Creative 2003 Annual Report Download - page 15

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 2003 were $232.0 million, an increase of $65.1 million compared to the balance
of $166.9 million at June 30, 2002.
Operating Activities:
Net cash generated from operating activities during fiscal 2003 was $99.7 million compared with $89.4 million in fiscal
2002. The cash generated during fiscal 2003 primarily resulted from net income of $23.4 million, net adjustments of
$39.8 million for non-cash items, a net decrease in accounts receivable and other assets and prepaid of $30.3 million, a
net decrease in inventory of $28.2 million, which is in line with lower sales and management’s decision to maintain a
lower inventory level, and a decrease in marketable securities of $1.4 million. The cash contributions were offset partially
by a decrease in accounts payable and accrued and other liabilities of $15.1 million and a decrease in income taxes
including deferred tax of $8.3 million. The $39.8 million of adjustments of non-cash items to net income include
depreciation of fixed assets of $19.1 million, amortization of intangible assets of $9.1 million, write downs of investments
and other non-current assets of $13.6 million and net gain from investments of $7.8 million.
Net cash generated from operating activities during fiscal 2002 was $89.4 million compared with $77.5 million in fiscal
2001. The cash generated during fiscal 2002 primarily resulted from the net loss of $19.7 million offset by net adjustments
of $105.9 million for non-cash items including depreciation and amortization of $29.9 million, write off of in-process
technology acquired from 3Dlabs amounting to $26.1 million (see Note 16 of “Notes to Consolidated Financial Statements”),
investments and other non-current asset write downs of $49.3 million, and net gain from investments of $5.3 million.
Also contributing to the cash generated from operating activities were net decreases in accounts receivable of $18.2
million and inventory of $50.6 million which was in line with the management’s decision to maintain a lower inventory
level. However, the positive cash flow was offset partially by a net reduction in accounts payable, other accrued liabilities
and income taxes including deferred tax of $69.1 million, resulting in the net cash generated of $89.4 million.
Investing Activities:
Net cash used for investing activities during fiscal 2003 was $12.3 million compared with $50.0 million in fiscal 2002.
The amount used in fiscal 2003 comprises $15.7 million in capital expenditures, $5.5 million to purchase investments,
and $4.9 million for the acquisition of other non-current assets. The cash used in investing activities was offset in part
by the proceeds from the sale of fixed assets and quoted investments amounting to $2.6 million and $11.2 million,
respectively.
Net cash used for investing activities during fiscal 2002 was $50.0 million compared with $69.4 million in fiscal 2001.
The amount used in fiscal 2002 comprises $25.8 million for the acquisition of 3Dlabs, net of cash acquired (see Note 16
of “Notes to Consolidated Financial Statements”), purchase of investments of $9.2 million, capital expenditures of $8.7
million, and the acquisition of other non current assets of $20.6 million. The cash used in investing activities was offset
in part by the proceeds from sale of quoted investments amounting to $13.9 million.