DTLK » Topics » Liquidity and Capital Resources

These excerpts taken from the DTLK 10-K filed Mar 26, 2009.

Liquidity and Capital Resources

        Since our initial public offering we have financed our operations and capital requirements through cash flows generated from operations. Our working capital was $21.0 million at December 31, 2008 as compared to $16.0 million at December 31, 2007. Our current ratio was 1.2:1 at December 31, 2008 and 2007. At December 31, 2008, our cash and cash equivalents balance was $26.3 million as compared to cash and cash equivalents of $22.7 million at December 31, 2007.

        Cash provided by operating activities for 2008 was $3.4 million. Cash provided by operating activities for 2008 was primarily impacted by:

    Net earnings for the year of $3.4 million.

    A net $934,000 increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $2.7 million reflecting increased sales activity over the prior year.

    A non-cash charge of $1.7 million for depreciation and amortization of intangibles.

        Cash provided by operating activities for 2007 was $5.1 million. Cash provided by operating activities for 2007 was primarily impacted by:

    Net earnings for the year of $1.2 million.

    A net $4.3 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

24


    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $3.8 million reflecting increased sales activity during the fourth quarter of 2007.

        Cash provided by operating activities for 2006 was $7.3 million. Cash provided by operating activities for 2006 was primarily impacted by:

    Net earnings for the year of $8.5 million.

    A net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

    A $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.

    A $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net deferred tax assets.

        Cash provided by investing activities was $204,000 in 2008. Cash used in investing activities was $5.5 million in 2007 and $562,000 in 2006. In 2008, we had proceeds from the sale of short term investments of $1.0 million offset by purchases of $800,000 for upgraded computer equipment, upgraded telephone systems and leasehold improvements. In 2007, we used this cash primarily for the acquisition of MCSI, purchase of a short-term investment, and leasehold improvements and upgraded computer equipment. In 2006, we used cash primarily to purchase computer equipment and provide further enhancements to our business reporting tools.

        Cash used in financing activities in 2008 was $80,000 primarily for the redemption of restricted shares for tax withholding payments. Cash provided by financing activities in 2007 and 2006 was $254,000 and $2.7 million, respectively, all of which we received from the exercise of stock options and warrants.

        We have an eleven-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning of the term to approximately $60,000 per month by the end of the term. For more information, see Note 5 of the Notes to our Financial Statements.

        On January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based in Chicago, Illinois. We paid approximately $14.3 million for MCSI, consisting of $5.0 million cash and 1,163,384 shares of our common stock.

        We believe that our current cash balance and funds generated from operations will finance our current operations and planned capital expenditures for at least the next twelve months. We believe if the need should arise to borrow funds, we could obtain a secured facility. However, the current state of the financial markets could impact our ability to obtain future funding.

Liquidity and Capital Resources



        Since our initial public offering we have financed our operations and capital requirements through cash flows generated from
operations. Our working capital was $21.0 million at December 31, 2008 as compared to $16.0 million at December 31, 2007. Our current ratio was 1.2:1 at December 31,
2008 and 2007. At December 31, 2008, our cash and cash equivalents balance was $26.3 million as compared to cash and cash equivalents of $22.7 million at December 31, 2007.




        Cash
provided by operating activities for 2008 was $3.4 million. Cash provided by operating activities for 2008 was primarily impacted by:





    Net earnings for the year of $3.4 million.


    A net $934,000 increase in deferred customer support contracts. While we amortize the revenues from these contracts over
    the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.



    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $2.7 million
    reflecting increased sales activity over the prior year.



    A non-cash charge of $1.7 million for depreciation and amortization of intangibles.



        Cash
provided by operating activities for 2007 was $5.1 million. Cash provided by operating activities for 2007 was primarily impacted by:





    Net earnings for the year of $1.2 million.


    A net $4.3 million increase in deferred customer support contracts. While we amortize the revenues from these
    contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.


24












    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $3.8 million
    reflecting increased sales activity during the fourth quarter of 2007.



        Cash
provided by operating activities for 2006 was $7.3 million. Cash provided by operating activities for 2006 was primarily impacted by:





    Net earnings for the year of $8.5 million.


