Creative 2007 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
2007 2007 2006 2006 2006 2006 2005 2005
Sales, net 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
Cost of goods sold 80 79 78 85 86 105 78 80
Gross profit (loss) 20 21 22 15 14 (5) 22 20
Operating Expenses:
Selling, general and
administrative 22 24 16 17 18 23 14 16
Research and development 9 10 5 7 7 8 6 7
Impairment of goodwill and other
intangible assets – – – – – 14 – –
Other charges – – – – – 3 – –
Operating (loss) income (11) (13) 1 (9) (11) (53) 2 (3)
(Loss) gain from investments, net – (1) – (1) – 1 2 4
Interest income 1 2 1 1 1 1 – –
Interest expense (1) (2) (1) (1) (1) (1) (1) (1)
Others 2 2 33 1 2 1 (1) –
(Loss) income before income
taxes and minority interest (9) (12) 34 (9) (9) (51) 2 –
Income tax (expense) benefit (3) (1) (6) – 3 – – –
Minority interest in loss (income) – – – – – – – –
Net (loss) income (12) % (13) % 28 % (9) % (6) % (51) % 2 % – %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 2007 were $250.5 million compared to the balance of $214.0 million at June 30, 2006.
Operating Activities
Net cash provided by operating activities during fiscal year 2007 was $132.2 million compared with $48.9 million in fiscal year
2006. The cash provided by operating activities of $132.2 million was mainly contributed by gross license fees $100.0 million
received from Apple Inc., less tax of $18.0 million, a $35.2 million net decrease in accounts receivable and other assets and prepaid
expenses, a $100.0 million net decrease in inventory and a $12.4 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 $45.9 million net decrease in accounts payable and accrued and other liabilities. The $12.4 million in adjustments to
non-cash items was mainly pertaining to $18.5 million of depreciation and amortization charges.
Net cash provided by operating activities during fiscal year 2006 was $48.9 million compared with $204.4 million used in fiscal
year 2005. The cash provided by operating activities of $48.9 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 $35.8 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