REGARDLESS OF THE FORM OF THE CLAIM. Some countries/states do not allow the limitation or exclusion of liability for incidental or consequential damages, so the above limitation or exclusion may not apply to you. PRODUCT RETURNS If you must ship the software to Creative or an authorized Creative distributor or dealer, you must prepay shipping and either insure the software or assume all risk of loss or damage in transit. U.S. GOVERNMENT RESTRICTED RIGHTS All Software and related documentation are provided with restricted rights. Use, duplication or disclosure by the U.S. Government is subject to restrictions as set forth in subdivision (b)(3)(ii) of the Rights in Technical Data and Computer Software Clause at 252.227-7013. If you are sub-licensing or using the Software outside of the United States, you will comply with the applicable local laws of your country, U.S. export control law, and the English version of this Agreement. CONTRACTOR/MANUFACTURER The Contractor/Manufacturer for the Software is: Creative Technology Ltd 31, International Business Park Creative Resource Singapore 609921 GENERAL This Agreement is binding on you as well as your employees, employers, contractors and agents, and on any successors and assignees. Neither the Software nor any information derived therefrom may be exported except in accordance with the laws of the U.S. or other applicable provisions. This Agreement is governed by the laws of the State of California (except to the extent federal law governs copyrights and federally registered trademarks). This Agreement is the entire agreement between us and supersedes any other understandings or agreements, including, but not limited to, advertising, with respect to the Software. If any provision of this Agreement is deemed invalid or unenforceable by any country or government agency having jurisdiction, that particular provision will be deemed modified to the extent necessary to make the provision valid and enforceable, and the remaining provisions will remain in full force and effect. For questions concerning this Agreement, please contact Creative at the address stated above. For questions on product or technical matters, contact the Creative technical support center nearest you. ADDENDUM TO THE MICROSOFT SOFTWARE LICENSE AGREEMENT (WINDOWS 95) IMPORTANT: By using the Microsoft software files (the Microsoft Software) provided with this Addendum, you are agreeing to be bound by the following terms. If you do not agree to be bound by these terms, you may not use the Microsoft Software. The Microsoft Software is provided for the sole purpose of replacing the corresponding files provided with a previously licensed copy of the Microsoft software product identified above (ORIGINAL PRODUCT). Upon installation, the Microsoft Software files become part of the ORIGINAL PRODUCT and are subject to the same warranty and license terms and conditions as the ORIGINAL PRODUCT. If you do not have a valid license to use the ORIGINAL PRODUCT, you may not use the Microsoft Software. Any other use of the Microsoft Software is prohibited. SPECIAL PROVISIONS APPLICABLE TO THE EUROPEAN UNION IF YOU ACQUIRED THE SOFTWARE IN THE EUROPEAN UNION (EU), THE FOLLOWING PROVISIONS ALSO APPLY TO YOU. IF THERE IS ANY INCONSISTENCY BETWEEN THE TERMS OF THE SOFTWARE LICENSE AGREEMENT SET OUT EARLIER AND IN THE FOLLOWING PROVISIONS, THE FOLLOWING PROVISIONS SHALL TAKE PRECEDENCE. DECOMPILATION You agree not for any purpose to transmit the Software or display the Softwares object code on any computer screen or to make any hard copy memory dumps of the Softwares object code. If you believe you require information related to the interoperability of the Software with other programs, you shall not decompile or disassemble the Software to obtain such information, and you agree to request such information from Creative at the address listed earlier. Upon receiving such a request, Creative shall determine whether you require such information for a legitimate purpose

event shall Creative Labs be liable for any loss of profit or any commercial damage, including but not limited to special, incidental, consequential, or other damages. Some states/ countries do not allow the exclusion of limitation of liability for consequential or LIMITATION OF REMEDY AND DAMAGES incidental damages, in which case the above THE LIMITATIONS OF REMEDIES AND DAMAGES IN THE SOFTWARE LICENSE AGREEMENT SHALL NOT APPLY TO PERSONAL INJURY limitation may not apply to you. (INCLUDING DEATH) TO ANY PERSON CAUSED BY CREATIVES NEGLIGENCE AND ARE SUBJECT TO THE PROVISION SET OUT UNDER If the product is found to be defective, Creative THE HEADING STATUTORY RIGHTS. Labs, at its option, agrees to replace or repair the STATUTORY RIGHTS product at no charge except as stated below, Irish law provides that certain conditions and warranties may be implied in contracts for the sale of goods and in contracts for the supply of services. Such conditions and provided that you deliver the product with a warranties are hereby excluded, to the extent such exclusion, in the context of this transaction, is lawful under Irish law. Conversely, such conditions and warranties, return material authorization (RMA) number insofar as they may not be lawfully excluded, shall apply. and a dated proof of purchase. If you ship the Accordingly nothing in this Agreement shall prejudice any rights that you may enjoy by virtue of Sections 12, 13, 14 or 15 of the Irish Sale of Goods Act 1893 (as amended). product to Creative Labs, you must assume the GENERAL risk of damage or loss in profit. You must use the This Agreement is governed by the laws of the Republic of Ireland. The local language version of this agreement shall apply to Software acquired in the EU. This Agreement original container (or the equivalent) and pay the is the entire agreement between us, and you agree that Creative will not have any shipping charge. liability for any untrue statement or representation made by it, its agents or anyone else (whether innocently or negligently) upon which you relied upon entering this Creative Labs may replace or repair the product Agreement, unless such untrue statement or representation was made fraudulently. with new or reconditioned parts, and the LIMITED HARDWARE WARRANTY replaced parts or product become the property of Creative Labs. Creative Labs warrants the Creative Labs warrants that the product enclosed herein to be free of defects for a period repaired or replaced product to be free from of ninety (90) days from the date of purchase. In defects in material and workmanship for a the event of a defect in material or workmanship period of ninety (90) days from the return during the warranty period, Creative Labs, at its shipping date. Before returning any product, contact Creative discretion, will repair or replace the defective product when the defective product is returned Labs' Technical Support (for telephone numbers to Creative Labs by the owner. The remedy for and addresses, see the Technical Support section this breach of warranty is limited to servicing or of this document). If Creative Labs Technical replacement only and shall not cover any other Support verifies that the product is defective, the damages, including but not limited to the loss of Return Authorization Department will issue an RMA number to place on the outer package of profit, special, incidental, consequential, and the product. Creative Labs cannot accept any other claims. product that does not include an RMA number Creative Labs specifically disclaims all other warranties, expressed or implied, including but on the package. not limited to implied warranties of merchantability and fitness for a particular purpose with respect to the defects of the products and the program license granted herein. With respect to the use of this product, in no

and, if so, Creative will provide such information to you within a reasonable time and on reasonable conditions. LIMITED WARRANTY EXCEPT AS STATED EARLIER IN THIS AGREEMENT, AND AS PROVIDED UNDER THE HEADING STATUTORY RIGHTS, THE SOFTWARE IS PROVIDED AS-IS WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, QUALITY AND FITNESS FOR A PARTICULAR PURPOSE.
6DIHW\ DQG 5HJXODWRU\ ,QIRUPDWLRQ
The following sections contain notices for various countries:

1RWLFH IRU &DQDGD

This apparatus complies with the Class B limits for radio interference as specified in the Canadian Department of Communications Radio Interference Regulations. Cet appareil est conforme aux normes de CLASSE B dinterfrence radio tel que spcifi par le Ministre Canadien des Communications dans les rglements dinterfrence radio.
CAUTION: This device is intended to be connected by the user to a CSA/TUV/UL certified/listed IBM AT or compatible personal computers in the manufacturers defined operator access area. Check the equipment operating/installation manual and/or with the equipment manufacturer to verify/confirm if your equipment is suitable for devices to be connected to it.
ATTENTION: Ce priphrique est destin tre connect par lutilisateur un ordinateur IBM AT certifi ou list CSA/TUV/UL ou compatible, lintrieur de la zone d'accs dfinie par le fabricant. Consulter le mode demploi/guide d'installation et/ ou le fabricant de lappareil pour vrifier ou confirmer qu'il est possible de connecter d'autres priphriques votre sytme.
'HFODUDWLRQ RI &RQIRUPLW\ According to the FCCand ET95-19, Manufacturer/ Importers Name: Creative Labs, Inc. Manufacturer/Importers Address: 1901 McCarthy Boulevard Milpitas, CA. 95035 United States Tel: (408) 428-6600 declares under its sole responsibility that the product Trade Name: Creative Labs Model Numbers: DAP-6G01/DAP-6G02 has been tested according to the FCC / CISPR22/85 requirement for Class B devices and found compliant with the following standards: EMI/EMC:ANSI C63.4 1992, FCC Part 15 Subpart B Complies with Canadian ICES-003 Class B. This device complies with part 15 of the FCC Rules. Operation is subject to the following two conditions: 1. This device may not cause harmful interference, and 2. This device must accept any interference received, including interference that may cause undesirable operation. Ce matriel est conforme la section 15 des rgles FCC. Son Fonctionnement est soumis aux deux conditions suivantes: 1. Le matriel ne peut tre source Dinterfrences et 2. Doit accepter toutes les interfrences reques, Y compris celles pouvant provoquer un fonctionnement indsirable. Supplementary Information: DAP-6G01 == Standard Model DAP-6G02 == Europe Model DS-6401 is the docking station model. Compliance Manager Creative Labs, Inc. March 30, 2000

Skip Backward button Press to restart audio at the start of the previous track in the Play List. The PlayPointer icon indicates the playing track. Hold down the button to enable the Seek function and search backward to any point in the memory.
Play button Press to immediately play a selected track. A track selected from the Music Library is placed at the top of the ACTIVE QUEUE Stop button LIST; a track selected from the ACTIVE Press once to pause playback. Press QUEUE LIST advances the list to that again to stop playback. The PlayPointer track and begins playback. returns to the beginning of the track. Press the Play button to resume playback.

