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VIASYSTEMS GROUP INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q (the "Report"). We have made certain "forward-looking" statements in this Report under the protection of the safe harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such forward-looking statements include those statements made in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities and effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "expects," "may," "anticipates," "intends," "plans," "estimates" or the negative thereof or other similar expressions or comparable terminology. Forward-looking statements involve risks, uncertainties and assumptions and are not guarantees of future events or results. Actual results may differ materially from anticipated results expressed or implied in these forward-looking statements. You should not put undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we file this Report, except to the extent required by law. You should understand that many important factors could cause our results to differ materially from those expressed in forward-looking statements. These factors include, but are not limited to, global economic conditions, fluctuations in our operating results and customer orders, our competitive environment, our reliance on our largest customers, risks associated with our international operations, our ability to protect our patents and trade secrets, environmental laws and regulations, our substantial indebtedness, risks associated with integration of DDi Corp. and being controlled by VG Holdings, LLC. Please refer to the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2012, for additional factors that could materially affect our financial performance. Recent Developments Guangzhou Fire On September 5, 2012, we experienced a fire on the campus of our PCB manufacturing facility in Guangzhou, China which temporarily reduced the facility's manufacturing capacity (the "Guangzhou Fire"). While we were able to restore some of the lost capacity during the fourth quarter of 2012, it was not until the end of January 2013 before we were able to achieve normal operating capacity. In addition, the installation and calibration required to bring new equipment online caused labor inefficiencies and increased scrap rates during the first quarter. Where possible we shifted production of affected products to our other PCB facilities; however, due to customer qualification requirements, we were not able to shift all affected work orders. Our results for the first quarter of 2013 reflect the diminished capacity at our Guangzhou facility as well as a reduction in sales orders from some of our customers who required us to re-qualify our Guangzhou facility before they would place new orders. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, approximately 24% of our Printed Circuit Boards segment sales were attributable to our Guangzhou facility for the three months ended March 31, 2012. For the three months ended March 31, 2013, sales attributable to our Guangzhou facility declined by 33% as compared to the comparable period in 2012. 16 -------------------------------------------------------------------------------- Table of Contents Company Overview We are a leading worldwide provider of complex multi-layer rigid, flexible and rigid-flex printed circuit boards ("PCBs") and electro-mechanical solutions ("E-M Solutions"). PCBs serve as the "electronic backbone" of almost all electronic equipment, and our E-M Solutions products and services integrate PCBs and other components into finished or semi-finished electronic equipment, which include custom and standard metal enclosures, metal cabinets, metal racks and sub-racks, backplanes, cable assemblies and busbars. The products we manufacture include, or can be found in, a wide variety of commercial products, including automotive engine controls, hybrid converters, automotive electronics for navigation, safety, entertainment and anti-lock braking systems, telecommunications switching equipment, data networking equipment, computer storage equipment, semiconductor test equipment, wind and solar energy applications, off-shore drilling equipment, flight control systems, military communications applications and complex industrial, medical and other technical instruments. We have fifteen manufacturing facilities, including eight in the United States and seven located outside of the United States that allow us to take advantage of low cost, high quality manufacturing environments, while serving a broad base of customers around the globe. Our PCB products are produced in our eight domestic facilities, three of our five facilities in China and our one facility in Canada. Our E-M Solutions products and services are provided from our other two facilities in China and our one facility in Mexico. In addition to our manufacturing facilities, in order to support our customers' local needs, we maintain engineering and customer service centers in Hong Kong, China, the Netherlands, England, Canada, Mexico and the United States. We