July 31, 2013, our principal sources of liquidity were our cash, cash equivalents and short-term investments. Cash and cash equivalents are comprised of cash, sweep funds and money market funds with an original maturity of 90 days or less at the time of purchase. Short-term investments include corporate bonds, U.S. government agency securities, U.S. treasury bills, commercial paper, and certificates of deposit. Cash, cash equivalents and short-term investments increased $68.6 millionduring fiscal 2013 from $346.2 millionin cash, cash equivalents and short term investments as of July 31, 2012to $414.8 millionas of July 31, 2013. As of July 31, 2013, we had $35.0 millionof cash and cash equivalents held outside the United States, the significant majority of which can be repatriated without adverse tax consequences. Historically, we have required capital principally to fund our working capital needs and acquisition activities. It is our investment policy to invest excess cash in a manner that preserves capital, provides liquidity and maintains appropriate diversification and optimizes current income within our policy's framework. We are averse to principal loss and attempt to ensure the safety and preservation of our invested funds by limiting default risk, market risk and reinvestment risk. Our investment policy is designed to prevent fluctuations in market value which materially affect our financial results. Cash Flows from Operating Activities Our cash flows from operating activities will continue to be affected principally by our profitability, working capital requirements, the extent to which we increase spending on personnel and the continued growth in revenue and cash collections. The timing of hiring sales personnel in particular affects cash flows as there is a lag between the hiring of sales personnel and the generation of revenue and cash flows from sales personnel. In the future, we anticipate achieving cash tax savings and a reduction in our overall tax rate as a result of the new structure of our corporate organization implemented in fiscal 2012 offset by increases in our cash tax obligations after our tax loss and credit carryforwards have been utilized. Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel related expenditures, purchases of inventory, and rent payments. During fiscal 2013, net cash provided by operating activities increased $40.4 millioncompared to fiscal 2012. The additional cash flows generated from operating activities was primarily due to an increase in cash flows of $16.5 millionfrom operations after adjusting for non-cash items, including depreciation and amortization, and stock-based compensation, and an 57
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$46.6 millionfrom the change in operating assets and liabilities. These additional cash flows were partially offset by an increase in our net loss of $22.8 million. The $46.6 millionchange in operating assets and liabilities was primarily driven by an increase in other current and non-current accrued liabilities. During fiscal 2012, net cash provided by operating activities increased $54.9 millioncompared to fiscal 2011. The additional cash flow generated from operating activities was primarily due to an increase in cash flow of $93.0 millionfrom operations after adjusting for non-cash items, including depreciation and amortization, and stock-based compensation, and an increase of $41.4 millionfrom the change in operating assets and liabilities. These additional cash flows were partially offset by a decrease in net income of $79.5 millionin fiscal 2012 compared to 2011. The $41.4 millionchange in operating assets and liabilities was primarily driven by an increase in deferred revenue and income taxes payable. Cash Flows from Investing Activities Cash used in investing activities increased $2.5 millionduring fiscal 2013 compared to fiscal 2012. We purchased $98.0 millionmore short-term investments during fiscal 2013 compared to fiscal 2012 as we reinvested cash flow from operations. Purchases of property and equipment in fiscal 2013 increased $7.6 millioncompared to fiscal 2012 due to an increase in investments in our research and development infrastructure. The higher level of direct research and development investment was offset by lower acquisition expenditures. We completed one acquisition during fiscal 2013 for a total cash purchase price consideration of $16.8 million, net of cash received, compared to two acquisitions in fiscal 2012 totaling $22.5 million, net of cash received. See Note 2, Business Combinations, of the Notes to Consolidated Financial Statements. Cash used in investing activities increased $51.4 millionduring fiscal 2012 compared to fiscal 2011. We purchased $44.7 millionmore short-term investments during fiscal 2012 compared to fiscal 2011 as we reinvested cash flow from operations. Purchases of property and equipment in fiscal 2012 increased $3.1 millioncompared to fiscal 2011 due to an increase in headcount. Further, we completed two acquisitions during fiscal 2012 for a total of $22.5 millionof cash used, net of cash received, compared to two acquisitions in fiscal 2011 totaling $4.3 million, net of cash received. See Note 2, Business Combinations, of the Notes to Consolidated Financial Statements. Cash Flows from Financing Activities Cash provided by (used in) financing activities changed by $79.6 millionduring fiscal 2013 compared to fiscal 2012 and primarily consisted of the increase of cash used in our stock repurchase program of $66.3 millioncompared to fiscal 2012, combined with a change in the excess tax benefit associated with stock-based compensation of $11.7 millionand by a decrease from cash provided from issuance of common stock of $1.6 million. Cash provided by financing activities was essentially flat in fiscal 2012 compared to fiscal 2011 and primarily consisted of the cash proceeds of $34.8 millionwe received from the issuance of common stock in conjunction with our equity plans. In addition, during fiscal 2012, we started receiving tax benefits associated with stock-based compensation of $21.6 million. This tax benefit was slightly offset by $19.9 millionof cash used to repurchase our common stock. Based on our current cash, cash equivalents and short-term investments we expect that we will have sufficient resources to fund our operations for the next 12 months. However, we may, in the future, need to raise additional capital or incur indebtedness to fund our operations or support acquisition activity. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products and potential future business acquisitions. Contractual Obligations & Commitments Operating leases and purchase obligations The following is a summary of our contractual obligations: More Less Than 1 - 3 3 - 5 Than Total 1 Year Years Years 5 Years (In thousands) Operating leases $ 24,740 $ 7,059 $ 13,741 $ 3,940$ - Purchase obligations (1) 40,031 29,494 8,272 564 1,701 Total contractual obligations $ 64,771 $ 36,553 $ 22,013 $ 4,504 $ 1,70158
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(1) Purchase obligations represent contractual amounts that will be due to purchase goods and services to be used in our operations and exclude
contractual amounts that are cancelable without penalty. These contractual
amounts are related principally to inventory, information technology and marketing related purchase agreements. Uncertain tax positions Other long term liabilities on our balance sheet include
$7.6 millionof long-term income taxes payable for uncertain tax positions. We are unable to reliably estimate the timing of future payments related to uncertain tax positions and therefore have excluded them from the preceding table. Off-Balance Sheet Arrangements In the ordinary course of business, we have investments in privately held companies, which we review annually to determine if they should be accounted for as variable interest entities. For the year ended July 31, 2013, we evaluated our investments in these privately held companies and concluded that we are not the primary beneficiary of any variable interest from investment entities. As a result, we account for these investments on a cost basis and do not consolidate the activity of these investee entities. Certain events can require a reassessment of our investments in privately held companies to determine if they meet the criteria for variable interest entities and to determine which stakeholders in such entities will be the primary beneficiary. In the event of a reassessment, we may be required to make additional disclosures or consolidate these entities in future periods. As of July 31, 2013, we had no off-balance sheet arrangements.