Marvell Technology Group (MRVL)

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $144.5 million for the three months ended May 2, 2009 compared to net cash provided by operating activities of $130.2 million for the three months ended May 3, 2008. The increase in cash from operations in the three months ended May 2, 2009 was primarily due to significant improvements in working capital, including a decrease in inventories of $106.3 million primarily due to our efforts to control our inventory levels as a result of the current economic environment. Accrued liabilities and other increased primarily due to a legal settlement in connection with the class action securities litigation. In addition, accounts payable increased by $30.7 million due to efforts to extend payment periods to vendors. Finally, accrued employee compensation increased $13.0 million due primarily to an increase in employee stock purchase plan contributions and prepaid and other assets decreased $14.3 million due to a decrease in the receivable from one of our foundries and amortization of CAD licenses.

Significant working capital changes offsetting positive cash flows for the three months ended May 2, 2009 related to an increase in accounts receivable of $63.3 million due primarily to the timing of revenue recorded as we experience much of the increase in revenue late in the quarter.

Significant working capital change contributing to positive cash flow in the three months ended May 3, 2008 was the decrease in inventories of $55.9 million. The decrease in inventories was primarily due to the completion of contractual obligations under the original supply agreement with Intel as well as concentrated efforts to reduce inventory levels. Also contributing to the increase in cash flows was a decrease in prepaid expenses and other assets of $32.5 million primarily due to the utilization of prepaid foundry capacity and prepaid wafers. In addition, accrued employee compensation increased $16.9 million due primarily to an increase in employee stock purchase plan contributions and the timing of accrued salary.

Significant working capital changes offsetting positive cash flows in the three months ended May 3, 2008 included a decrease in accounts payable of $63.1 million due to the timing of payments and a decrease in accrued liabilities and other of $18.8 million attributable to decreased in accrued sales rebates and accrued legal fees. Accounts receivable increased $38.2 million due primarily to higher revenues in the period. Restricted cash increased $24.5 million due to proceeds from settlement with our directors’ and officers’ insurance carriers with the settlement requiring the proceeds to be used towards the consolidated derivative actions settlement and any future class action securities litigation settlement.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $680.7 million for fiscal 2009 compared to $177.4 million for fiscal 2008 and $337.3 million for fiscal 2007. The cash inflows from operations in fiscal 2009 were primarily due to net income of $147.2 million adjusted for non-cash items and changes in working capital. Non-cash

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charges in fiscal 2009 included $153.3 million related to amortization and write-off of purchased intangibles, $112.8 million of depreciation and amortization and $177.1 million of stock-based compensation.

Significant working capital changes contributing to positive cash flows in fiscal 2009 included a decrease in inventories of $126.9 million primarily due to the completion of contractual obligations under the original supply agreement with Intel in connection with our acquisition of the ICAP Business as well as concentrated efforts to reduce inventory levels. The number of days in inventory increased at the end of fiscal 2009 to 112 days from 94 days at the end of fiscal 2008 due to the lower revenue levels at the end of the respective fiscal years. Also contributing to positive cash flow was a decrease in accounts receivable of $109.9 million due primarily to lower revenue recorded toward the end of the quarter as well as the timing of payments received from customers. Days sales outstanding, or DSO, increased to 39 days at the end of fiscal 2009 compared to 36 days at the end of fiscal 2008. Many of our larger customers have regularly scheduled payment dates that fall immediately before or after our fiscal quarter ends. As a result, our DSO may fluctuate depending on the timing of large payments made by our customers. Significant working capital changes offsetting positive cash flow in fiscal 2009 included a decrease in accounts payable of $88.8 million due to lower manufacturing volumes and overall activity at year end as we tried to control inventory levels due to lower revenue levels. Also contributing to the use of cash in operating activities was a decrease in accrued liabilities and other of $36.7 million. The decrease in other accrued liabilities and other was primarily attributable to the payment of accrued contingent consideration as certain milestones were met related to various acquisitions. Accrued employee compensation also decreased by $27.0 million due to lower bonus accruals for comparable periods.

Net cash provided by operating activities was $177.4 million for fiscal 2008 compared to $337.3 million for fiscal 2007 and $402.3 million for fiscal 2006. The cash inflows from operations in fiscal 2008 were primarily due to net loss adjusted for non-cash items and changes in working capital. Non-cash charges in fiscal 2007 included $155.7 million related to amortization of acquired intangible assets and other, $105.8 million of depreciation and amortization expense and $231.0 million of stock-based compensation. Offsetting positive non-cash charges was $109.3 million of fair market value adjustments to Intel inventory sold.

Significant working capital changes contributing to positive cash flows in fiscal 2008 included a decrease in prepaid expenses and other assets primarily due to the utilization of prepaid foundry capacity and prepaid wafers. Also contributing to positive cash flow was an increase in deferred income due to the increased levels of inventory at distributors due to the increase in revenue. Significant working capital changes offsetting positive cash flows in fiscal 2008 included an increase inventories of $202.3 million to support increased revenue levels and from purchases of inventory under the supply agreement for which we plan to sell over periods in excess of one year. The number of days in inventory increased at the end of fiscal 2008 to 94 days from 69 days at the end of fiscal 2007 due to the higher comparable inventory balance at the end of each respective fiscal year.

During fiscal 2007, net cash provided by operating activities was $337.3 million for fiscal 2007 compared to $402.3 million for fiscal 2006 and $221.5 million for fiscal 2005. The cash inflows from operations in fiscal 2007 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2007 included $110.0 million related to amortization of acquired intangible assets and other, $77.2 million of depreciation and amortization expense, $192.1 million of stock-based compensation, and $77.8 million of acquired IPRD. Significant working capital changes contributing to positive cash flows in fiscal 2007 included an increase of $43.9 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2007 as well as higher overall spending activity related to our expanding operations, an increase of $33.5 million in accrued employee compensation resulting from the increase in number of employees and related benefit accruals, an increase of $30.2 million in income tax payable resulting from taxable income for fiscal 2007 and an increase of $16.7 million in deferred income resulting from an increase in the number of distributors as well as increased shipments of product to our distributors.