operate our business in two segments: Printed Circuit Boards, which includes our PCB products, and Assembly, which includes our E-M Solutions products and services. We are a supplier to more than 1,000 original equipment manufacturers ("OEMs") and contract electronic manufacturers ("CEMs") in numerous end markets. Our OEM customers include industry leaders such as Agilent Technologies, Inc., Alcatel-Lucent SA, Apple Inc., Autoliv, Inc., BAE Systems, Inc., Robert Bosch GmbH, Broadcom Corporation, Ciena Corporation, Cisco Systems, Inc., Continental AG, Dell Inc., Danahar Corporation, Ericsson AB, General Electric Company, Goodrich Corporation, Harris Communications, Hitachi, Ltd., Huawei Technologies Co. Ltd., Intel Corporation, L-3 Communications Holdings, Inc., Motorola Inc., NetApp, Inc., Q-Logic Corporation, Qualcomm Incorporated, Raytheon Company, Rockwell Automation, Inc., Rockwell Collins, Inc., Tellabs, Inc., TRW Automotive Holdings Corp., and Xyratex Ltd. In addition, we have good working relationships with industry-leading CEMs such as Benchmark Electronics, Inc., Celestica, Inc., Flextronics International Ltd., Foxconn Technology Group, Jabil Circuit, Inc. and Plexus Corp., and we supply PCBs and E-M Solutions products to these customers as well. Business Overview As a component manufacturer, our sales trends generally reflect the market conditions in the industries we serve. While we believe the long-term growth prospects for our PCB and E-M Solutions products remain steady, economic uncertainty continues to exist, and our visibility to future demand trends and pricing pressures remains limited. Having regained normal operating capacity after the Guangzhou Fire, we expect sales in the automotive end market will recover as they follow long-term industry demand trends. According to Prismark Partners LLC, a leading PCB industry research firm, the global automotive electronics market is expected to grow at a compound annual growth rate of 6.8% from 2012 to 2017. Market growth in automotive electronics is expected to be driven primarily by growth in worldwide vehicle sales, particularly to customers in emerging markets such as China, increased electronic content per vehicle and increased sales of hybrid and electric vehicles. 17 -------------------------------------------------------------------------------- Table of Contents In the industrial & instrumentation market, while we have experienced sales fluctuations with some of our larger customers due to their own particular circumstances, we expect sales trends in this diverse market will follow global economic trends. The telecommunications end market remains dynamic as the customers we supply produce a mix of products which include both new cutting edge applications as well as more mature products with varying levels of demand. We continue to try to position ourselves to take advantage of growth opportunities related to the introduction of next generation wireless technology standards, but this portion of the market has been slow to develop. In the computer and datacommunications end market, we continue to pursue new customers and programs for both our Printed Circuit Boards and Assembly segments, especially in the high-end server and storage sectors. In the military and aerospace market, while we continue to pursue market share gains as a result of continuing customer qualification activity, overall demand trends in this market have been negatively impacted by implementation of the budget sequester. Until there is some resolution to the ongoing budget debate in Washington, we expect pressures on U.S. government defense spending will continue to hamper demand and cause downward pricing pressures. Results of Operations Three Months Ended March 31, 2013, Compared with the Three Months Ended March 31, 2012 Net Sales. Net sales for the three months ended March 31, 2013, were $272.9 million, a $10.9 million, or 4.1%, increase from net sales during the same period in 2012. Driving this increase were sales from manufacturing and distribution facilities acquired in the DDi Acquisition, partially offset by decreased sales at legacy Viasystems Printed Circuit Boards and Assembly facilities. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales decreased by approximately $58.1 million, or 17.5%, to $272.9 million for the three months ended March 31, 2013, as compared with the same period in 2012. Net sales by end market for the three months ended March 31, 2013 and 2012, on i) a historical basis and ii) a pro forma basis as if the DDi Acquisition had been completed on January 1, 2012, were as follows: Pro Historical Forma End Market (dollars in millions) 2013 2012 2012 Automotive $ 78.9 $ 104.7 $ 105.9 Industrial & Instrumentation 68.8 63.0 87.1 Computer and Datacommunications 49.3 44.1 60.4 Telecommunications 44.3 38.7 45.9 Military and Aerospace 31.6 11.6 31.7 Total Net Sales $ 272.9 $ 262.1 $ 331.0 Our net sales of products for end use in the automotive market decreased by approximately $25.7 million, or 24.6%, during the three months ended March 31, 2013, compared with the same period in 2012. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales of products for use in this market decreased by approximately $27.0 million, or 25.5%, to $78.9 million for the three months ended March 31, 2013, as compared with the same period in 2012. The decrease was primarily a result of reduced manufacturing capacity at the beginning of the quarter which also slowed sales orders as we underwent requalification activity after the Guangzhou Fire. In addition, while we made an effort to lower selling prices in light of reductions in some material costs, we experienced reduced market share on some programs due to price competitiveness. 18 -------------------------------------------------------------------------------- Table of Contents Net sales of products ultimately used in the industrial & instrumentation markets for the three months ended March 31, 2013, increased by approximately $5.7 million, or 9.1%, compared with the same period in 2012. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales of products for use in this market decreased by approximately $18.2 million, or 20.9%, to $68.8 million for the three months ended March 31, 2013, as compared with the same period in 2012. The decrease in net sales was driven primarily by a decline in sales of wind power related programs as one of our largest customers began manufacturing a portion of the components we supply in-house. During the first quarter of 2013, net sales of our products for use in the computer and datacommunications market increased by approximately $5.2 million, or 11.8%, as compared with the same period in the prior year. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales of products for use in this market decreased by approximately $11.1 million, or 18.3%, to $49.3 million for the three months ended March 31, 2013, as compared with the same period in 2012. The decrease was primarily a result of reduced manufacturing capacity and a disruption in sales orders due to the Guangzhou Fire, a decline in orders from a customer that experienced reduced demand in their own business and loss of certain business due to price competitiveness, partially offset by increased demand and program wins with a customer we added in 2012. Net sales of products ultimately used in the telecommunications market increased by approximately $5.6 million, or 14.4%, for the quarter ended March 31, 2013, as compared with the quarter ended March 31, 2012. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales of products for use in this market decreased by approximately $1.7 million, or 3.6%, to $44.3 million for the three months ended March 31, 2013, as compared with the same period in 2012. The sales decline was primarily a result of reduced demand for certain programs we supply, partially offset by new program wins. Net sales to the military and aerospace end market increased by $20.1 million, or 173.3%, to $31.6 million for the quarter ended March 31, 2013, as compared with the quarter ended March 31, 2012. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, net sales of products for use in this market were essentially flat for the three months ended March 31, 2013, as compared with the same period in 2012. While we believe there are still opportunities to increase our market share in this market, the pro forma flat sales reflect tepid demand from our customers as a result of uncertainty caused by the budget sequester. Net sales by segment for the three months ended March 31, 2013 and 2012, on i) a historical basis and ii) a pro forma basis as if the DDi Acquisition had been completed on January 1, 2012, were as follows: Pro Historical Forma Segment (dollars in millions) 2013 2012 2012 Printed Circuit Boards $ 243.8 $ 215.0 $ 283.9 Assembly 31.9 49.0 49.0 Eliminations (2.8 ) (1.9 ) (1.9 ) Total Net Sales $ 272.9 $ 262.1 $ 331.0 Printed Circuit Boards segment net sales, including intersegment sales, for the three months ended March 31, 2013, increased by $28.9 million, or 13.4%, to $243.8 million. Assuming the DDi Acquisition had occurred on January 1, 2012, on a pro forma basis, Printed Circuit Boards segment net sales decreased by approximately $40.0 million, or 14.1%, to $243.8 million for the three months ended March 31, 2013, as compared with the same period in 2012. The decrease was a result of pro forma decreases in net sales in all but our telecommunications end market. Assembly segment net sales decreased by $17.1 million, or 34.8%, to $31.9 million for the three months ended March 31, 2013, compared with the first quarter of 2012. The decrease was primarily the result of reduced demand in wind power programs in our industrial & instrumentation end market. 19 -------------------------------------------------------------------------------- Table of Contents Cost of Goods Sold. Cost of goods sold, exclusive of items shown separately in the condensed consolidated statement of operations and comprehensive (loss) income for the three months ended March 31, 2013, was $219.1 million, or 80.3%, of consolidated net sales. This represents a 0.2 percentage point improvement from the 80.5% of consolidated net sales for the first quarter of 2012. Cost of goods sold as a percentage of net sales were positively impacted during the quarter by reduced incentive compensation, staffing reductions at certain of our PCB manufacturing facilities in China during the second half of 2012 and an increase in quick-turn PCB sales which enjoy a higher sales margin, partially offset by manufacturing inefficiencies stemming from the Guangzhou Fire. The costs of materials, labor and overhead in our Printed Circuit Boards segment can be impacted by trends in global commodities prices and currency exchange rates, as well as other cost trends which can impact minimum wage rates, electricity and diesel fuel costs in China. Economies of scale can help to offset any adverse trends in these costs. With anticipated changes in minimum wage laws in China, we expect our labor costs may increase over the next twelve months. During the second half of 2012, we gave notice and began to gradually reduce staffing at certain of our PCB manufacturing facilities in China. Through the end of 2012 we had implemented most of the planned reductions, and we expect the balance of these headcount reductions will be completed over the balance of 2013. Cost of goods sold in our Assembly segment relates primarily to component materials costs. As a result, trends in sales volume for the segment drive similar trends in cost of goods sold. Selling, General and Administrative Costs. Selling, general and administrative costs increased by $6.2 million, or 28.9%, to $27.7 million for the three months ended March 31, 2013, compared to the same period in the prior year. The increase in selling, general and administrative costs is primarily a result of costs associated with manufacturing and administrative sites acquired in the DDi Acquisition, increased non-cash stock compensation expense and costs associated with management meetings during the first quarter of 2013, partially offset by reduced professional fees related to the DDi Acquisition and reduced incentive compensation expense. Depreciation. Depreciation expense for the three months ended March 31, 2013, was $22.0 million, including $20.9 million related to our Printed Circuit Boards segment and $1.1 million related to our Assembly segment. Depreciation expense in our Printed Circuit Boards segment increased by approximately $4.9 million, or 30.4%, compared to the same period last year primarily as a result of fixed assets acquired in the DDi Acquisition and increased investments in new equipment during the past twelve months at legacy Viasystems facilities. Depreciation expense in our Assembly segment increased by approximately $0.1 million primarily as a result of new capital investments over the last twelve months. Restructuring and Impairment. During the three months ended March 31, 2013, we incurred no restructuring charges as compared to the three months ended March 31, 2012, when we recognized $6.4 million of restructuring charges in our Printed Circuit Boards segment related to the announcement of the closure of our Huizhou, China facility and $0.6 million of restructuring charges in our Assembly segment related to the announcement of the closure of our Qingdao, China facility. The district where our Huizhou facility was located was redeveloped away from industrial use, and we were unable to renew our lease of the facility. The Huizhou facility ceased operations during the third quarter of 2012, and was returned to the landlord in January 2013. Our Qingdao facility had primarily operated as a satellite facility supporting the operations of our E-M Solutions facility in Shanghai, China. In order to achieve operational efficiencies and cost reductions, we consolidated the operations of the Qingdao facility into our other E-M Solutions facilities in China. The Qingdao facility ceased operations and was returned to the landlord during the third quarter of 2012. 20 -------------------------------------------------------------------------------- Table of Contents At the time we acquired DDi in May 2012, DDi was in the process of building a new PCB manufacturing facility in Anaheim, California with plans to relocate its existing Anaheim operations from a leased facility. We expect the new facility will be completed and the Anaheim operations will transition to the new facility during the second and third quarters of 2013. In connection with the relocation of the Anaheim operations, we expect to incur restructuring costs in our Printed Circuit Boards segment of approximately $1.0 million. Operating Income. Operating income of $2.6 million for the three months ended March 31, 2013, represents a decrease of $2.6 million compared to operating income of $5.2 million for the three months ended March 31, 2012. The primary sources of operating income (loss) for the three months ended March 31, 2013 and 2012, were as follows: Source (dollars in millions) 2013 2012 Printed Circuit Boards segment $ 3.7 $ 7.1 Assembly segment (1.0 ) (0.9 ) Other (0.1 ) (1.0 ) Operating income $ 2.6 $ 5.2 