Your NOMAD Jukebox

Line Out Jacks 1 and 2 Use for a four-speaker system such as Creative Cambridge SoundWorks FourPointSurround.
Line In Jack Connects to an external device for recording to NOMAD Jukebox.

USB Port

Power Jack Connects to the power adapter. NOMAD Jukebox recharges the NiMH batteries if the batteries are installed and the adapter is connected to an outlet.

Headphones Jack

Lock switch While in the ON position, the control buttons and Volume Adjuster cannot be operated.
Volume Control Adjusts audio volume through the headphones. Note: To control the playback volume of speakers connected to NOMAD Jukebox using Line Out Jacks 1 and 2, adjust the volume control of the speakers instead.

%RWWRP

Battery case
Reset If NOMAD Jukebox stops responding, insert and push a straightened paperclip into this hole.

6HWWLQJ 8S 120$' -XNHER[

0HWDO FRQWDFW FOLS IMPORTANT Make sure that the four metal contact clips are set against the plastic platform and not pushed sideways or downwards when you insert the batteries. Use only Creative NiMH batteries. Follow the placement diagram in the battery compartment for proper installation. Do not mix batteries of different types or power (amperage). Batteries must be charged fully for 12 hours before initial use. Time required for recharging is four hours while Jukebox is turned off or ten hours if Jukebox is in use.

6WHS 9HULI\ 120$' -XNHER[ 'ULYHU ,QVWDOODWLRQ
To check that the NOMAD Jukebox driver was successfully installed: 1. Click the Start button on the Windows Taskbar and select Settings, and click on Control Panel. 2. On the Control Panel window, double-click the System icon. 3. In the System Properties dialog, click the Device Manager tab. 4. On the Device Manager tab page, double-click Universal Serial Bus controllers, and then check that Creative NOMAD Jukebox is listed.
6WHS &RQQHFW +HDGSKRQHV
To connect the headphones to the NOMAD Jukebox: 1. Insert the headphones jack into the connector on the right side of the NOMAD Jukebox. 2. Ensure that the lock switch on NOMAD Jukebox is in the OFF position. 3. Press and hold the Play button for two seconds. 4. Put on your headphones as shown.
6WHS 6HOHFW DQG 3OD\ D 7UDFN
To play a track preloaded on your NOMAD Jukebox: 1. Turn on your NOMAD Jukebox. The ACTIVE QUEUE LIST screen appears whenever you turn on NOMAD Jukebox. If you are turning on the Jukebox for the first time, the ACTIVE QUEUE LIST displays the message No tracks left. 1. Press the LIB button to display the LIBRARY CATEGORIES screen. 2. Press Open to display a list of albums available for playback. If you prefer, use the UP/DOWN arrows to select tracks by Artist or Genre. 3. Press the UP/DOWN arrow to select an album. 4. With the album selected, press the Play button to play the entire album.
Or, select a single track by pressing Open to view a list of the tracks on the album. Press the Play button to listen to the selected track. Note: NOMAD Jukebox can only be accessed through its control buttons when it is disconnected from the computer. If NOMAD Jukebox is connected to the computer, use PlayCenter 2 to control the functions of your Jukebox.
8VLQJ <RXU 120$' -XNHER[

6FUHHQ ,FRQV

The following symbols are used on the NOMAD Jukebox display: Category (Album, Artist, Style, etc.) List of tracks from an album, a play list, etc.
The interactive tutorial on the installation CD is included to guide you through the important operations on NOMAD Jukebox.
Single track. PlayPointer appears beside the track or list that is currently being played. A selected item is highlighted. Battery Charging. Note: Should the Battery Charging icon change to the Power Source icon, the batteries are fully charged. Power Source is from the adapter.

6WDUWLQJ 120$' -XNHER[

The PLAY LISTS category appears on your NOMAD Jukebox only after a Play List has been created.
To turn on the NOMAD Jukebox, press and hold the Play button until Loading appears on the display. Whenever you turn on NOMAD Jukebox, the ACTIVE QUEUE LIST screen appears. When you make changes to the ACTIVE QUEUE LIST, the settings are saved when you turn off the Jukebox. To display the Library Categories screen, press the LIB button on the Jukebox.

Using Your NOMAD Jukebox

1DYLJDWLQJ 0XVLF /LEUDU\ 6FUHHQV
The Music Library screens allow you to view and select from the lists and tracks stored on the NOMAD Jukebox. To select lists or tracks, use the SCROLL UP/DOWN button. To play, select the list or track and press either the PLAY button or the QUEUE soft button. There are four main types of screens in the Music Library: Categories Lists Tracks Details These screens may apply to play lists, albums, artists, and genres.
1DYLJDWLQJ WR /RZHU /HYHO 6FUHHQV

Categories screen

The top level of the Music Library. Press OPEN (soft button) to navigate to the Lists screen.

Lists screen

Press OPEN to navigate to the Tracks screen.

Tracks screen

Press DETAILS to navigate to the Details screen.

Details screen

The bottom level of the Music Library; cannot be expanded further.
1DYLJDWLQJ WR 8SSHU /HYHO 6FUHHQV
Press CLOSE to navigate to the Tracks screen.
Tracks screen BACK may be displayed instead of CLOSE. Press CLOSE to navigate to the Lists screen.
Lists screen Press CLOSE to navigate to the Categories screen.

0XVLF /LEUDU\

6HDUFKLQJ IRU DQ $OEXP $UWLVW 6W\OH RU 3OD\ /LVW
Begin your search from the LIBRARY CATEGORIES screen. 1.Press SCROLL UP/DOWN buttons to select ALBUMS. 2.Press SEARCH to access the SEARCH FOR ALBUMS screen.
To return to the LIBRARY CATEGORIES screen without searching, press the LIB button.
3. Press PLUS/MINUS to change the letter and then press the SCROLL UP/DOWN buttons to move the letter entry position (indicated by a ^).
NOTE: As each letter is entered, the letters are compared with the ALBUMS list. The ALBUM with the nearest match is displayed.
4. Press GO! to jump to the nearest match. The album appears on the screen.

4XHXHLQJ DQ $OEXP

Queueing an album adds each album selected to the end of the ACTIVE QUEUE LIST. If the Queue List is currently playing, the playback is not interrupted by the operation. Begin queueing from the ALBUMS screen. 1. Press the SCROLL UP/DOWN button to select an album, then press QUEUE. NOTE: Select the albums one at a time and press QUEUE for each album. 2. Press the LIB button to access the ACTIVE QUEUE LIST screen to review your queue list.
NOTE: By default, the ACTIVE QUEUE LIST
screen displays tracks. Press COLLAPSE to view by albums.

4XHXHLQJ D 7UDFN

Queueing a track or voice recording is very similar to adding an albumstart from the ALBUMS screen. 1. Press the SCROLL UP/DOWN button to select an album, then press OPEN to display the tracks available. NOTE: Select the tracks one at a time and press QUEUE for each. 2. Press the LIB button to access the ACTIVE QUEUE LIST screen to review the tracks in your queue list.