    A net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these
    contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.



    A $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.


    A $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net
    deferred tax assets.



        Cash
provided by investing activities was $204,000 in 2008. Cash used in investing activities was $5.5 million in 2007 and $562,000 in 2006. In 2008, we had proceeds from the sale
of short term investments of $1.0 million offset by purchases of $800,000 for upgraded computer equipment, upgraded telephone systems and leasehold improvements. In 2007, we used this cash
primarily for the acquisition of MCSI, purchase of a short-term investment, and leasehold improvements and upgraded computer equipment. In 2006, we used cash primarily to purchase computer
equipment and provide further enhancements to our business reporting tools.



        Cash
used in financing activities in 2008 was $80,000 primarily for the redemption of restricted shares for tax withholding payments. Cash provided by financing activities in 2007 and
2006 was $254,000 and $2.7 million, respectively, all of which we received from the exercise of stock options and warrants.




        We
have an eleven-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual
base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is
co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning
of the term to approximately $60,000 per month by the end of the term. For more information, see Note 5 of the Notes to our Financial Statements.




        On
January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based
in Chicago, Illinois. We paid approximately $14.3 million for MCSI, consisting of $5.0 million cash and 1,163,384 shares of our common stock.



        We
believe that our current cash balance and funds generated from operations will finance our current operations and planned capital expenditures for at least the next twelve months. We
believe if the need should arise to borrow funds, we could obtain a secured facility. However, the current state of the financial markets could impact our ability to obtain future funding.




Liquidity and Capital Resources



        Since our initial public offering we have financed our operations and capital requirements through cash flows generated from
operations. Our working capital was $21.0 million at December 31, 2008 as compared to $16.0 million at December 31, 2007. Our current ratio was 1.2:1 at December 31,
2008 and 2007. At December 31, 2008, our cash and cash equivalents balance was $26.3 million as compared to cash and cash equivalents of $22.7 million at December 31, 2007.




        Cash
provided by operating activities for 2008 was $3.4 million. Cash provided by operating activities for 2008 was primarily impacted by:





    Net earnings for the year of $3.4 million.


    A net $934,000 increase in deferred customer support contracts. While we amortize the revenues from these contracts over
    the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.



    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $2.7 million
    reflecting increased sales activity over the prior year.



    A non-cash charge of $1.7 million for depreciation and amortization of intangibles.



        Cash
provided by operating activities for 2007 was $5.1 million. Cash provided by operating activities for 2007 was primarily impacted by:





    Net earnings for the year of $1.2 million.


    A net $4.3 million increase in deferred customer support contracts. While we amortize the revenues from these
    contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.


24












    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $3.8 million
    reflecting increased sales activity during the fourth quarter of 2007.



        Cash
provided by operating activities for 2006 was $7.3 million. Cash provided by operating activities for 2006 was primarily impacted by:





    Net earnings for the year of $8.5 million.


    A net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these
    contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.



    A $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.


    A $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net
    deferred tax assets.



        Cash
provided by investing activities was $204,000 in 2008. Cash used in investing activities was $5.5 million in 2007 and $562,000 in 2006. In 2008, we had proceeds from the sale
of short term investments of $1.0 million offset by purchases of $800,000 for upgraded computer equipment, upgraded telephone systems and leasehold improvements. In 2007, we used this cash
primarily for the acquisition of MCSI, purchase of a short-term investment, and leasehold improvements and upgraded computer equipment. In 2006, we used cash primarily to purchase computer
equipment and provide further enhancements to our business reporting tools.



        Cash
used in financing activities in 2008 was $80,000 primarily for the redemption of restricted shares for tax withholding payments. Cash provided by financing activities in 2007 and
2006 was $254,000 and $2.7 million, respectively, all of which we received from the exercise of stock options and warrants.




        We
have an eleven-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual
base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is
co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning
of the term to approximately $60,000 per month by the end of the term. For more information, see Note 5 of the Notes to our Financial Statements.




