strategic report for american science &...
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Strategic Report for American Science & Engineering
Joe Thorpe
Levon Balayon Alex Menenberg
April 20, 2009
American Science & Engineering
April 2009 Page 2
Table of Contents
Executive Summary..........................................................................................................................3 History...............................................................................................................................................4 Product Line & Current Model .....................................................................................................6
Competitive Analysis........................................................................................................................7 Internal Rivalry.................................................................................................................................7 Supplier Power.................................................................................................................................7 Buyer Power .....................................................................................................................................8 Entry and Exit..................................................................................................................................9 Substitutes.........................................................................................................................................9 Complements .................................................................................................................................10
SWOT .................................................................................................................................................11 Strengths .........................................................................................................................................11 Weaknesses.....................................................................................................................................11 Opportunities .................................................................................................................................11 Threats.............................................................................................................................................11
Financial Analysis ...........................................................................................................................13 Key Financial Metrics ...................................................................................................................13 Conclusion......................................................................................................................................14
Strategic Recommendations ........................................................................................................15 References .........................................................................................................................................19 Appendix – Financial Statements...............................................................................................20
Balance Sheet..................................................................................................................................20 Income Statement..........................................................................................................................21 Statement of Cash Flows..............................................................................................................22
American Science & Engineering
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Executive Summary
American Science & Engineering is a technology company that produces X-ray
technology for government and private institutions to help detect contraband. While ASEI
has flourished in recent years as a result of the increase of the United State’s investment in
homeland security, the company has hired Oasis Consulting in order to continue growth in
an uncertain economic and political climate.
The United States currently has a new executive administration as well as a saturated
market for American Science & Engineering’s products. While a potential buyout should be
considered, we believe that by diversifying the company’s product line and also continuing
expansion into foreign markets, ASEI can continue with the exceptional growth that it has
experienced. This strategic report is broken up into five main sections: Company
Background, Competitive Analysis, SWOT, Financial Analysis and our Strategic
Recommendation. We will attempt to show that ASEI cannot be content with current
success and must look towards maintaining continued growth into the future.
American Science & Engineering
April 2009 Page 4
Company Overview
History
X-Ray Technology and Astronomy:
American Science and Engineering formed in 1958 as a developer of scientific
instruments and applications for NASA. In 1959, renowned scientist Dr. Riccardo Giacconi
joined the company and created a small astronomy team to focus research on X-rays. In
1963 Dr. Giacconi’s team launched a rocket equipped with X-ray detectors and discovered
Sco X-1, the first known X-ray source outside the solar system. Throughout the 1960's and
1970's the team carried on its innovative spirit by pioneering the discovery of X-ray related
astronomical phenomena and construction of X-ray detecting technology. Notable
achievements during this period include:
1965:
AS&E participates in launch operations for eight rocket and satellite payloads
carrying instrumentation designed and developed by AS&E. Among these flights is a
NASA rocket carrying an image-forming X-ray telescope designed by AS&E. This
experiment results in the first successful photograph of the sun in soft X-rays.
1967:
AS&E builds the first focusing X-Ray telescope, a model of which is now flying as
part of the Orbiting Solar Observatory launched on October 18. The telescope
returns an X-ray picture of the sun every five minutes for the next 15 years.
1969:
The first stop-action sequence ever taken of the development of a solar flare in X-
rays is obtained during a rocket launch of AS&E's telescope - the largest X-ray
telescope flown to date.
1970:
Dr. Giacconi's research group launches "Uhuru" - the first satellite dedicated
completely to X-ray astronomy. Uhuru completes its mission in 1973.
American Science & Engineering
April 2009 Page 5
An Expanding Focus
Beginning in the 1970 with the acquisition of Sippican Electronics Division of
Sippican Corporation, American Science and Engineering expanded its focus to include
other applications of X-Ray, such as defense, education, medicine, non-destructive testing,
and security. In 1975 American Science and Engineering became a public company and a
year later, introduced ASEP to the market, a field-leading system for public utility load
management, demand metering and automatic remote meter reading. ASEP became a major
revenue-generator for AS&E during the 1980s and provided AS&E with ample cash to fund
the increased scope of business.
