WebMD Health (WBMD)

Background Information on Certain Trends and Developments — Certain Developments — Impairment of Auction Rate Securities; Non-Recourse Credit Facility” above. Our working capital as of December 31, 2008 was $186,653. Our working capital is affected by the timing of each period end in relation to items such as payments received from customers, payments made to vendors, and internal payroll and billing cycles, as well as the seasonality within our business. Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

 

Cash provided by operating activities from our continuing operations in 2008 was $102,912, which related to net income of $26,702, adjusted for non-cash expenses of $75,742, which included depreciation and amortization, non-cash advertising expense, non-cash stock-based compensation expense, deferred and other income taxes and the impairment of auction rate securities. Additionally, changes in operating assets and liabilities provided cash flow of $333, primarily due to cash provided by an increase in accrued expenses and other long-term liabilities of $4,053, an increase in deferred revenue of $4,088 and a change in amounts due to/from HLTH of $1,601, offset by cash used due to an increase in accounts receivable of $8,059 and an increase in other assets of $1,350. Cash provided by operating activities from continuing operations in 2007 was $87,900, which related to net income of $65,884, adjusted for the income from discontinued operations of $3,442, which includes the gain on the sale of the ACS/ACP Business and non-cash expenses of $30,935, which included depreciation and amortization, non-cash advertising expense, non-cash stock-based compensation expense and deferred and other income taxes. Additionally, changes in operating assets and liabilities utilized cash flow of $5,477, primarily due to a decrease in accrued expenses and other long-term liabilities of $7,185 and a change in amounts due from HLTH of $3,278, partially offset by cash provided by a decrease in accounts receivable of $3,570 and a decrease in other assets of $1,102.

 

Cash used in investing activities in 2008 was $116,269, which primarily related to net purchases of available-for-sale securities of $83,900 and investments in property and equipment of $24,250 primarily to enhance our technology platform. Cash used in investing activities in 2007 was $89,468, which primarily related to net purchases of available-for-sale securities of $71,410 and investments in property and equipment of $18,058 primarily to enhance our technology platform.

 

Cash used in financing activities in 2008 related to the repurchase of shares issued to the Subimo, LLC sellers of $12,818, partially offset by proceeds from the issuance of common stock of $3,797 and a tax benefit related to stock option deductions of $284. Cash provided by financing activities in 2007 principally related to net cash transfers from HLTH of $155,119, primarily $149,862 received from HLTH related to the utilization of the Company’s NOLs, a tax benefit related to stock option deductions of $1,577 and proceeds from the issuance of common stock of $14,355.

 

Included in our 2007 and 2006 consolidated statements of cash flows are cash flows from discontinued operations of the ACS/ACP Business. Our cash flows from discontinued operations are comprised of cash flows used in operating activities of $390 for 2007 and cash flows provided by operating activities of $305 for 2006. There were no cash flows from investing or financing activities for the ACS/ACP Business.

 

 

As of December 31, 2008, we had $191,659 of cash and cash
equivalents and we owned investments in ARS with a face value of
$164,800 and a fair value of $133,563. While liquidity for our
ARS investments is currently limited, we entered into a
non-recourse credit facility with Citigroup in May 2008 that
will allow us to borrow up to 75% of the face amount of our ARS
holdings through May 2009. See
“— Introduction —

Background Information on Certain Trends and
Developments — Certain Developments —
Impairment of Auction Rate Securities; Non-Recourse Credit
Facility” above. Our working capital as of
December 31, 2008 was $186,653. Our working capital is
affected by the timing of each period end in relation to items
such as payments received from customers, payments made to
vendors, and internal payroll and billing cycles, as well as the
seasonality within our business. Accordingly, our working
capital, and its impact on cash flow from operations, can
fluctuate materially from period to period.

 

Cash provided by operating activities from our continuing
operations in 2008 was $102,912, which related to net income of
$26,702, adjusted for non-cash expenses of $75,742, which
included depreciation and amortization, non-cash advertising
expense, non-cash stock-based compensation expense, deferred and
other income taxes and the impairment of auction rate
securities. Additionally, changes in operating assets and
liabilities provided cash flow of $333, primarily due to cash
provided by an increase in accrued expenses and other long-term
liabilities of $4,053, an increase in deferred revenue of $4,088
and a change in amounts due to/from HLTH of $1,601, offset by
cash used due to an increase in accounts receivable of $8,059
and an increase in other assets of $1,350. Cash provided by
operating activities from continuing operations in 2007 was
$87,900, which related to net income of $65,884, adjusted for
the income from discontinued operations of $3,442, which
includes the gain on the sale of the ACS/ACP Business and
non-cash expenses of $30,935, which included depreciation and
amortization, non-cash advertising expense, non-cash stock-based
compensation expense and deferred and other income taxes.
Additionally, changes in operating assets and liabilities
utilized cash flow of $5,477, primarily due to a decrease in
accrued expenses and other long-term liabilities of $7,185 and a
change in amounts due from HLTH of $3,278, partially offset by
cash provided by a decrease in accounts receivable of $3,570 and
a decrease in other assets of $1,102.

 

Cash used in investing activities in 2008 was $116,269, which
primarily related to net purchases of
available-for-sale
securities of $83,900 and investments in property and equipment
of $24,250 primarily to enhance our technology platform. Cash
used in investing activities in 2007 was $89,468, which
primarily related to net purchases of
available-for-sale
securities of $71,410 and investments in property and equipment
of $18,058 primarily to enhance our technology platform.

