CREATIVE TECHNOLOGY REPORTS RECORD EARNINGS OF $1.01 PER SHARE FOR Q3 FY2000SINGAPORE - April 27, 2000 - Creative Technology Ltd. (NASDAQ: CREAF), the leading provider of Personal Digital Entertainment (PDE) solutions, today announced financial results for the third quarter of fiscal year 2000, ended March 31, 2000. All financial results are stated in U.S. dollars.
Strong operating income contributes 21 cents per share resulting from higher than expected revenues and strong margins, with 80 cents per share from investments
Sales for the third quarter were higher than expected at $330.0 million, driven by strong demand for audio systems, including speakers. This compares to $313.7 million for the same quarter last year. Net income was $88.3 million dollars and earnings per share were $1.01 including investment gains of $0.80 per share. This compares to net income of $18.3 million and earnings per share of $0.20 for the same quarter last year.
Sales for the first nine months of fiscal 2000 were $1.036 billion, compared to $1.021 billion for the same period last year. Net income for the first nine months of fiscal 2000, including investment gains of $84.2 million, was $143.6 million or $1.66 per share. This compares to net income, including investment gains of $2.5 million, of $100.3 million or $1.07 per share for the same period last year.
"Our revenues, which were a record for fiscal Q3, reflect that Creative is performing strongly in all areas -- products, regions, and business units," said Craig McHugh, president of Creative Labs, Inc. "Audio systems, including speakers, accounted for half of our total revenues, posting fifty percent year-over-year gains for the category in the quarter, which helped drive our gross margin to its highest level in eight quarters. Comparative operating results were particularly strong considering that this quarter's operating expenses included $11 million for our Internet initiatives."
"Creative's vision of building a vibrant, multi-faceted, clicks-and-mortar company around a solid and profitable core is now yielding tangible results, " said Sim Wong Hoo, Chairman and CEO of Creative Technology Ltd. "And being able to fully execute on our Internet initiatives and venture strategies, while achieving record revenues from our traditional businesses, including PDE Internet appliances, validates this vision."
"Since our last call, our board of directors approved doubling our value-added venture fund to a total of $200 million and, during this quarter, we invested an additional $86 million, bringing the total investment by the fund to over $150 million with holdings in over 30 public and private investee companies. Our strategy of investing in broadband and communications, PDE, contract manufacturing, and Internet companies has provided a diverse portfolio which has weathered the recent turbulence in the financial markets fairly well."
Investee companies in which Creative has a position of under 5% include: Bex.com, Centillium Technology, EMusic.com, GRIC Communications, HearMe (through its acquisition of AudioTalk), MyTeam.com, Coresma (formerly NetGame), NVIDIA, Sina.com, and TeraLogic.
In addition to the companies listed above, there are other companies in which Creative has invested that are not disclosed at this time due to competitive, strategic, or other reasons.
During the quarter, Creative continued its stock buy-back program, purchasing 379,000 shares at a cost of $6.6 million. Subject to market price and conditions and securities law restrictions, the company plans to continue its buyback program during the fiscal fourth quarter
Creative continues to pursue private and public financing options for certain of the company's subsidiaries in both U.S. and foreign markets, including a current plan to file for an IPO for one of the subsidiary companies. However, in light of the uncertain market for Internet-related IPO's, another subsidiary, Hifi.com, decided to temporarily hold off on plans for a public offering, although the company currently intends to reinstate the process pending more favorable market conditions. The decision to pursue any particular offering will depend upon a variety of factors, including, among other things, market conditions. For filings in the United States, non-U.S. companies are permitted, at their option, to file on a confidential basis with the Securities and Exchange Commission.