AS&E has a strong and storied history of scientific innovation, particularly in the
field of X-ray technology. Formed in 1958, AS&E began as a developer of scientific
instruments and applications for NASA. In 1959, Dr. Riccardo Giacconi joined AS&E and
created an X-ray astronomy team. In the coming decades, Dr. Giacconi's team made a
succession of pioneering discoveries and developments in the field of X-ray technology,
including the discovery of the first known X-ray source outside the solar system (1962), the
first successful soft X-ray photograph of the sun (1965), the launch of the first satellite
dedicated completely to X-ray astronomy (1970), and the launch of the Einstein Observatory
– the world's largest X-ray telescope (1978). Dr. Giacconi's pioneering work at AS&E later
earned him the Nobel Prize in Physics.
In subsequent years, AS&E also developed innovative technologies in the fields of
defense, education, medicine, non-destructive testing, and security. AS&E's additional
technological achievements include: development of low energy, high resolution Computed
Tomography (CT) scanning of the human body, derivatives of which are used today in
medical scanning systems worldwide; as well as development of the first practical rail car
inspection system used by the U.S. Government to scan rail cars leaving Russian missile
factories, to confirm compliance with the 1972 Intermediate Range Nuclear Forces Treaty.
AS&E also designed and implemented high-resolution non-destructive testing systems to
inspect aluminum welds on the U.S. Space Station.
Beginning in the 1980's, American Science and Engineering introduced a new focus
of production to security products with the introduction of MICRO-DOSE X-ray System.
American Science & Engineering
April 2009 Page 6
Throughout the 1980's and 1990's the company narrowed its focus to solely developing
security products, and in 2005 sold its High Energy Systems Division. Currently, the
company's main customers are governments and private corporations interested in securing
ports, border crossings, and high-threat facilities and events.
Product Line & Current Model
American Science & Engineering currently develops, manufactures, markets and sells
X-ray imaging technologies used to inspect parcels, baggage, vehicles, pallets, cargo
containers and people in order to detect contraband. Current customers include: authorities
responsible for port and border security, aviation security agencies, military organizations
and high threat commercial and governmental facilities. After the attacks on the World
Trade Center on September 11, 2001, the United States government has significantly
increased homeland security spending and American Science & Engineering has secured the
United States government as its largest customer.
American Science & Engineering’s products and services can be grouped into six
different areas including Z Backscatter Systems, CargoSearch Inspection Systems, Personnel
Inspection, ParcelSearch Inspection Systems, Contract Research and Development, and
Service and Support.
American Science & Engineering
April 2009 Page 7
Competitive Analysis
FORCE STRATEGIC SIGNIFICANCE Internal Rivalry Low Supplier Power High Buyer Power High Entry and Exit Low Substitutes Low Complements Medium
Internal Rivalry
Main Competitor:
o Analogic Corporation (ALOG)
While both ALOG is listed as a major competitor, ASEI has significant monopoly power in
the X-ray security scanning industry (7). Analogic Corporation currently produces x-ray
technology mainly for healthcare purposes, which is not the type of product that American
Science and Engineering currently produces. ASEI’s main product is the Z-Backscatter Van,
which scans large cargo. ASEI currently holds a patent on this product and they are the only
company which manufactures anything of its kind. Furthermore, the ZBV is the main
product ASEI produces and the US government recently signed a contract with the
company explicitly saying ASEI would be their only producer of such a product. At this
point, ASEI does not have to worry much about internal rivalry and should only be
concerned if Analogic begins to shift production into homeland security scanning.
Supplier Power
American Science & Engineering relies on a small number of suppliers that provide core
materials and subsystems for their products. While their suppliers are not clear, it is implied
in their 10K that certain materials or subsystems may be available from a sole source or
limited number of suppliers, which increases the risk of supply disruption. Products would
have to be redesigned if one of the materials from their suppliers was no longer available;
this would be extremely costly and could potentially take an extremely long period of time.
Additionally, ASEI does not have any guaranteed supply arrangements with their suppliers
American Science & Engineering
April 2009 Page 8
and they have no assurance that their suppliers will continue to meet their product
requirements. It is clear that American Science & Engineering’s suppliers have a tremendous
amount of power and this is a high risk for the company.
Buyer Power
The main buyers of ASEI products are governments. The leading buyer is currently the
United States government, but the company has seemed to switch its focus to international
governments simply because the US government has purchased all they need to at the
current time. Homeland security is important to every government and it is the responsibility
of the government to purchase top of the line technology to protect its citizens (this has
been especially important in the United States, Israel, and other countries in the Middle East
due to the current political climate). ASEI does have power in the sense that the government
strongly prefers their security products and have not had to deal with much competition
recently. The problem is the small number of buyers. If governments decided to shift
spending in national security to some other department, American Science & Engineering
would take a strong hit in sales. The graph below shows that while ASEI is moving towards
acquiring more customers, they are still strongly dependent on a relatively small number of
buyers. They must continue to acquire more in order to eliminate the risk of folding if a large
buyer pulled out.