You may select tracks from the GENRES screen as well: On the LIBRARY CATEGORIES screen, use the SCROLL UP/DOWN button to select GENRES and press OPEN. Select the type of music from which you want to choose and press OPEN. To add a voice recording to the ACTIVE QUEUE LIST, from the LIBRARY CATEGORIES screen, select GENRES. Use the SCROLL UP/DOWN button to select RECORDING and press the OPEN button. Select the recording you want to add to the ACTIVE QUEUE LIST and press QUEUE.
Using Your NOMAD Jukebox 14

9LHZLQJ 'HWDLOV

There are two types of DETAILS screens. The first type is accessed from the TRACKS screen and the second type is accessed from the ACTIVE QUEUE LIST screen. View DETAILS accessed from the TRACKS screen: 1. Press DETAILS. The DETAILS screen displays the Track Order, Album, Artist, and duration of the track.
2. Press CLOSE to return to the TRACKS screen.
The following Playback settings are shown on the LCD if they are on: EA: Environmental Audio EQ: Parametric EQ HS: Headphone Spatialization TS: Playback speed 4S: 4-Channel Speaker Sound (appears only if speakers are connected and the effect is on).
Viewing DETAILS accessed from the ACTIVE QUEUE LIST screen: 1. Press DETAILS. The DETAILS screen displays the Track Title, Artist, and Album together with Audio Playback settings (see note below) and Play Mode (see Setting Play Mode on page 17 ). 2. Press BACK to return to the ACTIVE QUEUE LIST screen.
You can adjust all the settings from the EAX AND SYSTEM MENU screen.
The following playback settings, if selected (set to ON), are shown on the DETAILS screen: EA Environmental Preset EQ Parametric EQ HS Headphone Spatialization TS Time Scaling 4S 4-Channel Speaker Sound (only if speakers are connected) When viewing DETAILS, the word in the lower right corner of the screen indicates the current playback setting for the play list: ONCE, SHUFFLE, RANDOM, or REPEAT
Using Your NOMAD Jukebox 15

3UHYLHZLQJ D 7UDFN

These adjustments are applied only if EQ ENABLED is selected. They are disabled if EQ BYPASSED is selected. To close the EAX AND SYSTEM MENU without making changes, press the EAX button.
$GMXVWLQJ 6SDWLDOL]DWLRQ 6HWWLQJV
With Spatialization, you can experience audio from your headphones with Narrow, Wide or Full effects. Duplicate or Surround effects are also possible with a four-speaker system like Cambridge SoundWorks FourPointSurround. Begin from the EAX AND SYSTEM MENU. 1.Press the SCROLL UP/DOWN buttons to select SPATIALIZATION. 2.Press OPEN.
Only one spatialization effect can be applied at a time. For example, if you select FULL spatialization for your headphones, no spatialization effects are applied to your speakers.
3. Press the SCROLL UP/DOWN buttons to select a setting for adjustment. 4. Press PLUS/MINUS to adjust the setting. 5. Press SET to save the adjustment(s).
$GMXVWLQJ (QYLURQPHQWDO $XGLR
You can select one of the following Environmental Audio settings: City, Concert Hall, Club, Hallway, Living Room, Arena, Auditorium, Cave, Stone Room, or Ball Room. Begin on the EAX AND SYSTEM MENU. 1. Press the SCROLL UP/DOWN buttons to select ENVIRONMENTAL SETTINGS. 2. Press ENTER.

8VLQJ 3OD\EDFN 6SHHG

Playback Speed allows you to slow down or speed up audio playback without distortion. Begin on the EAX AND SYSTEM MENU. 1.Press the SCROLL UP/DOWN buttons to select PLAYBACK SPEED. 2.Press OPEN.
3. Press the SCROLL UP/DOWN buttons to select a setting for adjustment. 4. Press PLUS/MINUS to adjust the setting. To enable Playback Speed, the setting must be ON. 5. Press SET to save the adjustment(s).
&UHDWLQJ DQG 6DYLQJ DQ $XGLR 5HFRUGLQJ
A pre-amplified microphone should be used for recording.
NOMAD Jukebox is capable of recording hours of audio using an attached microphone. Ensure that you are in EAX AND SYSTEM MENU before proceeding. 1. Connect a pre-amplified microphone to the Jukeboxs LINE IN jack.
2.Press the SCROLL UP/DOWN buttons to select RECORDING. 3.Press OPEN.
To listen to what you are recording, select MONITOR THRU (set to ON).
4. Press the SCROLL UP/DOWN buttons to select a setting for adjustment. NOTE: To start recording without adjusting the settings, go to step 6, below. 5. Press PLUS/MINUS to adjust the setting. 6.Press ARM to go to recording standby state.

Recordings are saved in increments of 10 minutes, when recording at 48Mhz.
7. Press the PLAY button to begin recording. 8. Press the STOP button or PAUSE to pause recording.
You can make adjustments to the settings while you are recordingsee steps 4 and 5, above
9. Press RESUME to continue recording or press DISCARD to delete the recording. 10.Press SAVE to save the recording.
11. Press PLUS/MINUS to change the letter and then press the SCROLL UP/DOWN buttons to move the letter entry position. 12.Press DONE! to save the recording. The recording is saved in GENRES and ALBUMS.
/LVWHQLQJ WR DQ $XGLR 5HFRUGLQJ
You can use PlaybackSpeed (see Using Playback Speed on page 20) to slow down or speed up the playback speed of your audio recording.
To listen to your saved audio recording, begin with the LIBRARY CATEGORIES screen. 1.Press the SCROLL UP/DOWN buttons to select GENRES. 2.Press OPEN.
3. Press the SCROLL UP/DOWN buttons to select RECORDINGS. 4. Press OPEN.
Use PlayCenter 2 to encode your recording to an MP3 track to reduce its file size or to fill in the track details. Refer to its online Help for instructions.
5. Press the SCROLL UP/DOWN buttons to select the recording you have saved. 6. Press the PLAY button to listen. Press DETAILS to view information on the track. Press QUEUE to place track on active playlist.
You can save an Active Queue List on the Jukebox. 1. After you create an active play list, press EAX to access EAX AND SYSTEM MENU screen. Note: For details on how to create an active queue list, refer toSaving an Active Queue List on page 18. 2.Press the SCROLL UP/DOWN buttons to select SAVE ACTIVE QUEUE LIST. 3.Press OPEN.
4. Press PLUS/MINUS to change the letter and then press the SCROLL UP/DOWN buttons to move the letter entry position indicated by a caret ( ^ ). 5. Press DONE! to save the playlist.

'HOHWLQJ /LEUDU\ ,WHPV

You can delete a play list, track, or album from NOMAD Jukebox. Begin on the EAX AND SYSTEM MENU. 1. Press the SCROLL UP/DOWN buttons to select DELETE LIBRARY ITEMS. 2. Press OPEN to access LIBRARY CATEGORIES screen.

3OD\&HQWHU

Creative PlayCenter 2 allows you to manage the contents on your NOMAD Jukebox: Play MP3 files on the Jukebox. View and manage the contents of the NOMAD Jukebox. Upload MP3 and other files to the NOMAD Jukebox. Download the contents (except MP3 files) to the computer. To open PlayCenter 2: 1. Connect NOMAD Jukebox to your computer. (See Step 2: Connect NOMAD Jukebox to Your PC or Mac on page 6.) 2. You can start PlayCenter 2 by either of the following methods: Double-click on the PlayCenter 2 icon on the Windows Desktop. Click Start on the Windows Taskbar, select Programs, select Creative, select Creative PlayCenter 2.0, and click on Creative PlayCenter 2.0.
Using Your NOMAD Jukebox Software in Windows 29
When NOMAD Jukebox is connected to your computer, you must use PlayCenter 2 to control the Jukebox.
To access help information: 1. On the PlayCenter 2, click the question mark (?) in the upper right corner. 2. On the Help screen, double-click the book icon to display additional topics. To change the PlayCenter 2 settings: 1. Click on the Settings button to display the Setting dialog. 2. Click on one of the tabs to display the dialog on which changes can be made to the PlayCenter 2: PlayCenter 2: Selects modules (Audio CD, My Computer, NOMAD Jukebox, PC Music Library) to be displayed on either panel. PC Music Library: Assign folder for storing files on your PCs hard disk drive. My Computer: Select the types of media files that you want PlayCenter 2 to display. CD Ripping: Configure a CD-ROM drive for digital audio extraction. Encoder: Select compression method. CDDB: Select whether or not to automatically retrieve CDDB information for audio CD. Transfer: Select options for file transfer. To play a track using PlayCenter 2: 1. Click the NOMAD Jukebox button. 2. Double-click All Tracks to display all of the tracks available. 3. Select a track from the list and press the play button at the bottom of the window. You may listen to the track only through devices attached to the Jukebox, such as headphones or speakers.
You must be connected to the Internet to retrieve an audio CDs information from CDDB2. To retrieve information each time you insert an audio CD, enable Always get the information of an audio CD from CDDB in the Settings dialog. See Using CDDB in the on-line help for more information.

