Creative 2008 Annual Report Download - page 15

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Investing Activities
Net cash provided by investing activities during fiscal year 2008 was $30.5 million compared to cash used of $2.8 million
in fiscal year 2007. The $30.5 million cash provided in fiscal year 2008 was primarily proceeds from sale of investments
amounting to $53.0 million, offset partially by $12.6 million of capital expenditures and $9.5 million of purchase of
investments.
Net cash used in investing activities during fiscal year 2007 was $2.8 million compared to cash provided of $10.7 million
in fiscal year 2006. The $2.8 million cash used in fiscal year 2007 was primarily for capital expenditures amounting to
$6.0 million offset partially by proceeds from sales of fixed assets of $4.3 million.
Financing Activities
Net cash provided by financing activities during fiscal year 2008 was $64.1 million compared with $99.5 million net cash
used in fiscal year 2007. Cash provided by financing activities of $64.1 million comprised $127.6 million advance payments
from sale of building, offset partially by $32.2 million used for the purchase of treasury shares, $19.8 million for repayment
of debt obligations and $11.5 million for dividend payment (see Note 9 of “Notes to Consolidated Financial Statements”).
The $127.6 million advance payment from sale of building arises because under FASB Statement No. 98 “Accounting
for Leases: Sale-Leaseback Transactions Involving Real Estate, Sales-Type Leases of Real Estate, Definition of the Lease
Term, and Initial Direct Costs of Direct Financing Leases” (“SFAS 98”), the transaction did not meet certain criteria of
sale-leaseback accounting. Accordingly, for US GAAP accounting purposes, the building is still recorded as a fixed asset
and the sale proceeds received, net of security deposit and rental prepayment, is presented as “Advance payments from sale
of building” (see Note 3 and 4 of “Notes to Consolidated Financial Statements”). Legal Counsel has confirmed that legal
title has been transferred to the buyer and in the opinion of the directors and management, the sale was completed as legal
title has been transferred to the buyer and sale proceeds were received.
Net cash used in financing activities during fiscal year 2007 was $99.5 million compared with $35.0 million in fiscal year
2006. Cash used in financing activities of $99.5 million primarily consisted of a $20.9 million dividend payment (see Note
9 of “Notes to Consolidated Financial Statements”) and $78.9 million in repayments of debt obligations.
Current and Expected Liquidity
As of June 30, 2008, in addition to its cash reserves and excluding long term loans, Creative has credit facilities totaling
$100.1 million for overdrafts, guarantees, letters of credit and fixed short-term loans, of which approximately $97.2 million
were unutilized.
Subsequent to the end of the fiscal year on June 30, 2008, Creative repaid the entire $100.0 million outstanding balance of
the $175.0 million syndicated term loan facility that it obtained in November 2004.
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 give Creative a competitive advantage
in the markets in which Creative competes.
Management believes that Creative has adequate resources to meet its projected working capital and other cash needs for
at least the next twelve months. To date, inflation has not had a significant impact on Creative’s operating results.