the growth in revenue.
 
We believe that our existing cash, cash equivalents and cash from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We cannot assure you that this will be the case or that our assumptions regarding revenues and expenses underlying this belief will be accurate. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility, and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.
 
Liquidity
and Capital Resources



 



As of March 31, 2009, our cash and cash equivalents balance
of $105.2 million primarily consisted of money market
funds. In recent fiscal years, our principal sources of
liquidity have been cash provided by operations and cash
provided from our public offerings of common stock.
Historically, our principle source of liquidity had been cash
provided by private placements of preferred equity securities
and common stock.


 



In July 2008, we entered into a credit facility in which we can
borrow up to $40.0 million over the initial 12 months
of the credit facility. Borrowings under the facility are
available to repurchase our common stock under the share
repurchase program and to provide for working capital and
general corporate purposes. The credit facility contains
financial covenants that require us to maintain a quick ratio
and minimum earnings before interest, taxes, depreciation and
amortization (“EBITDA”), as defined in the credit
agreement. Repayments of amounts borrowed under the credit
facility will occur over a
2-year
amortization period with a maximum maturity date of July 2011.
Borrowings under the credit facility bear interest, at our
option, at either a rate equal to LIBOR plus 1.5% or the
bank’s base rate, as defined in the credit agreement. The
credit facility also contains a quarterly commitment fee based
on the unused portion of the credit facility. As of
March 31, 2009, we were in compliance with all required
covenants, and there were no outstanding balances on the credit
facility. We are currently evaluating our options related to
borrowing under the credit facility before its expiration date
in July 2009.


 



In January 2008, our Board of Directors approved a stock
repurchase program under which we were authorized to repurchase
up to $40.0 million of our common stock. In July 2008, our
Board of Directors authorized an additional $40.0 million
increase to the existing share repurchase program. In the year
ending March 31, 2009, we repurchased approximately
1.8 million shares with a total cost of approximately
$25.2 million. The average price of the common stock
repurchased during the year ended March 31, 2009 was $13.83
per share. Under our share repurchase program, repurchased
shares are constructively retired and returned to unissued
status. As of March 31, 2009, we have repurchased
approximately $40.2 million under the share repurchase
authorization. As a result, we





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may repurchase an additional $39.8 million of our common
stock under the current program, which has been extended by the
Board of Directors until March 31, 2010.


 



In June 2007, we completed our follow-on public offering in
which we sold 300,000 shares and certain of our
stockholders sold 7,570,000 shares of common stock to the
public at a price of $17.00 per share. After deducting the
underwriting discounts, commissions and other offering costs,
our net proceeds from the offering were approximately
$4.3 million. During fiscal 2008, we used the net proceeds
from our follow-on public offering, together with approximately
$3.2 million of our existing cash, to pay approximately
$7.5 million in satisfaction of the outstanding principal
on our term loan.


 



In September 2006, we completed our initial public offering and
related concurrent private placement and generated net proceeds
of approximately $81.7 million. We used the net proceeds,
together with net borrowings of $10.0 million under a term
loan and $10.1 million of our existing cash and cash
equivalents, to pay $101.8 million in satisfaction of
amounts due on our Series A, B, C, D and E preferred stock
upon its conversions into common stock.


 



Net cash provided by operating activities was $43.1 million
in fiscal 2009, $34.4 million in fiscal 2008 and
$30.6 million in fiscal 2007. In fiscal 2009, cash
generated by operating activities was primarily due to net
income adjusted for the impact of non-cash charges and an
increase in deferred services revenue as a result of customer
support agreements from new customers and renewal agreements
with our installed software base. These increases in operating
cash flows were partially offset by an increase in accounts
receivable as a result of higher overall revenues and timing of
cash receipts during fiscal 2009. In fiscal 2008 and 2007, cash
generated by operating activities was primarily due to net
income adjusted for the impact of non-cash charges and an
increase in deferred services revenue and accrued liabilities,
partially offset by an increase in accounts receivable due to
higher revenues. We anticipate that as our revenues continue to
grow, accounts receivable and deferred services revenue balances
should continue to grow as well.