Using Your NOMAD Jukebox Software in Windows

&KDQJLQJ 6NLQV

The PlayCenter 2 display is excellent for managing and transferring files between your NOMAD Jukebox and your PC. However, the alternate skins provide a more user-friendly access to playing and listening to tracks while connected to the computer. To change the PlayCenter 2 skin: 1. On the PlayCenter 2 display, click the Settings button. 2. Click on the Change Skin tab. 3. On the Change Skin tab page, select the skin that appeals to you. The each skin is previewed as you select it in the list of available skins. When the skin you want is shown in the preview, click OK to return to PlayCenter 2. 4. To switch to the skin you have chosen, click the Skin icon on the PlayCenter 2 display.

0DQDJLQJ )LOHV

&RQYHUWLQJ DQG 7UDQVIHUULQJ )LOHV
If there is no button for the destination, click on the Settings button and click on the PlayCenter 2 tab to choose the modules you want to display in the PlayCenter 2 windows.
You can use the PlayCenter 2 to convert and transfer files between the Jukebox and your computer, add or delete files, connect to the NOMAD web site, and upgrade the Jukeboxs firmware. To convert CD audio tracks to MP3 on your hard disk drive: 1. Insert an audio CD into your CD-ROM drive. 2. Click the Audio CD button to the left of the track list window. 3. Select the drive in which the CD was placed. The list of tracks on the CD are displayed in the track list window.
4. Click TRANSFER/RIP on the right side of the PlayCenter 2 and select the destination for the converted tracks, for example, Music Library. 5. Select the track(s) to be converted and transferred to your NOMAD Jukebox (or to your PCs hard disk drive). 6. The PlayCenter 2 shows the status of the selected tracks in the Transfer Queue window.
To copy files from your hard disk to the Jukebox: 1. On the PC Music Library window, select the tracks to be uploaded to the Jukebox. 2. Click the arrow button pointing to the Jukebox window. The Transfer Queue scale at the bottom of the PC Music Library window displays the status of the transfer. To transfer files from the Jukebox to your computer: 1. In the My Computer window, open the folder to which you want to copy the file from the Player. 2. Select the file in the Player that you want to copy to your PCs hard disk (or other destination). 3. Click the Upload button on the NOMAD Jukebox window to copy the file to your PC.

You cannot transfer MP3 files from the Jukebox to your computer.

'HOHWLQJ )LOHV

To delete files from NOMAD Jukebox: 1. In the NOMAD Jukebox window, select the file to be deleted. 2. Click on the Delete icon to permanently remove the file from NOMAD Jukebox. To delete files from your computers hard disk: 1. In the My Computer window, select the file to be deleted. 2. Click on the Delete icon to permanently remove the file from your computers hard disk. You are asked to confirm the deletion.

&UHDWLQJ 3OD\ /LVWV

After you create a play list on your computer, you can copy it to the Jukebox. To create a play list on the Jukebox: 1. Click the NOMAD Jukebox button on PlayCenter 2. 2. Click the NOMAD Jukebox menu. 3. On the menu, select Play List. 4. Click New on the PlayCenter 2 Toolbar. 5. In the Play List 1box, enter a title for your play list. 6. In the My Computer window, display a music library containing the track(s) you want to add to the play list. 7. Select the track(s) you want to add to the play list. 8. Click the left arrow button to add the track(s) to the play list. If the track(s) are located on your computer, they are copied to the Jukebox. To create a play list on your computer: 1. Click the PC Music Library button on the PlayCenter 2 window. 2. Click Play Lists in the PC Music Library window. 3. Click New. 4. In the Play List 1 box, enter a new name for the play list. 5. Follow the instructions, starting with number 6, above.
Using Your NOMAD Jukebox Software in Windows 33
&RQQHFWLQJ WR WKH 120$' :HE 6LWH
8SJUDGLQJ 120$' -XNHER[V )LUPZDUH
To connect to the NOMAD web site: 1. Click on the Internet button on PlayCenter 2. Or, type the URL address (www.nomadworld.com) into your browsers Location box and press the ENTER key. You must have a Internet service provider in order to make the Internet connection. To upgrade the NOMAD Jukebox: 1. Click on the Internet button on PlayCenter 2. Or, type the URL address (www.nomadworld.com) into your browsers Location box and press the ENTER key. 2. On the NOMADWorld home page, click on Software Downloads. 3. Under Downloads, look for an upgrade to NOMAD Jukebox (or PlayCenter 2). Follow the instructions on the web site to download the upgrade file. You may use Environmental Audio effects when recording a title from an input source, such as a CD-ROM. To include effects, display the Recorder Settings dialog and enable CD Recording Mode, Analog; and choose an effect. When you include the effect with the recording, it remains in the file; you must re-record the title to remove the effect. In the Playlist, highlight the title to which you want to add Environmental Audio effects and right-click on it. If you add Environmental Audio effects, the title in the Playlist is preceded by EA. To enhance an audio file or audio CD track with EAX: 1. Select the track to be enhanced with an EAX environment. 2. Click the EAX button to display the EAX menu. 3. Select the Effects or Environment option. 4. Click on an Effect/Environment. 5. Click on the Rip To arrow to convert the file with the EAX enhancement.

(QYLURQPHQWDO $XGLR

8VLQJ 6RXQG-DP 03 ZLWK 0DFLQWRVK 26
SoundJam MP is the ultimate MP3 music centerplay all MP3 files, in any order, with a 10-band graphic equalizer to make the sound quality exactly what you want. SoundJam can also: Display animated graphics. Change its look, skin, at your command. Play music CDs with visuals. Convert almost any kind of sound file, including those on your favorite CDs, into MP3 files that you can transfer to your NOMAD Jukebox. Download new MP3 files directly from the Internet with the built-in Web menu. Play streaming music from the Internetlive broadcasts as well as commercial recordings that come in the form of real-time transmissions, not downloadable files. Automatically fill in the names of your CDs, songs and artists by linking to CDDB, the Internets massive CD-ROM information database. Serve as a database of your own music. Sort by song name, artist name, album, and much more. With SoundJam installed there are several methods for opening and playing a music file: Files opened or created in SoundJam can be opened by double-clicking the file. Drag the files icon over the SoundJam icon. Or, with SoundJam or a SoundJam window open, drag the file iconor even the folder to SoundJam or the SoundJam window. With SoundJam open, open the File menu, choose Open, and navigate to the folder in which the file or files are located. Double-click on the file you want to play.
Using SoundJam MP with Macintosh OS
6RXQG-DP 03 DQG 120$' -XNHER[

120$' -XNHER[ :,1'2:

When SoundJam MP is installed on your Mac and the NOMAD Jukebox is correctly connected to your Mac, the main NOMAD screen appears and an entry for the Nomad window is added to SoundJams Window menu. Voice files created with the NOMAD Jukebox have a file name extension of.NVF. SoundJam can manipulate and play.NVF files in the same way it works with any other file. NOMAD Jukebox Logo: Click this logo to launch your Web browser and access the Creative Labs NOMAD Web site: www.nomadworld.com. It includes music downloads, information about the Nomad hardware and accessories, and more. Content Gauge: The content gauge monitors the memory in your NOMAD Jukebox. Playlist: In the NOMAD Jukebox playlist, the first column lets you list tracks by album, artist, genre, name, size or time. The subsequent columns also allow you to list tracks by these catorgories. The display at the top of the playlist tells you how many items are in the playlist and how much space the files require. MP3 file names in the NOMAD Jukebox playlist appear with a maximum of eight characters followed by the.MP3 file name extension. When the NOMAD Jukebox actually plays the files, the songs full title is displayed. Add.: Clicking this button brings up the standard Macintosh get file dialog box, where you can select files that you want to add to the playlist. Its much easier, however, to simply drag files from another SoundJam playlist or the Macintosh Finder into the NOMAD Jukebox playlist. As soon as you drag the files, SoundJam transfers the files to the NOMAD Jukebox, and keeps you updated on the transfers progress. Settings.: Clicking this button brings up a window where you can select the bass, treble, balance and volume of your NOMAD Jukebox.

YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001 Net sales for the year ended June 30, 2002 decreased by 34% compared to the year ended June 30, 2001. The substantially lower revenues in fiscal year 2002, was a result of the strategic shift by Creative to focus on its core products and to deemphasize lower margin products and the difficult global economic climate. Audio product sales for fiscal year 2002 decreased by 30% compared to fiscal year 2001, but as a percentage of total sales, increased from 41% in fiscal 2001 to 44% in fiscal 2002. Sales of speakers increased by 10% and represented 21% of sales in fiscal 2002 compared with 12% of sales in fiscal 2001. The improvement in speaker sales was primarily a result of the introduction of new models of multi-media speakers. Sales of PDE products decreased by 31% and represented 9% of sales in fiscal 2002 and fiscal 2001. Sales of MMUKs decreased by 84% in fiscal 2002 compared to fiscal 2001 and comprised 5% of sales compared to 22% of sales in the prior fiscal year. The reduction in MMUK sales in fiscal 2002 is in line with Creatives current business strategy of de-emphasizing lower margin products. Similarly, in line with this current strategy, sales of graphics and video products decreased by 36% and represented 6% of sales in both fiscal years 2002 and 2001. Sales of other products, which includes accessories, music products, communication products and other miscellaneous items, increased by 4% and represented 15% of sales in fiscal 2002 compared to 10% of sales in the prior fiscal year. This increase in other product sales was primarily due to an increase in sales of communication products. Gross profit in fiscal 2002 increased to 33% of net sales, compared to 27% in fiscal 2001. This improvement in gross profit was primarily a result of the strategic shift in business, with emphasis on Creatives core audio products, speakers and PDE products. SG&A expenses in fiscal 2002 declined by 26% due to managements cost cutting efforts to correspond to the revised revenue expectations. As a percentage of sales, SG&A expenses were 21% of sales for fiscal 2002 and 19% for fiscal 2001. R&D expenses were 5% of sales in fiscal 2002 and 4% of sales in fiscal 2001. Other charges of $26.1 million in fiscal 2002 relates to the write-off of acquired in-process technology arising from the acquisition of 3Dlabs and represented 3% of sales in fiscal 2002 compared to 2% of sales in fiscal 2001. See Note 16 of Notes to Consolidated Financial Statements. Net investment loss of $45.4 million in fiscal year 2002 comprised $49.3 million in write-downs of investments, offset partially by a $3.9 million net gain from sales of investments and marketable securities. Net investment loss of $148.5 million in fiscal 2001 included $200.3 million in write-downs of investments, offset partially by a $51.8 million net gain from sales of investments and marketable securities. Net interest and other income increased by $2.7 million to $5.1 million in fiscal 2002 compared to $2.4 million in the prior fiscal year. This increase was primarily due to an exchange gain of $3.9 million in fiscal 2002 versus an exchange loss of $3.7 million in fiscal 2001, offset partially by lower interest income resulting from lower interest rates and lower average cash balances. Creatives provision for income taxes for fiscal 2002 as a percentage of operating income was 20% compared to 34% in fiscal 2001. The higher tax provision in fiscal 2001 was primarily due to changes in the mix of taxable income arising from various geographical regions and a lower other charges in fiscal 2001 compared to fiscal 2002 which Creative has considered it a non-tax deductible expense.

QUARTERLY RESULTS The following is a summary of Creatives unaudited quarterly results for the eight quarters ended June 30, 2003, together with the percentage of sales represented by such results. Consistent with the PC peripheral market, demand for Creatives products is generally stronger in the quarter ended December 31, compared to any other quarter of the fiscal year due to consumer buying patterns. In managements opinion, the results detailed below have been prepared on a basis consistent with the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented when read in conjunction with the financial statements and notes thereto contained elsewhere herein. Creatives business is seasonal in nature and the quarterly results are not necessarily indicative of the results to be achieved in future quarters.
Unaudited data for quarters ended (in US$000 except per share data) Jun Sales, net (1) Cost of goods sold Gross profit Operating expenses: Selling, general and administrative (1) Research and development Other charges (2) Operating income (loss) Net gain (loss) from investments Interest income (expense) and other, net Income (loss) before income taxes and minority interest Provision for income taxes Minority interest in (income) loss Net income (loss) Basic earnings (loss) per share Weighted average ordinary shares outstanding (000) Diluted earnings (loss) per share Weighted average ordinary shares and equivalents outstanding (000) $ $ $ 34,266 15,583 2,1,972 37,379 14,646 4,886 49,039 13,279 19,1,199 42,155 15,(6,316) 807 42,815 10,748 26,080 (19,362) (29,845) 2,289 38,737 8,412 17,151 45,143 9,480 27,1,291 43,427 9,608 2,878 (16,425) 1,424 Mar Dec Sep Jun Mar Dec Sep 30 2001
$ 149,589 $ 160,617 $ 230,940 $ 160,623 $ 182,572 $ 193,385 $ 249,506 $ 180,442 96,788 52,801 104,365 56,252 149,169 81,771 102,630 57,993 122,291 60,281 129,209 64,176 167,353 82,153 124,529 55,913
4,934 (295) (12) 4,627 $ 0.06 79,527 0.06 $ $

5,198 (423) 73

20,824 (1,945)

(4,938) (57) 18

(46,918) (1,012) (436)
17,306 (1,703) (423) 15,180 $ 0.21 $ 72,134 0.20 $

29,549 (2,753) (489)

(12,123) (230) (495)
4,848 $ 18,879 $ 0.06 $ 79,377 0.06 $ 0.24 $ 79,026 0.23 $
(4,977) $ (48,366) $ (0.06) $ 78,877 (0.06) $ (0.65) $ 74,375 (0.65) $
26,307 $ (12,848) 0.36 $ 72,366 0.36 $ (0.17) 73,854 (0.17)

80,906

80,557

80,699

78,877

74,375

76,323

73,664

73,854
Unaudited data for quarters ended (as a percentage of sales) Jun Sales, net (1) Cost of goods sold Gross profit Operating Expenses: Selling, general and administrative (1) Research and development Other charges (2) Operating income (loss) Net gain (loss) from investments Interest income (expense) and other, net Income (loss) before income taxes and minority interest Provision for income taxes Minority interest in (income) loss Net income (loss) (4) (11) (16) 2 (9) 100 % Mar 100 % Dec 100 % Sep 100 % Jun 100 % Mar 100 % Dec 100 % Sep 100 % 69 31

4 (1) 3%

9 (1) 8%

(3) (3) %

(26) (1) (27) %

12 (1) 11 %

(7) (7) %
For the quarter ended March 31, 2002, Creative has adopted EITF Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products). As a result, certain consideration paid to distributors and resellers of its products has been reclassified as a revenue offset rather than as selling, general and administrative expense. Prior quarters financial data have been reclassified to conform to this presentation. Other charges for the quarter ended June 30, 2002 relates to the write-off of in-process technology arising from the acquisition of 3Dlabs.
LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents at June 30, 2003 were $232.0 million, an increase of $65.1 million compared to the balance of $166.9 million at June 30, 2002.
Operating Activities: Net cash generated from operating activities during fiscal 2003 was $99.7 million compared with $89.4 million in fiscal 2002. The cash generated during fiscal 2003 primarily resulted from net income of $23.4 million, net adjustments of $39.8 million for non-cash items, a net decrease in accounts receivable and other assets and prepaid of $30.3 million, a net decrease in inventory of $28.2 million, which is in line with lower sales and managements decision to maintain a lower inventory level, and a decrease in marketable securities of $1.4 million. The cash contributions were offset partially by a decrease in accounts payable and accrued and other liabilities of $15.1 million and a decrease in income taxes including deferred tax of $8.3 million. The $39.8 million of adjustments of non-cash items to net income include depreciation of fixed assets of $19.1 million, amortization of intangible assets of $9.1 million, write downs of investments and other non-current assets of $13.6 million and net gain from investments of $7.8 million. Net cash generated from operating activities during fiscal 2002 was $89.4 million compared with $77.5 million in fiscal 2001. The cash generated during fiscal 2002 primarily resulted from the net loss of $19.7 million offset by net adjustments of $105.9 million for non-cash items including depreciation and amortization of $29.9 million, write off of in-process technology acquired from 3Dlabs amounting to $26.1 million (see Note 16 of Notes to Consolidated Financial Statements), investments and other non-current asset write downs of $49.3 million, and net gain from investments of $5.3 million. Also contributing to the cash generated from operating activities were net decreases in accounts receivable of $18.2 million and inventory of $50.6 million which was in line with the managements decision to maintain a lower inventory level. However, the positive cash flow was offset partially by a net reduction in accounts payable, other accrued liabilities and income taxes including deferred tax of $69.1 million, resulting in the net cash generated of $89.4 million.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS The following table presents the contractual obligations and commercial commitments of Creative as of June 30, 2003:
Payments Due by Period (US$000) Less than 1 to to year years years $ 3,423 1,949 9,976 49,$ 6,845 8,764 1,439 14,027 $ 6,3,832 $
Contractual Obligations Long Term Debt Convertible Note Capital Lease Obligations Operating Leases Unconditional Purchase Obligations Other Obligations $
Total 29,091 8,764 3,433 40,939 49,470 522
After 5 years 11,978 13,104
Total Contractual Cash Obligations $

