Hypercom Corporation Annual Report - CiteSeer

Operating income for Asia-Pacific was $9.1 million in 2009 compared to $4.4 million in 2008. The $4.7 million increase is
primarily due to a $4.5 million write-down of goodwill and intangible assets in 2008, whereas no write-down was required in 2009.
Shared cost center expenses were $71.0 million in 2009 compared to $82.8 million in 2008. The $11.8 million decrease is
primarily due to lower integration costs from the TeT acquisition, including reductions of $2.0 million in professional fees and $1.5
million of legal expenses. In addition, as part of our continued effort to reduce costs there were reductions of $0.7 million in global
marketing expenses and $2.2 million of lower global research and development professional expenses. Stock-based compensation
expense decreased by $1.5 million, primarily due to lower fair value associated with stock options granted in 2009.
Comparison of Years Ended December 31, 2008 and 2007
Net Revenues
The Americas net revenues increased in 2008 compared to 2007, principally as a result of increases in countertop and multilane
products in North America and increases in services revenues in Brazil. Offsetting these increases were declines in countertop
revenue in Brazil, as we discontinued local manufacturing and sales activities in the third quarter of 2007, as well as a collection of
$4.6 million from a past service contract that had been previously written off during 2007. This did not re-occur in 2008. NEMEA
and SEMEA net revenues increased due to the acquisition of TeT during the year.
Operating Income
The Americas operating income increased in 2008 compared to 2007, principally as a result of increased product sales activity in
North America and services revenues in Brazil. In addition, 2007 was negatively impacted by increased inventory reserves related to
excess non-compliant PCI inventory. NEMEA and SEMEA operating profit increased in 2008 compared to 2007, principally as a
result the acquisition of TeT during the year, which was more than offset by the write-down of goodwill and intangible assets within
these regions. Asia-Pacific operating income decreased in 2008 compared to 2007, principally as a result of the sales mix and
declines in our Australian service margins. In addition, the operating income decreased due to the write-down of goodwill within this
region.
Shared cost center expenses increased in 2008 compared to 2007, principally as a result of an increase in costs incurred for due
diligence and acquisition related expenses of $8.3 million and global research and development of $4.7 million related to our
acquisition of TeT, and stock-based compensation of $1.6 million offset by decreases in operations management of $4.6 million as a
result of our transition to third-party contract manufacturing during 2008.
Liquidity and Capital Resources
We have historically financed our operations primarily through cash generated from operations and occasionally from borrowings
under a line of credit or other debt facilities. During 2009, our primary source of cash was cash generated by our operating activities.
Our ability to service our long-term debt, to remain in compliance with the various restrictions and covenants contained in our debt
agreements, and to fund working capital, capital expenditures and business development efforts, will depend on our ability to generate
cash from operating activities, which in turn is subject to, among other things, future operating performance, as well as general
economic, financial, competitive, legislative, regulatory and other conditions, some of which may be beyond our control. We have
available to us, upon compliance with certain conditions, a revolving credit facility, less any letters of credit outstanding under the
sub-line of the revolving credit facility. Availability under our revolving credit facility for cash and outstanding letters of credit was
$14.9 million as of December 31, 2009, after deducting outstanding letters of credit of $3.1 million under this revolving line of credit
at December 31, 2009.
Cash flows from operating activities
Cash provided by operating activities is comprised of net income (loss) from continuing operations adjusted for non-cash items
and changes in operating assets and liabilities. Cash provided by continuing operating activities totaled $30.6 million for 2009,
compared to cash provided by operating activities of $22.2 million for 2008, a year-over-year increase of $8.3 million. The increase in
cash provided by operations is principally related to changes in operating assets and liabilities and a reduction in our net loss before
discontinued operations from $84.9 million in 2009 to $5.9 million in 2008.
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