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CONTACT INFORMATION:
Financial Analysts:
Lisa Laymon
Manager, Investor Relations
Media:
Rick Myllenbeck
Director, Public Relations
Creative Technology Announces Fourth Quarter and Fiscal 1998 Earnings
SINGAPORE - August 6, 1998 - Creative Technology Ltd. (NASDAQ: CREAF), today announced financial results for the fourth quarter and fiscal year ended June 30, 1998.
Sales for the fourth quarter of fiscal 1998 were US$253.0 million as compared to US$280.1 million for the same quarter last year. This reduction in sales is consistent with the company's June earnings alert. Sales for fiscal 1998 were US$1.234 billion, compared to US$1.233 billion for fiscal year 1997.
Before one time write-offs and gains from investments, the quarterly and yearly results were:
Net income for the quarter of US$13.1 million, as compared to US$44.4 million for the same quarter last year.
Earnings per share for the quarter of US$0.14, versus US$0.48 per share for the same quarter last year.
Net income for the fiscal year 1998 - at a record of US$184.9 million - is an increase of 15.4 percent from US$160.2 million for the previous year.
Earnings per share for the fiscal year at US$1.95, versus US$1.77 per share for the previous fiscal year.
(The results for the fiscal year 1998 exclude: A one time write-off of US$8.3 million in the fourth quarter relating to the cessation of certain activities; a gain of US$18.5 million from the sale of quoted investments in the first quarter; and a one-time write-off for in-process technology of US$60.3 million in the second quarter. The results for fiscal 1997 exclude a gain of US$6.8 million from the sale of investments in the fourth quarter of that year.)
After one time write-offs and including gains from investments, the quarterly and yearly results were:
Net income for the quarter of US$4.8 million and earnings per share of US$0.05.
Net income for the fiscal year 1998 of US$134.8 million and earnings per share of US$1.42.
"Although this was a challenging period for Creative - and for the industry - we were able to produce results in line with our most recent guidance," said Sim Wong Hoo, chairman and chief executive officer of Creative Technology Ltd. "I am especially pleased with the systems we have put in place that enabled us to reduce our inventories and to grow our cash position.
"Market acceptance of our products has been strong. In each of our product categories, Creative's solutions are either the number one or number two best-selling products in US retail! With over 50 million Sound Blaster solutions installed worldwide, we are, of course, broadly recognized as the standard for PC audio. And, according to PC Data, our PC-DVD drives have captured market share approaching 90 percent, our graphics solutions own three of the top five best-selling positions, and our speaker business has taken the number two position in less than one year.
"Preparing for the year ahead, we have the best product line-up in our history. With the shipment of our much anticipated Sound Blaster Live! last week; the growing acceptance of our PC-DVD drives; the strength of our speaker business; and the phenomenal popularity of our graphics solutions, we anticipate a solid fiscal year ahead."
Business Developments
Creative made a number of announcements in the past several months that further its leadership position in the industry. These announcements include:
The launch of Sound Blaster Live!, Creative's premiere audio platform and the most advanced, powerful, true hardware 3D audio accelerator and integrated audio effects processor currently available today - and the first sound card from Creative that delivers Environmental Audio.
The introduction of Environmental Audio, the new sound standard developed by Creative that creates interactive audio experiences that rival real-world audio events on the PC.
The announcement of support from top developers for Creative's newly announced Environmental Audio Extensions - the latest applications programming interface (API) which lets developers optimize their newest games to use the features in Sound Blaster Live!
The announcement of Creative's Graphics Blaster RIVA TNT, utilizing the RIVA TNT chipset from NVIDIA Corp., providing the fastest 2D/3D graphics acceleration possible.
The introduction of Sound Blaster PCI128 and PCWorks FourPointSurround - the first complete audio system for multi-channel surround sound - at a highly attractive estimated street price of US$149.99.
The acquisition of Silicon Engineering, Inc., a key innovator in the design and development of integrated circuits for the multimedia, storage and communications markets.
