Vonage 2010 Annual Report Download - page 45

mar
k
et
i
ng expen
di
tures an
d
overa
ll
t
i
g
h
ter contro
l
s on costs
p
artiall
y
offset b
y
lower revenues as our overall customer bas
e
decreased in 2009 and hi
g
her interest expense associated wit
h
our November 2008 financin
g.
C
ash used for workin
g
capital requirements increased by
$
22,260 durin
g
the year ended December 31, 2009 compared t
o
the year ended December 31, 2008, primarily due to prepay
-
ments to take advanta
g
eo
f
discounts ne
g
otiated with vendor
s
g
iven our concentration account requirements under our prio
r
c
r
ed
it
fac
iliti
es.
I
nvest
i
ng
A
ct
i
v
i
t
i
e
s
C
ash used in investing activities for 2010 of
$
4,686 wa
s
attributable to capital expenditures of
$
17,674 and development
of software assets of
$
22,712, partiall
y
offset b
y
a decrease in
r
estricted cash of
$
35,700 due primaril
y
to the reduction of
$
32,830 of reserves held b
y
our credit card processors as
a
r
esult of improvements in credit qualit
y
and the elimination of
t
he concentration account under our prior credit facilities of
$
3,277 as a result of our new Credit Facilit
y
.
C
ash used in investing activities for 2009 of
$
50,565 wa
s
attributable to capital expenditures of
$
23,724,
$
1,250 for th
e
l
icensing of IBM patents, development of software assets of
$
21
,
654
,
and an increase in restricted cash of
$
3
,
937.
C
ash provided by investin
g
activities for 2008 of
$
40,48
6
was attributable to net
p
urchases and sales of marketable secu
-
r
ities of $79,942, offset by the purchase of capital expenditure
s
of $38,476, of which $26,530 was for software ac
q
uisition an
d
develo
p
ment and an increase in restricted cash of $980 relate
d
t
o reserves required by our credit card processors.
Fi
nanc
i
ng
A
ct
i
v
i
t
i
es
C
ash used in financing activities for 2010 of $143,762 was
attributable to
$
28,664 in First Lien Senior Facilit
y
principa
l
p
a
y
ments,
$
13,128 in Second Lien Senior Facilit
y
principa
l
p
ayments, including
$
3,668 representing paid-in-kind (“PIK”
)
i
nterest payments, payments of
$
290,660 to extinguish Firs
t
Lien
S
enior Facilit
y
,
S
econd Lien
S
enior Facilit
y
and
C
onvertibl
e
Notes including
$
28,652 representing PIK interest payments
,
and
$
1,500 in capital lease pa
y
ments partiall
y
offset b
y
pro-
ceeds of the Credit Facilit
y
of
$
200,000 offset b
y
note discoun
t
of
$
6,000 and debt related costs of
$
5,430, and proceeds o
f
$
1,620 from stock options exercised.
C
ash used in financing activities for 2009 of
$
3,253 wa
s
attributable to
$
1,251 in capital lease pa
y
ments,
$
1,809 in Firs
t
Lien Senior Facilit
y
principal pa
y
ments and
$
252 in additiona
l
d
e
b
tre
l
ate
d
costs.
C
ash used in financin
g
activities for 2008 of
$
68,370 wa
s
p
rimarily attributable to the repurchase of our previous con
-
v
ertible notes of
$
253,460 in a tender offer in November 2008.
We also had a new debt financin
g
for
$
220,300 offset by ori
g
inal
i
ssue discount of
$
7,167, debt related costs of
$
26,799, and th
e
p
rincipal payments on capital lease obli
g
ations of
$
1,036.
CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
T
he table below summarizes our contractual obli
g
ations at December 31, 2010, and the e
ff
ect such obli
g
ations are expected to
have on our liquidity and cash
f
low in
f
uture periods.
P
a
y
ments
D
ue
by P
er
i
o
d
(dollars in thousands
)
T
ota
l
L
es
s
tha
n
1
yea
r
2
-
3
years
4-
5
years
Af
t
e
r
5
y
ears
(unaudited)
C
ontractual
O
bli
g
ations:
S
enior secured term loa
n
$
200,000
$
20,000
$
40,000
$
140,000
$
–
Interest related to senior secured term loan 76,891 19,359 32,799 24,733
–
C
apital lease obli
g
ation
s
29
,
044 4
,
118 8
,
484 8
,
826
7,
616
O
peratin
g
lease obli
g
ation
s
7,7
48 3
,77
03
,55
8 420
–
Purchase obli
g
ation
s
55,
130 1
7,5
23 23
,
98
7
13
,
620
–
O
ther obli
g
ations
13
,
000
7,
800
5,
200
–
–
Total contractual obli
g
ations
$
381,813
$
72,570
$
114,028
$
187,599
$
7,616
O
ther
C
ommercial
C
ommitments
:
Standb
y
letters of credi
t
$
7
,
885 $ 7
,
885 $ – $ – $
–
T
otal contractual obligations and other commercial commitments $389,698 $80,455 $114,028 $187,599 $7,616
S
enior debt facilit
y.
O
n December 14, 2010, we entered int
o
t
he Credit Facility which consists of a
$
200,000 senior secured
t
erm loan.
S
ee Note 6 in the notes to the consolidated financial
s
t
a
t
e
m
e
nt
s.
C
apital lease obli
g
ations
.
A
t December 31, 2010, we ha
d
c
apital lease obli
g
ations of $29,044 related to our corporate
headquarters in Holmdel, New Jersey that expire in 2017.
O
peratin
g
lease obli
g
ations. At December 31, 2010,
f
uture
c
ommitments for operatin
g
leases included $6,274 fo
r
c
o-location facilities in the United States that accommodate
a
p
ortion of our network equipment throu
g
h 2013, $224 for kiosks
leased in various locations throu
g
hout the United States throu
gh
2
011, $525 for office space leased for our London, United Kin
g-
d
om office throu
g
h 2015, $35 for office space leased in Atlanta,
G
eor
g
ia for product development throu
g
h 2011, $652 for offic
e
sp
ace leased in Tel Aviv, Israel
f
or a
pp
lication develo
p
ment
38
VO
NA
G
E ANN
U
AL REP
O
RT 2010