Creative 2006 Annual Report Download - page 38
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE10–INCOMETAXES(Cont’d)
DeferredtaxassetsatJune30,2006and2005consistedofthefollowing(inUS$’000):
As of June 30
2006 2005
Non-deductiblereserves $ 24,493 $ 26,963
Netoperatinglosscarryforwards 59,095 54,760
Other 612 833
Totaldeferredtaxassets 84,200 82,556
Valuationallowancefordeferredtaxassets (84,200) (82,556)
$ – $–
DeferredtaxliabilitiesatJune30,2006and2005consistedofthefollowing(inUS$’000):
As of June 30
2006 2005
Unremittedoffshoreinterestincome $ 7,256 $ 7,256
Undistributedprofitofcertainforeignsubsidaries 6,144 6,144
Others 1,165 612
Totaldeferredtaxliabilities$ 14,565 $14,012
Creativehadnetoperatinglosscarryforwardofapproximately$167.4millionand$136.8millionasatJune30,2006andJune30,2005,
substantiallyexpiringbetween2009to2025.TheutilizationofthenetoperatinglossesbyCreativeissubjecttocertainconditions.
ValuationallowanceisprovidedforCreative’sdeferredtaxassetsasmanagementbelievessubstantialuncertaintyexistsregardingthe
realizabilityoftheseassets.
CreativehasUnitedStatestaxdeductionsnotincludedinthenetoperatinglosscarryforwarddescribedaboveaggregatingapproximately
$59.0millionand$58.8millionatJune30,2006andJune30,2005,asaresultoftheexerciseofemployeestockoptions,thetax
benefitofwhichhasnotbeenrealized.Thetaxbenefitofthedeductions,whenrealizedwillbeaccountedforasacredittoadditional
paid-incapitalratherthanareductionoftheincometaxprovision.
NOTE11–DEBTOBLIGATIONS
InNovember2004,Creativeenteredintoafive-year$175.0millionsyndicatedtermloanfacilitywithagroupofinternationalbanks.
Theproceedsfromthisfacilitywereusedprimarilytofundthegrowthinworkingcapitalrequirementsarisingfromthegrowthinthe
company’srevenue.ThefacilityisunsecuredandbearsinterestatLIBORplusamarginof0.45%forthefirstthreeyearsandLIBOR
plusamarginof0.95%fortheremainingtwoyears.Theloanfacilitycontainscertainfinancialcovenants,includingrequirementsfor
Creativetomaintaincertainratiosforitsworkingcapital,butdoesnotrestrictCreative’sabilitytoborrownordistributeearnings.The
entireloanfacilityof$175.0millionwasdrawndowninfiscal2005.