Creative 2007 Annual Report Download

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TABLE OF CONTENTS
Chairman’s Message 2
Selected Consolidated Financial Data 4
Management’s Discussion and Analysis of
Financial Condition and Results of Operations 6
Report of Independent Registered Public Accounting Firm 19
Consolidated Balance Sheets 20
Consolidated Statements of Operations 21
Consolidated Statements of Cash Flows 22
Consolidated Statements of Shareholders’ Equity 24
Notes to Consolidated Financial Statements 25
Stock Market Information 44
The Creative Network 46
Corporate Directory 48
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Table of contents

  • Page 1
    ...'s Message Selected Consolidated Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Cash Flows...

  • Page 2
    ...X-Fi beyond the PC space into the consumer electronics and cell phone markets, and beyond the X-Fi sound cards into speakers and headphones, portable music and video players, digital entertainment products for the living room, and other X-Fi-enabled audio enhancement products. X-Fi can provide these...

  • Page 3
    ... Live! Headphones. Despite the challenging MP3 market, Creative continued to achieve the number two worldwide unit market share position, with our ZEN family of MP3 players. In line with our plan to streamline our MP3 player business to focus on a few strategic high-volume and profitable products...

  • Page 4
    ... report. CONSOLIDATED STATEMENTS OF OPERATIONS DATA (US$'000, EXCEPT PER SHARE DATA): For the years ended June 30 2007 Sales, net Cost of goods sold Gross profit Operating expenses: Selling, Selling,general generaland andadministrative administrative Research Researchand anddevelopment development...

  • Page 5
    ...% for fiscal year 2004. These standard corporate income tax rates continue to be applicable to profits arising from activities excluded from the Pioneer Certificate. See Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") for further discussion. (2) (3) 5

  • Page 6
    ...'s ability to timely develop new products that gain market acceptance and to manage frequent product transitions; competitive pressures in the marketplace; a reduction or cancellation of sales orders for Creative products; accelerated declines in the average selling prices of Creative's products or...

  • Page 7
    ... accounts, returns and discounts based on credit profiles of its customers, current economic trends, contractual terms and conditions and historical payment, return and discount experience. Management performs ongoing credit evaluations of customers' financial condition and uses letters of credit...

  • Page 8
    ... changes in the manner of use of the acquired assets or the strategy for Creative's overall business; significant negative industry or economic trends; significant decline in Creative's stock price for a sustained period; and Creative's market capitalization relative to net book value. When the...

  • Page 9
    ...'s current business model. Additionally, in response to changes in the PC peripherals and consumer electronics industries and changes in global or regional economic conditions, Creative may strategically realign its resources and consider restructuring, disposing or otherwise exiting businesses...

  • Page 10
    ... the periods indicated, selected statement of operations data as a percentage of sales: Years ended June 30 2007 Sales, net Cost of goods sold Gross profit 100 % 81 19 2006 100 % 85 15 2005 100 % 78 22 Operating expenses: Selling, general and administrative Research and development Impairment of...

  • Page 11
    ... lower average selling prices of digital audio players resulting from product mix and management's decision to streamline the company's lineup of digital audio players to focus on strategic and more profitable products. Sales of audio products, which consist of Sound Blaster audio cards and chipsets...

  • Page 12
    ... year 2006 included a $20.9 million net gain from sales of investments offset by $2.0 million in write-downs of investments. As part of its long-term business strategy, from time to time, Creative makes strategic equity investments in companies that can provide Creative with technologies or products...

  • Page 13
    ...from the sales of investments was derived from sales of shares of SigmaTel, Inc. ("SigmaTel"). As part of its long-term business strategy, from time to time, Creative makes strategic equity investments in companies that can provide Creative with technologies or products that management believes will...

  • Page 14
    ..., offset partially by $1.2 million in dividends received from investments. Income tax (expense) benefit Income taxes of foreign subsidiaries are based on the corporate income tax rates of the country in which the subsidiary is located. Net operating profits from some subsidiaries are not offsetable...

  • Page 15
    ... except per share data) Jun 30 2007 Sales, net Cost of goods sold Gross profit (loss) Operating expenses: Selling, general and administrative Research and development Impairment of goodwill and other intangible assets Other charges Operating (loss) income (Loss) gain from investments, net Interest...

  • Page 16
    MANAGEMENT'S dISCUSSION ANd ANALYSIS OF FINANCIAL CONdITION ANd RESULTS OF OPERATIONS Unaudited data for quarters ended (as a percentage of sales) Jun 30 2007 Sales, net Cost of goods sold Gross profit (loss) Operating Expenses: Selling, general and administrative Research and development ...

  • Page 17
    ..., letters of credit and fixed short-term loans, of which approximately $89.3 million were unutilized. As part of its long-term business strategy, from time to time, Creative makes strategic equity investments in companies that can provide Creative with technologies or products that management...

  • Page 18
    ... of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations. As of June 30, 2007, Creative has utilized approximately $2.0 million under guarantees and letters of credit. RECENTLY ISSUED ACCOUNTING...

  • Page 19
    ... present fairly, in all material respects, the financial position of Creative Technology Ltd and its subsidiaries at June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2007 in conformity with accounting principles...

  • Page 20
    ...000, except per share data) June 30 2007 ASSETS Current assets: Cash and cash equivalents Accounts receivable, less allowances of $14,153 and $18,806 Inventory Other assets and prepaids Total current assets Property and equipment, net Investments Other non-current assets Total Assets LIABILITIES AND...

  • Page 21
    ... per share data) Years ended June 30 2007 Sales, net Cost of goods sold Gross profit Operating expenses: Selling, general and administrative Research and development Impairment of goodwill and other intangible assets Other charges Operating (loss) income (Loss) gain from investments, net Interest...

  • Page 22
    ... fixed assets Proceeds from disposal of interests in associated company Proceeds from sale of investments Purchase of new subsidiaries (net of cash acquired) Purchase of investments Dividend income received Increase in other non current assets, net Net cash (used in) provided by investing activities...

  • Page 23
    ... at end of year Supplemental disclosure of cash ï¬,ow information: Interest paid Income taxes paid, net Non cash transaction: Fixed assets acquired under capital lease 29,903 6,582 213,995 $ 250,480 Years ended June 30 2006 24,584 2,165 187,246 $ 213,995 $ 2005 (18,610) (5,221) 211,077 187,246...

  • Page 24
    ... data) Unrealised Holding Gains deferred (Losses) on Shares Retained Investments Compensation Earnings (1,991) $ 210,723 Ordinary Shares ('000) Balance at June 30, 2004 Shares issued under employee options and share purchase plans Dividends paid Reversal of unvested deferred share compensation, net...