        On
January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based
in Chicago, Illinois. We paid approximately $14.3 million for MCSI, consisting of $5.0 million cash and 1,163,384 shares of our common stock.



        We
believe that our current cash balance and funds generated from operations will finance our current operations and planned capital expenditures for at least the next twelve months. We
believe if the need should arise to borrow funds, we could obtain a secured facility. However, the current state of the financial markets could impact our ability to obtain future funding.




These excerpts taken from the DTLK 10-K filed Mar 28, 2008.

Liquidity and Capital Resources

        We have financed our operations and capital requirements through cash flows generated from operations and the proceeds from our offerings of our common stock. Our working capital was $16.0 million at December 31, 2007 as compared to $19.6 million at December 31, 2006. Our current ratio was 1.2:1 at December 31, 2007 as compared to 1.3:1 at December 31, 2006. At December 31, 2007, our cash and cash equivalents balance was $22.7 million.

        Cash provided by operating activities for 2007 was $5.1 million as compared to $7.3 million in 2006 and $1.7 million in 2005. Cash provided by operating activities for 2007 was primarily impacted by:

    Net earnings for the year of $1.2 million.

    A net $4.3 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

    A net decrease in working capital (accounts receivable, inventories and accounts payable) of $3.8 million reflecting increased sales activity during the fourth quarter of 2007.

        Cash provided by operating activities for 2006 was primarily impacted by:

    Net earnings for the year of $8.5 million.

    A net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

    A $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.

    A $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net deferred tax assets.

        Cash provided by operating activities for 2005 was primarily impacted by:

    A $7.2 million increase in accounts receivable reflecting increasing sales activity over the prior year.

    An $8.6 million increase in accounts payable reflecting the increase in business with our vendors for our increasing sales activity.

    A net increase of $2.5 million related to the sublease of part of our Chanhassen facility. This includes the $3.5 million non-cash charge related to the sublease and lot sale offset by $1.0 million of amortization for the year.

    A $2.9 million increase in inventories shipped but not installed for our backlog of orders at the beginning of 2006.

24


    A net $1.6 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

        Cash used in investing activities was $5.5 million in 2007, $562,000 in 2006 and $1.1 million in 2005. In 2007, we used this cash primarily for the acquisition of MCSI, purchase of a short-term investment, and leasehold improvements and upgraded computer equipment. In 2006, we used cash primarily to purchase computer equipment and provide further enhancements to our business reporting tools. In 2005, we used cash primarily to complete the facility build-out related to our Chanhassen sublease, purchase computer equipment and provide further enhancements to our web-enabled reporting tools.

        Cash provided in financing activities in 2007, 2006 and 2005 was $254,000, $2.7 million and $148,000, respectively, all of which we received from the exercise of stock options and warrants and stock sold under our employee stock purchase plan. We discontinued our employee stock purchase plan in December 2005.

        We have an eleven-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning of the term to approximately $60,000 per month by the end of the term. For more information, see Note 6 of the Notes to our Financial Statements.

        On January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based in Chicago, Illinois. We paid approximately $14.3 million for MCSI, consisting of $5.0 million cash and 1,163,384 shares of our common stock.

Liquidity and Capital Resources



        We have financed our operations and capital requirements through cash flows generated from operations and the proceeds from our offerings of our common stock. Our
working capital was $16.0 million at December 31, 2007 as compared to $19.6 million at December 31, 2006. Our current ratio was 1.2:1 at December 31, 2007 as
compared to 1.3:1 at December 31, 2006. At December 31, 2007, our cash and cash equivalents balance was $22.7 million.



        Cash
provided by operating activities for 2007 was $5.1 million as compared to $7.3 million in 2006 and $1.7 million in 2005. Cash provided by operating activities
for 2007 was primarily impacted by:





    Net
    earnings for the year of $1.2 million.


    A
    net $4.3 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer
    typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.


    A
    net decrease in working capital (accounts receivable, inventories and accounts payable) of $3.8 million reflecting increased sales activity during the fourth
    quarter of 2007.



        Cash
provided by operating activities for 2006 was primarily impacted by:





    Net
    earnings for the year of $8.5 million.


    A
    net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer
    typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.


