56 The accompanying notes are an integral part of these consolidated financial statements. Year Ended December  31 , 2002 2003 2004 Cash flows from operating activities: Net income $  64 , 843 $  67 , 876 $  77 , 674 Adjustments to reconcile net income to net cash provided by operating  activities: Depreciation and amortization 21 , 602 22 , 369 27 , 883 Amortization of deferred compensation — 715 778 (Gain) loss on sale of assets ( 1 , 328 ) 525 — Changes in operating assets and liabilities: Accounts receivable 404 3 , 860 ( 1 , 003 ) Related parties receivable 5 , 971 — — Inventories, net ( 4 , 051 ) 4 , 968 ( 4 , 136 ) Prepaid expenses and other ( 3 , 674 ) 11 , 714 21 , 869 Other assets 12 , 473 ( 7 , 965 ) ( 10,372 ) Accounts payable 3 , 259 824 6 , 366 Accrued expenses 14 , 160 1 , 176 10 , 910 Related parties payable ( 6 , 967 ) — — Other liabilities 4 , 424 2 , 964 381 Net cash provided by operating activities 111 , 116 109 , 026 130,350 Cash flows from investing activities: Purchase of property and equipment ( 19 , 026 ) ( 23 , 518 ) ( 34 , 996 ) Proceeds on investment sales 5,200 70,775 185,015 Purchases of investments (20,750) (52,800) (195,245) Purchase of long-term assets ( 7 , 505 ) — (2,953) Net cash used in investing activities ( 42,081 ) ( 5,543 ) ( 48,179 ) Cash flows from fi nancing activities: Payments of cash dividends ( 19 , 593 ) ( 21 , 851 ) ( 22 , 627 ) Repurchase of shares of common stock ( 14 , 158 ) ( 150 , 009 ) ( 72 , 311 ) Exercise of distributor and employee stock options 1 , 261 8 , 892 16 , 627 Payments on long-term debt — — ( 16 , 241 ) Proceeds from long-term debt — 75 , 000 — Proceeds from revolving credit facility — 20 , 000 — Payments on revolving credit facility — ( 20 , 000 ) — Net cash used in fi nancing activities ( 32 , 490 ) ( 87 , 968 ) ( 94 , 552 ) Effect of exchange rate changes on cash ( 7 , 677 ) 4 , 687 ( 322 ) Net increase (decrease) in cash and cash equivalents 28,868 20,202 ( 12,703 ) Cash and cash equivalents, beginning of period 73,498 102,366 122 , 568 Cash and cash equivalents, end of period $  102,366 $  122 , 568 $  109,865 (U.S. dollars in thousands) NU SKIN ENTERPRISES, INC. Consolidated Statements of Cash Flows