Awards and Recommendations
In the last quarter, Creative garnered top-rate reviews and numerous recommendations from a variety of computer trade publications and organizations. These include the following:
3D BlasterT Voodoo2
-Earned a "5-Star Review" from Game Buyer
-Earned a "4-Star Review" from Computer Gaming World
-Earned a "4-Star Review" from c/net Gamecenter
-Made the "WinList" from Windows Magazine
-Received "Editors' Choice" from PC Gamer
Sound Blasterr AWE64 Gold
-Awarded prestigious "Win 100" from Windows Magazine
-Made the "A" List in PC Computing
-Earned a "World Class Award" and "Best Sound Board" from PC World
PC-DVD Encore Dxr2T
-Recognized as the "Best DVD Drive" by PC World
-Awarded prestigious "Win 100" from Windows Magazine
-Earned a "World Class Award" from PC World
Cambridge SoundWorks Speaker Series -Received "Best Buy Award" from Consumers Digest
-Recognized as the "Editor's Choice" by Computer Player
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 world's leading provider of advanced multimedia solutions for personal computers, including sound, graphics, communications and videoconferencing products. The company's Sound Blaster technology has been accepted as the worldwide standard sound platform for PCs, and the company's global distribution network is among the most extensive in the multimedia industry. Creative is focused on enhancing the overall user experience by providing powerful, enabling, high-value technology for the mass market.
Balance Sheets & Statements of Income
CREATIVE TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(In US$' 000, except per share data)
(Unaudited)
June, 30 June, 30
1998 1997
ASSETS
Current Assets: -
Cash and cash equivalents $417,262 $417,943
Accounts receivable,
less allowances
of $14,074 and $21,726 115,930 119,848
Inventory 144,320 69,250
Other assets and prepaids 10,180 12,510
Total current assets 687,692 619,551
Property and equipment, net 100,767 94,582
Investments and other
non-current assets 76,654 100,685
$865,113 $814,818
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: -
Accounts payable $90,544 $116,861
Other accrued liabilities 61,381 94,843
Income taxes payable 45,002 35,711
Current portion of
long term obligations 5,973 215
Total current liabilities 202,900 247,630
Long term obligations 32,277 33,711
Minority interest in subsidiaries 7,622 10,872
Shareholders' equity:
Ordinary Shares; S$0.25
par value ('000);
Authorized: 200,000 shares
Outstanding : 92,914 and
88,932 shares 9,678 9,060
Additional paid-in capital 158,532 138,741
Unrealized holding gains
on quoted investments 13,719 70,343
Retained earnings 440,385 304,461
Total shareholders' equity 622,314 522,605
$865,113 $814,818
CREATIVE TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF INCOME
(In US$' 000, except per share data)
(Unaudited)
Three months ended Twelve months ended
June 30, June 30,
1998 1997 1998 1997
Sales $253,009 $280,066 $1,234,208 $1,232,957
Cost of goods sold 188,210 192,204 848,305 893,432
Gross profit 64,799 87,862 385,903 339,525
Operating expenses:
Selling, general
and administrative 43,899 35,370 162,464 135,644
Research and
development 10,615 10,094 41,723 35,164
Other charges 8,268 -- 68,568 --
Total operating
expenses 62,782 45,464 272,755 170,808
Operating income 2,017 42,398 113,148 168,717
Net gain from investments -- 6,803 18,469 6,803
Interest income and
other, net 3,172 7,276 21,183 11,579
Income before income
taxes and minority
interest 5,189 56,477 152,800 187,099
Provision for income
taxes (883) (4,968) (19,805) (20,073)
Minority interest
in loss (income) 491 (282) 1,779 20
Net income $4,797 $51,227 $134,774 $167,046
Basic earnings
per share : $0.05 $0.58 $1.49 $1.89
Average ordinary shares
outstanding ('000) 92,218 88,743 90,654 88,422
Diluted earnings
per share : $0.05 $0.55 $1.42 $1.84
Average ordinary shares
and equivalents
outstanding ('000) 95,339 93,397 94,964 90, |
