Plantronics 2008 Annual Report Download - page 47

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Cash Flows from Operating Activities
Cash flows from operating activities in fiscal 2008 consisted of net income of $68.4 million, non-cash charges of $44.7 million and
working capital uses of cash of $10.2 million. Non-cash charges consisted primarily of $28.5 million of depreciation and
amortization, $16.0 million of stock-based compensation under SFAS No. 123(R), provision for excess and obsolete inventory of $7.8
million and restructuring and other related charges of $1.6 million. Non-cash charges were partially offset by a $9.3 million non-cash
benefit related to deferred income taxes. Working capital uses of cash consisted primarily of increases in inventory and accounts
receivable. Inventory increased to support higher overall volumes and the transition of manufacturing of consumer headsets to our
manufacturing facility in Suzhou, China. Inventory turns remained flat at 3.8 for fiscal 2007 and 2008. Accounts receivable increased
due to higher net revenues. Days Sales Outstanding as of March 31, 2008 was 57 days compared to 53 days as of March 31,
2007. Working capital sources of cash consisted primarily of increases in accrued liabilities and income taxes payable which fluctuate
with the timing of payments.
Cash flows from operating activities in fiscal 2007 consisted of net income of $50.1 million, non-cash charges of $49.5 million and
working capital uses of cash of $26.6 million. Non-cash charges consisted primarily of $29.2 million of depreciation and
amortization, $16.9 million of stock-based compensation under SFAS No. 123(R) and provision for excess and obsolete inventory of
$14.6 million. Non-cash charges were partially offset by non-cash benefits of $8.4 million related to deferred income taxes and a $2.5
million gain on the disposal of property, plant and equipment. Working capital uses of cash consisted primarily of increases in
inventory related to finished goods for Bluetooth and wireless office products and working capital sources of cash consisted primarily
of a decrease in accounts receivable and an increase in accounts payable and accrued liabilities which fluctuate with the timing of
payments.
Cash flows from operating activities in fiscal 2006 consisted of net income of $81.2 million, non-cash charges of $35.8 million and
working capital uses of cash of $38.6 million. Non-cash charges consisted primarily of $23.1 million of depreciation and
amortization, and provision for excess and obsolete inventory of $10.4 million. Working capital uses of cash consisted primarily of
increases in inventory related to raw material purchases for manufacturing for our Bluetooth and wireless office products and an
increase in accounts receivable. Working capital sources of cash consisted primarily of an increase in accounts payable and income
taxes payable which fluctuate with the timing of payments.
In fiscal 2008, compared to fiscal 2007, operating cash flow increased by $29.9 million. The increase in cash provided by operations
is primarily attributable to the increase in net income and decreased spending on inventory in fiscal 2008 compared to the prior
year. The remaining increase is attributable to fluctuations in accrued liabilities and income taxes payable related to the timing of
payments.
We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors including
fluctuations in our net revenues and operating results, collection of accounts receivable, changes to inventory levels and timing of
payments.
Cash Flows from Investing Activities
In fiscal 2008, net cash flows used for investing activities consisted of capital expenditures of $23.3 million primarily related building
improvements at our corporate headquarters in Santa Cruz, CA and net purchases of short-term investments of $18.9 million.
Net cash flows used for investing activities in fiscal 2007 consisted of capital expenditures of $24.0 million primarily related to
building improvements at our corporate headquarters in Santa Cruz, CA, expansion of a warehouse facility in Milford, Pennsylvania,
and the purchase of machinery and equipment, tooling, computers and software and net purchases of short-term investments of $1.1
million, offset by $2.7 million related to the sale of land in Frederick, Maryland in the first quarter of fiscal 2007.
In fiscal 2006, net cash flows used in investing activities consisted of the payment of $165.4 million to purchase Altec Lansing and
capital expenditures of $41.9 million, offset by net proceeds from short-term investments of $156.4 million.
As our business grows, we may need additional facilities and capital expenditures to support our growth. We will continue to evaluate
new business opportunities and new markets. If we pursue new opportunities or markets in areas in which we do not have existing
facilities, we may need additional expenditures to support future expansion.
Cash Flows from Financing Activities
Net cash flows provided by financing activities in fiscal 2008 consisted of $9.8 million in proceeds from the exercise of employee