Net cash used in investing activities was $2.1 billion during the six months
ended July 31, 2013 and $102.7 million during the same period a year ago. The
net cash used in investing activities during the six months ended July 31, 2013
primarily related to the acquisition of EdgeSpring, Inc. ("EdgeSpring") in June
2013, the acquisition of ExactTarget, Inc. ("ExactTarget") in July 2013, capital
expenditures, including new office build-outs and a new IP licensing agreement,
investment of cash balances and strategic investments offset by proceeds from
sales and maturities of marketable securities.
Net cash provided by financing activities was $1.4 billion during the six months
ended July 31, 2013 and $138.1 million during the same period a year ago. Net
cash provided by financing activities during the six months ended July 31, 2013
consisted primarily of $1.1 billion of proceeds from the issuance of convertible
senior notes, $84.8 million from proceeds from the issuance of warrants,
$298.5 million of proceeds from the term loan, net of loan fees, and
$106.7 million from proceeds from equity plans offset by $153.8 million for the
purchase of hedges on the convertible note and $20.6 million of principal
payments on capital leases.
In July 2013, we entered into a credit agreement (the "Credit Agreement") with
Bank of America, N.A. and certain other lenders, which provides for a $300.0
million term loan (the "Term Loan") that matures on July 11, 2016. The Term Loan
bears interest at our option under either a LIBOR-based formula or a base rate
formula, each as set forth in the Credit Agreement.
The Credit Agreement contains certain customary affirmative and negative
covenants, including a consolidated leverage ratio covenant, a consolidated
interest coverage ratio covenant, a limit on our ability to incur additional
indebtedness, issue preferred stock or pay dividends, and certain other
restrictions on our activities as defined in the Credit Agreement. We were in
compliance with the Credit Agreement's covenants as of July 31, 2013.
The weighted average interest rate on the Term Loan was 2.3% as of July 31,
2013. As of July 31, 2013, the amount outstanding under the Term Loan was $300.0
million. During the three months ended July 31, 2013, we accrued $0.4 million of
interest. The first payment for the term loan of $7.5 million is due on
September 30, 2013 and subsequent payments of $7.5 million are due at the end of
each three month period thereafter.
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In January 2010, we issued $575.0 million of 0.75% convertible senior notes due
January 15, 2015 (the "0.75% Senior Notes") and concurrently entered into
convertible notes hedges (the "0.75% Note Hedges") and separate warrant
transactions (the "0.75% Warrants"). The 0.75% Senior Notes will mature on
January 15, 2015, unless earlier converted. Upon conversion of any 0.75% Senior
Notes, we will deliver cash up to the principal amount of the 0.75% Senior Notes
and, with respect to any excess conversion value greater than the principal
amount of the 0.75% Senior Notes, shares of our common stock, cash, or a
combination of both. To date, there has been a nominal amount of conversions of
the 0.75% Senior Notes.