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Table of Contents
income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk.
Our operating activities in 2010, 2009 and 2008, respectively, generated sufficient cash to meet our operating needs. Our cash flows for the
years ended 2010, 2009 and 2008 were as follows:
In evaluating our liquidity internally, we focus on long-term, sustainable growth in free cash flows and in non-GAAP cash flows from
operating activities (“non-GAAP operating cash flows”). We define non-
GAAP operating cash flows as net cash provided by operating activities
less capitalized software development costs plus the excess tax benefits from stock-based compensation. We define free cash flows, also a non-
GAAP financial measure, as non-GAAP operating cash flows less capital expenditures. See “Non-GAAP Financial Measures” for additional
information.
Our non-GAAP operating cash flows and free cash flows for 2010, 2009 and 2008 were as follows:
Free cash flows increased by $362.2 or 43% to $1,202.0 for the year ended December 31, 2010, compared with $839.8 for the year ended
December 31, 2009, and by $236.4 or 39% to $839.8 for the year ended December 2009, compared with $603.4 for the year ended December 31,
2008. The increase in free cash flows in 2010 and 2009 was primarily due to increased sales and related cash collections.
Historically, we have invested excess cash predominantly in money market securities that are liquid and of high quality investment grade.
The fair value for money market securities is determined based on quoted market prices as of the valuation date. We limit the amount of our
domestic and international investments with any single issuer and any single financial institution, and also monitor the diversity of the portfolio,
thereby diversifying the credit risk. In the second quarter of 2010, we began investing in fixed income securities. As of December 31, 2010, we
held a diversified portfolio of money market funds and fixed income securities, which
57
December 31,
2010
2009
Cash and cash equivalents
$
1,629.0
$
2,486.5
Short
-
term investments
1,694.7
27.4
Total cash, cash equivalents and short
-
term investments
$
3,323.7
$
2,513.9
For the Year Ended December 31,
2010
2009
2008
Net cash provided by (used in):
Operating activities
$
1,174.4
$
985.6
$
800.1
Investing activities
(2,261.9
)
(562.4
)
(421.9
)
Financing activities
230.1
222.4
231.4
Net increase (decrease) in cash and cash equivalents
$
(857.4
)
$
645.6
$
609.6
For the Year Ended December 31,
2010
2009
2008
Net cash provided by operating activities
$
1,174.4
$
985.6
$
800.1
Capitalized software development costs
(64.1
)
(68.6
)
(90.9
)
Excess tax benefits from stock
-
based compensation
223.4
26.2
85.8
Non
-
GAAP operating cash flows
1,333.7
943.2
795.0
Capital expenditures
(131.7
)
(103.4
)
(191.6
)
Free cash flows
$
1,202.0
$
839.8
$
603.4