Creative 2008 Annual Report Download - page 28

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28
NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Recently issued accounting pronouncements (Cont’d)
In December 2007, the FASB issued SFAS No. 160 “Non-controlling Interests in Consolidated Financial Statements – an
amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires the recognition of a non-controlling (minority) interest
as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income
attributable to the non-controlling (minority) interest will be included in consolidated net income on the face of the income
statement. It also amends certain of ARB No. 51’s consolidation procedures. This statement also includes expanded
disclosure requirements regarding the interests of the parent and its non-controlling interest. SFAS 160 is effective for fiscal
years beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure
requirements of the statement shall be applied retrospectively for all periods presented. Creative is currently evaluating
the impact of SFAS 160.
NOTE 2 – NET (LOSS) INCOME PER SHARE
In accordance with SFAS No. 128, “Earnings per Share,” Creative reports both basic earnings per share and diluted earnings
per share. Basic earnings per share is computed using the weighted average number of ordinary shares outstanding during
the period. Diluted earnings per share is computed using the weighted average number of ordinary and potentially dilutive
ordinary equivalent shares outstanding during the period. Ordinary equivalent shares are excluded from the computation if
their effect is anti-dilutive. In computing diluted earnings per share, the treasury stock method is used to determine, based
on average stock prices for the respective periods, the ordinary equivalent shares to be purchased using proceeds received
from the exercise of such equivalent shares. Other than the dilutive effect of stock options, there are no other financial
instruments that would impact the weighted average number of ordinary shares outstanding used for computing diluted
earnings per share. The potentially dilutive ordinary equivalent shares outstanding under the employee share purchase plan
were not material.
The following is a reconciliation between the average number of ordinary shares outstanding and equivalent shares
outstanding (in ’000):
฀ ฀ As฀of฀June฀30
฀ 2008฀ 2007฀ 2006
Weighted฀average฀ordinary฀shares฀outstanding฀–฀Basic฀ 81,564฀ 83,452฀ 83,093
Effect฀of฀dilutive฀shares฀on฀account฀of฀stock฀options฀ –฀ 461฀ –
Weighted฀average฀ordinary฀shares฀and฀equivalents฀฀
฀ outstanding฀–฀Diluted฀ 81,564฀83,913฀ 83,093
For fiscal years 2008 and 2006, approximately 0.1 million and 0.8 million shares were excluded from the computation of
dilutive earnings per share, as the effect of including such shares would be anti-dilutive.