This excerpt taken from the OIIM 20-F filed May 12, 2009.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through private sales of securities and through our initial public offering in August 2000 and our public offering in November 2001 as well as cash provided by operating activities in recent years. Cash, cash equivalents and short-term investments were $104.2 million at December 31, 2008 as compared to $81.2 million at December 31, 2007. Our operating activities provided cash in the amount of $25.8 million in the year ended December 31, 2008, $21.4 million in the year ended December 31, 2007, and $3.3 million in the year ended December 31, 2006.
Non-cash charges primarily consist of depreciation of property and equipment, impairment loss on long-term investments, goodwill impairment, changes of deferred income tax assets, reversal of income tax payable, and amortization of stock-based compensation from stock options. The working capital components that have a significant impact on our cash flows are accounts receivable, inventories, notes and accounts payable, prepaid expenses and other current assets, income tax payable and accrued expense and other current liabilities.
Net cash inflows from operations resulted from net income adjusted by changes in inventory, accounts receivable, notes and accounts payable, accrued expenses and other current liabilities and income tax payable.
In 2008, we had a net cash outflow from investing activities of $36.1 million as compared to a net cash outflow of $14.3 million in 2007. This increase in net cash used by investing activities between 2007 and 2008 was principally due to a net purchase of short-term investments of $43.4 million in 2008 as compared to a net purchase of short-term investments of $8.9 million in 2007 and an increase of $6.5 million in cash paid in acquisition, offset by a decrease of $5.7 million in acquisition of property and equipment and decrease in restricted assets and cash of $12.9 million.
In 2007, we had a net cash outflow from investing activities of $14.3 million as compared to a net cash inflow of $1.7 million in 2006. This increase in net cash used by investing activities between 2006 and 2007 was principally due to a net purchase of short-term investments of $8.9 million in 2007 as compared to net sales of short-term investments of $35.5 million in 2006 offset by a decrease of $15.2 million in acquisition of property and equipment and a decrease in acquisition of long-term investments of $8.1 million.
Net cash outflow from our financing activities in 2007 was $956,000 which was primarily due to the repurchase of $4.3 million of our Shares and ADSs under a share repurchase program which was partially offset by proceeds from the exercise of stock options and issuance of shares under our existing employee stock purchase plan for the year. Net cash outflow from our financing activities in 2008 was $10.8 million which was primarily due to the repurchase of $11.8 million of our Shares and ADSs under a share repurchase program which was partially offset by proceeds from the exercise of stock options and issuance of shares under our existing employee stock purchase plan for the year.
We believe our cash generated from operations, together with the liquidity provided by existing cash, cash equivalents balances and short-term investment will be sufficient to meet our capital requirements for at least the next 12 months. We incurred capital expenditure of $23.4 million, $8.1 million, and $2.4 million in 2006, 2007, and 2008, respectively. Our future capital expenditure requirements will depend on many factors, including the inventory levels we maintain, the level of investments we make in new technology and improvements to existing technology, the levels of promotion and advertising required to launch new products and attain a competitive position in the marketplace, and the market acceptance of our products. Thereafter, we may need to raise additional funds through public or private financing. No assurance can be given that additional funds will be available or that we can obtain additional funds on terms favorable to us.