% Revenues Accounted for by Two Customers
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008
American Science & Engineering
April 2009 Page 9
Entry and Exit
This is an especially difficult industry to both enter and exit. One major reason for this is the
high cost of entry. These are two major reasons ASEI has benefited by being a first mover in
the industry. They are currently the only producer of the Z-Backscatter Van, which is their
main product. Furthermore, exit is difficult for their manufacturing equipment is extremely
specialized and would be difficult to sell simply because there are not many companies who
would have a need to purchase such a product. Patents are another strong barrier to entry.
ASEI employs highly skilled engineers and holds a number of patents on their advanced
technology. American Science & Engineering currently has 63 unexpired patents with the
U.S. Patent and Trademark Office as well as with the patent offices of Norway, The Russian
Federation, Ukraine, Singapore, United Arab Emirates, Malaysia, Thailand, Egypt and under
the Gulf Cooperation Council and the Patent Cooperation Treaty. While the exact expiration
dates of all of their products are difficult to establish, it has been said that the duration of
their patents are adequate relative to the expected lives of their products.
Substitutes
Again, this does not seem like much of a problem for American Science & Engineering. At
the current time, there does not seem to be a viable substitute for their ZBVs and additional
x-ray technology. There is some discussion about possible retinal scans or RFID security,
however this is not much of a threat. The thought is that if a better identification technology
becomes standardized that traditional imaging technology will become obsolete. Even if
people are more easily accounted for in domestic and international travel, there is still a need
for cargo scanning as long as there are people entering and exiting countries or shipping
goods.
American Science & Engineering
April 2009 Page 10
Complements
Complements for this particular firm can be categorized as any product that would likely
lead to the purchase of an ASEI product. One such complement would be the construction
of a new airport, especially in the United States. As additional airports are constructed new
security systems must be installed that comply with federal regulations, and ASEI’s product
line is the most popular among such security systems. Another complement would be
popular live events that attract large crowds. Political conventions, sporting events, and
other such events all attract large crowds and demand high levels of security. This can be
considered a medium threat, for it is possible that ASEI could saturate their market, but with
the large amount of national security spending in foreign countries, it does not seem likely in
the near future.
American Science & Engineering
April 2009 Page 11
SWOT
Strengths
o Proprietary technology to provide scanning equipment – relatively new patents
established within the last five years
o The company is instrumental both domestically and on the two war front
o Little competition
o Established clientele and reputation
Weaknesses
o Company is reliant on government contracts
o An enormous portion of sales depend upon governmental agency decisions to
expand or upgrade security at high risk locations. Because of this, ASEI’s product
sales are subject to delays associated with the length approval processes that often
accompany such capital expenditures.
o ASEI’s revenues are made up of a relatively small number of expensive products.
Opportunities
o Shifting priorities in defense spending toward intelligence and surveillance
o Potential international growth
o Olympics in London, 2012 and other large events that demand a high level of
security
o Potential buyout from large defense contractor looking to diversify
Threats
o Round of consolidation in the defense technology market, especially in the light of
the recent reduction in stock prices
American Science & Engineering
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o If ASEI fails to receive an order after expending resources, they may be unable to
generate sufficient revenue to recover incurred costs. This could be a result of the
lengthy sales cycle.
o US market for the ASEI product saturated
o Unclear prospects from the perspective of the Government Policy towards national
security. ASEI’s R&D is primarily government funded and in order to stay
competitive, they must continue to receive government funds, which are not
guaranteed in the new administration.