    A
    $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.


    A
    $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net deferred tax assets.




        Cash
provided by operating activities for 2005 was primarily impacted by:





    A
    $7.2 million increase in accounts receivable reflecting increasing sales activity over the prior year.


    An
    $8.6 million increase in accounts payable reflecting the increase in business with our vendors for our increasing sales activity.


    A
    net increase of $2.5 million related to the sublease of part of our Chanhassen facility. This includes the $3.5 million non-cash charge related
    to the sublease and lot sale offset by $1.0 million of amortization for the year.


    A
    $2.9 million increase in inventories shipped but not installed for our backlog of orders at the beginning of 2006.


24













NAME="page_dk45501_1_25">















    A
    net $1.6 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer
    typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.



        Cash
used in investing activities was $5.5 million in 2007, $562,000 in 2006 and $1.1 million in 2005. In 2007, we used this cash primarily for the acquisition of MCSI,
purchase of a short-term investment, and leasehold improvements and upgraded computer equipment. In 2006, we used cash primarily to purchase computer equipment and provide further
enhancements to our business reporting tools. In 2005, we used cash primarily to complete the facility build-out related to our Chanhassen sublease, purchase computer equipment and provide
further enhancements to our web-enabled reporting tools.



        Cash
provided in financing activities in 2007, 2006 and 2005 was $254,000, $2.7 million and $148,000, respectively, all of which we received from the exercise of stock options and
warrants and stock sold under our employee stock purchase plan. We discontinued our employee stock purchase plan in December 2005.



        We
have an eleven-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual
base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is
co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning
of the term to approximately $60,000 per month by the end of the term. For more information, see Note 6 of the Notes to our Financial Statements.



        On
January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based
in Chicago, Illinois. We paid approximately $14.3 million for MCSI, consisting of $5.0 million cash and 1,163,384 shares of our common stock.



This excerpt taken from the DTLK 10-K filed Mar 29, 2007.

Liquidity and Capital Resources

We have financed our operations and capital requirements through cash flows generated from operations and the proceeds from our offerings of our common stock. Our working capital was $19.0 million at December 31, 2006 as compared to $9.4 million at December 31, 2005. Our current ratio was 1.3:1 at December 31, 2006 as compared to 1.2:1 at December 31, 2005. At December 31, 2006, our cash and cash equivalents balance was $22.9 million.

24




Cash provided by operating activities for 2006 was $7.3 million as compared to $1.7 million in 2005 and $396,000 in 2004. Cash provided by operating activities for 2006 was primarily impacted by:

·       Net earnings for the year of $8.5 million.

·       A net $2.7 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

·       A $3.6 million increase in accounts receivable reflecting increasing sales activity over the prior year.

·       A $2.8 million increase in deferred income taxes resulting from the reversal of our valuation allowance for net deferred tax assets.

Cash provided by operating activities for 2005 was primarily impacted by:

·       A $7.2 million increase in accounts receivable reflecting increasing sales activity over the prior year.

·       An $8.6 million increase in accounts payable reflecting the increase in business with our vendors for our increasing sales activity.

·       A net increase of $2.5 million related to the sublease of part of our Chanhassen facility. This includes the $3.5 million non-cash charge related to the sublease and lot sale offset by $1.0 million of amortization for the year.

·       A $2.9 million increase in inventories shipped but not installed for our backlog of orders at the beginning of 2006.

·       A net $1.6 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

Cash provided by operating activities for 2004 was primarily impacted by:

·       A $3.0 million increase in accounts receivable, reflecting increasing sales activity offset by an increase in accrued expenses for employee bonus incentives.

·       A $2.2 million increase in accounts payable due to higher sales activity.

·       A net increase in $1.0 million in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

Cash used in investing activities was $562,000 in 2006, $1.1 million in 2005 and $415,000 in 2004. In 2006, we used this cash to purchase computer equipment and provide further enhancements to our business reporting tools. In 2005, we used this cash to complete the facility build-out related to our Chanhassen sublease, purchase computer equipment and provide further enhancements to our web-enabled reporting tools. In 2004, we used this cash to purchase computer equipment, complete a data warehouse project and provide further enhancements to our business reporting software tool.