Operating income from our Printed Circuit Boards segment decreased by $3.4 million to $3.7 million for the three months ended March 31, 2013, compared to $7.1 million for the same period in the prior year. The decrease is primarily the result of increased selling, general and administrative and depreciation costs partially offset by decreased restructuring and impairment charges. Operating loss from our Assembly segment was $1.0 million for the three months ended March 31, 2013, compared to a loss of $0.9 million in the first quarter of 2012. The increase is primarily the result of reduced sales volumes. The operating loss in the "Other" segment for the three months ended March 31, 2013 and 2012, relate to professional fees and other expenses associated with the DDi Acquisition. Adjusted EBITDA. We measure our performance primarily through our operating income. In addition to our consolidated financial statements presented in accordance with U.S. GAAP, management uses certain non-U.S. GAAP financial measures, including "Adjusted EBITDA." Adjusted EBITDA is not a recognized financial measure under U.S. GAAP, and does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is presented to enhance an understanding of our operating results and is not intended to represent cash flows or results of operations. Our board of directors, lenders and management use Adjusted EBITDA primarily as an additional measure of operating performance for matters including executive compensation and competitor comparisons. In addition, the use of this non-U.S. GAAP measure provides an indication of our ability to service debt, and we consider it an appropriate measure to use because of our highly leveraged position. Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to our consolidated results of operations, such as interest expense, income tax expense and depreciation and amortization. In addition, Adjusted EBITDA may differ from the Adjusted EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure. We use Adjusted EBITDA to provide meaningful supplemental information regarding our operating performance and profitability by excluding from EBITDA certain items that we believe are not indicative of our ongoing operating results or will not impact future operating cash flows, as follows: • Stock Compensation - non-cash charges associated with recognizing the fair value of stock options and other equity awards granted to employees and directors. We exclude these charges to more clearly reflect comparable year-over-year cash operating performance. 21 -------------------------------------------------------------------------------- Table of Contents • Costs Relating to Acquisitions and Equity Registrations - professional fees and other non-recurring costs and expenses associated with mergers and acquisition activity as well as costs associated with capital transactions, such as equity registrations. We exclude these costs and expenses because they are not representative of our customary operating expenses. • Restructuring and Impairment Charges - which consist primarily of facility closures and other headcount reductions. Historically, a significant amount of these restructuring and impairment charges have been non-cash charges related to the write-down of property, plant and equipment to estimated net realizable value. We exclude these restructuring and impairment charges to more clearly reflect our ongoing operating performance. Reconciliations of operating income to Adjusted EBITDA for the three months ended March 31, 2013 and 2012, were as follows: Three Months Ended March 31, Source (dollars in millions) 2013 2012 Operating income $ 2.6 $ 5.2 Add-back: Depreciation and Amortization 23.6 17.4 Non-cash stock compensation expense 3.2 2.5 Costs relating to acquisitions and equity registrations 0.1 1.0 Restructuring and impairment - 7.0 Adjusted EBITDA $ 29.5 $ 33.1 Adjusted EBITDA decreased by $3.6 million, or 10.7%, primarily as a result of increased selling, general and administrative costs partially offset by lower cost of goods sold relative to net sales levels. Interest Expense, Net. Interest expense, net of interest income, was $11.2 million for the three month period ended March 31, 2013, compared with $7.4 million for the quarter ended March 31, 2012. On April 30, 2012, we issued $550.0 million in aggregate principal amount of 7.875% senior secured notes due 2019 and on May 30, 2012, we redeemed our $220.0 million in the aggregate principal amount of 12.0% Senior Secured Notes due 2015. The increase in interest expense is primarily due to the incremental interest expense associated with the 2019 Notes compared with the 2015 Notes and interest expense associated with mortgage loans assumed in the DDi Acquisition. Other Income and Expense. Other expense, net for the three months ended March 31, 2013 and 2012, was $0.7 million and $0.2 million, respectively, and consisted primarily of net foreign currency translation losses, net losses upon the disposal of fixed assets and state franchise taxes. We are party to contracts and agreements with third parties