Creative 2008 Annual Report Download - page 41

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41
NOTE 15 – LEGAL PROCEEDINGS
During the course of its ordinary business operations, Creative and its subsidiaries are subject to a variety of intellectual
property and other disputes, including claims against Creative alleging copyright infringement, patent infringement, contract
claims, employment claims and business torts. Ongoing disputes exist with, among other entities, Bose Corporation (a patent
infringement action filed in the U.S. International Trade Commission against Creative Technology Ltd and several other
respondents); SMDK Corp. (a patent infringement action filed in the U.S. District Court for the Eastern District of Texas
against Creative Labs, Inc. and several other defendants); Acticon Technologies (a patent infringement action filed in the
U.S. District Court for the Eastern District of Texas against Creative Labs, Inc. and E-Mu Systems, Inc.); and Fuzzysharp
Technologies Corporation (a patent infringement action filed in the U.S. District Court, Northern District of California
against 3Dlabs Inc., Ltd). Creative believes it has valid defenses to the various claims asserted against it, and intends to
defend the actions vigorously. However, should any of these claimants prevail in their suits or claims, Creative does not
expect there to be any consequent material adverse effect on its financial position or results of operations.
NOTE 16 – INVESTMENTS
Net investment gain of $18.8 million in fiscal year 2008 comprised $34.4 million net gain from sales of investments offset by
$15.6 million in write-downs of mainly quoted investments. Bulk of the $34.4 million in net gain from sales of investments
was derived from the sale of shares in subsidiaries and equity accounted investments, including a net gain of $6.9 million
on disposal of 80.1% interest in a manufacturing operation in Malaysia to a group of third party investors. Net loss of $1.9
million in fiscal year 2007 was mainly due to $2.0 million write-downs of investments.
The following is a summary of investments as of June 30 (in US$’000):
฀As฀of฀June฀30
฀ 2008฀ 2007
Non-quoted฀equity฀investments฀ $฀ 11,160฀ $฀ 12,274฀
Quoted฀equity฀investments฀ ฀ 26,087฀ ฀ 67,847
Total฀investments฀ $฀ 37,247฀ $฀ 80,121
The following provides a breakdown on the net (loss) gain from available-for-sale investments (in US$’000):
฀ ฀ Years฀ended฀June฀30
฀ 2008฀ 2007฀ 2006
฀ ฀
Proceeds฀from฀disposals฀ $฀ 16,273฀ $฀ 2฀ $฀ 29,152
Fair฀value฀of฀investments฀disposed฀ ฀ (9,545)฀ ฀ –฀ ฀ (7,911)
Net฀realized฀gain฀from฀disposals฀ ฀ 6,728฀ ฀ 2฀฀ ฀ 21,241
Write-downs฀of฀investments฀฀ ฀ (12,136)฀ ฀ (1,224)฀฀ ฀ (87)฀
฀
Net฀(loss)฀gain฀ $฀ (5,408)฀ $฀ (1,222)฀ $฀ 21,154
Gross realized gains were $8.2 million and $21.2 million for fiscal years 2008 and 2006 and negligible in fiscal year 2007.
Gross realized losses were $1.5 million for fiscal year 2008 and nil for fiscal years 2007 and 2006.