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CREATIVE TECHNOLOGY ANNOUNCES THIRD QUARTER FISCAL 2003 RESULTS IN-LINE WITH EXPECTATIONS

SINGAPORE - May 8, 2003 - Creative Technology Ltd. (Nasdaq: CREAF), the worldwide leader in digital entertainment products for PC users, today announced financial results for the third quarter of fiscal year 2003, ended March 31, 2003. All financial results are stated in U.S. dollars.

Sales for the third quarter were $160.6 million, in line with the Company's guidance. This compares to sales of $193.4 million for the same quarter of last year. Creative achieved net income for the third quarter of $4.8 million, and earnings per share met the Company's expectations at $0.06. This compares to last year's third quarter net income of $15.2 million and EPS of $0.20.

Sales for the first nine months of fiscal year 2003 were $552.2 million, compared to $623.3 million for the same period last year. Net income for the first nine months of fiscal 2003 was $18.8 million or $0.23 per share, compared to net income of $28.6 million or $0.38 per share for the same period last year. Net income for the first nine months of fiscal 2003 includes net investment losses of $6.1 million or $0.07 per share. Net income for the first nine months of the previous year includes net investment losses of $15.6 million or $0.21 per share.

"Based on strong sales of our PDE products including our NOMAD® MP3 players and Webcams, we were able to achieve our guidance for revenue and EPS in a challenging quarter for the retail market" said Craig McHugh, president of Creative Labs, Inc. "The sales from our PDE products were up more than 80% from the previous year and helped offset declines in our low end sound card business. Overall, sales of our products that are outside the PC represented more than 50% of revenues in the period."

"I am excited about the growth in our PDE products, as I believe it reflects the much larger market opportunity we have in the future as we continue to expand our product offerings outside of the PC," said Sim Wong Hoo, chairman and CEO of Creative Technology. "We believe we are well-positioned in the high-growth MP3 market where we are the leader, having sold a cumulative total of more than one million NOMAD Jukeboxes and NOMAD MP3 digital audio players. We also see the potential to increase our market share in digital cameras and speakers. And with the introduction this week of the USB Sound Blaster® MP3+, we have added a low-priced offering that can enable mass market PCs to upgrade easily to premium sound."

Flow Back Restriction to Commence on June 1, 2003
In a separate press release on April 25, 2003, Creative announced that the previously announced Flow Back Restriction will commence on June 1, 2003.

Share Buyback Program
During the quarter, Creative did not repurchase any shares under its share buyback program.

Recent Announcements

  • Creative introduced the Sound Blaster MP3+ and the Sound Blaster Go! portable USB Sound Blaster sound systems, for legendary Sound Blaster audio quality in an easy-to-use solution that's as small and light as a PDA.

  • Creative introduced exciting new speaker systems to match the look of the Apple® iPod?. The sharp, white Creative I-Trigue 2.1 I3300 and the Creative TravelSound? I300 are a perfect companion at home or on the go for iPod or Mac users.

  • Creative introduced the NOMAD Jukebox Zen 60GB, the highest capacity NOMAD Jukebox ever, with twice the storage capacity as the most expensive Apple iPod yet priced at $100 less.

  • 3Dlabs® introduced the Wildcat® VP990 Pro, the world's first professional graphics accelerator with 512MB of onboard memory in a single-card solution.

  • 3Dlabs introduced the Wildcat VP880 Pro, providing CAD and DCC professionals with a value-priced 256MB solution.

Awards & Accolades
  • The Creative MegaWorks® THX® 6.1 650 speaker system won:
    - The "ExtremeTech Approved" award from Ziff-Davis ExtremeTech

  • The Creative I-Trigue 2.1 3300 speaker system won:
    - The "Editor's Choice" award from Computer Games magazine

  • The Creative Inspire® 6.1 6600 speaker system won:
    - The "Editor's Choice" award from globetechnology.com

  • The Sound Blaster Audigy? 2 Platinum sound card won:
    - The "Hot Pick" award from Computer Source magazine

  • The NOMAD Jukebox Zen portable audio player won:
    - A "5 out of 5" rating from TechEdge magazine
    - A "5 out of 5" rating from Laptop magazine

  • The NOMAD Jukebox 3 portable audio player won:
    - The "Editor's Choice" award from DV® magazine

  • The Creative CardCam? won:
    - The "Editor's Choice" award from TechEdge magazine

  • The Creative PC-CAM 600 won:
    - The "Good Design" award from the Chicago Athenaeum Museum of Architecture and Design

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About Creative
Creative (Nasdaq: CREAF) is a worldwide leader in digital entertainment products for PC users. Famous for its Sound Blaster audio cards and for launching the multimedia revolution, Creative is now driving digital entertainment on the PC platform with products like its highly acclaimed NOMAD Jukebox. Creative's innovative hardware, proprietary technology, applications and services leverage the Internet, enabling consumers to experience high-quality digital entertainment -- anytime, anywhere.

This announcement refers to products and pricing sold in the United States of America. Pricing and product availability are subject to change without notice. Sound Blaster, I-Trigue, Creative TravelSound, MegaWorks, Creative Inspire, Audigy, MuVo and Creative CardCam are trademarks or registered trademarks of Creative Technology Ltd. in the United States and/or other countries. 3Dlabs and Wildcat are registered trademarks of 3Dlabs, Inc. Ltd. NOMAD is a registered trademark of Aonix and is used by Creative Technology Ltd. and/or its affiliates under license. Apple and iPod are trademarks of Apple Computer, Inc., registered in the U.S. and other countries. All other brand and product names are trademarks of their respective holder and are hereby recognized as such.

Safe Harbor for Forward-Looking Statements Under The Private Securities Litigation Reform Act of 1995:
Except for the historical information contained herein and in the corresponding conference call, the matters set forth in this release and in the call are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: Creative's ability to timely develop new products that gain market acceptance and to manage frequent product transitions; competitive pressures in the marketplace; Creative's ability to successfully integrate acquisitions; potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; possible disruption in commercial activities caused by factors outside of Creative's control, such as terrorism, armed conflict and labor disputes; a reduction in demand for computer systems, peripherals and related consumer products as a result of poor economic conditions, social and political turmoil and major health concerns, such as the spread of Severe Acute Respiratory Syndrome, or SARS; the proliferation of sound functionality in new products from competitors at the application software, chip and operating system levels; the failure of cost-cutting measures to achieve anticipated cost reduction benefits; the continued deterioration of global equity markets; increased exposure to excess and obsolete inventory; Creative's reliance on sole sources for many of its chips and other key components; component shortages which may impact Creative's ability to meet customer demand; Creative's ability to protect its proprietary rights; a reduction or cancellation of sales orders for Creative products or other unexpected or unplanned events that could cause Creative to miss its revenue guidance, operating expense projections or negatively impact its margins; accelerated declines in the average selling prices of Creative's products; the vulnerability of certain markets to current and future currency fluctuations; the effects of restricted fuel availability and rising costs of fuel; fluctuations in the value and liquidity of Creative's investee companies; and the potential decrease in the trading volume and value of Creative's Ordinary Shares as a result of Creative's intended delisting from NASDAQ and elimination of its U.S. public reporting obligations. For further information regarding the risks and uncertainties associated with Creative's business, please refer to its filings with the SEC, including its Form 20-F for fiscal 2002 filed with the SEC. Creative undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in Creative's expectations.

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