 

Cash used in financing activities in 2008 related to the
repurchase of shares issued to the Subimo, LLC sellers of
$12,818, partially offset by proceeds from the issuance of
common stock of $3,797 and a tax benefit related to stock option
deductions of $284. Cash provided by financing activities in
2007 principally related to net cash transfers from HLTH of
$155,119, primarily $149,862 received from HLTH related to the
utilization of the Company’s NOLs, a tax benefit related to
stock option deductions of $1,577 and proceeds from the issuance
of common stock of $14,355.

 

Included in our 2007 and 2006 consolidated statements of cash
flows are cash flows from discontinued operations of the ACS/ACP
Business. Our cash flows from discontinued operations are
comprised of cash flows used in operating activities of $390 for
2007 and cash flows provided by operating activities of $305 for
2006. There were no cash flows from investing or financing
activities for the ACS/ACP Business.

 

and internal payroll and billing cycles, as well as the seasonality within our business. Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

 

Cash provided by operating activities from our continuing operations in 2007 was $87,900, which related to net income of $65,884, adjusted for the income from discontinued operations, including the gain on the ACS/ACP Business, of $3,442 and non-cash expenses of $30,935, which included depreciation and amortization, non-cash advertising expense, non-cash stock-based compensation expense and deferred income taxes. Additionally, changes in working capital utilized cash flow of $5,477, primarily due to a decrease in accrued expenses and other long-term liabilities of $7,185 and a change in amounts due from HLTH of $3,278, offset by a decrease in accounts receivable of $3,570 and a decrease in other assets of $1,102. Cash provided by operating activities from continuing operations in 2006 was $52,496, which related to net income of $2,536, adjusted for the income from discontinued operations of $385 and non-cash expenses of $53,855, which included depreciation and amortization, non-cash advertising expense, non-cash stock-based compensation expense and deferred income taxes. Additionally, changes in working capital utilized cash flow of $3,510, primarily due to an increase in accounts receivable of $25,430 and a change in amounts due from HLTH of $1,568, offset by an increase in deferred revenue of $17,761 and an increase in accrued expenses and other long-term liabilities of $6,698.

 

Cash used in investing activities in 2007 was $89,468, which primarily related to net purchases of available-for-sale securities of $71,410 and investments in property and equipment of $18,058 primarily to enhance our technology platform. Cash used in investing activities in 2006 was $83,845, which primarily related to the acquisitions of eMedicine, Summex, Medsite and Subimo and investments in property and equipment primarily to enhance our technology platform, partially offset by net maturities and sales of available-for-sale securities of $74,774.

 

Cash provided by financing activities in 2007 principally related to net cash transfers from HLTH of $155,119, primarily $149,862 received from HLTH related to the utilization of the Company’s NOLs, a tax benefit related to stock option deductions of $1,577 and proceeds from the issuance of common stock of $14,355.

 

Included in our consolidated statements of cash flows are cash flows from discontinued operations of the ACS/ACP Business. Our cash flows from discontinued operations are comprised of cash flows used in operating activities of $390 for 2007 and cash flows provided by operating activities of $305 for 2006. There were no cash flows from investing or financing activities for the ACS/ACP Business.

 

 

As of December 31, 2007, we had $294,653 of cash and cash
equivalents and short-term investments. Our working capital as
of December 31, 2007 was $292,157. Our working capital is
affected by the timing of each period end in relation to items
such as payments received from customers, payments made to
vendors,

and internal payroll and billing cycles, as well as the
seasonality within our business. Accordingly, our working
capital, and its impact on cash flow from operations, can
fluctuate materially from period to period.

 

Cash provided by operating activities from our continuing
operations in 2007 was $87,900, which related to net income of
$65,884, adjusted for the income from discontinued operations,
including the gain on the ACS/ACP Business, of $3,442 and
non-cash expenses of $30,935, which included depreciation and
amortization, non-cash advertising expense, non-cash stock-based
compensation expense and deferred income taxes. Additionally,
changes in working capital utilized cash flow of $5,477,
primarily due to a decrease in accrued expenses and other
long-term liabilities of $7,185 and a change in amounts due from
HLTH of $3,278, offset by a decrease in accounts receivable of
$3,570 and a decrease in other assets of $1,102. Cash provided
by operating activities from continuing operations in 2006 was
$52,496, which related to net income of $2,536, adjusted for the
income from discontinued operations of $385 and non-cash
expenses of $53,855, which included depreciation and
amortization, non-cash advertising expense, non-cash stock-based
compensation expense and deferred income taxes. Additionally,
changes in working capital utilized cash flow of $3,510,
primarily due to an increase in accounts receivable of $25,430
and a change in amounts due from HLTH of $1,568, offset by an
increase in deferred revenue of $17,761 and an increase in
accrued expenses and other long-term liabilities of $6,698.

 

Cash used in investing activities in 2007 was $89,468, which
primarily related to net purchases of available-for-sale
securities of $71,410 and investments in property and equipment
of $18,058 primarily to enhance our technology platform. Cash
used in investing activities in 2006 was $83,845, which
primarily related to the acquisitions of eMedicine, Summex,
Medsite and Subimo and investments in property and equipment
primarily to enhance our technology platform, partially offset
by net maturities and sales of available-for-sale securities of
$74,774.

 

Cash provided by financing activities in 2007 principally
related to net cash transfers from HLTH of $155,119, primarily
$149,862 received from HLTH related to the utilization of the
Company’s NOLs, a tax benefit related to stock option
deductions of $1,577 and proceeds from the issuance of common
stock of $14,355.

 

Included in our consolidated statements of cash flows are cash
flows from discontinued operations of the ACS/ACP Business. Our
cash flows from discontinued operations are comprised of cash
flows used in operating activities of $390 for 2007 and cash
flows provided by operating activities of $305 for 2006. There
were no cash flows from investing or financing activities for
the ACS/ACP Business.