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CREATIVE TECHNOLOGY REPORTS ALL-TIME RECORD EPS OF $2.09 FOR FISCAL YEAR 2000

Fourth quarter EPS up 153% year-over-year; Annual EPS rise by 67%

SINGAPORE - August 3, 2000 - Creative Technology Ltd. (NASDAQ: CREAF), the market leader in Personal Digital Entertainment (PDE) solutions, today announced financial results for the fourth quarter and fiscal year 2000, ended June 30, 2000. All financial results are stated in U.S. dollars.

Creative posted its third consecutive quarter of record year-over-year revenues, achieving sales for the fourth quarter of $307.7 million. This represents a 12% increase over the same quarter the previous year when sales were $275.1 million. The company reported fiscal year revenues of $1.343 billion, up from $1.296 billion for the previous fiscal year.

• Net income for the fourth quarter was $37.4 million, a 153% increase from $14.7 million for the same quarter in the previous year.
• Earnings per share also increased by 153% to $0.43, versus $0.17 for the same quarter in the previous year.
• Net income for the fiscal year was an all-time record $181.0 million, a 57% increase from $115.0 million for the previous fiscal year.
• Earnings per share increased to a record $2.09, an increase of 67% from $1.25 for the previous fiscal year.

Note: The results for the fourth quarter of fiscal 2000 include a gain of $19.2 million from investment gains, versus investment gains of $12.6 million for the same quarter in fiscal 1999. Results for fiscal year 2000 include investment gains of $103.4 million, versus investment gains of $15 million in fiscal 1999.

"In addition to achieving our third consecutive quarter of record revenues, we improved gross margin to the highest level in nine quarters - driven not only by a 32% increase in audio systems sales over the same quarter last year, but also by strong margin contributions from other PDE products such as our Video Blaster WebCam family," said Craig McHugh, President of Creative Labs, Inc.

"At this time last year, we shared our plan to improve operating results. The success of these efforts is reflected in the eight-fold increase in income from operations over the same quarter last year, and we have delivered three straight quarters of strong financial results and a record year. We are particularly proud of this, as we achieved it in a time when component shortages are increasingly disrupting the technology hardware industry. We have implemented a deliberate strategy to increase inventory levels of key components in our effort to lessen the impact of the supply situation on our audio and PDE products in the upcoming quarters."

"I am very pleased with how Creative has delivered on the sweeping transformation we outlined a year ago," said Sim Wong Hoo, Chairman and CEO. "We have improved profitability, made significant progress on our PDE and Internet initiatives, and increased our strategic investment fund from $50 to $200 million, with investments to date in over 40 companies. These investments have contributed to both our profitability and our balance sheet, while helping us build technology partnerships for our future. More importantly, we increased shareholders' equity by 42% to $799 million, even after spending $102 million of our cash on share buybacks and $21 million on our dividend."

"The market for our products has extended well beyond traditional gaming, driven by the excitement and phenomenal growth of MP3 and downloadable digital music. Companies like Napster and others have brought awareness of digital music on the PC platform to tens of millions of people in less than a year. Creative is ideally positioned to benefit from this revolution because users are demanding the high-quality sound and full functionality offered by Environmental Audio in our Sound Blaster Live! and Cambridge SoundWorks audio systems, which enable the PC platform to provide a listening experience which rivals or exceeds that of home stereo. We are now developing this market opportunity even further, with PDE appliances which expand digital entertainment beyond the confines of the PC box, such as the soon-to-be shipped NOMAD Jukebox."

During the quarter, Creative continued its share buy-back program, repurchasing approximately 2.2 million shares at a cost of $54 million. During the fiscal year, Creative repurchased approximately 5.9 million shares at a cost of $102 million. Subject to market price and conditions and securities law restrictions, the company plans to continue its buyback program during fiscal year 2001.

Also during the fourth quarter, Creative's broadband communications subsidiary, Digicom, was spun-off by closing a $22.5 million first round of private equity financing for approximately 11% of the company, with Creative retaining 89% ownership.

Strategic Investment Fund - Investee Companies
During the fourth quarter, Creative made new investments in a number of companies, including DataPlay, DiMagic, and e-Micro, and announced its investment in Halo Data Devices and SigmaTel. Investee companies in which Creative holds a position of over 5% include: Adroit Innovations, Behavioral Technology Computer, Catcha.com, ChainCast, DiMagic, Embedded Solutions, e-Micro, Eureka Technologies, InnoMedia, Lafe Technology, MediaRing.com, Mindmaker, Pixaround.com, PlanetWeb, SigmaTel, Silicon Illusions, 3DFX (through its acquisition of GigaPixel), and 3Dlabs.

Investee companies in which Creative holds a position of under 5% include: Bex.com, Centillium Technology, Coresma, DataPlay, EMusic.com, GRIC Communications, Halo Data Devices, HearMe (through its acquisition of AudioTalk), MyTeam.com, NVIDIA, Sina.com, and TeraLogic.

In addition to the companies listed above, there are several other companies in which Creative has invested that are not disclosed at this time due to competitive, strategic, or other reasons.

Sound Blaster and Blaster are registered trademarks and Environmental Audio, PC-DVD Encore, DeskTop Theater, 3D Blaster and Graphics Blaster are trademarks of Creative Technology Ltd. Cambridge SoundWorks is a registered trademark of Cambridge SoundWorks, Inc. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such. Nomad is a registered trademark of Aonix and is used by Creative Technology Ltd. and/or its affiliates under license.

Safe Harbor for Forward Looking Statements:
Except for the historical information contained herein and in the accompanying conference call on today's date, the matters set forth herein and in the accompanying conference call (including our guidance on future revenues, margins, expenses and earnings) are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such risks and uncertainties include, among others: potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; the vulnerability of certain markets to currency fluctuations and credit shortages; reductions in the market value of products sold by Creative, including increases in supply or declines in demand or prices for CD-ROM or DVD drives, board and chip-level products, and software products; the short product cycles that characterize most of Creative's products; the increasing proliferation of sound functionality in new products from new and existing competitors and at the application software, chip and operating system levels; Creative's reliance on sole sources for many of its chips and other key components; the timely development, ramp, delivery and market acceptance of new products, including Creative's next generation audio, graphics accelerator, CD-ROM and DVD drives and communications products; the volatility of share prices for companies in Creative's industry and the effect of those prices or other events beyond Creative's control; and other risk factors described in Creative's filings with the Securities and Exchange Commission over the past twelve months. The company undertakes no obligation to publicly release the results of any revisions to such forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.