132,219

65,340

31,075

10,722

25,082

As of June 30, 2003, Creative has utilized approximately $4.6 million under guarantees, letters of credit, overdraft and short-term loan facilities.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Please refer to Note 1 of Notes to Consolidated Financial Statements for the discussion of recently issued accounting pronouncements.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CREATIVE TECHNOLOGY LTD.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of cash flows and of shareholders equity present fairly, in all material respects, the financial position of Creative Technology Ltd. and its subsidiaries at June 30, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Creatives management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers Singapore August 5, 2003
CONSOLIDATED BALANCE SHEETS
(In US$000, except per share data) June ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, less allowances of $18,417 and $22,159 Inventory Other assets and prepaids Total current assets Property and equipment, net Investments Other non-current assets Total Assets LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Accounts payable Accrued liabilities Income taxes payable Current portion of long term obligations and others Total current liabilities Long term obligations Minority interest in subsidiaries Shareholders equity: Ordinary shares (000); S$0.25 par value; Authorized: 200,000 shares Outstanding: 79,714 and 78,866 shares Additional paid-in capital Unrealized holding gains on quoted investments Deferred share compensation Retained earnings Total shareholders equity Total Liabilities and Shareholders Equity $ $ June 30 2002

232,053 61,225 80,367 11,269 384,914 104,404 49,168 108,357 646,843
166,917 1,388 85,193 108,549 17,773 379,820 104,748 66,688 115,122

666,378

52,869 79,573 37,564 5,519 175,525 39,027 3,454
64,809 77,831 43,794 27,441 213,875 16,782 11,769
7,713 314,572 14,189 (4,305) 96,668 428,837 646,843 $
7,592 311,445 20,636 (8,836) 93,115 423,952 666,378
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In US$000, except per share data) Years ended June Sales, net Cost of goods sold Gross profit Operating expenses: Selling, general and administrative Research and development Other charges (Notes 13 and 16) Operating income Loss from investments, net Interest income and other, net Income (loss) before income taxes and minority interest Provision for income taxes Minority interest in loss (income) Net income (loss) Basic earnings (loss) per share Weighted average ordinary shares outstanding (000) Diluted earnings (loss) per share Weighted average ordinary shares and equivalents outstanding (000) $ $ $ 162,839 58,775 27,203 (6,049) 4,864 26,018 (2,720) 79 23,377 0.30 79,202 0.29 80,851 $ $ $ 170,122 38,248 26,080 28,073 (45,414) 5,155 (12,186) (5,698) (1,843) (19,727) (0.27) 73,182 (0.27) 73,182 $ 230,417 54,022 22,814 24,579 (148,490) 2,416 (121,495) (8,409) (469) $ (130,373) $ (1.65) 79,049 (1.65) 79,049 $ 701,769 452,952 248,$ 805,905 543,382 262,$1,226,068 894,236 331,832
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents (in US$000) 2003 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation of fixed assets Amortisation of intangible assets Deferred share compensation amortization Write off of acquired in-process technology Minority interest in (loss) income Equity share in loss of unconsolidated investments (Gain) loss on disposal of fixed assets Write downs of investments and other non-current assets Gain from investments, net Changes in assets and liabilities, net: Accounts receivable Inventory Marketable securities Other assets and prepaids Accounts payable Accrued and other liabilities Income taxes, including deffered tax Net cash provided by operating activities Cash flows from investing activities: Capital expenditures, net Proceeds from sale of fixed assets Proceeds from sale of quoted investments Purchase of new subsidiaries (net of cash acquired) Purchase of investments Increase in other non current assets, net Net cash used in investing activities Cash flows from financing activities: (Decrease) increase in minority shareholders loan and equity balance Net proceeds from issuance of preference shares to minority shareholders Buyout of subsidiarys preference shares issued to minority interest Buyout of subsidiarys minority interest Proceeds from exercise of ordinary share options Repurchase of ordinary shares Proceeds from debt obligations Repayments of debt obligations Repayments of capital leases Dividends paid to ordinary shareholders Dividends paid to minority interest Net cash used in financing activities $ 23,377 Years ended June $ (19,727) 2001 $ (130,373)

Approximate Percentage of $ Balance Denominated in: US$ Cash and cash equivalents Accounts receivable, less allowances Total current liabilities Long-term obligations S$ EURO Other Currencies

83 % 72 % 79 % 32 %

0% 0% 9% 67 %

6% 15 % 6%

11 % 13 % 6% 1%
The exchange rates for the S$ and Euro utilized in translating the balance sheet at June 30, 2003, expressed in US$ per one S$ and Euro was 0.5704 and 1.1413, respectively. Cash equivalents Cash equivalents consist of highly liquid investment instruments with original or remaining maturities of three months or less at the time of purchase. All deposits are in short term deposit and money market accounts with various banks. This diversification of risk is consistent with Creatives policy to maintain liquidity and ensure the safety of principal. Included in cash equivalents as of June 30, 2003 and 2002 are fixed rate deposits of $188.2 million and $128.0 million respectively. In fiscal 2002, a total of $4.5 million in the fixed rate deposits was held as collateral for one of the subsidiarys bank overdraft and short term loan facilities (see Note 11), but in fiscal 2003, the entire outstanding balances has been repaid and all liabilities were discharged. Marketable Securities Creative determines the appropriate classification of marketable securities at the time of acquisition and evaluates such designation at each balance sheet date. For all periods presented, Creative has classified marketable securities as trading securities, and accordingly such securities are stated at their market values based on the last transacted prices at each balance sheet date. The resulting net unrealized gains or losses on marketable securities are included in earnings in the period they are incurred.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) Fair value of financial instruments For certain of Creatives financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. The amounts shown for long term obligations also approximate fair value because current interest rates charged to Creative for debts of similar maturities are substantially the same. Inventory Inventory is stated at the lower of cost or market. Cost is determined using standard cost, appropriately adjusted at balance sheet date to approximate actual cost on a weighted average basis. In the case of finished products and work-in-progress, cost includes materials, direct labor and an appropriate proportion of production overheads. Management performs a detailed assessment of inventory at each balance sheet date to establish provisions for excess and obsolete inventories. Evaluation includes a review of, among other factors, historical sales, current economic trends, forecasted sales, demand requirements, product lifecycle and product development plans, quality issues, and current inventory levels. Property and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the remaining facility lease term or the estimated useful lives of the improvements. No depreciation is provided on freehold land and construction in progress. Investments Creative holds equity investments in various companies pursuant to which it has acquired anywhere from less than 1% to 100% of the issuers outstanding capital stock. Investments in which Creative acquires more than 50% of the outstanding capital stock of an entity, or which are under the effective control of Creative, are treated as investments in subsidiaries, and the balance sheets and results of operations of these subsidiaries are fully consolidated after making allowance for any minority interests. Companies in which Creatives investment totals between 20% and 50% of such companys capital stock are treated as associated companies and recorded on an equity basis, whereby Creative adjusts its cost of investments to recognize its share of all post acquisition results of operations. Non quoted investments of less than 20% in an entity are carried at cost, less provisions for permanent impairment where necessary. In accordance with SFAS 115, Accounting for Certain Investments in Debt and Equity Securities, quoted investments of less than 20% in an entity are classified as available-for-sale. Such investments are reported at fair value with the unrealized gains and losses included as a separate component of shareholders equity. Unrealized losses are charged against income when a decline in fair value is determined to be other than temporary. Realized gains and losses upon the sale or disposition of such investments are based on the average cost of the specific investments sold. The investment portfolio is monitored on a periodic basis for impairment. Creatives investments in these companies are inherently risky because the markets for the technologies or products they have under development are typically in the early stages and may never develop. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. Fair values for investments in public companies are determined using quoted market prices. Fair values for investments in privately-held companies are estimated based upon one or more of the following: pricing models using historical and forecasted financial information and current market rates, liquidation values, the values of recent rounds of financing, or quoted market prices of comparable public companies.

In order to determine whether a decline in value is other-than-temporary, Creative evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value; the financial condition of and business outlook for the company, including key operational and cash flow metrics, current market conditions and future trends in the companys industry, and the companys relative competitive position within the industry; and Creatives intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. A summary of investments is as follows (in US$000):
As of June Non quoted investments Quoted investments Total investments $ 12,944 36,224 49,168 $ 2002 15,924 50,764 66,688
Acquisitions Creative acquired 3Dlabs in fiscal 2002 (Note 16). The acquisition was accounted for under the purchase method of accounting, and accordingly, the estimated fair value of assets acquired and liabilities assumed and the results of operations were included in Creatives consolidated financial statements as of the effective date of the acquisition through the end of the period. There were no significant differences between the accounting policies of Creative and 3Dlabs. Goodwill and other intangible assets Goodwill and other intangible assets are stated at cost and relate principally to the acquisition of new subsidiaries accounted for under the purchase method. Under this method, the purchase price has been allocated to the assets acquired, liabilities assumed and in-process technology based on their estimated fair market values at the dates of acquisition. Amounts allocated to acquired in-process technology are expensed in the period in which the acquisition is consummated. The goodwill and identifiable intangible assets acquired in connection with the acquisition of 3Dlabs have been accounted for in accordance with SFAS 141 and SFAS 142, Business Combinations and Goodwill and Other Intangible Assets. Intangible assets are amortized on a straight line basis over the estimated useful lives of the assets, ranging from one to seven years. Goodwill is not subject to amortization, but will be evaluated at least annually for impairment. Creative reviews for impairment of goodwill on an annual basis. Reviews for impairment of goodwill and other intangible assets are also conducted whenever events indicate that the carrying amount might not be recoverable. Factors that Creative may consider important which could trigger an impairment review include the followings: significant under performance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for Creatives overall business; significant negative industry or economic trends; significant decline in Creatives stock price for a sustained period; and Creative market capitalization relative to net book value.

When the existence of one or more of the above factors indicates that the carrying value of the goodwill or intangible assets may be impaired, Creative measures any impairment based on a projected discounted cash flow method using a discount rate determined by the management to be commensurate with the risk inherent in Creatives current business model. Creative performed an assessment for goodwill impairment as at June 30, 2003 and accordingly no impairment of goodwill is assessed.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) Goodwill and other intangible assets (Contd) A summary of goodwill and other intangible assets are as follows (in US$000):
As of June Other intangible assets Accumulated amortization Other intangible assets, net Goodwill Net goodwill and other intangible assets $ $ 33,682 (24,917) 8,765 91,976 100,741 $ $ 2002 33,682 (15,788) 17,894 91,976 109,870
Goodwill and other intangible assets fully amortized were excluded from above. Other intangible assets amortization expense was $9.1 million, $5.2 million and $6.3 million for fiscal year 2003, 2002 and 2001, respectively, and estimated to be $1.8 million each in fiscal year 2004 to fiscal 2007 and $1.4 million in fiscal 2008. Revenue recognition Creative generally recognizes revenue when persuasive evidence of an arrangement exists, title and risk of loss transferred, delivery has occurred, price is fixed or determinable, and collectibility is probable. Allowances are provided for estimated returns, discounts and warranties, based on historical experience, current economic trends and changes in customer demand and acceptance of its products. Such allowances are adjusted periodically to reflect actual and anticipated experience. When recognizing revenue, Creative records estimated reductions to revenue for customer and distributor programs and incentive offerings, including price protection, promotions, other volume-based incentives and rebates. Research and development Research and development costs are charged to operations as incurred. Restructuring costs and accruals for excess facilities In accordance with the provisions of EITF Issue No. 94-3, Accounting for Restructuring Charges, and Staff Accounting Bulletin No.100, Restructuring and Impairment Charges, Creative records restructuring costs when it commits to an exit plan and significant changes to the exit plan are not likely. The estimated loss on facilities which Creative intends to sublease is based on estimates of the timing and amount of sublease income. Creative reassesses this liability quarterly based on market conditions. Exit activities initiated after December 31, 2002, will be accounted for in accordance with SFAS No. 146, Accounting For Costs Associated With Exit Or Disposal Activities. Assessment of the probability of the outcome of current litigation Creative records accruals for loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Income taxes Deferred tax assets and liabilities, net of valuation allowances, are established for the expected future tax consequences of events resulting from the differences between the financial reporting and income tax bases of Creatives assets and liabilities and from tax credit carry forwards. No provision has been made for the undistributed earnings of Creatives subsidiaries outside of Singapore since it is Creatives intention to reinvest these earnings in those subsidiaries. Reinvested earnings of such subsidiaries have been immaterial to date.

A summary of options granted to employees, consultants and directors under the subsidiarys stock option plan is presented below:
Options Outstanding Number of Shares (000) Balance as of June 30, 2000 Options granted Options canceled Balance as of June 30, 2001 Options granted Options canceled Balance as of June 30, 2002 Options granted Options canceled Balance as of June 30, 2003 3,(2,540) 2,200 (2,195) 5 (5) Weighted Average Exercise Price ($) 1.98 2.45 1.80 2.39 2.39 2.50 2.50
Creative and Subsidiary Pro Forma Disclosures The fair value of the purchase rights under the Creative employee share purchase plan and stock option plan is estimated using the Black-Scholes model based on the following assumptions:
Fiscal 2003 Volatility Risk-free interest rates Share purchase plan Stock options Dividend yield Expected lives: Share purchase plan Stock options 6 months 0.01 years after vest date 6 months 0.01 years after vest date 6 months 2.18% to 3.26% 1.27% to 3.01% 3.0% 2.18% to 5.16% 2.16% to 5.16% 2.5% 3.78% to 6.09% 45% Fiscal 2002 60% Fiscal 2001 50%
NOTE 9 EMPLOYEE SHARE PURCHASE AND STOCK OPTION PLANS (Contd)
Years ended June Weighted average fair value of stock options granted: Stock options: At market Below market $ $ 1.70 $ $ 1.53 3.74 $ $ 2002 2001
The fair value of the purchase rights under the subsidiary stock option plan is estimated at the date of the grant using the Black-Scholes model based on the following assumptions:
Fiscal 2003 Volatility Risk-free interest rates Dividend yield Expected lives Fiscal 2002 Fiscal 2001 3.78% to 6.34% 0.01 years after vest date
The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of SFAS 123, Accounting for Stock-Based Compensation, to stock-based employee compensation:
In US$000, except for per share data Years ended June Net income (loss) as reported Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects Add: Stock-based employee compensation expense included in reported net income, net of related tax effects Pro forma net income (loss) Earnings (loss) per share: Basic as reported Basic pro forma Diluted as reported Diluted pro forma $ $ $ $ 0.30 0.25 0.29 0.25 $ $ $ $ (0.27) (0.32) (0.27) (0.32) $ $ $ $ (1.65) (1.71) (1.65) (1.71) $ $ 23,377 $ 2002 (19,727) 2001 $ (130,373)

(7,309)

(6,031)

(6,960)

3,703 19,771 $

2,295 (23,463)

2,465 $ (134,868)
NOTE 10 INCOME TAXES Creative was granted a Pioneer Certificate in 1990 under the Singapore Economic Expansion Incentives (Relief from Income Tax) Act, Cap. 86 for the design and manufacture of digital computer video, audio and multimedia products, including personal computers and related components, chipsets and software but not including interest income. The Pioneer Certificate exempted income derived from such activities (Pioneer Income) from tax in Singapore, subject to certain conditions. The Pioneer Certificate expired in March 2000. Creative has applied for a separate and new Pioneer Certificate. If Creative is awarded this new Pioneer Certificate, profits under the new Pioneer Certificate will be exempted from tax in Singapore. For fiscal 2001, 2002 and 2003, corporate tax was provided for in full based on the standard tax rates of 24.5% for fiscal 2001 and 22% for fiscal 2002 and 2003, as the terms and agreements of the new Pioneer Certificate is currently still under negotiation as at to-date. The new Pioneer Certificate is expected to result in the reduction of Creatives provision for income taxes, subject to the terms and agreement by the Singapore Comptroller of Income Tax. The Singapore and other components of income (loss) before income taxes are as follows (in US$000):
Years ended June Singapore Other countries Income (loss) before income taxes and minority interest The provisions for income taxes consists of (in US$000): Years ended June Singapore Other countries Provisions for income taxes $ $ 2,2,720 $ $ 2002 4,5,698 $ $ 2001 7,8,409 $ $ 36,199 (10,181) 26,018 $ $ 2002 45,738 (57,924) (12,186) $ 2001 25,193 (146,688) $ (121,495)
Creatives effective tax provision for fiscal 2003, 2002 and 2001 reconciles to the amount computed by applying the Singapore statutory rate of 22.0% for 2003 and 2002 and 24.5% for 2001 to income before income taxes and minority interest, as follows (in US$000):
Years ended June Income tax (benefit) at Singapore statutory rate Tax excempt income Singapore Others Non-deductible expenses and write-offs Change in valuation allowances Rate differences and others Provisions for income taxes $ (11) 1,433 (6,106) 1,680 2,720 $ (13) 3,013 (657) 6,036 5,698 $ (834) 5,486 8,699 24,824 8,$ 5,724 $ 2002 (2,681) $ 2001 (29,766)
NOTE 10 INCOME TAXES (Contd) Deferred tax assets at June 30, 2003 and 2002 consisted of the following (in US$000):
As of June Non-deductible reserves Net operating loss carryforwards Other Total deferred tax assets Valuation allowance for deferred tax assets $ $ $ 26,110 70,390 1,971 98,471 (98,471) $ $ $ 2002 33,778 20,099 1,765 55,642 (55,642)
Creative had Irish net operating loss carryforward of nil and approximately $1.9 million at June 30, 2003 and June 30, 2002. US net operating loss carryforward is approximately $162.0 million and $47.8 million as at June 30, 2003 and June 30, 2002. The Irish net operating losses have an indefinite carryforward period while the US net operating losses expire between 2005 to 2022. The utilization of these net operating losses by Creative is subject to certain conditions. Valuation allowance is provided for Creatives deferred tax assets as management believes substantial uncertainty exists regarding the realizability of these assets. Creative has United States tax deductions not included in the net operating loss carryforward described above aggregating approximately $53.6 million at June 30, 2003 and June 30, 2002, as a result of the exercise of employee stock options, the tax benefit of which has not been realized. The tax benefit of the deductions, when realized will be accounted for as a credit to additional paid-in capital rather than a reduction of the income tax provision.

