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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 year.
• 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 Highlights

• 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 and Siemens.
• 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 Micron.
• 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.