 



Net cash used in investing activities was $4.5 million in
fiscal 2009, $4.3 million in fiscal 2008 and
$4.2 million in fiscal 2007. Cash used in investing
activities in each period was due to purchases of property and
equipment related to the growth in our business as we continue
to invest in and enhance our global infrastructure. We
anticipate that as our business grows we will continue to
explore opportunities to invest in our global infrastructure.


 



Net cash used in financing activities was $22.1 million in
fiscal 2009, $4.4 million in fiscal 2008 and
$9.0 million in fiscal 2007. The cash used in financing
activities in fiscal 2009 was primarily due to
$25.2 million used to repurchase shares of our common stock
under our share repurchase program, partially offset by
$2.7 million of proceeds from the exercise of stock options
and $0.5 million of excess tax benefits recognized as a
result of the stock option exercises. The cash used in financing
activities in fiscal 2008 was primarily due to
$15.0 million used to repurchase shares of our common stock
under our share repurchase program and $7.5 million in
principal repayment on our term loan, partially offset by
$8.8 million of proceeds from the exercise of stock
options, $5.1 million of excess tax benefits recognized as
a result of the stock option exercises and $4.3 million of
net proceeds generated from our follow-on public offering. The
cash used in financing activities in fiscal 2007 was primarily
due to the cash use of $101.8 million in satisfaction of
amounts due on our Series A, B, C, D and E preferred stock
upon its conversions into common stock, partially offset by net
proceeds of $82.2 million from our initial public offering
and concurrent private placement. In addition, we incurred net
borrowings of $7.5 million in fiscal 2007 under our term
loan in connection with the payments due to the holders of our
Series A, B, C, D and E preferred stock upon our initial
public offering.


 



Working capital increased $7.1 million from
$77.5 million as of March 31, 2008 to
$84.6 million as of March 31, 2009. The increase in
working capital is primarily due to a $13.5 million
increase in cash and cash equivalents and a $4.2 million
decrease in accrued liabilities, partially offset by a
$9.0 million increase in deferred revenue. The increase in
cash and cash equivalents is primarily due to net income
generated during the period, cash received from the exercise of
stock options and the increase in deferred revenue, partially
offset by cash used to repurchase approximately 1.8 million
shares of our common stock under our share repurchase program.
The decrease in accrued liabilities is primarily due to lower
income tax payable balances as a result of higher estimated
payments made throughout fiscal 2009.





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Working capital increased $42.6 million from
$34.9 million as of March 31, 2007 to
$77.5 million as of March 31, 2008. The increase in
working capital is primarily due to a $26.7 million
increase in cash and cash equivalents and a $22.2 million
increase in accounts receivable, partially offset by a
$16.1 million increase in deferred revenue. The increase in
cash and cash equivalents is primarily due to net income
generated during the period adjusted for the impact of noncash
charges, cash received from the exercise of stock options and
the increase in deferred revenue, partially offset by cash used
to repurchase approximately 1.0 million shares of our
common stock under our share repurchase program. The increase in
accounts receivable is primarily due to the growth in revenue.


 



We believe that our existing cash, cash equivalents and cash
from operations will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures for at least
the next 12 months. We cannot assure you that this will be
the case or that our assumptions regarding revenues and expenses
underlying this belief will be accurate. We may seek additional
funding through public or private financings or other
arrangements during this period. Adequate funds may not be
available when needed or may not be available on terms favorable
to us, or at all. If additional funds are raised by issuing
equity securities, dilution to existing stockholders will
result. If we raise additional funds by obtaining loans from
third parties, the terms of those financing arrangements may
include negative covenants or other restrictions on our business
that could impair our operational flexibility, and would also
require us to fund additional interest expense. If funding is
insufficient at any time in the future, we may be unable to
develop or enhance our products or services, take advantage of
business opportunities or respond to competitive pressures, any
of which could have a material adverse effect on our business,
financial condition and results of operations.