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Significant working capital changes offsetting positive cash flows in fiscal 2007 included an increase in prepaid and other assets of $113.2 million due primarily to $68.2 million in payments in connection with a capacity reservation agreement with a foundry and a $19.3 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow in the fiscal 2007 was an increase in accounts receivable of $83.1 million primarily due to higher net revenue in fiscal 2007 as compared to fiscal 2006. Accounts receivable increased and the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, increased to 48 days at the end of fiscal 2007 as compared to 45 days at the end of fiscal 2006. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers. Accrued liabilities and other also increased by $22.8 million in fiscal 2007 due to higher accruals for legal fees, royalties, interest expense and an accrual for contingent acquisition payment.

Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available capacity and competitive situations in the marketplace. These considerations are balanced against risk of obsolescence or potentially excess inventory levels.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $680.7 million for fiscal 2009 compared to $177.4 million for fiscal 2008 and $337.3 million for fiscal 2007. The cash inflows from operations in fiscal 2009 were primarily due to net income of $147.2 million adjusted for non-cash items and changes in working capital. Non-cash

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charges in fiscal 2009 included $153.3 million related to amortization and write-off of purchased intangibles, $112.8 million of depreciation and amortization and $177.1 million of stock-based compensation.

Significant working capital changes contributing to positive cash flows in fiscal 2009 included a decrease in inventories of $126.9 million primarily due to the completion of contractual obligations under the original supply agreement with Intel in connection with our acquisition of the ICAP Business as well as concentrated efforts to reduce inventory levels. The number of days in inventory increased at the end of fiscal 2009 to 112 days from 94 days at the end of fiscal 2008 due to the lower revenue levels at the end of the respective fiscal years. Also contributing to positive cash flow was a decrease in accounts receivable of $109.9 million due primarily to lower revenue recorded toward the end of the quarter as well as the timing of payments received from customers. Days sales outstanding, or DSO, increased to 39 days at the end of fiscal 2009 compared to 36 days at the end of fiscal 2008. Many of our larger customers have regularly scheduled payment dates that fall immediately before or after our fiscal quarter ends. As a result, our DSO may fluctuate depending on the timing of large payments made by our customers. Significant working capital changes offsetting positive cash flow in fiscal 2009 included a decrease in accounts payable of $88.8 million due to lower manufacturing volumes and overall activity at year end as we tried to control inventory levels due to lower revenue levels. Also contributing to the use of cash in operating activities was a decrease in accrued liabilities and other of $36.7 million. The decrease in other accrued liabilities and other was primarily attributable to the payment of accrued contingent consideration as certain milestones were met related to various acquisitions. Accrued employee compensation also decreased by $27.0 million due to lower bonus accruals for comparable periods.

Net cash provided by operating activities was $177.4 million for fiscal 2008 compared to $337.3 million for fiscal 2007 and $402.3 million for fiscal 2006. The cash inflows from operations in fiscal 2008 were primarily due to net loss adjusted for non-cash items and changes in working capital. Non-cash charges in fiscal 2007 included $155.7 million related to amortization of acquired intangible assets and other, $105.8 million of depreciation and amortization expense and $231.0 million of stock-based compensation. Offsetting positive non-cash charges was $109.3 million of fair market value adjustments to Intel inventory sold.

Significant working capital changes contributing to positive cash flows in fiscal 2008 included a decrease in prepaid expenses and other assets primarily due to the utilization of prepaid foundry capacity and prepaid wafers. Also contributing to positive cash flow was an increase in deferred income due to the increased levels of inventory at distributors due to the increase in revenue. Significant working capital changes offsetting positive cash flows in fiscal 2008 included an increase inventories of $202.3 million to support increased revenue levels and from purchases of inventory under the supply agreement for which we plan to sell over periods in excess of one year. The number of days in inventory increased at the end of fiscal 2008 to 94 days from 69 days at the end of fiscal 2007 due to the higher comparable inventory balance at the end of each respective fiscal year.

During fiscal 2007, net cash provided by operating activities was $337.3 million for fiscal 2007 compared to $402.3 million for fiscal 2006 and $221.5 million for fiscal 2005. The cash inflows from operations in fiscal 2007 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2007 included $110.0 million related to amortization of acquired intangible assets and other, $77.2 million of depreciation and amortization expense, $192.1 million of stock-based compensation, and $77.8 million of acquired IPRD. Significant working capital changes contributing to positive cash flows in fiscal 2007 included an increase of $43.9 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2007 as well as higher overall spending activity related to our expanding operations, an increase of $33.5 million in accrued employee compensation resulting from the increase in number of employees and related benefit accruals, an increase of $30.2 million in income tax payable resulting from taxable income for fiscal 2007 and an increase of $16.7 million in deferred income resulting from an increase in the number of distributors as well as increased shipments of product to our distributors.

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Significant working capital changes offsetting positive cash flows in fiscal 2007 included an increase in prepaid and other assets of $113.2 million due primarily to $68.2 million in payments in connection with a capacity reservation agreement with a foundry and a $19.3 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow in the fiscal 2007 was an increase in accounts receivable of $83.1 million primarily due to higher net revenue in fiscal 2007 as compared to fiscal 2006. Accounts receivable increased and the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, increased to 48 days at the end of fiscal 2007 as compared to 45 days at the end of fiscal 2006. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers. Accrued liabilities and other also increased by $22.8 million in fiscal 2007 due to higher accruals for legal fees, royalties, interest expense and an accrual for contingent acquisition payment.

Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available capacity and competitive situations in the marketplace. These considerations are balanced against risk of obsolescence or potentially excess inventory levels.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $571.5 million for the nine months ended November 1, 2008 compared to net cash provided by operating activities of $13.9 million for the nine months ended October 27, 2007.  The cash inflow from operations in the nine months ended November 1, 2008 was primarily due to net income of $212.3 million and significant improvements in working capital.  Non-cash charges for the nine months ended November 1, 2008 included $85.8 million of depreciation and amortization expense, $132.4 million of stock-based compensation expense and $105.0 million related to amortization of acquired intangible assets.  A significant working capital change contributing to positive cash flow in the nine months ended November 1, 2008 was the decrease in inventories of $95.9 million primarily due to the completion of contractual obligations under the original supply agreement with Intel in connection with our acquisition of their communications and applications processor business as well as concentrated efforts to reduce inventory levels.  The number of days in inventory decreased to 82 days as of November 1, 2008 compared to 87 days as of October 27, 2007.  Also contributing to the increase in cash flows was a decrease in prepaid expenses and other assets of $61.8 million primarily due to the utilization of prepaid foundry capacity and prepaid wafers.  In addition, accrued employee compensation increased $17.7 million due primarily to an increase in accrued vacation, accrued salaries due to timing of the payroll cycle and to accrued bonuses.

Significant working capital changes offsetting positive cash flows for the nine months ended November 1, 2008 included an increase in accounts receivable of $65.8 million due primarily to the timing of revenue recorded toward the end of the quarter as well as timing of payments received from customers.  Days sales outstanding (“DSO”) remained flat at 46 days as of November 1, 2008 and October 27, 2007.  Many of our larger customers have regularly scheduled payment dates that fall immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments made by our customers.  Also contributing to the use of cash in operating activities was a decrease in accrued liabilities and other of $23.7 million.  The decrease in accrued liabilities and other was attributable to the payment of accrued contingent consideration as certain milestones were met related to various acquisitions.  Restricted cash increased $24.5 million due to proceeds from settlement with our directors’ and officers’ insurance carriers requiring the proceeds to be used towards the consolidated derivative actions settlement and any future class action securities litigation settlement.

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Net Cash Provided by Operating Activities

Net cash provided by operating activities was $130.2 million for the three months ended May 3, 2008 compared to $54.2 million for the three months ended April 28, 2007. The cash inflow from operations in the three months ended May 3, 2008 was primarily due to net income of $69.9 million and changes in working capital.  Non-cash charges for the three months ended May 3, 2008 included $35.2 million related to amortization of acquired intangible assets, $28.6 million of depreciation and amortization expense and $45.2 million of stock-based compensation.  A significant working capital change contributing to positive cash flow in the three months ended May 3, 2008 was the decrease in inventories of $55.9 million.  The decrease in inventories was primarily due to the completion of contractual obligations under the original supply agreement with Intel as well as concentrated efforts to reduce inventory levels.  The number of days in inventory increased to 87 days at the end of the first quarter of fiscal 2009 compared to 74 days at the end of the first quarter of fiscal 2008.  Also contributing to the increase in cash flows was a decrease in prepaid expenses and other assets of $32.5 million.  The decrease in prepaid expenses and other assets was primarily due to the utilization of prepaid foundry capacity and prepaid wafers.  In addition, accrued employee compensation increased $16.9 million due primarily to an increase in employee stock purchase plan contributions and the timing of accrued salary.

Significant working capital changes offsetting positive cash flows in the first three months of fiscal 2009 included a decrease in accounts payable of $63.1 million due to payments made on outstanding balances.  Accounts receivable increased $38.2 million due primarily to the timing of payments received from customers.  Days sales outstanding (“DSO”) increased to 41 days in the three months ended May 3, 2008 compared to 40 days for the three months ended April 28, 2007.  Many of our larger customers have regularly scheduled payment dates that fall immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments made by our customers.  Restricted cash increased $24.5 million due to proceeds from settlement with our directors’ and officers’ insurance carriers with the settlement requiring the proceeds to be used towards the consolidated derivative actions settlement and any future class action securities litigation settlement.  Also contributing to an increase in cash flow from operations was a decrease in accrued liabilities and other of $18.8 million.  The decrease in accrued liabilities and other was attributable to decreases in accrued sales rebates and accrued legal fees.

The cash inflow from operations in the three months ended April 28, 2007 was primarily due to changes in working capital. Non-cash charges in the three months ended April 28, 2007 included $37.3 million related to amortization of acquired intangible assets, $26.5 million of depreciation and amortization expense and $46.8 million of stock-based compensation.  A significant working capital change contributing to positive cash flow in the three months ended April 28, 2007 was the decrease in accounts receivable of $45.4 million primarily due to the timing of payments received from customers. Also contributing to an increase in cash flow from operations was an increase in accounts payable of $17.0 million, due to an overall increase in operating activities.

Significant working capital changes offsetting positive cash flows in the three months ended April 28, 2007 included a decrease in accrued liabilities and other of $26.4 million due primarily to application of a supply contract liability related to the acquisition of communications and applications processor business of Intel and an increase in inventories of $28.7 million due to the build up of inventory to support our increasing revenue as well as inventory purchase commitments from our acquisitions.

Net Cash Provided by Operating Activities

        During fiscal 2008, net cash provided by operating activities was $177.4 million for fiscal 2008 compared to $337.3 million for fiscal 2007 and $402.3 million for fiscal 2006. The cash inflows from operations in fiscal 2008 were primarily due to changes in working capital. Non-cash charges in fiscal 2007 included $155.7 million related to amortization of acquired intangible assets and other, $105.8 million of depreciation and amortization expense and $231.0 million of stock-based compensation. Offsetting positive non-cash charges was $109.3 million of fair market value adjustments to Intel inventory sold.

