Our liquidity and capital resources depend on our cash flows from operations and our working capital. The significant components of our working capital are liquid assets such as cash and cash equivalents, short-term investments, accounts receivable and inventories, reduced by trade accounts payable, accrued salaries and wages, and other accrued expenses. Our working capital increased to
$1.3 billionas of June 30, 2013from $1.0 billionat June 24, 2012, primarily due to $285.2 millioncash provided by operating activities, $96.2 millioncash provided by the net issuances of common stock from employee option exercises and stock plan purchases, partially offset by payments for patent and licensing rights and purchases of property and equipment of $98.3 million. 36
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The following table presents the components of our cash conversion cycle:
Three Months Ended June 30, June 24, 2013 2012 Change Days of sales outstanding (a) 46 45 1 Days of supply in inventory (b) 76 85 (9 )
Days in accounts payable (c) (47 ) (36 ) (11 ) Cash conversion cycle
75 94 (19 )
a) Days of sales outstanding (DSO) measures the average collection period of
our receivables. DSO is based on the ending net trade receivables and the
revenue for the quarter then ended. DSO is calculated by dividing ending
accounts receivable, net of applicable allowances and reserves, by the
average net revenue per day for the respective 90 day period.
b) Days of supply in inventory (DSI) measures the average number of days from
procurement to sale of our product. DSI is based on ending inventory and
cost of revenue, net sold for the quarter then ended. DSI is calculated by
dividing ending inventory by average cost of revenue, net per day for the
respective 90 day period. c) Days in accounts payable (DPO) measures the average number of days our payables remain outstanding before payment. DPO is based on ending
accounts payable and cost of revenue, net for the quarter then ended. DPO
is calculated by dividing ending accounts payable by the average cost of
revenue, net per day for the respective 90 day period.
The decrease in the cash conversion cycle was primarily driven by a decrease in days of supply in inventory and an increase in days in accounts payable. As of
June 30, 2013, we had unrealized losses on our investments of $3.1 million. All of our investments had investment grade ratings, and any such investments that were in an unrealized loss position at June 30, 2013were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes. As we intend and believe that we have the ability to hold such investments for a period of time that will be sufficient for anticipated recovery in market value, we currently expect to receive the full principal or recover our cost basis in these securities. The declines in value of the securities in our portfolio are considered to be temporary in nature and, accordingly, we do not believe these securities are impaired as of June 30, 2013. We believe our current working capital and anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations and capital expenditures for at least the next 12 months. We may use a portion of our available cash and cash equivalents, or funds underlying our marketable securities, to repurchase shares of our common stock pursuant to repurchase programs authorized by our Board of Directors. With our strong working capital position, we believe that we have the ability to continue to invest in further development of our products and, when necessary or appropriate, make selective acquisitions or other strategic investments to strengthen our product portfolio, secure key intellectual properties, or expand our production capacity.