 




These excerpts taken from the CVLT 10-K filed May 16, 2008.
Liquidity and Capital Resources
 
As of March 31, 2008, our cash and cash equivalents balance of $91.7 million primarily consisted of money market funds. In recent fiscal years, our principal sources of liquidity have been cash provided by operations and cash provided from our public offerings of common stock. Historically, our principle source of liquidity had been cash provided by private placements of preferred equity securities and common stock.
 
In January 2008, our Board of Directors approved a stock repurchase program under which we are authorized to repurchase up to $40.0 million of our common stock over the following 12 months. During the fourth quarter of fiscal 2008, we repurchased 1,028,476 shares with a total cost of approximately $15.0 million, or an average price of $14.60 per share. Under our share repurchase program, repurchased shares are constructively retired and returned to unissued status. As of March 31, 2008, approximately $25.0 million remained under our share repurchase authorization.
 
In June 2007, we completed our follow-on public offering in June 2007 in which we sold 300,000 shares and certain of our stockholders sold 7,570,000 shares of common stock to the public at a price of $17.00 per share. After deducting the underwriting discounts, commissions and other offering costs, our net proceeds from the offering were approximately $4.3 million. During fiscal 2008, we used the net proceeds from our follow-on public offering, together with approximately $3.2 million of our existing cash, to pay approximately $7.5 million in satisfaction of the outstanding principal on our term loan.
 
In September 2006, we completed our initial public offering and related concurrent private placement and generated net proceeds of approximately $81.7 million. We used the net proceeds, together with net borrowings of $10.0 million under a term loan and $10.1 million of our existing cash and cash equivalents, to pay $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock.
 
Net cash provided by operating activities was $34.4 million in fiscal 2008, $30.6 million in fiscal 2007 and $25.9 million in fiscal 2006. In fiscal 2008 and 2007, cash generated by operating activities was primarily due to net income adjusted for the impact of non-cash charges and an increase in deferred services revenue and accrued liabilities, partially offset by an increase in accounts receivable due to higher revenues. We anticipate that as our revenues continue to grow, accounts receivable and deferred services revenue balances should continue to grow as well. In fiscal 2006, cash provided by operating activities was primarily due to net income adjusted for the impact of noncash charges and an increase in deferred services revenue.


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Net cash used in investing activities was $4.3 million in fiscal 2008, $4.2 million in fiscal 2007 and $2.8 million in fiscal 2006. Cash used in investing activities in each period was due to purchases of property and equipment related to the growth in our business as we continue to invest in and enhance our global infrastructure. We anticipate that as our business grows we will continue to explore opportunities to invest in our global infrastructure.
 
Net cash used in financing activities was $4.4 million in fiscal 2008 and $9.0 million in fiscal 2007. Net cash provided by financing activities was less than $0.1 million in fiscal 2006. The cash used in financing activities in fiscal 2008 was due to $15.0 million used to repurchase approximately 1.0 million shares of our common stock and $7.5 million in principal repayment on our term loan, partially offset by $8.8 million of proceeds from the exercise of stock options, $5.1 million of excess tax benefits recognized as a result of the stock option exercises and $4.3 million of net proceeds generated from our follow-on public offering. The cash used in financing activities in fiscal 2007 was primarily due to the cash use of $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock, partially offset by net proceeds of $82.2 million from our initial public offering and concurrent private placement. In addition, we incurred net borrowings of $7.5 million in fiscal 2007 under our term loan in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering.
 
Working capital increased $42.6 million from $34.9 million as of March 31, 2007 to $77.5 million as of March 31, 2008. The increase in working capital is primarily due to a $26.7 million increase in cash and cash equivalents and a $22.2 million increase in accounts receivable, partially offset by a $16.1 million increase in deferred revenue. The increase in cash and cash equivalents is primarily due to net income generated during the period adjusted for the impact of noncash charges, cash received from the exercise of stock options and the increase in deferred revenue, partially offset by cash used to repurchase approximately 1.0 million shares of our common stock under our share repurchase program. The increase in accounts receivable is primarily due to the growth in revenue.
 
