Creative 2001 Annual Report Download - page 31

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31
Creative and Subsidiary Pro Forma Disclosures (Cont’d)
Had compensation cost for Creative’s employee share purchase and stock option plans, and the subsidiary’s stock
option plan been determined based on the fair value at the grant dates using the Black-Scholes model, Creative’s net
income (loss) and net income (loss) per share would have been as follows:
In US$’000, except for per share data Years ended June 30
2001 2000 1999
Net (loss) income:
As reported $(130,373) $ 161,012 $ 115,082
Pro forma $(134,868) $ 151,450 $ 108,230
Diluted (loss) earnings per share:
As reported $ (1.65) $ 1.86 $ 1.25
Pro forma $ (1.71) $ 1.78 $ 1.19
NOTE 9 – INCOME TAXES
Creative was granted a Pioneer Certificate in 1990 under the Singapore Economic Expansion Incentives (Relief from
Income Tax) Act, Cap. 86 for the design and manufacture of digital computer video, audio and multimedia products,
including personal computers and related components, chipsets and software but not including interest income. The
Pioneer Certificate exempted income derived from such activities (“Pioneer Income”) from tax in Singapore, subject
to certain conditions until the year 2000. Creative’s Pioneer Certificate expired in March 2000. Creative has applied
for a separate and new Pioneer Certificate covering a new range of products. If Creative is awarded this new Pioneer
Certificate, profits from qualified products under the new Pioneer Certificate will be exempted from tax in Singapore.
The Singapore corporate income tax rate of 24.5% will be applicable to the profits of products excluded from the new
Pioneer Certificate.
The Pioneer tax status had the effect of reducing Creative’s provision for income taxes by approximately $0.8 million,
$18.3 million and $26.4 million, or $0.01, $0.21 and $0.29 per share, for fiscal 2001, 2000 and 1999, respectively.
The corporate income tax rate in Singapore, which would otherwise be applicable for Creative is 24.5% for fiscal
2001, 25.5% for 2000, and 26% for 1999. Any income of a foreign subsidiary of Creative is subject to tax in the
country in which the subsidiary is located and, as a result, the effective rate of tax is subject to changes as a result
of the international source of income before tax.
The Singapore and other components of income before income taxes are as follows (in US$’000):
Years ended June 30
2001 2000 1999
Singapore $ 25,193 $ 96,577 $ 106,644
Other countries (146,688) 74,439 18,670
Income before income taxes and minority interest $(121,495) $ 171,016 $ 125,314