3Ware 1999 Annual Report Download - page 23

For the years ended March 31, 1999, 1998 and 1997, net cash provided by operating activities was $22.0 million,
$16.9 million and $11.7 million, respectively. Net cash provided by operating activities in fiscal 1999 primarily reflected
net income before depreciation and amortization expense plus increased accrued liabilities less increases in accounts receivable
and inventories. Net cash provided by operating activities in fiscal 1998 primarily reflected net income before depreciation
and amortization expense plus increases in accounts payable and accrued liabilities less increases in accounts receivable
and deferred income taxes. Net cash provided by operating activities in fiscal 1997 primarily reflected net income before
depreciation and amortization expense.
Capital expenditures and the purchase of other assets totaled $16.5 million, $11.6 million and $4.1 million for the years ended
March 31, 1999, 1998 and 1997, respectively, of which $6.7 million, $3.6 million and $1.2 million for the years ended
March 31, 1999, 1998 and 1997, respectively, were financed using debt or capital leases. In fiscal year 2000, the Company
expects to incur approximately $14.0 million in capital expenditures for manufacturing and test equipment, computer
hardware and software and the acquisition of land as a site for a potential new wafer fabrication facility. The Company
is exploring alternatives for the expansion of its manufacturing capacity, which would likely occur after fiscal year 2000,
including expanding its existing 4" wafer fabrication facility, building a new wafer fabrication facility, purchasing a wafer
fabrication facility and entering into strategic relationships to obtain additional capacity. Any of these alternatives could require
a significant investment by the Company, including an investment in excess of $80.0 million if the Company chose to or was
required to build a new wafer fabrication facility. The Company would anticipate financing any such investment through
a combination of available cash, cash equivalents and short-term investments, cash from operations and debt and lease financ-
ing. Although the Company believes that it will be able to obtain financing for a significant portion of the planned capital
expenditures at competitive rates and terms from its existing and new financing sources, there can be no assurance that the
Company will be successful in these efforts. Furthermore, there can be no assurance that any of the alternatives for expansion
of its manufacturing capacity will be available on a timely basis or at all.
The Company believes that its available cash, cash equivalents and short-term investments and cash generated from operations
will be sufficient to meet the Company’s capital requirements for the next 12 months, although the Company could be
required, or could elect, to seek to raise additional capital during such period. The Company expects that it will need to raise
additional debt or equity financing in the future. There can be no assurance that such additional debt or equity financing will
be available on commercially reasonable terms or at all.
MARKET RISK
At March 31, 1999, the Company’s investment portfolio includes fixed-income securities of $73 million. These securities are
subject to interest rate risk and will decline in value if interest rates increase. Due to the short duration of the Company’s invest-
ment portfolio, an immediate 100 basis point increase in interest rates would have no material impact on the Company’s
financial condition or results of operations.
The Company generally conducts business, including sales to foreign customers, in U.S. dollars and, as a result, has limited
foreign currency exchange rate risk. The effect of an immediate 10 percent change in foreign exchange rates would not have a
material impact on the Company’s financial condition or results of operations.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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1999 AMCC