Annual Report 2009 (1 MB, pdf) - Vasco

to a maximum of 5,000 Euros. Borrowing under the line of credit may be denominated in Euros, U.S. Dollars or
Swiss Francs. If the borrowings are denominated in Euros, we are obligated to pay interest at the monthly
average of the EONIA (Euro Over Night Index Average) plus 2.5% per year. If the borrowings are denominated
in U.S. Dollars, we are obligated to pay interest at the U.S. Dollar Fed Fund Rate plus 2.5% per year. If the
borrowings are denominated in Swiss Francs, we are obligated to pay interest at the Swiss National Bank Repo
rate plus 2.5% per year. Either party can terminate the credit line with 14 days notice without penalty. If
terminated, all borrowings under the line then outstanding would be due and payable. The bank can also
terminate the credit line immediately if VASCO fails to observe the specific terms of the credit line, becomes
insolvent, ceases operation or experiences a change in control. We had no borrowings under the credit line at
December 31, 2009.
The net effect of 2009 activity resulted in an increase in net cash of $9,887 and a net cash balance of
$67,601 at December 31, 2009, compared to $57,714 at the end of 2008. Our working capital at December 31,
2009 was $87,632, an increase of $11,702 or 15% from $75,930 at December 31, 2008. The change is primarily
attributable to the generation of positive cash flow from operations in 2009. Our current ratio was 4.8 to 1.0 at
December 31, 2009. We believe that our current cash balances, credit available under our existing overdraft
agreement and the anticipated cash generated from operations, including deposits received on orders of
DIGIPASS to be delivered in 2010, will be sufficient to meet our anticipated cash needs for the next 12 months.
The net effect of 2008 activity resulted in an increase in net cash of $18,881 and a net cash balance of
$57,714 at December 31, 2008, compared to $38,833 at the end of 2007. Our working capital at December 31,
2008 was $75,930, an increase of $23,492 or 45% from $52,438 at December 31, 2007. The change was
primarily attributable to the generation of positive cash flow from operations in 2008. Our current ratio was 3.5
to 1.0 at December 31, 2008.
While we believe that our financial resources and current borrowing arrangements are adequate to meet
our operating needs over the next twelve months, we anticipate that the difficult current economic conditions that
exist on a worldwide basis today may require us to modify our business plans. In the current economic
environment there is an increased risk that customers may delay their orders until the economic conditions
stabilize or improve. If a significant number of orders are delayed for an indefinite period of time, our revenue
and cash receipts may not be sufficient to meet the operating needs of the business. If this is the case, we may
need to borrow against our credit line, significantly reduce our workforce, sell certain of our assets, enter into
strategic relationships or business combinations, discontinue some or all of our operations, or take other similar
restructuring actions. While we expect that these actions would result in a reduction of recurring costs, they also
may result in a reduction of recurring revenue and cash receipts. It is also likely that we would incur substantial
non-recurring costs to implement one or more of these restructuring actions. See our “Risks Related to Our
Business” in Item 1A, Risk Factors.
Off-Balance Sheet Arrangements
The company has no off-balance sheet arrangements.
Contractual Obligations
The company has the following contractual obligations:
Total
Less than
1 year
Payments due by period
1-3
years
3-5
years
More than
5 years
Operating lease obligations ......... $13,500 $ 3,179 $4,439 $2,777 $3,105
Purchase obligations .............. 14,499 14,499 — — —
Warranty reserve ................. 150 150 — — —
Total contractual obligations . . . $28,149 $17,828 $4,439 $2,777 $3,105
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