Working capital increased $10.8 million from $24.1 million as of March 31, 2006 to $34.9 million as of March 31, 2007. The increase in working capital was primarily due to a $17.0 million increase in cash and cash equivalents, a $9.6 million increase in the recognized amount of our current portion of deferred tax assets and a $3.8 million increase in our accounts receivable. These increases were partially offset by a $7.5 million increase in accrued liabilities primarily due to a charge to record certain tax reserves, our net borrowing of $7.5 million under our term loan used in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering and a $6.4 million increase in deferred revenue. The increase in cash and cash equivalents is primarily due to net income generated during the period adjusted for the impact of non-cash charges and the increase in deferred revenue, partially offset by the net cash used in connection with the transactions associated with our initial public offering.
 
We believe that our existing cash, cash equivalents and cash from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We cannot assure you that this will be the case or that our assumptions regarding revenues and expenses underlying this belief will be accurate. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility, and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.
 
Liquidity
and Capital Resources



 



As of March 31, 2008, our cash and cash equivalents balance
of $91.7 million primarily consisted of money market funds.
In recent fiscal years, our principal sources of liquidity have
been cash provided by operations and cash provided from our
public offerings of common stock. Historically, our principle
source of liquidity had been cash provided by private placements
of preferred equity securities and common stock.


 



In January 2008, our Board of Directors approved a stock
repurchase program under which we are authorized to repurchase
up to $40.0 million of our common stock over the following
12 months. During the fourth quarter of fiscal 2008, we
repurchased 1,028,476 shares with a total cost of
approximately $15.0 million, or an average price of $14.60
per share. Under our share repurchase program, repurchased
shares are constructively retired and returned to unissued
status. As of March 31, 2008, approximately
$25.0 million remained under our share repurchase
authorization.


 



In June 2007, we completed our follow-on public offering in June
2007 in which we sold 300,000 shares and certain of our
stockholders sold 7,570,000 shares of common stock to the
public at a price of $17.00 per share. After deducting the
underwriting discounts, commissions and other offering costs,
our net proceeds from the offering were approximately
$4.3 million. During fiscal 2008, we used the net proceeds
from our follow-on public offering, together with approximately
$3.2 million of our existing cash, to pay approximately
$7.5 million in satisfaction of the outstanding principal
on our term loan.


 



In September 2006, we completed our initial public offering and
related concurrent private placement and generated net proceeds
of approximately $81.7 million. We used the net proceeds,
together with net borrowings of $10.0 million under a term
loan and $10.1 million of our existing cash and cash
equivalents, to pay $101.8 million in satisfaction of
amounts due on our Series A, B, C, D and E preferred stock
upon its conversions into common stock.


 



Net cash provided by operating activities was $34.4 million
in fiscal 2008, $30.6 million in fiscal 2007 and
$25.9 million in fiscal 2006. In fiscal 2008 and 2007, cash
generated by operating activities was primarily due to net
income adjusted for the impact of non-cash charges and an
increase in deferred services revenue and accrued liabilities,
partially offset by an increase in accounts receivable due to
higher revenues. We anticipate that as our revenues continue to
grow, accounts receivable and deferred services revenue balances
should continue to grow as well. In fiscal 2006, cash provided
by operating activities was primarily due to net income adjusted
for the impact of noncash charges and an increase in deferred
services revenue.





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Net cash used in investing activities was $4.3 million in
fiscal 2008, $4.2 million in fiscal 2007 and
$2.8 million in fiscal 2006. Cash used in investing
activities in each period was due to purchases of property and
equipment related to the growth in our business as we continue
to invest in and enhance our global infrastructure. We
anticipate that as our business grows we will continue to
explore opportunities to invest in our global infrastructure.


