Creative 2006 Annual Report Download - page 16

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16
฀Unaudited data for quarters ended (as a percentage of sales)
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
2006 2006 2005 2005 2005 2005 2004 2004
฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
Sales,฀net฀ 100฀%฀ 100฀%฀ 100฀%฀฀ 100฀%฀฀ 100฀%฀฀ 100฀%฀฀ 100฀%฀ 100฀%
Cost฀of฀goods฀sold฀ 86฀ 105฀฀ 78฀ 80฀฀ 90฀฀ 77฀฀ 73฀฀ 69
Gross฀profit฀ 14฀ (5)฀฀ 22฀฀ 20฀฀ 10฀฀ 23฀฀ 27฀฀ 31
฀฀
Operating฀Expenses:
฀ Selling,฀general฀and฀
฀ ฀ administrative฀ 18฀฀ 23฀฀ 14฀฀ 16฀ 16฀฀ 15฀฀ 15฀ 19
฀ Research฀and฀development฀ 7฀฀ 8฀฀ 6฀฀ 7฀฀ 6฀฀ 6฀฀ 6฀฀ 10
฀ Impairment฀of฀goodwill/฀
฀ ฀ intangible฀assets฀ –฀ 17฀ –฀ –฀ –฀ –฀ 17฀ –
฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
Operating฀(loss)฀income฀ (11)฀ (53)฀฀ 2฀฀ (3)฀฀ (12)฀ 2฀ (11)฀ 2
฀ ฀
Net฀(loss)฀gain฀from฀investments฀ –฀ 1฀ 2฀ 4฀ 3฀ 5฀ 14฀ (1)
Interest฀income฀ 1฀ 1฀ –฀ –฀ –฀ –฀ –฀ –
Interest฀expense฀ (1)฀ (1)฀ (1)฀ (1)฀ –฀฀ –฀ –฀ –
Others฀ 2฀฀ 1฀ (1)฀฀ –฀ (2)฀ (2)฀฀ 1฀ 1
(Loss)฀income฀before฀income฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀
฀ taxes฀and฀minority฀interest฀ (9)฀ (51)฀฀ 2฀฀ –฀ (11)฀ 5฀ 4฀฀ 2฀
฀฀ ฀
Provision฀for฀income฀taxes฀ 3฀ –฀ –฀ –฀ ฀1฀฀ –฀฀ (1)฀ –
Minority฀interest฀in฀(income)฀loss฀ –฀ –฀ –฀ –฀ –฀ –฀ –฀ –
Net฀(loss)฀income฀฀ (6)฀%฀ (51)฀%฀ 2฀%฀ ฀–฀%฀ (10)฀%฀ 5฀%฀ 3฀%฀ 2฀%
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY฀AND฀CAPITAL฀RESOURCES
Cash฀and฀cash฀equivalents฀at฀June฀30,฀2006฀were฀$214.0฀million฀compared฀to฀the฀balance฀of฀$187.2฀million฀at฀June฀30,฀2005.฀
Operating฀Activities
Net฀cash฀provided฀by฀operating฀activities฀during฀fiscal฀year฀2006฀was฀$49.3฀million฀compared฀with฀$208.1฀million฀used฀in฀fiscal฀
year฀2005.฀฀The฀cash฀provided฀by฀operating฀activities฀of฀$49.3฀million฀was฀mainly฀due฀to฀a฀$21.6฀million฀net฀decrease฀in฀accounts฀
receivable฀and฀other฀assets฀and฀prepaid฀expenses,฀a฀$161.0฀million฀net฀decrease฀in฀inventory฀and฀a฀$36.3฀million฀adjustment฀for฀
non-cash฀items.฀฀The฀decrease฀in฀inventory฀was฀in฀line฀with฀management’s฀intention฀to฀maintain฀a฀lower฀inventory฀balance.฀฀Cash฀
provided฀by฀operating฀activities฀was฀offset฀partially฀by฀ a฀$49.6฀million฀net฀decrease฀ in฀accounts฀payable฀ and฀accrued฀and฀ other฀
liabilities.฀฀The฀$36.3฀million฀in฀adjustments฀to฀non-cash฀items฀comprised฀mainly฀$25.0฀million฀of฀depreciation฀and฀amortization,฀
$31.5฀million฀in฀impairment฀of฀goodwill฀and฀intangible฀assets,฀offset฀partially฀by฀a฀$20.9฀million฀in฀net฀gains฀from฀the฀disposal฀of฀
investments.
Net฀cash฀used฀in฀operating฀activities฀during฀fiscal฀year฀2005฀was฀$208.1฀million฀compared฀with฀$22.8฀million฀in฀fiscal฀year฀2004.฀฀
The฀cash฀used฀in฀operating฀activities฀of฀$208.1฀million฀was฀mainly฀due฀to฀a฀$96.2฀million฀net฀increase฀in฀accounts฀receivable฀and฀
other฀assets฀and฀prepaid฀ expenses฀ and฀a฀$212.0฀million฀net฀ increase฀ in฀inventory.฀฀ As฀of฀June฀30,฀2005,฀ Creative฀ had฀$395.9฀
million฀in฀inventory฀compared฀to฀$183.9฀million฀in฀inventory฀as฀of฀June฀30,฀2004.฀฀Creative฀built฀up฀its฀inventory฀to฀better฀position฀