This excerpt taken from the MRVL 10-Q filed Sep 6, 2007.
Net Cash (Used In) Provided by Operating Activities
Net cash used in operating activities was $10.8 million for the six months ended July 28, 2007 compared to net cash provided by operating activities of $215 million for the six months ended July 29, 2006. The cash inflow from operations in the first six months of fiscal 2008 was primarily due to changes in working capital. Non-cash charges in the first six months of fiscal 2008 included $74.6 million related to amortization of acquired intangible assets, $52.4 million of depreciation and amortization expense, $105.7 million of stock-based compensation and $77.6 for a fair market value adjustment to cost of goods sold from a supply contract. Significant working capital changes contributing to the use of cash in operating activities included an increase in inventories of $88.7 million from inventory purchase commitments and build up of inventory to support increased revenue levels. The number of days in inventory has increased at the end of the second quarter to fiscal 2008 to 80 days from 75 days at the end of the second 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 $28.7 million primarily due to the timing of payments received from customers. The days outstanding, or DSO metric decreased to 49 days at the end of the second quarter of fiscal 2008 compared to 54 days in at the end of the second quarter 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 the use of cash in operating activities was a decrease in accrued liabilities and other of $26.2 million due primarily to a reduction in accrued legal expenses and payment of an acquisition contingency.
Significant working capital changes contributing to positive cash flows in the first six months of fiscal 2008 included a decrease in prepaid expense and other assets of $54.0 million due primarily to the utilization of prepaid foundry capacity and prepaid wafers. Also contributing to positive cash flows was an increase in accounts payable of $22.3 million due to the increase in overall activity and to the increase in inventory.
Significant working capital changes contributing to positive cash inflow in the first six months of fiscal 2007 included an increase of $25.4 million in income tax payable resulting from higher taxable income in the first six months of fiscal 2007 and an increase in accounts payable of $15.5 million resulting primarily from amounts due to our suppliers relating to increased inventory purchases as well as higher overall spending activity related to our expanding operations. Inventory decreased $7.1 million, primarily as a result of the build up of inventory to support our increasing revenue and additional inventory from our acquisitions.
Significant working capital changes offsetting positive cash flows in the first six months of fiscal 2007 included an increase in accounts receivable of $97.6 million primarily due to higher total net revenue in the first six months of fiscal 2007 compared to the first six months of fiscal 2006. Accounts receivable increased and the days sales outstanding, or DSO, metric increased to 54 days at the end of second quarter of fiscal 2007 compared to 48 days at the end of the second quarter of fiscal 2006. Also contributing to working capital changes offsetting positive cash flow in the first six months of fiscal 2007 was an increase in prepaid expenses and other current assets of $28.5 million due primarily to payments made in connection with a capacity reservation agreement with a foundry.