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| Value-Added Venture Fund Generates Over $150 Million in Unrealized Gains |
| SINGAPORE, Jan. 27
/PRNewswire/ -- Creative Technology Ltd. (Nasdaq: CREAF), the world's leading provider of
multimedia products for personal computers, today announced financial results for the
second quarter of fiscal year 2000, ended December 31, 1999. Sales for the second quarter were a record US$436.8 million -- the highest quarterly revenue ever reported by Creative. This compares to US$428.7 million for the same quarter last year. Net income was US$44.5 million dollars and earnings per share were US$0.52, including investment gains of US$9.2 million or US$0.11 per share. This compares to net income of US$60.6 million and earnings per share of US$0.64 for the same quarter last year. Sales for the first six months of fiscal 2000 were US$705.9 million, compared to US$707.7 million for the same period last year. Net income for the first six months of fiscal 2000 was US$55.3 million or US$0.65 per share, including investment gains of US$13.6 million or US$0.16 per share. This compares to US$82.1 million or US$0.86 per share for the same period last year. During the quarter, Creative continued its stock buy-back program, purchasing approximately 1.7 million shares at a cost of US$25.3 million. ``The second quarter was full of key accomplishments for Creative,'' said Craig McHugh, president of Creative Labs, Inc. ``Our earnings exceeded expectations, and we significantly strengthened our balance sheet. It's important to note that in this quarter, we incurred about $16 million in operating expenses for our Internet initiatives -- bringing our total for the first six months of fiscal 2000 to over $25 million invested in advertising, marketing, R&D and infrastructure to develop our Internet-related businesses. We continue to hit key milestones in our PDE and Internet strategies, highlighted by the successful launch of hifi.com in mid-October.'' ``The strong financial results we have delivered are just the beginning of the story,'' said Sim Wong Hoo, chairman and CEO. ``Our value-added venture fund invested in more Internet, broadband and PDE companies during the quarter, bringing the total to over 20 companies and over $70 million invested since we set up the fund. The financial gains the fund has begun to produce can bring additional value to our shareholders -- as reflected by this quarter's increase of $154 million in unrealized gains from quoted investments on our balance sheet.'' ``Since we defined and created the Personal Digital Entertainment category a year ago, we have moved at net speed to transform the entire company to a PDE and Internet company. Creative has become the leader in PDE, just as we did a decade ago with audio. Going forward, there will be five product and service areas which will allow us to focus on the opportunities we see: our PDE Desktop Solutions; PDE Internet Appliances; PDE Internet services and applications; E-Commerce; and, our Value Added Venture Fund.'' Second Quarter Review & Recent Highlights
For more information on these and other announcements please visit the Creative press room at: www.americas.creative.com/pressroom/ Awards and Recommendations Creative's products continued to receive top ratings and recommendations from both traditional and on-line media:
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Except for the historical information contained herein or in the accompanying conference call, the statements herein and in the call (including information on future products, future marketing efforts, and future revenues, margins, expenses and earnings) are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such statements are subject to the attached cautionary statements which are provided pursuant to The Private Securities Litigation Reform Act of 1995. Creative Technology Ltd. is the leading provider of advanced multimedia solutions for personal computers. It develops, manufactures and markets a wide array of solutions for the PC, entertainment, education, music and productivity tools markets. Creative's products are marketed through the OEM, systems integrator and retail channels under a variety of trademarks, including the ``Blaster'' family name. With the new Sound Blaster® PCI standard, Creative has produced a solution that utilizes a combination of hardware and software for near-perfect compatibility with existing DOS and Windows titles. Creative's corporate headquarters and primary manufacturing are based in Singapore, with sales, distribution and research and development being carried out through an extensive, global network of subsidiaries located in North America, Europe, Asia and Africa. NOTE: Sound Blaster and Blaster are registered trademarks and Environmental Audio, PC-DVD Encore, DeskTop Theater, 3D Blaster and Graphics Blaster are trademarks of Creative Technology Ltd. Cambridge SoundWorks is a registered trademark of Cambridge SoundWorks, Inc. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such. Safe Harbor for Forward Looking Statements: Except for the historical information contained herein and in the
accompanying conference call on today's date, the matters set forth herein and in the
accompanying conference call (including our guidance on future revenues, margins, expenses
and earnings) are forward looking statements that are subject to certain risks and
uncertainties that could cause actual results to differ materially from those set forth in
the forward looking statements. Such risks and uncertainties include, among others:
potential fluctuations in quarterly results due to the seasonality of Creative's business
and the difficulty of projecting such fluctuations; the vulnerability of certain markets
to currency fluctuations and credit shortages; reductions in the market value of products
sold by Creative, including increases in supply or declines in demand or prices for CD-ROM
or DVD drives, board and chip-level products, and software products; the short product
cycles that characterize most of Creative's products; the increasing proliferation of
sound functionality in new products from new and existing competitors and at the
application software, chip and operating system levels; Creative's reliance on sole
sources for many of its chips and other key components; the timely development, ramp,
delivery and market acceptance of new products, including Creative's next generation
audio, graphics accelerator, CD-ROM and DVD drives and communications products; the
volatility of share prices for companies in Creative's industry and the effect of those
prices or other events beyond Creative's control; and other risk factors described in
Creative's filings with the Securities and Exchange Commission over the past twelve
months. The company undertakes no obligation to publicly release the results of any
revisions to such forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events. CREATIVE TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
( In US$' 000 )
( Unaudited )
December 31, June 30,
1999 1999
ASSETS
Current Assets:
Cash and cash equivalents $253,182 $318,990
Marketable securities 32,949 --
Accounts receivable, net 191,198 130,144
Inventory 176,783 148,028
Other assets and prepaids 18,673 12,709
Total current assets 672,785 609,871
Property and equipment, net 95,363 97,961
Investments 280,159 70,305
Other non-current assets 18,265 27,552
$1,066,572 $805,689
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $183,046 $101,666
Accrued liabilities 82,134 55,684
Income taxes payable 48,573 47,031
Current portion of long term
obligations 6,458 4,492
Total current liabilities 320,211 208,873
Long term obligations 27,307 28,642
Minority interest in subsidiaries 8,627 7,913
Total shareholders' equity 710,427 560,261
$1,066,572 $805,689
CREATIVE TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
( In US$' 000, except per share data)
(Unaudited)
Three months ended Six months ended
December 31, December 31,
1999 1998 1999 1998
Sales, net $436,789 $428,699 $705,867 $707,688
Cost of goods sold 306,912 299,308 505,974 498,464
Gross profit 129,877 129,391 199,893 209,224
Operating expenses:
Selling, general and
administrative 76,340 58,445 129,842 110,168
Research and development 14,717 11,681 27,430 22,027
Total operating expenses 91,057 70,126 157,272 132,195
Operating income 38,820 59,265 42,621 77,029
Interest income and
other, net 10,153 6,094 18,374 11,711
Income before income
taxes and minority
interest 48,973 65,359 60,995 88,740
Provision for income taxes (3,939) (4,889) (5,141) (6,993)
Minority interest in
(income) loss (554) 112 (564) 348
Net income $44,480 $60,582 $55,290 $82,095
Basic earnings per share: $0.54 $0.66 $0.67 $0.89
Average ordinary shares
outstanding ('000) 81,999 92,428 82,705 92,708
Diluted earnings per share: $0.52 $0.64 $0.65 $0.86
Average ordinary shares
and equivalents
outstanding ('000) 86,291 95,137 85,573 95,052
SOURCE: Creative Technology Ltd. |
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