Creative 1999 Annual Report Download - page 40

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38
NOTE 14 – ACQUISITIONS AND INVESTMENTS (Cont’d)
The following unaudited pro forma information has been prepared assuming that the above acquisitions had taken place at the beginning
of the earliest periods presented. The amount of the aggregate purchase price allocated to in-process research and development has been
excluded from the pro forma information as it is a non-recurring item. The pro forma financial information is not necessarily indicative
of the combined results that would have occurred had the acquisitions taken place at the beginning of the earliest period, nor is it necessarily
indicative of results that may occur in the future.
Unaudited Pro Forma for
In US$’000, except for per share data the years ended June 30
1998 1997
Sales, net $ 1,287,095 $ 1,337,003
Net income $ 192,179 $ 140,839
Basic earnings per share $ 2.12 $ 1.59
Diluted earnings per share $ 2.02 $ 1.55
On May 22, 1998, Creative acquired all the outstanding shares of Silicon Engineering, Inc. (“SEI”), a privately-held company based in
Scotts Valley, California. SEI designs and develops integrated circuits for the multimedia, storage and communications markets. The
consideration for this acquisition was the issuance of 921,271 Ordinary Shares of Creative plus an additional 102,314 shares that were issued
in fiscal 1999, upon expiration of the contingency period. The acquisition has been accounted for as a pooling of interests. However due
to its immateriality, results of operations have been included from the date of acquisition rather than restating prior periods in accordance
with pooling of interests accounting.
Investments
In accordance with Statement of Financial Accounting Standards No. 115 (SFAS 115), Creative carried its available-for-sale quoted
investments at their fair market value, which resulted in unrealized gains of $15.4 million and $13.7 million being included in shareholders’
equity in fiscal 1999 and 1998, respectively. Included in the results of operations for fiscal 1999 and 1998, are realized net gains from the
sale of quoted investments of $15.0 million and $18.5 million, respectively.
Trade receivables include amounts due from one investee company amounted to $2.4 million, and $2.5 million at June 30, 1999 and 1998,
respectively, and are included in other assets.
Notes to Consolidated Financial Statements