45
June 30, 2013, which was fully satisfied, and $6.8 million, less adjustments for post-closing indemnifications of $1.9 million as of
December 31, 2013, up to a maximum adjustment of $2 million, plus interest due June 30, 2014. The promissory notes are effectively
subordinated to our structured debt and structurally subordinated to any of our present and future indebtedness and other obligations of
our subsidiaries.
We currently believe that we have sufficient capital resources with cash generated from operations as well as cash on hand to
meet our anticipated cash operating expenses, working capital, and capital expenditure and debt service needs for the next twelve
months. We have a $30 million undrawn Revolving Loan Facility through March 2018, $14.6 million undrawn Delayed Draw Term
Loan Facility available for retirement of the remaining notes due in November 2014 and up to an additional $18.9 million available on
March 31, 2015 for further borrowings if covenant requirements are met, as well as borrowing capacity under a capital lease facility.
We may also consider raising capital in the public markets as a means to meet our capital needs and to invest in our business.
Although we may need to return to the capital markets, establish new credit facilities, raise capital in private transactions in order to
meet our capital requirements, we can offer no assurances that we will be able to access these potential sources of funds on terms
acceptable to us or at all.
Off-Balance Sheet Arrangements
As of December 31, 2013, 2012, and 2011, we did not have any material standby letters of credit outstanding.
Contractual Commitments
As of December 31, 2013, our most significant commitments consisted of term debt, non-cancelable operating leases, purchase
obligations, and obligations under capital leases. Contractual acquisition earn-outs consist of contingent consideration included as part
of the purchase price of certain acquisitions. We lease certain furniture and computer equipment under capital leases. We lease office
space and equipment under non-cancelable operating leases. Purchase obligations represent contracts for parts and services in
connection with our government satellite services and systems offerings. As of December 31, 2013 our commitments consisted of the
following:
($ in millions)
Within 12
Months
1-3
Years
3-5
Years
More than
5 Years
Total
Senior credit facility............................................................... $
8.4 $
12.0 $
56.5 $
— $
76.9
7.75% convertible notes obligation........................................
3.9
7.7
55.8
—
67.4
4.5% convertible notes obligation..........................................
15.1
—
—
—
15.1
Operating leases .....................................................................
7.2
14.8
0.7
0.1
22.8
Purchase obligations ..............................................................
11.5
4.0
—
—
15.5
Capital lease obligations ........................................................
5.5
7.4
—
—
12.9
Promissory note, adjusted for post-closing indemnifications.
5.0
—
—
—
5.0
Contractual acquisition earn-outs...........................................
0.4
—
—
—
0.4
Total contractual commitments .................................... $
57.0 $
45.9 $
113.0 $
0.1 $
216.0
The preceding table does not reflect unrecognized tax benefits as of year ended 2013 of $4.8 million as the Company is unable
to estimate the timing of related future payments. The Company does not anticipate the total amounts of unrecognized tax benefits to
significantly increase in the next twelve months, see Note 16 to the Consolidated Financial Statements.
Item 7A.
Qualitative and Quantitative Disclosures about Market Risk
Interest Rate Risk
We have limited exposure to financial market risks, including changes in interest rates. As discussed above under “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,” we
have a $30.0 million line of credit and $66.1 million senior credit facility. A hypothetical 100 basis point adverse movement (increase)
in the prime rate would have increased our interest expense for the year ended December 31, 2013 by approximately $1.0 million.
At December 31, 2013, we had $41.9 million of cash and cash equivalents and $20 million of marketable securities, or a total of
$61.9 million. Cash and cash equivalents consisted of demand deposits and money market accounts that are interest rate sensitive.
Marketable securities consisted of corporate bonds and mortgage and asset backed securities, see Note 5. However, these investments
have short maturities mitigating their sensitivity to interest rates. A hypothetical 100 basis point adverse movement (decrease) in
interest rates would have decreased our net income for 2013 by approximately $0.6 million, resulting in no significant impact on our
consolidated financial position, results of operations or cash flows.