Payments Due by Period (US$000) Debt Obligations Long Term Debt Convertible Note Capital Lease Obligations Total Debt Obligations $ $ Total 29,091 8,764 3,433 41,288 $ $ Less than 1 year 3,423 1,949 5,372 $ $ 1 to 3 years 6,845 8,764 1,439 17,048 $ 4 to 5 years $ 6,6,890 $ $ After 5 years 11,978 11,978
NOTE 11 DEBT OBLIGATIONS (Contd) Creative has various other credit facilities relating to overdrafts, letters of credit, bank guarantees and short term loans with several banks totaling approximately $92.5 million at June 30, 2003. Within these credit facilities, sub-limits have been set on how Creative may utilize the overall credit facilities. At June 30, 2003, $3.0 million in letters of credit and $1.6 million in bank guarantees were drawn under these facilities. Facilities under letters of credit and bank guarantees bear interest at approximately the banks prime rates, and for interest rates on overdraft and short term loan facilities, please see above comments.
NOTE 12 MINORITY INTEREST In May 2000, a wholly owned subsidiary issued 5.0 million convertible preference shares at $4.50 per share, resulting in net proceeds to the subsidiary of $22.5 million. In November 2001, Creative entered into agreements with the holders of these 5.0 million convertible preference shares to repurchase all such shares for $10.0 million cash. The repurchase was completed during the quarter ended March 31, 2002 and the excess of carrying value over the repurchase price paid of $11.8 million was credited to additional paid in capital. In July 2002, CTC declared dividends of approximately $4 million to its shareholders, namely Creative and Bukit Frontiers Pte Ltd (BFPL), a company owned by Creatives Chairman and CEO, Sim Wong Hoo. Creative and BFPL received a net dividend of approximately $2 million each. In accordance with the joint venture agreement with BFPL as approved by Creatives shareholders, in July 2002, Creative acquired from BFPL the remaining 50% interest that it did not currently own in its building located in the International Business Park in Singapore. The consideration payable by Creative for the 50% interest in CTC amounted to approximately $4 million. Additionally, Creative repaid the outstanding building-related loans of $7.1 million to BFPL. The financial consideration for the purchase of CTC shares was set at CTCs audited net asset valued at July 4, 2002, based on the value of the building as determined by an independent property appraiser. The acquisition was accounted for by the purchase method. The payment was allocated to land and buildings, deferred tax liability and against minority interest.

NASDAQ (Price in US$/Share) High Low Annual High and Low Fiscal 1999 Fiscal 2000 Fiscal 2001 Fiscal 2002 Fiscal 2003 Quarterly High and Low Fiscal 2002: First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2003 First Quarter Second Quarter Third Quarter Fourth Quarter Monthly High and Low March 2003 April 2003 May 2003 June 2003 July 2003 August 2003 18.56 38.00 23.81 15.05 10.50 8.12 9.69 8.10 4.20 5.65 SGX-ST (Price in Singapore $/Share) High Low 30.30 64.00 41.00 27.90 18.90 14.10 16.60 14.90 8.15 10.10

9.00 8.30 15.05 12.20

4.20 4.24 8.16 8.40

16.90 15.10 27.90 22.90

8.15 8.25 14.80 15.10

10.50 8.55 7.75 8.30

6.26 6.10 5.65 6.06

18.90 14.70 13.70 14.70

11.50 11.10 10.10 10.70
6.55 6.65 6.77 8.30 8.63 10.69
5.65 6.06 6.20 6.52 7.91 7.73
11.80 12.30 11.90 14.70 15.20 18.80
10.10 10.70 11.10 11.40 14.10 13.80
As of September 19, 2003, there were approximately 14,735 shareholders of record of the ordinary shares, of which approximately 282 were registered in the US, and approximately 14,453 in Singapore. Because many of the US shares are held by brokers and other institutions on behalf of shareholders, Creative is unable to estimate the total number of shareholders represented by these US record holders. On September 19, 2003, the closing price of Creatives ordinary shares on the NASDAQ National Market was $10.85 and on the SGX-ST was S$18.80.

THE CREATIVE NETWORK

Worldwide Corporate Headquarters Creative Technology Ltd. 31 International Business Park, Creative Resource, Singapore 609921 Tel: +65-Fax: +65-Website: www.creative.com
INSIDE ASIA Singapore Broadxent Pte Ltd 31 International Business Park, Creative Resource, Singapore 60991 Tel: +65-Fax: +65-China Creative Future Computer Co. Ltd Creative Park, No.18, Anhuaxili Block 2, Chaoyang District, Beijing 100011 Peoples Republic of China Tel: +86-10-Fax: +86-10-Hong Kong Creative Labs (HK) Limited Unit 927-931, 9/F., Hongkong International Trade & Exhibition Centre, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong Tel: +852-Fax: +852-Japan Creative Media K.K. Kanda Eight Bldg., 3F, 4-6-7 Soto-Kanda, Chiyoda-ku, Tokyo 101-0021, Japan Tel: +81-3-Fax: +81-3-Malaysia Cubic Electronics Sdn Bhd No.1, Jalan T.U.43, Taman Tasik Utama, Air Keroh, 75450 Melaka, Malaysia Tel: +60-6-Fax: +60-6-Taiwan Creative Labs Taiwan Co., Ltd 15F, No. 163, Sec. 1, Keelung Road, Taipei, Taiwan, R.O.C. Zip Code: 110 Tel: +886-2-Fax: +886-2-Australia/New Zealand Creative Labs Pty Ltd Shop 3 5, 524 Parramatta Road Petersham. NSW 2049 Australia Tel: +61-2-Fax: +61-2-9021 9899

Constant Innovation _ Design and Technology
Today's lifestyle demands both form and functionality from the discerning and sophisticated user. With this understanding in mind, we have been channeling investment into the research and development of excellent product design to create products that integrate cool ID, user-friendliness and suitability for the user lifestyle. Design aside, a good product must also encompass great features to enhance the user experience. At Creative, we are persistently striving to better ourselves each time by formulating improved and advanced features. To see our users carry and use our products with pride, that is what drives us.

Graphics

Creative WebCam Pro

Creative WebCam Pro eX

Creative CardCam

Creative CardCam Value

Creative WebCam Go ES

3D Labs Wildcat VP

3D Labs Wildcat 4
Graphic Blaster Picture Perfect

3D Blaster 5 RX9800 Pro

Communications

Prosumer Speakers System

From Strength to Strength _ The Future
No longer contented with being the leader in the sound card industry, we have tapped on our strength and expertise to extend to other areas of audio. In line with our far-reaching vision and strategy, we have produced a slew of top-notch quality MP3 players and speakers amongst a host of Creative products for consumers who are IT-savvy, who want choices and who want to be entertained. More than that, we must be swift, nimble and flexible to ride on favorable market forces or react to changes in order to remain competitive. All this is made possible by a team of dedicated people who believe and enjoy what we do. This is what motivates us to keep innovating and create quality products that aspire to deliver fantastic digital entertainment for many unforgettable, inspiring experiences. e lifest tyle digital entertainment philosophy.
Creative Broadband Blaster BritePort 7420C
Creative Broadband Blaster BritePort Router 8110
Network Blaster Wireless LAN Access Point
Network Blaster Wireless LAN PCMCIA Card
Newton Theater T300 6.1 Home Theater Speaker System
Newton Series T500 Tower Speakers
Newton Series T300 Tower Speakers
Newton Theater MC300.5 Home Theater Speaker System
Network Blaster Wireless LAN USB Adapter
Network Blaster Wireless 2020 PCMCIA Card
Network Blaster Wireless 2103 Access Point Router
Network Blaster Wireless Access Point
Network Blaster Notebook Adapter
MovieWorks 208 Home Theater Speaker System
MusicWorks 411 Mini-System
Newton Series MC500 Main/Center Speakers
Newton Series S300 Surround Speakers
Newton Series P500 Powered Subwoofer
Network Blaster Wireless USB Adapter
Network Blaster Wireless Access Point Router

Modem Blaster USB DE5673

Modem Blaster V.92 USB

Modem Blaster PCI