Financing Activities: Our cash provided by financing activities was $6.5
million in the first six months of 2013. This was from cash provided by the
exercise of stock options and shares purchased by our employees under the
employee stock purchase plan, resulting in 256,455 shares issued to our
employees and directors. The tax benefits from share awards was $3.1 million in
the first six months of 2013, which fluctuates based principally on when
employees choose to exercise their vested stock options. In the first six months
of 2013, we acquired 27,260 shares of our common stock from employee option
exercises and vested restricted stock by remitting $1.8 million in payments for
the employee's share award income tax withholding obligations.
In July 2010, our Board of Directors approved a share purchase plan to purchase
up to $40.0 million of our common stock. We have purchased $11.9 million of our
stock pursuant to this plan, leaving a balance of $28.1 million available for
future purchases. There were no purchases under this plan in the first six
months of 2013. This plan has no expiration date. We may purchase additional
shares in future quarters and expect we would use our cash and investments to
fund the share purchases.
We have a substantial cash and investment security position generated from
profitable operations and stock sales, principally from the exercise of employee
stock options. We maintain this position to fund our growth, meet increasing
working capital requirements, fund capital expenditures, and to take advantage
of acquisition opportunities that may arise. Our primary investment goal is
capital preservation, as further described in Part 1, Item 3. Quantitative and
Qualitative Disclosures about Market Risk.
As of June 30, 2013, we have $15.0 million of cash and cash equivalents held by
our foreign subsidiaries, the majority of which is available to fund foreign
operations and obligations.
We believe that our existing cash, cash equivalents and investment securities
along with funds expected to be generated from future operations will provide us
with sufficient funds to finance our current operations for the next twelve
months. In the event that we experience illiquidity in our investment
securities, downturns or cyclical fluctuations in our business that are more
severe or longer than anticipated or if we fail to achieve anticipated revenue
and expense levels, we may need to obtain or seek alternative sources of capital
or financing, and we can provide no assurances that the terms of such capital or
financing will be available to us on favorable terms, if at all.
Off Balance Sheet Arrangements
In the normal course of business, we have agreed to indemnify our officers and
directors to the maximum extent permitted under Delaware law and to indemnify
customers as to certain intellectual property matters related to sales of our
products. There is no maximum limit on the indemnification that may be required
under these agreements. Although we can provide no assurances, we have never
incurred, nor do we expect to incur, any material liability for indemnification.
We have contractual obligations, at June 30, 2013, of approximately the amount
set forth in the table below. This amount excludes inventory related purchase
orders for goods and services for current delivery. The majority of our
inventory purchase orders are blanket purchase orders that represent an
estimated forecast of goods and services. We do not have a commitment liability
on the blanket purchase orders. Since we do not have the ability to separate out
blanket purchase orders from non-blanket purchase orders for inventory related
goods and services for current delivery, amounts related to such purchase orders
are excluded from the table below. We have excluded from the table below
pursuant to ASC 740-10-25 (formerly FIN 48), an interpretation of ASC 740-10
(formerly SFAS 109), a non-current income tax liability of $3.3 million due to
the high degree of uncertainty regarding the timing of future cash outflows
associated with the liabilities.