Earthlink 2011 Annual Report Download - page 69

Table of Contents
at the discretion of the Board of Directors and will depend on, among other things, our results of operations, financial condition, cash
requirements, investment opportunities and other factors the Board of Directors may deem relevant.
Other.
We may use cash to invest in or acquire other companies, to repurchase common stock or to repurchase or redeem debt. We
expect to continue to evaluate and consider potential strategic transactions that we believe may complement or grow our business. Although we
continue to consider and evaluate potential strategic transactions, there can be no assurance that we will be able to consummate any such
transaction.
Our cash requirements depend on numerous factors, including costs required to integrate our acquisitions, costs required to repurchase debt,
the size and types of future acquisitions in which we may engage, the costs required to maintain our network infrastructure, the pricing of our
access services and the level of resources used for our sales and marketing activities, among others. In addition, our use of cash in connection
with acquisitions may limit other potential uses of our cash, including stock repurchases, debt repayments or repurchases and dividend payments.
Future sources of cash
Our principal sources of liquidity are our cash, cash equivalents and marketable securities, as well as the cash flow we generate from our
operations. During the years ended December 31, 2009, 2010 and 2011, we generated $208.6 million, $154.4 million and $148.1 million in cash
from operations, respectively. As of December 31, 2011, we had $211.8 million in cash and cash equivalents and $29.6 million in marketable
securities. Our cash, cash equivalents and marketable securities are subject to general credit, liquidity, market, and interest rate risks, which may
be exacerbated by unfavorable economic conditions.
Another source of liquidity is our revolving credit facility. In May 2011, we entered into a credit agreement providing for a senior secured
revolving credit facility with aggregate revolving commitments of $150.0 million. The senior secured revolving credit facility terminates in May
2015, and at that time all amounts outstanding thereunder shall be due and payable in full. As of December 31, 2011, no amounts had been
drawn or were outstanding under the senior secured revolving credit facility.
Our available cash and cash equivalents, together with our results of operations, are expected to be sufficient to meet our operating
expenses, service outstanding indebtedness, capital requirements and investment and other obligations for the next 12 months. However, to
increase available liquidity or to fund acquisitions or other strategic activities, we may seek additional financing. We have no commitments for
any additional financing and have no lines of credit or similar sources of financing, other than the $150.0 million credit facility we entered into
in May 2011. We cannot be sure that we can obtain additional financing on favorable terms, if at all, through the issuance of equity securities or
the incurrence of additional debt. Additional equity financing may dilute our stockholders, and debt financing, if available, may restrict our
ability to repurchase common stock or debt, declare and pay dividends and raise future capital. If we are unable to obtain additional needed
financing, it may prohibit us from making acquisitions, capital expenditures and/or investments, which could materially and adversely affect our
business.
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