3Ware 2002 Annual Report Download - page 45

primarily represents the net sales of available-for-sale investments and a shift to investments with shorter initial
maturities that are classified as cash and cash equivalents. This shift to shorter maturities is indicative of our view
that yields will increase in the near term, and is not reflective of the cash being designated for a particular use.
Capital expenditures totaled $31.3 million, $78.6 million and $22.7 million for the years ended March 31,
2002, 2001 and 2000, respectively. These capital expenditures primarily consisted of the purchases of
engineering hardware and design software, purchases of manufacturing and test equipment and investments made
in our corporate facilities. In addition, we purchased 32 acres of land in fiscal 2001 for a future corporate site.
We used $9.9 million of cash in fiscal 2002 for financing activities compared to generating $67.0 million
and $824.8 million in fiscal 2001 and 2000, respectively. The major financing application of cash in fiscal 2002
was for the repurchase of approximately 3.6 million shares of our common stock for $29.4 million. On
September 17, 2001, our Board of Directors approved a stock repurchase program whereby we were authorized
to expend up to $200 million to purchase our common stock over the 12 months following the Board’s
authorization. Our Board of Directors approved this plan primarily as a result of liquidity concerns following the
terrorist attacks of September 11, 2001. We do not currently plan to continue repurchasing our shares. Offsetting
this use of cash in fiscal 2002, we generated $20.8 million of cash from the issuance of our common stock under
employee stock plans. Cash generated from financing activities in fiscal 2001 and 2000 primarily reflects the
issuance of shares of our common stock offset by repayments of our long-term debt and capital lease obligations.
We believe that our available cash, cash equivalents and short-term investments will be sufficient to meet
our capital requirements and fund our operations for the next 12 months, although we could elect or could be
required to raise additional capital during such period. There can be no assurance that such additional debt or
equity financing will be available on commercially reasonable terms or at all.
The following table summarizes our contractual obligations as of March 31, 2002. This table should be read
in conjunction with the accompanying Notes to the Consolidated Financial Statements.
Notes
Payable
Operating
Leases
Capital
Leases Total
Fiscal year ended:
2003 .......................................... $ 772 $16,906 $ 466 $18,144
2004 .......................................... 516 13,437 679 14,632
2005 .......................................... — 10,956 — 10,956
2006 .......................................... — 3,910 — 3,910
2007 .......................................... — 2,199 — 2,199
Thereafter ...................................... — 4,780 — 4,780
Total ...................................... $1,288 $52,188 $1,145 $54,621
Item 7A. MARKET RISK.
Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign
currency exchange, interest rates and a decline in the stock market. We do not hold or enter into derivatives or
other financial instruments for trading or speculative purposes. We are exposed to market risks related to changes
in interest rates and foreign currency exchange rates.
We are exposed to market risk as it relates to changes in the market value of our investments. At March 31,
2002, our investment portfolio includes fixed-income securities classified as available-for-sale investments with
a fair market value of $723.1 million and a cost basis of $718.6 million. These securities are subject to interest
rate risk and will decline in value if interest rates increase. Because the maturity dates of our investment portfolio
are relatively short, an immediate 100 basis point increase in interest rates would have no material impact on our
financial condition or results of operations.
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