American Science & Engineering
April 2009 Page 13
Financial Analysis Stock Chart (ASEI v. ALOG v. S&P 500) 5 yr Trailing (5)
Key Financial Metrics
American Science & Engineering (ASEI) (4)
o Current Price: $58.64/share (04/17/09)
o Market Cap: $534.03 Million
o P/E: 22.93
o Beta: 0.40
o EPS: $2.56
o Debt/Capital: 5% (6)
Q4 (Dec '08) Annual
(2008)
Annual
(TTM)
Net profit margin 15.41% 10.48% 11.27%
Operating margin 22.69% 12.73% 15.86%
EBITD margin - 15.20% 17.95%
Return on average assets 15.92% 7.64% 8.93%
Return on average equity 23.62% 10.47% 13.06%
American Science & Engineering
April 2009 Page 14
Analogic Corporation (ALOG) (4)
o Current Price: $34.76/share (04/17/09)
o Market Cap: $444.89 Million
o P/E: 39.47
o Beta: 0.78
o EPS: $0.88
Q1 (Jan '09) Annual
(2008)
Annual
(TTM)
Net profit margin 1.38% 5.68% 2.76%
Operating margin -1.47% 5.88% 1.66%
EBITD margin - 9.42% 5.66%
Return on average assets 1.21% 4.84% 2.50%
Return on average equity 1.42% 5.72% 2.91%
Conclusion
It is clear from the financial analysis that ASEI does not have any liquidity concerns
(5% Debt/Capital) and has managed to stay profitable even during poor economic times
(15.41% Net Profit Margin in Q4 ’08) (1). The one immediate concern is the dependence on
government purchases and also the relatively flat stock price in the last two years. Large
jumps in stock price are directly correlated with large purchases from the U.S. government.
Stockholders will not continue to be satisfied with a relatively flat stock price, and potential
ways to fix this are listed in the Strategic Recommendations section below. Another issue is
that its main competitor, Analogic Corporation, has nearly twice the P/E ratio of ASEI. This
may be an indicator that ASEI is not as focused on growth, which is definitely a concern and
may be a reason to potentially look to sell off the company (see Strategic
Recommendations).
American Science & Engineering
April 2009 Page 15
Strategic Recommendations Market Expansion
The tremendous performance of American Science & Engineering over the past ten
years has been undeniable. Profits soared and as shown in the financial section above, the
stock price followed. This tremendous growth is mainly due to the success ASEI has had
inventing impressive products and establishing solid patents. It is with these products
(namely the Z-Scatter Van) that ASEI has been able to obtain large government and private
contracts. The largest customer of American Science & Engineering is undoubtedly the
United States Government (1).
% Sales in 2006 % Sales in 2008
It is clear that the main issue this company faces is market saturation. With highly
specialized products, the company can only sell so many to the US government before their
need is filled and the only billing they can receive is from maintenance.
Market saturation combined with a new executive administration could result in
significantly reduced demand and a subsequent decrease in the company’s profits. American
Science & Engineering currently invests heavily in R&D and has continued to increase its
investment in R&D over the past three years. While a new technological breakthrough could
help open new avenues for new contracts with the United States government, this is not a
safe plan and the company must look towards expanding to new markets.
77%
14%
9%
US Gov
Foreign Gov
Other
55%36%
9%
US Gov
Foreign Gov
Other
American Science & Engineering
April 2009 Page 16
Homeland Security is a vital part of every nation and this must be highly stressed
when looking to acquire new contracts from foreign governments. Lobbyists from foreign
nations (especially in potential high demand areas such as the Middle East, South America
and Northern Africa) must be used in an attempt to push for an increase in homeland
security investment in foreign nations. The company must be able to clearly demonstrate the
direct results of an increase in homeland security investment. Below is a list of projected
spending in homeland security over the next ten years. It is in ASEI’s best interest to target
countries at the top of the list, for they are the countries most likely to be potential
customers.
American Science & Engineering
April 2009 Page 17
Shifting Product Focus
American Science & Engineering is known as a company that produces imaging
technology for use in the aid of strengthening homeland security. While this has proven to
be profitable, it may be in the company’s best interest to diversify their product line in order
to open new avenues for additional revenue. Several possible pathways for diversification
include intelligence, surveillance and medical.
The company’s most profitable and most popular product is the Z-Backscatter Van.
This van, which emits X-rays in various directions rather than one, is mobile and extremely
effective in detecting concealed contraband. While the current uses for the technology have
proven to be effective, we believe that they could serve additional purposes. One potential
customer could be the Drug Enforcement Agency (DEA). Officers are currently put in
compromising positions when they raid homes believed to be distribution or production
centers for illegal substances (such as methamphetamine labs). The ZBV vans could be used
to detect laboratories and people within suspected homes before they conduct the raids,
which would help protect officers to a great degree.
Possible diversification into the medical imaging industry is another exciting
possibility for American Science & Engineering. The X-ray technology used by ASEI
currently produces about 1/6000th of the radiation that a traditional X-ray produces (3). If
the technology could be tweaked to perform traditional medical exams, the health care
industry would be pressured into providing a safer alternative to the traditional imaging
procedures offered to clients.