Cash provided in financing activities in 2006, 2005 and 2004 was $2.7 million, $148,000 and $117,000, respectively, all of which we received from stock sold under our employee stock purchase plan and from the exercise of options and warrants. We discontinued our employee stock purchase plan in December 2005.

Our bank revolving credit facility expired in June 2004. We have not renewed it or pursued a new facility. We have no outstanding debt, and if the need should arise to borrow funds, we believe that we could obtain a secured facility.

25




We have an 11-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual base rental payments of approximately $1.3 million. In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning of the term to approximately $60,000 per month by the end of the term. For more information, see Note 6 of the Notes to our Financial Statements.

On January 31, 2007, we entered into an agreement and plan of merger with Midrange Computer Systems Inc. (MCSI), a storage consulting, solutions and service provider based in Chicago, Illinois. We paid a purchase price of $14 million for MCSI, consisting of $5.0 million cash ($4.5 million of which we paid at closing to the Shareholders and $500,000 of which we deposited in escrow) and 1,163,384 shares of our common stock (1,047,459 shares of which we issued at closing to the Shareholders and 116,384 shares of which we deposited in escrow). Based upon a post-closing audit, we will reduce the purchase price by the shortfall, if any, against the agreed upon minimum net assets at the time of closing.

This excerpt taken from the DTLK 10-K filed Mar 31, 2006.
Liquidity and Capital Resources

We have financed our operations and capital requirements through cash flows generated from operations and the proceeds from our offerings of our common stock. Our working capital was $9.4 million at December 31, 2005 as compared to $10.0 million at December 31, 2004. Our current ratio was 1.2:1 at December 31, 2005 as compared to 1.4:1 at December 31, 2004. At December 31, 2005, our cash and cash equivalents balance was $13.4 million.

Cash provided by operating activities for 2005 was $1.7 million as compared to $396,000 in 2004 and $3.2 million in 2003. Significant items which impacted our operating cash flows in 2005 were:

·       A $7.2 million increase in accounts receivable reflecting increasing sales activity over the prior year.

·       An $8.6 million increase in accounts payable reflecting the increase in business with our vendors for our increasing sales activity.

·       A net increase of $2.5 million related to the sublease of part of our Chanhassen facility. This includes the $3.5 million non-cash charge related to the sublease and lot sale offset by $1.0 million of amortization for the year.

·       A $2.9 million increase in inventories shipped but not installed for our backlog of orders at the beginning of 2006.

·       A net $1.6 million increase in deferred customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

22




The cash provided in 2004 resulted from:

·       A $3.0 million increase in accounts receivable, reflecting increasing sales activity offset by an increase in accured expenses for employee bonus incentives.

·       A $2.2 million increase in accounts payable due to higher sales activity.

·       A net increase in $1.0 million in deferred customer support contracts.

The cash provided in 2003 resulted primarily from a reduction in our net operating assets. This included a $2.0 million income tax refund, a $1.9 million reduction in inventory shipped but not installed with fewer projects left to be installed at year end, a $441,000 reduction in field evaluation inventory and a $3.9 million reduction in accounts receivable due to an improvement in our days sales outstanding. These reductions were partially offset by a $3.5 million reduction in accounts payable.

Cash used in investing activities was $1.1 million in 2005, $415,000 in 2004 and $1.1 million in 2003. In 2005, we used this cash to complete the facility build-out related to our Chanhassen sublease, purchase computer equipment and provide further enhancements to our web-enabled reporting tools. In 2004, we used this cash to purchase computer equipment, complete a data warehouse project and provide further enhancements to our business reporting software tool. In 2003, we used this cash to complete our own storage and data recovery project, purchase computer equipment and provide further enhancements to our customer relationship management information systems and our business reporting software tool.

Cash provided in financing activities in 2005, 2004 and 2003 was $148,000, $117,000 and $111,000, respectively, all of which we received from stock sold under our employee stock purchase plan and from the exercise of options. We discontinued our employee stock purchase plan in December 2005.