        Significant working capital changes contributing to positive cash flows in fiscal 2008 included a decrease in prepaid expenses and other assets primarily due to the utilization of prepaid foundry capacity and prepaid wafers. Also contributing to positive cash flow was an increase in deferred income due to the increased levels of inventory at distributors due to the increase in revenue. Significant working capital

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changes offsetting positive cash flows in fiscal 2008 included an increase inventories of $202.3 million to support increased revenue levels and from purchases of inventory under the supply agreement for which we plan to sell over periods in excess of one year. The number of days in inventory has increased at the end of fiscal 2008 to 94 days from 69 days at the end of fiscal 2007 due to the higher comparable inventory balance at the end of each respective fiscal year.

        During fiscal 2007, net cash provided by operating activities was $337.3 million for fiscal 2007 compared to $402.3 million for fiscal 2006 and $221.5 million for fiscal 2005. The cash inflows from operations in fiscal 2007 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2007 included $110.0 million related to amortization of acquired intangible assets and other, $77.2 million of depreciation and amortization expense, $192.1 million of stock-based compensation and $77.8 million of acquired in-process research and development. Significant working capital changes contributing to positive cash flows in fiscal 2007 included an increase of $43.9 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2007 as well as higher overall spending activity related to our expanding operations, an increase of $33.5 million in accrued employee compensation resulting from the increase in number of employees and related benefit accruals, an increase of $30.2 million in income tax payable resulting from taxable income for fiscal 2007 and an increase of $16.7 million in deferred income resulting from an increase in the number of distributors as well as increased shipments of product to our distributors.

        Significant working capital changes offsetting positive cash flows in fiscal 2007 included an increase in prepaid and other assets of $113.2 million due primarily to $68.2 million in payments in connection with a capacity reservation agreement with a foundry and a $19.3 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow in the fiscal 2007 was an increase in accounts receivable of $83.1 million primarily due to higher net revenue in fiscal 2007 as compared to fiscal 2006. Accounts receivable increased and the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, increased to 48 days at the end of fiscal 2007 as compared to 45 days at the end of fiscal 2006. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers. Accrued liabilities and other also increased by $22.8 million in fiscal 2007 due to higher accruals for legal fees, royalties, interest expense and an accrual for contingent acquisition payment.

        During fiscal 2006, net cash provided by operating activities was $402.3 million compared to $221.5 million for fiscal 2005. The cash inflows from operations in fiscal 2006 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2006 included $91.7 million related to amortization of acquired intangible assets and other, $56.8 million of depreciation and amortization expense and $101.0 million of amortization of stock-based compensation. Significant working capital changes contributing to positive cash flows in fiscal 2006 included an increase of $66.9 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2006 as well as higher overall spending activity related to our expanding operations, an increase of $66.4 million in income tax payable resulting from taxable income for fiscal 2006, an increase of $23.8 million in accrued compensation primarily related to an increase in the number of employee contributions under the employee stock purchase plan and higher benefit related obligations as a result of the increase in number of employees and an increase of $13.8 million in deferred income resulting from increased shipments of product to our distributors as well as the increase in number of distributors.

        Significant working capital changes offsetting positive cash flows in fiscal 2006 included an increase in prepaid and other assets of $128.9 million due primarily to $106.0 million in payments in connection with a capacity reservation agreement with a foundry, a $12.3 million security deposit for long-term assets under

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construction, and a $19.5 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow in fiscal 2006 was an increase in inventory of $60.4 million, primarily a result of increased wafer starts to meet forecasted demand. As a result of the increase in inventory, the number of days in inventory, which is calculated on a quarterly basis, increased to 86 days at the end of fiscal 2006 compared to 71 days at the end of fiscal 2005. In addition, accounts receivable increased $44.2 million primarily due to higher net revenue in fiscal 2006 as compared to fiscal 2005. Although accounts receivable has increased, the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, decreased to 45 days at the end of fiscal 2006 as compared to 53 days at the end of fiscal 2005. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers.

        Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available capacity and competitive situations in the marketplace. These considerations are balanced against risk of obsolescence or potentially excess inventory levels. Our minimum purchase commitments to Intel may also contribute to higher inventory levels.

Net Cash Provided by Operating Activities

        During fiscal 2008, net cash provided by operating activities was $177.4 million for fiscal 2008 compared to $337.3 million for fiscal 2007 and
$402.3 million for fiscal 2006. The cash inflows from operations in fiscal 2008 were primarily due to changes in working capital. Non-cash charges in fiscal 2007 included
$155.7 million related to amortization of acquired intangible assets and other, $105.8 million of depreciation and amortization expense and $231.0 million of stock-based
compensation. Offsetting positive non-cash charges was $109.3 million of fair market value adjustments to Intel inventory sold.

        Significant
working capital changes contributing to positive cash flows in fiscal 2008 included a decrease in prepaid expenses and other assets primarily due to the utilization of
prepaid foundry capacity and prepaid wafers. Also contributing to positive cash flow was an increase in deferred income due to the increased levels of inventory at distributors due to the increase in
revenue. Significant working capital

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changes
offsetting positive cash flows in fiscal 2008 included an increase inventories of $202.3 million to support increased revenue levels and from purchases of inventory under the supply
agreement for which we plan to sell over periods in excess of one year. The number of days in inventory has increased at the end of fiscal 2008 to 94 days from 69 days at the end of
fiscal 2007 due to the higher comparable inventory balance at the end of each respective fiscal year.

        During
fiscal 2007, net cash provided by operating activities was $337.3 million for fiscal 2007 compared to $402.3 million for fiscal 2006 and $221.5 million for
fiscal 2005. The cash inflows from operations in fiscal 2007 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in
fiscal 2007 included $110.0 million related to amortization of acquired intangible assets and other, $77.2 million of depreciation and amortization expense, $192.1 million of
stock-based compensation and $77.8 million of acquired in-process research and development. Significant working capital changes contributing to positive cash flows in fiscal 2007
included an increase of $43.9 million in accounts payable resulting
primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2007 as well as higher overall spending activity related to our expanding operations, an increase of
$33.5 million in accrued employee compensation resulting from the increase in number of employees and related benefit accruals, an increase of $30.2 million in income tax payable
resulting from taxable income for fiscal 2007 and an increase of $16.7 million in deferred income resulting from an increase in the number of distributors as well as increased shipments of
product to our distributors.

        Significant
working capital changes offsetting positive cash flows in fiscal 2007 included an increase in prepaid and other assets of $113.2 million due primarily to
$68.2 million in payments in connection with a capacity reservation agreement with a foundry and a $19.3 million receivable from a foundry for reimbursements under a capacity reservation
agreement. Also contributing to working capital changes offsetting positive cash flow in the fiscal 2007 was an increase in accounts receivable of $83.1 million primarily due to higher net
revenue in fiscal 2007 as compared to fiscal 2006. Accounts receivable increased and the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, increased to 48 days
at the end of fiscal 2007 as compared to 45 days at the end of fiscal 2006. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before
or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers. Accrued liabilities and other
also increased by $22.8 million in fiscal 2007 due to higher accruals for legal fees, royalties, interest expense and an accrual for contingent acquisition payment.

        During
fiscal 2006, net cash provided by operating activities was $402.3 million compared to $221.5 million for fiscal 2005. The cash inflows from operations in fiscal 2006
were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2006 included $91.7 million related to
amortization of acquired intangible assets and other, $56.8 million of depreciation and amortization expense and $101.0 million of amortization of stock-based compensation. Significant
working capital changes contributing to positive cash flows in fiscal 2006 included an increase of $66.9 million in accounts payable resulting primarily from amounts due to our suppliers
relating to increased inventory purchases during fiscal 2006 as well as higher overall spending activity related to our expanding operations, an increase of $66.4 million in income tax payable
resulting from taxable income for fiscal 2006, an increase of $23.8 million in accrued compensation primarily related to an increase in the number of employee contributions under the employee
stock purchase plan and higher benefit related obligations as a result of the increase in number of employees and an increase of $13.8 million in deferred income resulting from increased
shipments of product to our distributors as well as the increase in number of distributors.

        Significant
working capital changes offsetting positive cash flows in fiscal 2006 included an increase in prepaid and other assets of $128.9 million due primarily to
$106.0 million in payments in connection with a capacity reservation agreement with a foundry, a $12.3 million security deposit for long-term assets under

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construction,
and a $19.5 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow
in fiscal 2006 was an increase in inventory of $60.4 million, primarily a result of increased wafer starts to meet forecasted demand. As a result of the increase in inventory, the number of
days in inventory, which is calculated on a quarterly basis, increased to 86 days at the end of fiscal 2006 compared to 71 days at the end of fiscal 2005. In addition, accounts
receivable increased $44.2 million primarily due to higher net revenue in fiscal 2006 as compared to fiscal 2005. Although accounts receivable has increased, the days sales outstanding, or DSO,
metric, which is calculated on a quarterly basis, decreased to 45 days at the end of fiscal 2006 as compared to 53 days at the end of fiscal 2005. Many of our larger customers have
regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate
depending on the timing of large payments by our customers.

        Due
to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to
sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts
receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our
customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as
the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available
capacity and competitive situations in the marketplace. These considerations are balanced against risk of obsolescence or potentially excess inventory levels. Our minimum purchase commitments to Intel
may also contribute to higher inventory levels.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $13.9 million for the nine months ended October 27, 2007 compared to net cash provided by operating activities of $346.5 million for the nine months ended October 28, 2006. The cash inflow from operations in the first nine months of fiscal 2008 was primarily due to changes in working capital. Non-cash charges in the first nine months of fiscal 2008 included $111.9 million related to amortization of acquired intangible assets, $78.8 million of depreciation and amortization expense, $161.0 million of stock-based compensation and $103.9 for a fair market value adjustment to cost of goods sold from a supply contract.  Significant working capital changes contributing to positive cash inflow cash in the first nine months of fiscal 2008 included a decrease in prepaid expenses and other assets due primarily to the utilization of prepaid foundry capacity and prepaid wafers.  Also contributing to positive cash flow was an increase in deferred income due to the increased levels of inventory at distributors as sales ramp up.

Significant working capital changes offsetting positive cash flows in the first nine months of fiscal 2008 included an increase in inventories of $158.8 million to support increased revenue levels.  The number of days in inventory has increased at the end of the third quarter to fiscal 2008 to 87 days from 81 days at the end of the third quarter of fiscal 2007 due to the higher comparable inventory balance at the end of each respective quarter.  Also contributing to the use of cash in operating activities was an increase in accounts receivable of $56.9 million primarily due to the higher net revenue in the first nine months of fiscal 2008 compared to the first nine months of fiscal 2007.  The days outstanding, or DSO, metric decreased to

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Net Cash Provided by Operating Activities

Net cash provided by operating activities was $54.2 million for the three months ended April 28, 2007 compared to $46.7 million for the three months ended April 29, 2006. The cash inflow from operations in the first three months of fiscal 2008 was primarily due to changes in working capital. Non-cash charges in the first three months of fiscal 2008 included $37.3 million related to amortization of acquired intangible assets, $26.5 million of depreciation and amortization expense and $46.8 million of stock-based compensation.  A significant working capital change contributing to positive cash flow in the first three months of fiscal 2008 was the decrease in accounts receivable of $45.4 million primarily due to the timing of payments received from customers.  The days sales outstanding, or DSO, metric decreased to 40 days in the first three months of fiscal 2008 compared to 51 days for the first three months of fiscal 2007.  Many of our larger customers have regularly scheduled payment dates that fall immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments made by our customers.  Also contributing to an increase in positive cash flow was an increase in accounts payable of $12.5 million, due to an overall increase in operating activities.

Significant working capital changes offsetting positive cash flows in the first three months of fiscal 2008 included a decrease in accrued liabilities and other of $57.8 million due primarily to application of a supply contract liability related to the acquisition of communications and applications processor business of Intel and an increase in inventories of $20.6 million due to the build up of inventory to support our increasing revenue as well as inventory purchase commitments from our acquisitions.  The number of days in inventory has decreased at the end of the first quarter of fiscal 2008 to 74 days compared to 77 days at the end of the first quarter of fiscal 2007.

Net cash provided by operating activities was $46.7 million for the three months ended April 29, 2006. The cash inflows from operations in the first three months of fiscal 2007 were primarily a result of our generation of income during the period and changes to working capital. Non-cash charges in the first three months of fiscal 2007 included $17.4 million related to amortization of acquired intangible assets, $15.6 million of depreciation and amortization expense and $48.8 million of stock-based compensation. Significant

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working capital changes contributing to positive cash inflow in the first three months of fiscal 2007 included an increase of $15.1 million in income tax payable resulting from higher taxable income in the first three months of fiscal 2007 and a decrease in inventory of $8.7 million, primarily as a result of a reduction in wafer starts. The number of days in inventory has increased at the end of the first quarter of fiscal 2007 to 77 days compared to 58 days at the end of the first quarter of fiscal 2006 due primarily to a higher comparable inventory balance at the end of each respective quarter. We expect the number of days in inventory to fluctuate in the range of approximately 60 to 75 days depending on our wafer starts and the inventory purchase needs of our customers as well as lead times and competitive situations in the marketplace.

Significant working capital changes offsetting positive cash flows in the first three months of fiscal 2007 included an increase in accounts receivable of $48.4 million primarily due to higher total net revenue in the first three months of fiscal 2007 compared to the first three months of fiscal 2006. Although accounts receivable increased, the days sales outstanding, or DSO, metric has remained consistent in the first three months of both fiscal 2007 and 2006 at 51 days. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on timing of large payments made by our customers. Also contributing to working capital changes offsetting positive cash flow in the first three months of fiscal 2007 was a decrease in accounts payable of $45.9 million due to payments on outstanding balances and an increase in prepaid expenses and other assets of $25.8 million due primarily to a $23.0 million payment in connection with a capacity reservation agreement with a foundry.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $46.7 million for the three months ended April 30, 2006 compared to $68.9 million for the three months ended April 30, 2005. The cash inflow from operations in the three months of fiscal 2007 was primarily a result of our generation of income during the period and changes in working capital. Non-cash charges in the first three months of fiscal 2007 included $17.4 million related to amortization of acquired intangible assets, $15.6 million of depreciation and amortization expense and $44.5 million of stock-based compensation. Significant working capital changes contributing to positive cash inflow in the first three months of fiscal 2007 included an increase of $14.9 million in income tax payable resulting from higher taxable income in the first three months of fiscal 2007 and a decrease in inventory of $8.7 million, primarily as a result of a reduction in wafer starts. The number of days in inventory has increased at the end of the first quarter of fiscal 2007 to 77 days compared to 58 days at the end of the first quarter of fiscal 2006 due primarily to a higher comparable inventory balance at the end of each respective quarter. We expect the number of days in inventory to fluctuate in the range of approximately 60 to 75 days depending on our wafer starts and the inventory purchase needs of our customers as well as lead times and competitive situations in the marketplace.

Significant working capital changes offsetting positive cash flows in the first three months of fiscal 2007 included an increase in accounts receivable of $48.3 million primarily due to higher total net revenue in the first three months of fiscal 2007 compared to the first three months of fiscal 2006. Although accounts receivable has increased, the days sales outstanding, or DSO, metric has remained consistent in the first three months of both fiscal 2007 and 2006 at 51 days. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments made by our customers. Also contributing to working capital changes offsetting positive cash flow in the first three months of fiscal 2007 was a decrease in accounts payable of $45.9

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million due to payments on outstanding balances and an increase in prepaid and other assets of $25.8 million due primarily to a $23.0 million payment in connection with a capacity reservation agreement with a foundry.

Net cash provided by operating activities was $68.9 million for the three months ended April 30, 2005. The cash inflow from operations in the first three months of fiscal 2006 was primarily a result of our generation of income during the period and changes in working capital. Non-cash charges in the first three months of fiscal 2006 included $19.8 million related to amortization of acquired intangible assets, $13.4 million of depreciation and amortization expense and $0.9 million of amortization of stock-based compensation. Significant working capital changes contributing to positive cash inflow in the first three months of fiscal 2006 included a decrease in inventory of $15.7 million, primarily as a result of better visibility of forecasted demand, as well as reduced cycle times from our foundry vendors. Accordingly, the number of days in inventory has decreased at the end of the first quarter of fiscal 2006 to 58 days compared to 76 days at the end of the first quarter of fiscal 2005. Other working capital changes contributing to positive cash inflow in the first three months of fiscal 2006 included an increase of $8.1 million in income tax payable resulting from higher taxable income in the first three months of fiscal 2006 and an increase of $2.6 million in deferred income due to increased shipments of product to distributors during the first quarter of fiscal 2006.

Significant working capital changes offsetting positive cash flows in the first three months of fiscal 2006 included an increase in prepaid and other assets of $43.8 million due primarily to a $37.0 million payment in connection with a capacity reservation agreement with a foundry. Also contributing to working capital changes offsetting positive cash flow in the first three months of fiscal 2006 was a decrease in accounts payable of $7.4 million due to payments on outstanding balances and the decrease in inventory balances and an increase in accounts receivable of $4.2 million primarily due to higher total net revenue in the first three months of fiscal 2006 compared to the first three months of fiscal 2005.

Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available capacity, and competitive situations in the marketplace. Such considerations are balanced against risk of obsolescence or potentially excess inventory levels.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $402.3 million for fiscal 2006 compared to $221.5 million for fiscal 2005 and $149.8 million for fiscal 2004. The cash inflows from operations in fiscal 2006 were primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2006 included $91.7 million related to amortization of acquired intangible assets and other, $56.8 million of depreciation and amortization expense and $2.2 million of amortization of stock-based compensation. Significant working capital changes contributing to positive cash flows in fiscal 2006 included an increase of $66.9 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2006 as well as higher overall spending activity related to our expanding operations, an increase of $44.7 million in income tax payable resulting from taxable income for fiscal 2006, an increase of $19.4 million in accrued compensation primarily related to an increase in the number of employee contributions under the employee stock purchase plan and higher benefit related obligations as a result of the increase in number of employees and an increase of $13.8 million in deferred income resulting from increased shipments of product to our distributors as well as the increase in number of distributors.

Significant working capital changes offsetting positive cash flows in fiscal 2006 included an increase in prepaid and other assets of $128.9 million due primarily to $106.0 million in payments in connection with a capacity reservation agreement with a foundry, a $12.3 million security deposit for long-term assets under construction, and a $19.5 million receivable from a foundry for reimbursements under a capacity reservation agreement. Also contributing to working capital changes offsetting positive cash flow in the fiscal 2006 was an increase in inventory of $60.4 million primarily a result of the increased in wafer starts to meet forecasted demand and changes in forecast of large volume consumer products. As a result of the increase in inventory, the number of days in inventory, which is calculated on a quarterly basis, has increased to 86 days at the end of fiscal 2006 compared to 71 days at the end of fiscal 2005. In addition, accounts receivable increased $44.2 million primarily due to higher net revenue in fiscal 2006 as compared to fiscal 2005. Although accounts receivable has increased, the days sales outstanding, or DSO, metric, which is calculated on a quarterly basis, has decreased to 45 days at the end of fiscal 2006 as compared to 53 days at the end of fiscal 2005. Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal year-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments by our customers.

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During fiscal 2005, net cash provided by operating activities was $221.5 million. The cash inflow from operations in fiscal 2005 was primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2005 included $79.0 million related to amortization of acquired intangible assets and other, $44.3 million of depreciation and amortization expense, $5.4 million related to the tax benefit from employee stock transactions, $4.0 million of amortization of stock-based compensation and $2.4 million for a charge in connection with a facilities consolidation. Significant working capital changes contributing to positive cash flow in fiscal 2005 included an increase of $30.7 in income tax payable resulting from taxable income for fiscal 2005, an increase of $11.2 million in accrued compensation primarily related to an increase in the number of employee contributions under the employee stock purchase plan and higher benefit related obligations as a result of the increase in number of employees and an increase of $8.5 million in accounts payable resulting primarily from amounts due to our suppliers relating to increased inventory purchases during fiscal 2005 as well as higher overall spending activity related to our expanding operations.

Significant working capital changes offsetting positive cash flows in fiscal 2005 included an increase in accounts receivable of $64.4 million primarily due to higher net revenue in fiscal 2005 as compared to fiscal 2004. Although accounts receivable has increased, the DSO, which is calculated on a quarterly basis, remained relatively consistent at the end of fiscal 2005 as compared to the end of fiscal 2004 in the range of 49 to 54 days. Inventory increased by $37.1 million primarily as a result of increased volumes of purchase orders received from our customers and associated purchases of inventory required to meet customer demand. The number of days of inventory which is calculated on a quarterly basis, has remained reasonably consistent at 71 days at the end of both fiscal 2005 and 2004.

During fiscal 2004, net cash provided by operating activities was $149.8 million. The cash inflow from operations in fiscal 2004 was primarily the result of our generation of income during the period and changes in working capital. Non-cash charges in fiscal 2004 included $80.4 million related to the amortization and write-off of goodwill and acquired intangible assets and other, $33.7 million of depreciation and amortization expense and $4.9 million of amortization of stock-based compensation. Significant working capital changes contributing to positive cash inflow in fiscal 2004 included an increase of $71.9 million in accounts payable resulting primarily from amounts due to our suppliers related to increased inventory purchases during fiscal 2004, and higher overall spending activity related to our expanding operations and an increase of $8.3 million relating to accrued employee compensation, primarily as the result of increased withholding taxes from the exercise of stock options by employees and increased accrued paid time-off due primarily to the increase in number of employees in fiscal 2004 compared to fiscal 2003.

Significant working capital changes offsetting positive cash flows in fiscal 2004 included a $50.2 million increase in accounts receivable, which was primarily due to increases in our net revenue in fiscal 2004 as compared to fiscal 2003. Although accounts receivable has increased, DSO remained relatively consistent at the end of fiscal 2004 in the range of 48 to 50 days. Inventory increased by $52.1 million, primarily as a result of increased volumes of purchase orders received from our customers and associated purchases of inventory required to meet such customer demand. The number of days of inventory, increased at the end of fiscal 2004 to 71 days compared to 51 days at the end of fiscal 2003 as we began to build buffer inventory in the second half of fiscal 2004 in anticipation of longer production lead times and tighter capacity constraints at our foundries.

Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our

54

inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle stage of our products, foundry lead times and available capacity and competitive situations in the marketplace. Such considerations are balanced against risk of obsolescence or potentially excess inventory levels.

SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement may reduce net operating cash flows and increase net financing cash flows in periods after its adoption.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $263.9 million for the nine months ended October 31, 2005 compared to $153.7 million for the nine months ended October 31, 2004. The cash inflow from operations in the nine months of fiscal 2006 was primarily a result of our generation of income during the period and changes in working capital. Non-cash charges in the first nine months of fiscal 2006 included $59.3 million related to amortization of acquired intangible assets, $41.8 million of depreciation and amortization expense and $1.9 million of amortization of stock-based compensation.  Significant working capital changes contributing to positive cash inflow in the first nine months of fiscal 2006 included an increase in accounts payable of $60.4 million resulting from the overall increase in activity and inventory levels, an increase in income taxes payable of $29.6 million resulting from higher taxable income in the first nine months of fiscal 2006 and an increase in deferred income of $9.8 million due to the increase in inventory levels at distributors to replenish and build up for year-end sales as well as new distributors building up inventory.

Significant working capital changes offsetting positive cash flows in the first nine months of fiscal 2006 included an increase in prepaid and other assets of $105.0 million due primarily to an $83.0 million payment in connection with a capacity reservation agreement with a foundry, a $12.3 million security deposit for long-term assets under construction and a $10.6 million receivable from a foundry for reimbursements under a capacity reservation agreement.  Also contributing to working capital changes offsetting positive cash flow in the first nine months of fiscal 2006 was an increase in accounts receivable of $52.4 million primarily due to higher total net revenue in the first nine months of fiscal 2006 compared to the first nine months of fiscal 2005. Although accounts receivable has increased, the days sales outstanding metric, or DSO, has remained consistent at the end of both the third quarters of fiscal 2006 and 2005 at 54 days.  Many of our larger customers have regularly scheduled payment dates with some of the dates falling immediately before or after our fiscal quarter-end. As a result, our accounts receivable balance and DSO may fluctuate depending on the timing of large payments made by our customers.  Inventory also increased $21.0 million, primarily as a result of additional wafer starts to meet forecasted demand and build in buffer stock to compensate for longer foundry lead times.  Accordingly, the number of days in inventory has increased at the end of the third quarter of fiscal 2006 to 68 days compared to 65 days at the end of the third quarter of fiscal 2005.

During the first nine months of fiscal 2005, net cash provided by operating activities was $153.7 million. The cash inflow from operations in the first nine months of fiscal 2005 was primarily a result of our generation of income during the period and changes in working capital. Non-cash charges in the first nine months of fiscal 2005 included $59.3 million related to amortization of acquired intangible assets and other, $30.7 million of depreciation and amortization expense, $3.5 million of amortization of stock-based compensation and $2.4 million for the charge in connection with a facilities consolidation. Significant working capital changes contributing to positive cash inflow in the first nine months of fiscal 2005 included an increase of $17.4 million in income tax payable resulting from taxable income in the first nine months of fiscal 2005, an increase of $11.6 million in accrued employee compensation primarily related to an increase in the amount of employee contributions under the employee stock purchase plan and higher benefit related obligations as a result of the increase in number of employees and an increase of $7.7 million in accrued liabilities and other related to increases in accruals for legal, technology licenses and prototype and tape-out expenses.  Significant working capital changes offsetting positive cash flows in the first nine months of fiscal 2005 included an increase in accounts receivable of $54.4 million primarily due to higher total net revenue in the first nine months of fiscal 2005 as compared to the first nine months of fiscal 2004.  Inventory increased by $16.2 million primarily as a result of increased volumes of sales and associated purchases of inventory required to meet customer demand.

Due to the nature of our business, we experience working capital needs for accounts receivable and inventory. We typically bill customers on an open account basis with net thirty to sixty day payment terms. If our sales levels were to increase as they have in prior fiscal years, it is likely that our levels of accounts receivable would also increase. Our levels of accounts receivable would also increase if customers delayed their payments or if we offered extended payment terms to our customers. Additionally, in order to maintain an adequate supply of product for our customers, we must carry a certain level of inventory. Our inventory level may vary based primarily upon orders received from our customers and our forecast of demand for these products, as well as the initial production ramp for significant design wins. Other considerations in determining inventory levels may include the product life cycle

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Net Cash Provided by Operating Activities

Net cash provided by operating activities was $181.0 million for the six months ended July 31, 2005 compared to $81.2 million for the six months ended July 31, 2004. The cash inflow from operations in the six months of fiscal 2006 was primarily a result of our generation of income during the period and changes in working capital. Non-cash charges in the first six months of fiscal 2006 included $39.5 million related to amortization of acquired intangible assets, $27.6 million of depreciation and amortization expense and $1.4 million of amortization of stock-based compensation.  Significant working capital changes contributing to positive cash inflow in the first six months of fiscal 2006 included an increase in income taxes payable of $18.1 million resulting from higher taxable income in the first six months of fiscal 2006 and a decrease in inventory of $14.7 million, primarily as a result of the timing of wafer starts at foundries, as well as increased cycle times from our foundry vendors.  Accordingly, the number of days in inventory has decreased at the end of the second quarter of fiscal 2006 to 56 days compared to 62 days at the end of the second quarter of fiscal 2005.  We expect the number of days in inventory to increase in future quarters as we increase our wafer starts and inventory purchases in anticipation of increased customer demand and longer production lead times.

Significant working capital changes offsetting positive cash flows in the first six months of fiscal 2006 included an increase in prepaid and other assets of $65.3 million due primarily to a $60.0 million payment in connection with a capacity reservation agreement with a foundry.  Also contributing to working capital changes offsetting positive cash flow in the first six months of fiscal

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