Enom 2013 Annual Report Download - page 66

Our obligations under the Credit Agreement are guaranteed by our material direct and indirect domestic subsidiaries, subject to certain
exceptions. Our obligations under the Credit Agreement and the guarantees are secured by a lien on substantially all of our tangible and
intangible property and substantially all of the tangible and intangible property of our domestic subsidiaries that are guarantors, and by a pledge
of all of the equity interests of our material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-
tier foreign subsidiaries, subject to limited exceptions.
The Credit Agreement contains customary events of default and affirmative and negative covenants, including certain financial
maintenance covenants requiring compliance with a maximum consolidated leverage ratio and a minimum fixed charge coverage ratio, as well
as other restrictions typical for a financing of this type that, among other things, restrict our ability to incur additional debt, pay dividends and
make distributions, make certain investments and acquisi tions, repurchase our capital stock and prepay certain indebtedness, create liens, enter
into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets and
merge or consolidate. Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance
outstanding under the Credit Agreement becoming immediately due and payable and termination of the outstanding commitments available
under the Revolving Loan Facility. As of December 31, 2013, we were in compliance with the covenants under the Credit Agreement.
The new credit facility provides us with significant additional flexibility and liquidity to pursue our strategic objectives, including the
separation of our domain name services business. The Credit Agreement permits the Proposed Business Separation to occur subject to certain
conditions, including pro forma compliance with the affirmative and negative covenants, including the fina ncial covenants, set forth in the
Credit Agreement, and maintenance of a minimum level of liquidity and a minimum trailing twelve month adjusted earnings before taxes,
interest, depreciation and amortization expense after giving effect to the Proposed Business Separation.
In the future, we may utilize commercial financings, bonds, debentures, lines of credit and loans with a syndicate of commercial banks or
other bank syndicates for general corporate purposes, including acquisitions and investing in our intangible assets, platform and technologies.
We expect that our existing cash and cash equivalents, Revolving Loan Facility and our cash flows from operating activities will be
sufficient to fund our operations for at least the next 12 months. However, we may need to raise additional funds through the issuance of equity,
equity-related or debt securities or through additional credit facilities to fund our growing operations, invest in new business opportunities and
make potential acquisitions. We currently ha ve an effective shelf registration statement on file with the SEC which we may use to offer and sell
debt or equity securities with an aggregate offering price not to exceed $100.0 million.
The following table sets forth our major sources and (uses) of cash for each period as set forth below (in thousands):
Cash Flow from Operating Activities
Year ended December 31, 2013
Net cash inflows from our operating activities was $76.2 million, a decrease of 16% or $14.8 million compared to the prior year. Our net
loss during the period was $20.2 million, which included non-cash charges of $91.1 million such as depreciation, amortization, stock-based
compensation, gain on other assets, net and deferred taxes. The remainder of the movement in our cash flow from operating activities was from
changes in our working capital, including increases in prepaids and other assets, accrued expenses, other long-term assets, deferred registration
costs and deposits with registries of $18.4 million, offset in part by increases in accounts receivable, accounts payable and deferred revenue of
$32.2 million. The increases in our deferred revenue and deferred registry costs were primarily due to growth in our Registrar business during
the period, while the decrease in our accounts receivable balances was primarily due to timing of collections.
Year ended December 31, 2012
Net cash inflows from our operating activities was $91.0 million, an increase of 7% or $5.6 million compared to the prior year. Our net
income during the period was $6.2 million, which included non-cash charges of $93.4 million such as depreciation, amortization, stock-based
compensation and deferred taxes. The remainder of the movement in our cash fl ow from operating activities was from changes in our working
capital, including increases in deferred revenue, accounts payable and accrued expenses of $10.6 million, offset by increases in accounts
receivable and deferred registration costs of $21.0 million. The increases in our deferred
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Year ended December 31,
2013
2012
2011
Net cash provided by operating activities
76,163
90,983
85,349
Net cash used in investing activities
(114,535
)
(67,482
)
(98,539
)
Net cash provided by (used in) financing activities
89,030
(6,566
)
66,936