Our bank revolving credit facility expired in June 2004. We have not renewed it or pursued a new facility. We have no outstanding debt, and if the need should arise to borrow funds, we believe that we could obtain a secured facility. For more information, see Note 4 of the Notes to our Financial Statements.

We have an 11-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012. The lease requires annual base rental payments of approximately $1.3 million.  In December 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied. The initial term of the sublease is co-terminal with our lease and is for 85 months starting in April 2005 and ending in April 2012. The sublease requires rent payments ranging from $55,000 per month at the beginning of the term to approximately $60,000 per month by the end of the term. For more information, see Note 6 of the Notes to our Financial Statements.

This excerpt taken from the DTLK 10-K filed Mar 31, 2005.

Liquidity and Capital Resources

 

We have financed our operations and capital requirements through cash flows generated from operations and the proceeds from our offerings of our common stock. Our working capital was $10.0 million at December 31, 2004 as compared to $11.5 million at December 31, 2003. Our current ratio was 1.4:1 at December 31, 2004 as compared to 1.5:1 at December 31, 2003.  At December 31, 2004, our cash and cash equivalents balance was $12.7 million.

 

Cash provided by operating activities for 2004 was $396,000 as compared to $3.2 million in 2003 and $984,000 in 2002.  Significant items which impacted our operating cash flows in 2004 were:

      A $3.0 million increase in accounts receivable reflecting increasing sales activity versus the prior year.

      A $2.2 million increase in accrued expenses and accounts payable due primarily to increased employee bonus incentive accruals.

      A net $1.0 million increase in deferred customer support contracts.  While we amortize the revenues from these contracts over the life of the contract, the customer almost always pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.

 

  The cash provided in 2003 resulted primarily from a reduction in our net operating assets.  This included a $2.0 million income tax refund, a $1.9 million reduction in inventory shipped but not installed with fewer projects left to be installed at year end, a $441,000 reduction in field evaluation inventory and a $3.9 million reduction in accounts receivable due to an improvement in our days sales outstanding.  These reductions were offset by a $3.5 million reduction in accounts payable.  The cash provided in 2002 resulted primarily from a reduction in our net operating assets from timing of certain payments and receipts and a reduction in the overall level of working capital.

 

Cash used in investing activities was $415,000 in 2004 and $1.1 million during each of 2003 and 2002.  In 2004, we used this cash to purchase computer equipment, complete a data warehouse project and provide further enhancements to our business reporting software tool.  In 2003, we used this cash to complete our own storage and data recovery project, purchase computer equipment and provide further enhancements to our customer relationship management information systems and our business reporting software tool.  In 2002, we used this cash primarily to implement our customer relationship management information system.

 

Cash provided by financing activities during 2004, 2003 and 2002 was $117,000, $111,000 and $4.7 million, respectively.  In 2004 and 2003, we received $117,000 and $111,000, respectively, from stock sold under our employee stock purchase plan and from the exercise of stock options.  In 2002, we received $5.3 million from a direct private offering of newly issued common stock to institutional investors and $186,000 from stock sold under our employee stock purchase plan. This cash was partially offset by the final scheduled payment of $704,000 on a note due to a former stockholder.

 

The revolving credit facility we have had with a bank since June 2003, expired in June 2004.  We have elected not to pursue a new facility at this time.  We have no outstanding debt, and if the need should arise to borrow funds, we believe that we could obtain a secured facility.  For more information, see Note 5 of the Notes to our Financial Statements.

 

We have an 11-year non-cancelable operating lease for our corporate headquarters in Chanhassen, Minnesota which expires in 2012.  The lease requires base rental payments of approximately $1.0 million in the first year and $1.3 million for each subsequent year.   On December 15, 2004, we agreed to sublease approximately 55,000 of the 104,000 square feet we then occupied.  The initial term of the sublease is co-terminal with our lease and is for 85 months starting on April 2005 and ending

 

14



 

on April 2012.  The sublease requires rent payments ranging from $55,000 per month at the beginning of the term to approximately $60,000 per month by the end of the term.  For more information, see Note 7 of the Notes to our Financial Statements.

 

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki