Digital River 2006 Annual Report Download - page 58

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cash paid for acquisitions, net of cash received, of $126.5 million and purchases of capital equipment of
$6.6 million and capitalized internal-use software of $2.7 million.
In January 2006, we acquired Direct Response Technologies, Inc. (now DR Marketing Solutions, Inc.) for
approximately $15.0 million in cash, and in June 2006, we acquired MindVision for approximately $21.2 million
in cash payments to stockholders plus the assumption of certain liabilities. In December 2005, we acquired all of
the capital stock of Commerce5, Inc., an outsourced e-commerce provider to high-tech and consumer electronics
manufacturers for $45.1 million in cash. In March 2005, we acquired SWReg, an operating business of Atlantic
Coast plc, a private limited UK company, for $8.8 million in cash. In November 2004, we acquired all of the
outstanding stock of BlueHornet Networks, Inc. Under the terms of the agreement we issued 160,185 shares of
common stock to BlueHornet shareholders and assumed debt obligations of BlueHornet totaling approximately
$0.7 million. In June 2004, we acquired substantially all of the assets and assumed certain liabilities of Fireclick,
Inc. Under the terms of the agreement, we paid $7.5 million in cash. In April 2004, we acquired element 5 AG
(now Digital River GmbH), a privately held company based in Germany. Under the terms of the acquisition, we
paid $120 million in cash to acquire all of the outstanding shares of capital stock of element 5.
Net cash provided by financing activities in 2006, 2005 and 2004 was $204.6 million, $12.3 million and
$209.0 million, respectively. Our external financing has been provided primarily by the sale of our stock and
convertible notes in private and public offerings, and, to a lesser extent, by sales to employees under our
employee stock purchase plan and by exercise of stock options. In March 2006, we sold 4.0 million shares of
our common stock. The offering provided net proceeds of $172.8 million, and was made pursuant to a shelf
registration statement previously filed with the Securities and Exchange Commission. During 2006, proceeds
from the exercise of stock options provided cash of $21.1 million, and proceeds of $9.0 million were provided
by the excess tax benefit from stock-based compensation. During 2005, proceeds from the exercise of stock
options provided cash of $23.2 million, and we repurchased $13.1 million of common stock, which reduced
our net cash provided by financing activities. In June 2004, we sold and issued $175 million in aggregate
principal amount of 1.25% convertible senior notes due January 1, 2024, in a private, unregistered offering.
The notes were subsequently registered for resale. The notes were sold at 100% of their principal amount. The
initial purchasers exercised in full their option to purchase up to an additional $20 million in aggregate
principal amount of the notes, closing on July 6, 2004. Cash provided from the issuance of convertible senior
notes in 2004 totaled $188.4 million, net of financing expense. Proceeds from the exercise of stock options
provided cash of $19.7 million in 2004.
Liquidity and Capital Resource Requirements
We believe that existing sources of liquidity and the results of our operations will provide adequate cash
to fund our ongoing operations for the foreseeable future, although we may seek to raise additional capital
during that period. In January 2005, we filed a registration statement to increase our available shelf registration
amount from approximately $55 million to approximately $255 million. In addition, we filed an acquisition
shelf for up to approximately 1.5 million shares. In February 2006, we filed a shelf registration that would
allow us to sell an undetermined amount of equity or debt securities in accordance with the recently approved
rules applying to “well known seasoned issuers.” These filings were made to provide future flexibility for
acquisition and financing purposes. The sale of additional equity or convertible debt securities could result in
additional dilution to our stockholders. There can be no assurances that financing will be available in amounts
or on terms acceptable to us, if at all.
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