in which we have agreed to indemnify such parties against certain liabilities in connection with claims by unrelated parties. At March 31, 2013, other non-current liabilities include $11.3 million of accruals for potential claims in connection with such indemnities. We presently expect to reverse approximately $9.0 million of these accruals during the fourth quarter of 2013 upon the lapse of the period during which certain of these claims could be made. The amount of any such reversals will be included in other income in our consolidated statements of operations and comprehensive (loss) income. Income Taxes. Our income tax provision relates to i) taxes provided on our pre-tax earnings based on the effective tax rates in the jurisdictions where the income is earned and ii) other tax matters, including changes in tax-related contingencies and changes in the valuation allowance established for deferred tax assets. Taxes provided on pre-tax income relate primarily to our profitable operations in China. Because of substantial net operating loss carryforwards related to the U.S. and other tax jurisdictions, we have not recognized income tax benefits in those jurisdictions for certain expenses, including our substantial interest expense. For the three months ended March 31, 2013, our tax provision included net expense of $2.5 million related to our pre-tax earnings and $0.6 million related to other tax matters. For the three months ended March 31, 2012, our tax provision includes net expense of $2.7 million related to pre-tax earnings and a net benefit of $0.5 million related to other tax matters. 22 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources We believe that cash flow from operations, availability on credit facilities and available cash on hand will be sufficient to fund our recurring capital expenditure requirements and other currently anticipated cash needs for the next twelve months. Our ability to meet our cash needs through cash generated by our operating activities will depend on the demand for our products, as well as general economic, financial, competitive and other factors, many of which are beyond our control. We cannot be assured however, that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule, that future borrowings will be available to us under our credit facilities or that we will be able to raise third party financing in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness. Our principal liquidity requirements over the next twelve months will be for i) $21.7 million semi-annual interest payments required in connection with the 2019 Notes, payable in May and November each year ii) capital expenditure needs of our continuing operations, iii) working capital needs, iv) debt service requirements in connection with our credit facilities and other debt, including $0.9 million payable upon the maturity of our 2013 Notes and v) costs to relocate our Anaheim, California operations from a leased facility to an owned facility beginning in the second quarter. In addition, the potential for acquisitions of other businesses in the future may require additional debt or equity financing. Cash Flow Net cash provided by operating activities for the three months ended March 31, 2013 and 2012, was $29.1 million and $10.3 million, respectively. The increase in net cash from operating activities is primarily due to positive changes in working capital, partially offset by lower net income. Net cash used in investing activities was $20.0 million for the three months ended March 31, 2013, and primarily related capital expenditures. Net cash used in investing activities was $23.4 million for the three months ended March 31, 2012, and primarily related to capital expenditures of approximately $22.4 million and a $1.1 million deposit paid towards the acquisition of the remaining 15% interest in our Huizhou, China facility. Our Printed Circuit Boards segment is a capital-intensive business that requires annual spending to keep pace with customer demands for new technologies, cost reductions, and product quality standards. The spending required to meet our customers' requirements is incremental to recurring repair and replacement capital expenditures required to maintain our existing production capacities and capabilities. Total capital expenditures by our Printed Circuit Boards segment for the three months ended March 31, 2013 and 2012, were $19.1 million and $18.9 million, respectively. Given the uncertainty about global economic conditions, we have and will continue to focus on managing capital expenditures to respond to changes in demand or other economic conditions. Net cash used in financing activities was $0.3 million for the three months ended March 31, 2013 which related to the repayment of the North America mortgages loans. Net cash used in financing activities was $0.3 million for the three months ended March 31, 2012, which related to financing commitments obtained in connection with the DDi Acquisition. 23 -------------------------------------------------------------------------------- Table of Contents |