Creative Labs, Inc.
CREATIVE TECHNOLOGY ANNOUNCES FOURTH QUARTER AND FISCAL 1999 EARNINGS
SINGAPORE - August 5, 1999 -
Creative Technology Ltd. (NASDAQ:
CREAF), the leading provider of multimedia products for personal
computers, today announced financial results for the fourth quarter
and fiscal year ended June 30, 1999.
Sales for the fourth quarter of fiscal 1999 were US$275.1 million
as compared to US$253.0 million for the same quarter last year.
Sales for fiscal 1999 were US$1.297 billion as compared to US$1.234
billion for 1998.
The quarterly and yearly results were:
- Net income for the fourth quarter was US$14.7 million, compared
to US$4.8 million for the same quarter last year.
- Earnings per share for the fourth quarter were US$0.17 per
share, compared to US$0.05 per share for the same quarter last
- Net income for the fiscal year 1999 was US$115.1 million,
compared to US$134.8 million for the same period last year.
- Earnings per share for the fiscal year at US$1.25, compared
to US$1.42 for the previous fiscal year.
Please note that the results for the fourth quarter of fiscal
1999 include a gain of US$12.6 million from the sale of quoted
investments. Comparative results for fiscal 1998 include: a gain
of US$18.5 million from the sale of quoted investments in the
first quarter of fiscal 1998; one-time write-offs totaling US$60.3
million for in-process technology related to acquisitions in the
second quarter of fiscal 1998; and a one-time write-off of US$8.3
million relating to the cessation of certain activities in the
fourth quarter of fiscal 1998.
"Although we reported earnings per share in line with expectations,
end-of-life graphics products hurt our performance, and our operating
income this quarter was a disappointment," said Craig McHugh,
President of Creative Labs, Inc. "Consolidation in the graphics
market and drastic price reductions on certain graphics products
impacted our margins and, in addition, cost us eleven cents per
share in charges related to these products during the quarter.
We are taking strong steps to improve our results, including
moving low-margin products to a direct e-commerce model - reducing
expenses and inventory exposure. This will allow us to turn what
have been bad businesses into good businesses."
"While we had a very challenging quarter, we made tremendous
progress on our Internet and PDE initiatives," said Sim Wong
Hoo, Chairman and Chief Executive Officer of Creative Technology
Ltd. "Among the steps we've already taken are eight completed
investments in Internet/broadband companies, a number of soon-to-be-closed
similar investments, the development of two very exciting products
in our PDE area, and plans for an aggressive transformation of
our business model to accelerate these opportunities. I am pleased
to announce today that, to assist in this transformation, I have
promoted Hock Leow, a Silicon Valley veteran, to Chief Technology
Officer, leading our 600-strong worldwide R&D effort. Hock
will continue to be based in California."
The Year in Review - Business Developments & Success
- Creative was honored as the overall Number One winner as the
most desired IT brand in the German marketplace, placing ahead
of perennial favorites Hewlett Packard, IBM, Microsoft, Nokia
- Creative launched NOMAD - a highly-anticipated portable digital
audio player that made headlines on top TV news programs and in
mainstream publications like Newsweek, the New York Times,
Rolling Stone, Fortune, Wired and GQ as well as major
Japanese and Latin American magazines and newspapers.
- Creative's speaker products achieved the number one market
share position in U.S. retail in May, 1999, according to PC Data.
During the year, Creative announced breakthrough digital multi-point
surround speaker systems - the Four Point Surround 2000 and Desktop
Theater 5.1 2500.
- Creative announced the company's entry into the broadband
market with upcoming ADSL solutions based on chipsets from Centillium
and Lucent Technologies.
- Creative announced design wins for Sound Blaster Live! Value
sound cards with key OEMs including Compaq, Dell, Gateway and
- Creative also announced that Gateway began shipping its Cambridge
SoundWorks-designed speaker systems.
- Creative's Environmental Audio garnered tremendous support
from top game developers. Over 50 leading game titles are now
shipping with support for Environmental Audio. In addition, Microsoft
licensed Environmental Audio effects for inclusion in an upcoming
version of DirectX.
- Creative launched an innovative cinema-centered marketing
campaign titled, The Difference Will Amaze You. The new
campaign was designed to reach mainstream PC customers, build
awareness for the Creative brand in the home, and encourage word-of-mouth
marketing for Creative's products. The Difference Will Amaze
You campaign was kicked-off in over 1,600 United Artist theaters
across the United States with a commercial produced in full Dolby
Digital, surround-sound technology. It continues to show before
this summer's blockbuster films. The ongoing campaign includes
print and on-line advertising and will focus on Creative's top
solutions for personal digital entertainment.
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. develops, manufactures and markets a
wide array of advanced multimedia 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.
|Sound Blaster and Blaster are registered trademarks and 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 projections on future market valuations and 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; 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 at the chip and operating
system levels; Creative's reliance on sole sources for many of
its chips and other key components and possible limitations on
future availability of graphics chips, memory chips, and passive
components used in Creative products; the timely 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.