 



Net cash used in financing activities was $4.4 million in
fiscal 2008 and $9.0 million in fiscal 2007. Net cash
provided by financing activities was less than $0.1 million
in fiscal 2006. The cash used in financing activities in fiscal
2008 was due to $15.0 million used to repurchase
approximately 1.0 million shares of our common stock and
$7.5 million in principal repayment on our term loan,
partially offset by $8.8 million of proceeds from the
exercise of stock options, $5.1 million of excess tax
benefits recognized as a result of the stock option exercises
and $4.3 million of net proceeds generated from our
follow-on public offering. The cash used in financing activities
in fiscal 2007 was primarily due to the cash use of
$101.8 million in satisfaction of amounts due on our
Series A, B, C, D and E preferred stock upon its
conversions into common stock, partially offset by net proceeds
of $82.2 million from our initial public offering and
concurrent private placement. In addition, we incurred net
borrowings of $7.5 million in fiscal 2007 under our term
loan in connection with the payments due to the holders of our
Series A, B, C, D and E preferred stock upon our initial
public offering.


 



Working capital increased $42.6 million from
$34.9 million as of March 31, 2007 to
$77.5 million as of March 31, 2008. The increase in
working capital is primarily due to a $26.7 million
increase in cash and cash equivalents and a $22.2 million
increase in accounts receivable, partially offset by a
$16.1 million increase in deferred revenue. The increase in
cash and cash equivalents is primarily due to net income
generated during the period adjusted for the impact of noncash
charges, cash received from the exercise of stock options and
the increase in deferred revenue, partially offset by cash used
to repurchase approximately 1.0 million shares of our
common stock under our share repurchase program. The increase in
accounts receivable is primarily due to the growth in revenue.


 



Working capital increased $10.8 million from
$24.1 million as of March 31, 2006 to
$34.9 million as of March 31, 2007. The increase in
working capital was primarily due to a $17.0 million
increase in cash and cash equivalents, a $9.6 million
increase in the recognized amount of our current portion of
deferred tax assets and a $3.8 million increase in our
accounts receivable. These increases were partially offset by a
$7.5 million increase in accrued liabilities primarily due
to a charge to record certain tax reserves, our net borrowing of
$7.5 million under our term loan used in connection with
the payments due to the holders of our Series A, B, C, D
and E preferred stock upon our initial public offering and a
$6.4 million increase in deferred revenue. The increase in
cash and cash equivalents is primarily due to net income
generated during the period adjusted for the impact of non-cash
charges and the increase in deferred revenue, partially offset
by the net cash used in connection with the transactions
associated with our initial public offering.


 



We believe that our existing cash, cash equivalents and cash
from operations will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures for at least
the next 12 months. We cannot assure you that this will be
the case or that our assumptions regarding revenues and expenses
underlying this belief will be accurate. We may seek additional
funding through public or private financings or other
arrangements during this period. Adequate funds may not be
available when needed or may not be available on terms favorable
to us, or at all. If additional funds are raised by issuing
equity securities, dilution to existing stockholders will
result. If we raise additional funds by obtaining loans from
third parties, the terms of those financing arrangements may
include negative covenants or other restrictions on our business
that could impair our operational flexibility, and would also
require us to fund additional interest expense. If funding is
insufficient at any time in the future, we may be unable to
develop or enhance our products or services, take advantage of
business opportunities or respond to competitive pressures, any
of which could have a material adverse effect on our business,
financial condition and results of operations.


 




This excerpt taken from the CVLT 10-K filed May 25, 2007.
Liquidity and Capital Resources
 
We intend to use estimated net proceeds of $4.2 million from the proposed follow-on offering of our common stock, together with approximately $2.1 million of our existing cash and cash equivalents to pay the outstanding principal and accrued interest under our term loan (an amount equal to $6.3 million as of June 15, 2007, assuming interest accrued at a rate equal to 7.0% per annum for the applicable period) as soon as practicable after the receipt of such proceeds.
 
As of March 31, 2007, we had $65.0 million of cash and cash equivalents. We have historically financed our operations primarily through the private placements of preferred equity securities and common stock and, to a much lesser extent, through funds from operations. On September 27, 2006, we completed our initial public offering and related concurrent private placement and generated net proceeds of approximately $81.7 million. We used the net proceeds, together with net borrowings of $10.0 million under our term loan and $10.1 million of our existing cash and cash equivalents, to pay $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock as discussed below.
 
