Creative 2002 Annual Report Download - page 8

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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: possible
disruption in commercial activities, occasioned by terrorist activity and armed conflict which may, among other things,
result in delays in, or damage to, the manufacture, shipment, or storage of Creative’s products, or customers delaying or
canceling purchasing decisions as a result of increased broad economic and safety concerns; the timely development,
ramp, shipment, delivery, and market acceptance of new products, including Creative’s next generation of audio and
personal digital entertainment appliances; the increasing proliferation of sound functionality in new products from new
and existing competitors and at the application software, chip and operating system levels; further deterioration of the
System Integrator markets and failure of the System Integrators or OEMs to adopt Creative’s products; the cost-cutting
measures Creative has taken and plans to take may be insufficient or may fail to achieve the anticipated cost reduction
benefits; 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; 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 and increased inventories and
pricing pressure from competitors; 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; further fluctuations in the value and liquidity of Creative’s investee companies, including any losses that may
result from the increased volatility for technology stocks and potential price reductions of carrying values of our investee
companies; and other risk factors described herein, in Creative’s press release announcing the signing of the definitive
agreement to acquire 3Dlabs dated March 11, 2002, and in Creative’s filings with the Securities and Exchange Commission
over the past twelve months, including without limitation, Creative’s Form 20-F dated October 10, 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.