American Science & Engineering
April 2009 Page 18
Potential Buyout
Another possible option for American Science & Engineering is to look into selling
itself off to the right company. Defense spending has shifted away from weapons programs
to intelligence and surveillance (2). Large defense contractors with a plentiful supply of cash,
such as Lockheed Martin, Boeing and Northrop Grumman may begin to look toward
acquiring smaller companies with niche technologies. Axsys Technologies put itself up for
sale in early March and many analysts believe similar companies will begin to follow suit (8).
This may seem like an odd decision for a company that has been so successful in
recent years, but it does seem like a good option at this point. The market in the United
States is saturated (see above) and the financial assessment of ASEI when compared to their
competitors shows that they may not be committed to growth. Larger companies like
Lockheed and Boeing not only have the cash on hand to purchase a small attractive
company with minimal debt like ASEI, but many attractive synergies seem to be available.
Lockheed and Boeing have great distribution channels and are already known in foreign
countries. Additionally, by diversifying their product line, larger corporations would be able
to have steadier cash flows when sales in their original divisions are down.
American Science & Engineering
April 2009 Page 19
References
1. "10K - ASEI." EDGAR ONLINE - SEC FILINGS. 13 June 2008. 21 Apr. 2009
<http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001104659-08-
039830>.
2. "American Science & Engineering: The Best Offense Is a Good Defense -- Seeking
Alpha." Stock Market News, Opinion & Analysis, Investing Ideas -- Seeking Alpha.
18 Aug. 2008. 21 Apr. 2009 <http://seekingalpha.com/article/91376-american-
science-engineering-the-best-offense-is-a-good-defense>.
3. AS&E: Advanced X-ray Inspection Systems. 21 Apr. 2009 <http://www.as-e.com/>.
4. "ASEI - American Science & Engineering, Inc. - Finance." Google Finance. 21 Apr. 2009
<http://www.google.com/finance?q=NASDAQ%3AASEI>.
5. "ASEI: Competitors for American Science and Engineerin -." Yahoo! Finance. 21 Apr.
2009 <http://finance.yahoo.com/q/co?s=asei>.
6. Price Target Research. American Science & Engineering, Inc. Rep. Billerica, 2009.
7. Roth Capital Partners. American Science & Engineering, Inc. Rep. Newport Beach, 2005.
8. "Small defense tech firms big bet for large contractors | Deals | Private Capital |
Reuters." Reuters.com - World News, Financial News, Breaking US & International
News. 26 Mar. 2009. 21 Apr. 2009
<http://www.reuters.com/article/euPrivateEquityNews/idUSTRE52P5T22009032
6>.
American Science & Engineering
April 2009 Page 20
Appendix – Financial Statements
Balance Sheet
Dollars in thousands December 31,
2008 March 31,
2008 Assets Current assets: Cash and cash equivalents $ 83,395 $ 52,418 Restricted cash and investments 59 319 Short-term investments, at fair value 47,934 72,687 Accounts receivable, net of allowances of $399 and $230 at December 31,
2008 and March 31, 2008, respectively 44,176 27,583 Unbilled costs and fees 4,917 6,114 Inventories 45,042 40,107 Prepaid expenses and other current assets 7,889 4,815 Deferred income taxes 2,571 1,577 Total current assets 235,983 205,620 Building, equipment and leasehold improvements, net 20,161 22,201 Restricted cash and investments — 2,204 Deferred income taxes 6,191 5,231 Other assets, net 965 278 Total assets $ 263,300 $ 235,534
Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 13,958 $ 12,660 Accrued salaries and benefits 8,222 2,935 Accrued warranty costs 2,216 1,671 Accrued income taxes 2,198 — Deferred revenue 21,951 23,120 Customer deposits 16,249 6,547 Current portion of lease financing liability 1,146 1,134 Other current liabilities 6,976 8,097 Total current liabilities 72,916 56,164 Lease financing liability, net of current portion 8,679 9,540 Other long term liabilities 5,788 3,758 Total liabilities 87,383 69,462 Stockholders’ equity: Preferred stock, no par value, 100,000 shares authorized; no shares issued — — Common stock, $0.66 2/3 par value, 20,000,000 shares authorized; 8,845,497
