Tucows 2014 Annual Report Download - page 103

Liquidity and capital resources
As of December 31, 2014, our cash and cash equivalents balance decreased by $4.1 million to $8.3 million when
compared to December 31, 2013. Our principal sources of liquidity during Fiscal 2014 was net cash provided by
operating activities of $8.9 million and the proceeds of $3.4 million we received on the exercise of stock options.
We have credit agreements (collectively the “Amended Credit Facility”) with the Bank that were amended on
November 19, 2012, and which provide us with access to a demand loan revolving facility (“the 2012 DLR Loan”) and a
demand loan revolving reducing facility (“the 2012 DLRR Loan”) that provide for a $14 million, five year revolving
credit facility, a $3.5 million treasury risk management facility and a $1.0 million operating demand loan. At
December 31, 2014, the 2012 DLR Loan and the DLRR Loan were fully repaid.
The Amended Credit Facility also provides for a $3.5 million settlement risk line to assist us with hedging
Canadian dollar exposure through foreign exchange forward contracts and/or currency options. Under the terms of the
Amended Credit Facility, we may enter into such agreements at market rates with terms not to exceed 18 months. As of
December 31, 2014, the Company held contracts in the amount of $26.2 million to trade U.S. dollars in exchange for
Canadian dollars.
The Amended Credit Facility contains customary events of default and affirmative and negative covenants and
restrictions, including certain financial maintenance covenants such as a maximum total funded debt to EBITDA ratio
and a minimum fixed charge ratio. As of December 31, 2014, we were in compliance with all our covenants.
Cash Flow from Operating Activities
Year ended December 31, 2014
Net cash inflows from operating activities were $8.9 million, an increase of 2% when compared to the prior
year. Net income, after adjusting for non-cash charges, during Fiscal 2014 was $8.0 million, an increase of 42% when
compared to the prior year. Net income included non-cash charges and recoveries of $1.7 million such as depreciation,
amortization, impairment of indefinite life intangible asset, stock-based compensation, the provision for unrealized
losses on currency forward contracts, excess tax benefit related to stock-based compensation and a recovery for
deferred tax. In addition, changes in our working capital generated $0.9 million. Positive contributions of $2.9 million
from movements in accounts payable, deferred revenue, prepaid expenses and deposits and accrued liabilities were
partially offset by our utilizing $2.0 million to fund a reduction in deferred registration costs, income taxes, customer
deposits and inventory and an increase in accounts receivable.
Year ended December 31, 2013
Net cash inflows from operating activities were $8.7 million, an increase of 37% when compared to the prior
year. Net income, after adjusting for non-cash charges, during Fiscal 2013 was $5.7 million, which included non-cash
charges and recoveries of $1.5 million such as depreciation, amortization, stock-based compensation, the provision for
unrealized losses on currency forward contracts, excess tax benefit related to stock-based compensation and a recovery
for deferred tax. In addition, changes in our working capital generated $3.0 million. Positive contributions of $5.4 million
from movements in deferred registration costs, income taxes, accrued liabilities, inventory, accounts payable and prepaid
expenses and deposits, were partially offset by our utilizing $2.4 million to fund a reduction in deferred revenue and
customer deposits and an increase in accounts receivable.
Year ended December 31, 2012
Net cash inflows from operating activities were $6.3 million, an increase of 8% when compared to the prior year.
Net income, after adjusting for non-cash charges, during Fiscal 2012 was $6.0 million, which included non-cash charges
and recoveries of $1.6 million such as a provision for deferred tax, gain on currency forward contracts, depreciation,
amortization and stock-based compensation. The remainder of our source of net cash flow from operating activities was
from changes in our working capital, with positive contributions of $4.3 million from movements in deferred revenue,
accounts payable, accrued expenses, income taxes recoverable and customer deposits being partially offset by our
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