8x8 2012 Annual Report Download - page 39

• the expense associated with stock-based awards.
Net cash used in investing activities was $5.4 million in fiscal 2011, compared with $0.9 million used in investing activities in
fiscal 2010. The increase in cash used in investing activities during fiscal 2011 is primarily related to the purchase of
investments ($2.0 million), the acquisition of Central Host in May 2010 ($1.0 million), a strategic investment in Stonyfish in
April 2010 ($0.3 million) and the purchase of additional equipment ($2.1 million) related to the build-out of our new East
Coast data center and growth in our data centers on the West Coast for voice and managed hosting services.
Net cash used in financing activities was $4.8 million in fiscal 2011, compared with $0.1 million provided by financing
activities in fiscal 2010. Our financing activities for fiscal 2011 used cash of $7.7 million for the repurchase of shares of
common stock under our share repurchase plan and $0.5 million for the buyout of employee stock options under the existing
provisions of our 1996 Stock Plan and 1999 Nonstatutory Stock Option Plan. The use of cash in financing activities in fiscal
2011 was partially offset by $3.4 million in cash provided by the issuance of common stock under our employee stock
purchase plan, the issuance of shares related to the exercise of warrants, and the issuance of restricted shares.
Contractual Obligations
Future operating lease payments, capital lease payments and purchase obligations at March 31, 2012 for the next five years
were as follows (in thousands):
2013 2014 2015 2016 2017 Total
Capital leases $ 69 $ 32 $ 21 $ 8 $ - $ 130
Office leases 938 1,578 1,625 1,674 6,422 12,237
Purchase obligations
Third party customer support provider 2,158 - - - - 2,158
Third party network service providers 664 70 7 - - 741
Open purchase orders 48 - - - - 48
$ 3,877 $ 1,680 $ 1,653 $ 1,682 $ 6,422 $ 15,314
Year Ending March 31,
On April 27, 2012, the Company entered into a seven-year lease for a new primary facility in San Jose, California, with a
scheduled commencement date of August 1, 2012. The lease is an industrial net lease with monthly base rent of $130,821 for
the first 15 months with a 3% increase each year thereafter. The table above includes this commitment.
In the third quarter of 2010, we amended our contract with one of our third party customer support vendors containing a
minimum monthly commitment of approximately $430,000. The agreement requires a 150-day notice to terminate. At March
31, 2012, the total remaining obligation under the contract was $2.2 million.
We entered into contracts with multiple vendors for third party network service providers which expire on various dates in
fiscal 2013 through 2015. At March 31, 2012, the total remaining obligations under these contracts were $0.7 million.
At March 31, 2012, we had open purchase orders of $48,000, primarily related to inventory purchases from our contract
manufacturers. These purchase commitments are reflected in our consolidated financial statements once goods or services
have been received or at such time when we are obligated to make payments related to these goods or services.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our investment activities is to preserve principal while maximizing income without significantly
increasing risk. Some of the securities in which we invest may be subject to market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we may maintain our
portfolio of cash equivalents and investments in a variety of securities, including commercial paper, money market funds, debt
securities and certificates of deposit. The risk associated with fluctuating interest rates is limited to our investment portfolio
and we do not believe that a 10% change in interest rates would have a significant impact on our interest income.
During the years ended March 31, 2012 and 2011, we did not have any outstanding debt instruments other than equipment
under capital leases and, therefore, we were not exposed to market risk relating to interest rates.
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