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2
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
cHAIRMAn’s MessAGe
Dear Shareholders,
Fiscal 2010 continued to be another difcult and challenging year for Creative. Our nancial performance continued to be
adversely affected by the uncertain market conditions, particularly in Europe and the US.
The global economic environment remained uncertain, and the overall market for our products remained difcult and unpredictable.
However, with the aggressive restructuring efforts we have taken in the previous year, we are now a much leaner company with
a lower operating cost structure, which allows us to weather these challenges.
In the previous nancial year, with the onset of the crisis in the global nancial markets and the resulting global economic
downturn, we took aggressive measures to position Creative to meet the challenges in the tough period ahead of us. We undertook
a complete restructuring of our worldwide sales and marketing operations, including closing or consolidating certain operations
that were too costly or under performing. We signicantly lowered our operating expenses by sharply reducing our international
headcount and infrastructure costs, primarily in Europe and the US, even as such actions negatively impacted on revenue, resulting
in substantially lower revenues.
During scal year 2010, we have continued with the restructuring and consolidation efforts, and worked towards building a leaner
company with a lower operating cost structure that is more in line with resulting lower revenues.
The result of these efforts is reected in the nancial results for the year – signicant improvements in gross margins and a large
reduction in operating expenses, albeit with substantially lower revenues, and a signicant reduction in net loss for the year.
Sales for scal year 2010 were US$275 million, 41% lower than the previous scal year sales of US$466 million. Gross prot
as a percentage of sales came in at 25% in scal 2010, a signicant improvement from 17% in scal 2009. Net loss for scal
2010 was US$38 million, compared to a net loss of US$138 million in scal 2009.
In my message to you last year, I shared with you the progress on the development of our Zii Platform and the ZMS System
Module, and our plan to utilize the Zii Platform in a new line of our own Zii-branded products, including portable media players,
speakers, audio solutions and other personal digital entertainment devices.
We had also announced our planned marketing program to sell these solutions, using our Zii Platform and ZMS-05 System Module,
into the huge ‘Shanzhai’ OEM market in China. These enterprising OEMs can leverage on our state-of-the-art technologies and
brand equities to rapidly bring a plethora of high quality and low cost Zii-powered products to market.
For the past year, despite the difcult market conditions, we have continued with our signicant ongoing investments in research
and development for products and services under the Zii Platform. While strong focus has been placed on the Zii Platform, we
have also continued with the development and launch of new products in our other product categories.
In early 2010, we pioneered a new line of wireless speaker system, ZiiSound, with the launch of our “Pure Music Everywhere”
campaign that was fronted by our comprehensive range of industry-leading wireless speakers, aimed especially at the mobile
device market such as the iPod, iPhone and iPad. The lineup consisted of the agship ZiiSound D5, the Inspire S2 Wireless, the
Creative D200, the Creative D100 and the Creative T12 wireless speaker systems. These elegantly designed speaker systems
effortlessly stream music from any compatible stereo Bluetooth devices, delivering the purest wireless audio listening experience
in their respective classes.
We also introduced “Pure Listening” solutions that comprised in-ear earphones such as the premium Aurvana In-Ear2, the EP-3NC
active noise-cancelling earphones, and the versatile HS-930i headset.
Expanding our Sound Blaster Wireless Ecosystem, we have introduced the Sound Blaster Wireless Headphones and Sound Blaster
Wireless Rock Speaker, two new ways to enjoy music wirelessly inside or outside the home.