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Sales for the first quarter were at the high end of the Company's guidance at $160.6 million. This compares to sales of $180.4 million for the same quarter of last year.

Creative achieved net income for the first quarter of $1.3 million or $0.02 per share before write-downs on listed investments of $6.3 million or $0.08 per share. Including the write-downs, the Company reported a net loss for the quarter of $5.0 million or $0.06 per share. Comparative results for the first quarter of last year were net income of $3.6 million or $0.05 per share before net investment write-downs of $16.4 million or $0.22 per share. Including the write-downs, the Company incurred a net loss of $12.8 million or $0.17 per share in the first quarter of last year.

The effects of the 3Dlabs acquisition in the quarter included: a revenue contribution of $13.0 million; gross profit of $6.1 million; and operating expenses of $10.7 million including $2.5 million for amortization of intangible assets.

Excluding the impact of the 3Dlabs acquisition and investment write-downs in the quarter, Creative achieved net income for the first quarter of $6.2 million or $0.08 per share. This compares to last year's first quarter net income of $3.6 million or $0.05 per share before investment write-downs.

"We came in at the top end of our revenue guidance with solid sales performance in a very tough economic climate," said Craig McHugh, president of Creative Labs, Inc. "We saw year-over-year growth of more than 50% in both our personal digital entertainment (PDE) and communications product categories. Overall, we achieved our highest quarterly gross margin percentage in many years, reflecting our year-long initiative to move away from lower margin, higher risk products and to concentrate on our higher-margin products and profitability. The high gross margins and our ongoing focus on reducing operating expenses were key contributors to our achieving EPS of eight cents per share for the first quarter, excluding the impact of 3Dlabs and investment write-downs, which is 60% ahead of last year's first quarter EPS of five cents."

"Creative has always had an enormously strong brand name within the PC industry," said Sim Wong Hoo, chairman and CEO of Creative Technology Ltd. "We are going to be enhancing that this quarter with the introduction of the Sound Blaster® Audigy(TM) 2, which again takes audio to a whole new level -- delivering to the PC platform an astounding 106dB SNR, 24-bit ADVANCED HD(TM) and, for the first time ever, the new music industry audio standard, Advanced Resolution(TM) DVD-Audio at 24-bit/192 kHz. We will extend our brand presence by offering our broadest and most exciting holiday lineup ever, with products that can transcend the traditional PC space and offer a compelling digital entertainment experience both when tethered to or away from the PC. With the breadth of our product offerings across a wide range of price points providing such great deals, I believe that even in these economically challenging times, consumers will buy a Creative product with unbeatable value to enrich their PC capabilities and create a fabulous digital entertainment experience."

Sim continued, "We have been directing our R&D resources toward innovation in both the technical product design and the visual industrial design (ID) of our products, as we significantly increase the overall number of product offerings. We have new offerings in our Creative Inspire(TM) family of speakers including the Inspire 6.1 6600 series speaker system, the ideal combination with the Sound Blaster Audigy 2, and another soon-to-be-announced speaker brand with a sleek, new visual ID. In our PDE product category, we just announced the Nomad® Jukebox 2 as well as the Nomad Jukebox Zen, our first pocket-sized Nomad Jukebox, which will allow us to compete head-to-head with the Apple® iPod(TM) but at a much lower price point and with significantly more features. These two new Nomad products join the Nomad MuVo(TM), the world's smallest MP3 player and USB storage device, which was launched last quarter. With its compact size and innovative design, people just love the Nomad MuVo, which is winning awards all over the world. We will also soon be adding two exciting new digital cameras to our expanding Creative WebCam family."

"This week we announced two new 3Dlabs workstation graphics products, the high-end Wildcat 4(TM) AGP 8x optimized professional graphics accelerator and the entry-level, dual-screen Wildcat® VP560. The Wildcat VP560 is based on a new, lower-cost chip which utilizes our scalable visual processing architecture to deliver workstation-grade performance and functionality at a breakthrough price," said Hock Leow, president of 3Dlabs. "3Dlabs achieved very good gross margins of 47% during the first quarter through the acceptance of our high-end workstation products and, with the introduction of these two new products, we have extended our product offerings to address the broader workstation market."

Share Buyback Program

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

Recent Announcements

• Creative set the new PC audio standard with the Sound Blaster Audigy 2, introducing 24-bit/192kHz DVD-Audio playback, and 6.1 surround sound at 106dB SNR with THX and Dolby Digital EX to the PC entertainment platform;
• The Creative Inspire 6.1 6600 speaker system was introduced as the ideal companion for the Sound Blaster Audigy 2, providing stunning audio realism and clarity for Dolby Digital EX playback of DVD movies and 6.1 surround sound for PC gaming;
• Creative announced the NOMAD Jukebox Zen, with both USB and FireWire support for millions of PC users to enjoy a compact, stylish and feature-rich digital audio player that holds up to 8,000 songs for only $299.99 after rebate.

    Awards & