Creative 2001 Annual Report Download - page 6

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Except for the historical information contained herein, the matters set forth herein (including all references to future
financial performance, products and marketing efforts) are forward-looking statements within the meaning of the
“safe harbor” provisions of The Private Securities Litigation Reform Act of 1995. Readers of this Annual Report
are cautioned not to place undue emphasis or reliance on these forward-looking statements which reflect management’s
analysis, judgement, belief or expectation only as of the date of this Annual Report. These forward-looking statements
are subject to certain assumptions, risks and uncertainties that could cause actual results to differ materially from
those set forth or implied in the forward looking statements. Such assumptions, risks and uncertainties include,
among others: the cost-cutting measures Creative has taken and plans to take may be insufficient or may fail to
achieve the anticipated cost reduction benefits; further deterioration of the global stock market and overall reduction
in demand for computer systems, peripherals and related products in general, and Creative’s products specifically;
increased exposure to excess and obsolete inventory; higher overhead costs as a percentage of revenue; reduction or
cancellation of sales orders for Creative products or other unexpected or unplanned events that could cause Creative
to miss its revenue guidance, operating expense projections or negatively impact its margins; the timely development,
ramp, shipment, delivery, and market acceptance of new products, including Creative’s next generation of audio and
personal digital entertainment appliances, including the WebCam line of products, the NOMAD and NOMAD
Jukebox line of products, CD-ROM, CD-RW and DVD drives, and communications products; the increasing proliferation
of sound functionality in new products from new and existing competitors and at the application software, chip and
operating system levels; reductions in the market value of products sold by Creative, including increases in inventory
or declines in demand or prices for storage devices, digital entertainment appliances, board and chip-level products,
software, speakers, and other products; reductions in revenues and gross margins due to numerous factors, including
declines in average selling prices of Creative’s products, failure to reduce costs, divestments of low margin product
lines or businesses, and increased inventories and pricing pressure from competitors; the short product cycles that
characterize most of Creative’s products; further fluctuations in the value and liquidity of Creative’s investee companies,
including any losses that may result from the recent trend of increased volatility for technology stocks and potential
price reductions of carrying values of our investee companies; potential fluctuations in quarterly results due to the
seasonality of Creative’s business and the difficulty of projecting such fluctuations; the vulnerability of certain
markets to current and future currency fluctuations, including the exchange rate of the Euro; labor shortages or work
stoppages; credit shortages; effects of restricted fuel availability and rising costs of fuel; Creative’s reliance on sole
sources for many of its chips and other key components; component shortages which may impact Creative’s ability
to meet customer demand; Creative’s ability to protect its proprietary rights; the volatility of share prices for companies
in Creative’s industry and the effect of those prices or other events beyond Creative’s control, including acts of war,
terrorist attacks, or adverse changes in general economic conditions; and other risk factors described in Creative’s
filings with the Securities and Exchange Commission over the past twelve months, including without limitation,
Creative’s Form 6-K dated January 19, 2001. Creative urges you to consider all such factors. Creative undertakes
no obligation to publicly release the results of any revisions to such forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.