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## Liquidity and Capital Resources 

## Sources of Liquidity 

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As of March 31, 2004, our primary source of liquidity is comprised of $466.6 million of cash and cash equivalents and $121.1 million of short-term investments. Over the last three years, our primary sources of liquidity have included cash on hand at the beginning of the year and cash flows generated from continuing operations. We have also gener- ated significant cash flows from the issuance of our common stock to employees through the exercise of options and to the public through an underwritten public offering in fiscal 2003, as well as from the utilization of structured stock repurchase transactions, which are described in more detail below in “Cash Flows from Financing Activities.” In recent years, we have not utilized debt financing as a significant source of cash flows. However, we do have available at certain of our international locations, credit facilities, which are described below in “Credit Facilities,” that can be utilized if needed. 

In August 2003, we filed with the Securities and Exchange Commission two amended shelf registration statements, including the base prospectuses therein. The first shelf registration statement, on Form S-3, allows us, at any time, to offer any combination of securities described in the base prospectus in one or more offerings with an aggregate initial offering price of up to $500.0 million. Unless we state otherwise in the applicable prospectus supplement, we expect to use the net proceeds from the sale of the securities for general corporate purposes, including capital expenditures, working capital, repayment or reduction of long-term and short-term debt and the financing of acquisitions and other business combinations. We may invest funds that we do not immediately require in marketable securities. 

The second shelf registration statement, on Form S-4, allows us, at any time, to offer any combination of securities described in the base prospectus in one or more offerings with an aggregate initial offering price of up to $250.0 million in connection with our acquisition of the assets, business or securities of other companies whether by purchase, merger, or any other form of business combination. 

We believe that we have sufficient working capital ($675.8 million at March 31, 2004), as well as proceeds avail- able from our international credit facilities, to finance our operational requirements for at least the next twelve months, including purchases of inventory and equipment, the funding of the development, production, marketing and sale of new products and the acquisition of intellectual property rights for future products from third parties. 

## Cash Flows from Operating Activities 

In recent years, the primary drivers of cash flows from operating activities typically have included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for the manufacture, distri- bution and marketing of our products, third-party developers and intellectual property holders and our own employees. A significant operating use of our cash relates to our continued investment in software development and intellectual property licenses. We spent approximately $115.2 million and $151.6 million in the years ended March 31, 2004 and 2003, respectively, in connection with the acquisition of publishing or distribution rights for products being devel- oped by third parties, the execution of new license agreements granting us long-term rights to intellectual property of 

