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47
Liquidity and Capital Resources
March 31, 2007 March 31, 2006 Change
(Inthousands)
Cash andcash equivalents ................................. $174,748 $91,517$83,231
Short-term investments .................................... 283,210 280,120 3,090
Cash, cash equivalents and short-term investments.......... $457,958 $371,637 $86,321
Percentage of totalassets .................................. 45%44%
Year Ended March 31,
2007 2006 Change
(Inthousands)
Cash providedby operatingactivities ...............................$63,997 $42,789 $21,208
Cash used in investingactivities....................................(28,135)(85,882)57,747
Cash providedby financing activities ...............................40,939 37,787 3,152
Effect of exchange rate changesoncash ............................6,430 (1,352) 7,782
Net increase (decrease) in cash andcashequivalents...............$83,231 $(6,658) $89,889
Cash Flow from Operating Activities. Our principal sourceof cashis from sales of interactive software
games designed for play on video game consoles, handheld devices and personal computers. Our principal
uses of cash are for product purchasesof discs and cartridgesalong with associated manufacturer’s
royalties, payments to external developers and licensors, the costs of internal software development and
sellingandmarketing expenses.
Cash provided by operating activities increased by approximately $21.2million in fiscal2007 as compared
to fiscal 2006. Theincrease in cash provided was primarily a result of an increase in earnings, improved
working capital and amortization of licenses and software development, partially offset by increases in cash
payments for software development and licenses. We expect to generate positive operatingcash flow for
the full fiscalyear2008.
Cash Flow from Investing Activities. Cash used in investing activities in fiscal 2007 decreased by
approximately $57.7 million primarily due to movement betweenourshort-term investments and our cash
balances.
Cash Flow from Financing Activities. Cash providedbyfinancing activities increasedby approximately
$3.2 million in fiscal 2007 as compared to fiscal 2006, primarily due to an increase in proceeds from
exerciseof stock options, partially offset by common stock repurchases. We had $13.6million of stock
repurchasesin fiscal 2007 and no repurchases in fiscal 2006.
In fiscal 2008, we expect to generate more cash than we did in fiscal 2007. The increase in thegeneration of
cash is expected to be primarily attributable to higher net income.
Key Balance Sheet Accounts
Accounts Receivable.Accounts receivable decreased $11.3 million in fiscal 2007, from$78.9 million at
March 31, 2006 to $67.6 million at March31, 2007. Thedecrease in net accounts receivable is primarily
dueto improved collection cycles and the timingof our fourth quarter product releases. Accounts
receivable allowances were$80.5million as of March 31,2007, a $22.7 million increasefromMarch 31,
2006. Allowancesfor price protection andreturns as apercentageof trailingnine month net saleswere 8%
as of March 31, 2007 and 2006. We believe our current reserves are adequate based on historical
experience, inventory remainingin the retail channel and therateof inventory sell-through in the retail
channel.