Creative 2002 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2002 Creative annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 56

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56

40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – EMPLOYEE SHARE PURCHASE AND STOCK OPTION PLANS (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
2002 2001 2000
Net (loss) income:
As reported $ (19,727) $ (130,373) $ 161,012
Pro forma $ (23,463) $ (134,868) $ 151,450
Diluted (loss) earnings per share:
As reported $ (0.27) $ (1.65) $ 1.86
Pro forma $ (0.32) $ (1.71) $ 1.78
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. The Pioneer Certificate expired in March 2000. Such status had the effect of reducing Creative’s
provision for income taxes by approximately $15.4 million, $26.4 million and $43.3 million, or $0.18, $0.29 and $0.46
per share, for fiscal 2000, 1999 and 1998 respectively. The corporate income tax rate in Singapore, which would otherwise
be applicable, would have been 25.5% for fiscal year 2000, and 26% for fiscal years 1998 to 1999.
Creative has applied for a separate and new Pioneer Certificate. If Creative is awarded this new Pioneer Certificate, profits
under the new Pioneer Certificate will be exempted from tax in Singapore. For fiscal 2000 (covering period from April
1, 2000 to June 30, 2000), 2001 and 2002, corporate tax was provided for in full based on the standard tax rates of 25.5%,
24.5% and 22% respectively as the terms and agreements of the new Pioneer Certificate is currently still under negotiation
as at to-date. The new Pioneer Certificate will result in the reduction of Creative’s provision for income taxes, subject to
the terms and agreement by the Singapore Comptroller of Income Tax. The corporate income tax rate in Singapore, which
would otherwise be applicable, would be 22.0% for fiscal 2002, 24.5% for fiscal 2001 and 25.5% for fiscal 2000.
The Singapore and other components of (loss) income before income taxes are as follows (in US$’000):
Years ended June 30
2002 2001 2000
Singapore $ 45,738 $ 25,193 $ 96,577
Other countries (57,924) (146,688) 74,439
(Loss) income before income taxes and minority interest $ (12,186) $ (121,495) $ 171,016