Tucows 2013 Annual Report Download - page 57

Investing activities during Fiscal 2012 used net cash of $0.5 million; $1.0 million was used to acquire additional
property and equipment, which was partially offset by the selling of certain intangible assets with no book value for
$0.5 million during Fiscal 2012.
Year ended December 31, 2011
Investing activities during Fiscal 2011 used net cash of $3.2 million; $2.4 million was used to fund the EPAG
Domainservices GmbH acquisition and $0.8 million to acquire additional property and equipment.
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Subsequent events
On March 4, 2014, we announced that our Board of Directors has approved a stock buyback program to repurchase
from time to time up to $20 million of our common stock in the open market. Purchases will be made exclusively through the
facilities of the NASDAQ Capital Market. The stock buyback program will commence immediately and will terminate on
March 3, 2015.
All shares purchased by Tucows under the stock buyback program will be retired and returned to treasury.
Off Balance Sheet Arrangements and Contractual Obligations
We have not entered into any off balance sheet financial arrangements and have not established any special purpose
entities as of December 31, 2013 nor have we guaranteed any debt or commitment of other entities. As such, we are not
materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We develop products in Canada and sell these services in North America and Europe. Our sales are primarily made
in U.S. dollars, while a major portion of expenses are incurred in Canadian dollars. Our financial results could be affected by
factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Our interest
income is sensitive to changes in the general level of Canadian and U.S. interest rates, particularly since the majority of our
investments are in short-term instruments. Based on the nature of our short-term investments, we have concluded that there is
no material interest rate risk exposure as of December 31, 2013. We are also subject to market risk exposure related to
changes in interest rates under our Amended Credit Facility. We do not expect that any changes in interest rates will be
material; however, fluctuations in interest rates are beyond our control. We will continue to monitor and assess the risks
associated with interest expense exposure and may take additional actions in the future to mitigate these risks.
Although our functional currency is the U.S. dollar, a substantial portion of our fixed expenses are incurred in
Canadian dollars. Our policy with respect to foreign currency exposure is to manage financial exposure to certain foreign
exchange fluctuations with the objective of neutralizing some of the impact of foreign currency exchange movements.
Exchange rates are, however, subject to significant and rapid fluctuations, and therefore we cannot predict the prospective
impact of exchange rate fluctuations on our business, results of operations and financial condition. Accordingly, we have
entered into foreign exchange contracts to mitigate the exchange rate risk on portions of our Canadian dollar exposure.
At December 31, 2013, the Company had the following outstanding forward exchange contracts to trade U.S.
dollars in exchange for Canadian dollars:
Maturity date
Notional
amount of
U.S. dollars
Weighted
average
exchange rate
of U.S. dollars
Fair value
January – March, 2014
6,410,000
1.0149
(296,398
)
April – June, 2014
6,610,000
1.0471
(120,645
)
July - September, 2014
6,710,000
1.0634
(34,455
)
October - December, 2014
6,810,000
1.0648
(39,600
)