and 8,945,633 shares issued and outstanding at December 31, 2008 and March 31, 2008, respectively 5,896 5,963
Capital in excess of par value 86,716 91,544 Accumulated other comprehensive income 12 114 Retained earnings 83,293 68,451 Total stockholders’ equity 175,917 166,072 Total liabilities and stockholders’ equity $ 263,300 $ 235,534
American Science & Engineering
April 2009 Page 21
Income Statement
Three months ended Nine months ended
Dollars and shares in thousands, except per share amounts December 31,
2008 December 31,
2007 December 31,
2008 December 31,
2007
Net sales and contract revenues:
Net product sales and contract revenues
$ 45,810 $ 26,729
$ 107,114 $ 77,461
Net service revenues
19,480 15,886
53,963 47,252
Total net sales and contract revenues
65,290 42,615
161,077 124,713
Cost of sales and contracts:
Cost of product sales and contracts
25,616 18,052
63,484 51,693
Cost of service revenues
10,914 9,379
31,777 26,357
Total cost of sales and contracts
36,530 27,431
95,261 78,050
Gross profit
28,760 15,184
65,816 46,663
Expenses:
Selling, general and administrative expenses
9,132 7,609
24,225 19,943
Research and development costs
4,815 3,148
12,554 8,678
Total expenses
13,947 10,757
36,779 28,621
Operating income
14,813 4,427
29,037 18,042
Other income (expense):
Interest and investment income
477 1,686
2,113 5,444
Interest expense
(36 ) (39 ) (110 ) (119 ) Other, net
(252 ) (182 ) (335 ) (398 ) Change in warrant valuation
— —
— 11
Total other income
189 1,465
1,668 4,938
Income before provision for income taxes
15,002 5,892
30,705 22,980
Provision for income taxes
4,943 1,890
10,596 8,291
Net income
$ 10,059 $ 4,002
$ 20,109 $ 14,689
Income per share—Basic
$ 1.16 $ 0.44
$ 2.32 $ 1.60
—Diluted
$ 1.13 $ 0.43
$ 2.26 $ 1.56
Weighted average shares—Basic
8,670 9,136
8,679 9,163
—Diluted
8,940 9,357
8,917 9,397
Cash dividends declared per common share
$ 0.20 $ 0.20
$ 0.60 $ 0.40
American Science & Engineering
April 2009 Page 22
Statement of Cash Flows
For the nine months ended
Dollars in thousands December 31,
2008 December 31,
2007
Cash flows from operating activities: Net income $ 20,109 $ 14,689 Adjustments to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 3,194 3,071 Provisions for contracts, inventory and accounts receivable reserves 1,874 77 Amortization of bond discount (401 ) (1,798 ) Deferred income taxes (1,954 ) (2,823 ) Stock based compensation expense 3,126 4,141 Change in value of warrants — (11 ) Changes in assets and liabilities:
Accounts receivable (16,754 ) (12,983 ) Unbilled costs and fees 1,197 3,940 Inventories (6,648 ) (19,453 ) Prepaid expenses and other assets (3,761 ) 1,645 Accounts payable 1,298 3,139 Accrued income taxes 2,198 1,031 Customer deposits 9,702 (2,181 ) Deferred revenue 881 21,052 Accrued expenses and other current liabilities 5,289 (749 ) Sale of leased asset 116 — Non-current liabilities (20 ) —
Net cash provided by operating activities 19,446 12,787
Cash flows from investing activities: Purchases of short-term investments (50,500 ) (125,282 ) Proceeds from maturities of short-term investments 75,650 100,725 Purchases of property and equipment (1,270 ) (2,271 )
Net cash provided by (used for) investing activities 23,880 (26,828 )
Cash flows from financing activities: Decrease in restricted cash and investments 2,464 278 Proceeds from exercise of warrants — 509 Proceeds from exercise of stock options 4,602 2,939 Repurchase of shares of common stock (14,382 ) (13,821 ) Payment of dividends (5,267 ) (3,704 ) Proceeds from financing of leasehold improvements — 417 Repayment of lease financing (849 ) (1,054 ) Reduction of income taxes paid due to the tax benefit from employee stock
option expense 1,181 1,221
Net cash used for financing activities (12,251 ) (13,215 )
Foreign currency translation effect on cash (98 ) (16 )
Net increase (decrease) in cash and cash equivalents 30,977 (27,272 ) Cash and cash equivalents at beginning of period 52,418 69,650
Cash and cash equivalents at end of period $ 83,395 $ 42,378