Upon the closing of our initial public offering, our Series A, B, C, D and E preferred stock converted into 6,332,508 shares of our common stock and also received $101.8 million consisting of:
 
  •  $14.85 per share, or $47.0 million in the aggregate; and
 
  •  accumulated and unpaid dividends of $1.788 per share per year since the date the shares of preferred stock were issued, or $54.8 million in the aggregate.
 
The outstanding shares of Series AA, BB and CC preferred stock converted into a total of 9,686,972 shares of common stock.
 
In May 2006, we entered into a $20.0 million term loan facility (the “term loan”) in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering. As of March 31, 2007, there was $7.5 million outstanding under the term loan. The term loan is secured by substantially all of our assets. Borrowings under the term loan bear interest at a rate equal to the 30-day LIBOR plus 1.50% with principal and interest to be repaid in quarterly installments over a 24-month period, subject to acceleration, at the discretion of the lender. The term loan requires us to maintain a “quick ratio,” as defined in the term loan agreement, of at least 1.50 to 1. We are in compliance with the quick ratio covenant as of March 31, 2007.
 
Net cash provided by operating activities was $30.6 million in fiscal 2007, $25.9 million in fiscal 2006, and $3.8 million in fiscal 2005. In fiscal 2007, cash generated by operating activities was primarily due to net income adjusted for the impact of non-cash charges and an increase in deferred services revenue and accrued liabilities, partially offset by an increase in accounts receivable due to higher revenues. We anticipate that as our revenues continue to grow, accounts receivable and deferred services revenue balances should continue to grow as well. In


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fiscal 2006 and 2005, cash provided by operating activities was primarily due to net income adjusted for the impact of noncash charges and an increase in deferred services revenue.
 
Net cash used in investing activities was $4.2 million in fiscal 2007, $2.8 million in fiscal 2006, and $1.9 million in fiscal 2005. Cash used in investing activities in each period was due to purchases of property and equipment. The increase in capital expenditures is primarily related to the growth in our business as we continue to invest in and enhance our global infrastructure. We anticipate that as our business grows we will continue to explore opportunities to invest in our global infrastructure.
 
Net cash used in financing activities was $9.0 million in fiscal 2007. Net cash provided by (used in) financing activities was minimal in fiscal 2006 and 2005. The cash used in financing activities in fiscal 2007 was primarily due to the cash use of $101.8 million in satisfaction of amounts due on our Series A, B, C, D and E preferred stock upon its conversions into common stock, partially offset proceeds generated of approximately $82.2 million from our initial public offering and concurrent private placement, net of underwriting fees and offering costs. In addition, we incurred net borrowings of $7.5 million in fiscal 2007 under our term loan in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering.
 
Working capital increased $10.8 million from $24.1 million as of March 31, 2006 to $34.9 million as of March 31, 2007. The increase in working capital is primarily due to a $17.0 million increase in cash and cash equivalents, a $9.6 million increase in the recognized amount of our current portion of deferred tax assets and a $3.8 million increase in our accounts receivable. These increases were partially offset by an $7.5 million increase in accrued liabilities primarily due to a charge to record certain tax reserves, our net borrowing of $7.5 million under our term loan used in connection with the payments due to the holders of our Series A, B, C, D and E preferred stock upon our initial public offering, and a $6.4 million increase in deferred revenue. The increase in cash and cash equivalents is primarily due to net income generated during the period adjusted for the impact of non-cash charges and the increase in deferred revenue, partially offset by the net cash used in connection with the transactions associated with our initial public offering.
 
Working capital increased $10.7 million from $13.4 million as of March 31, 2005 to $24.1 million as of March 31, 2006, primarily due a $23.2 million increase in cash and cash equivalents, partially offset by a $10.5 million increase in deferred revenue and a $2.2 million increase in accrued liabilities during the fiscal year ended March 31, 2006. The increase in cash and cash equivalents is primarily due to higher net income, stronger collection efforts of our accounts receivable and the increase in deferred revenue.
 
We believe that our existing cash, cash equivalents and cash from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We cannot assure you that this will be the case or that our assumptions regarding revenues and expenses underlying this belief will be accurate. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility, and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.
 
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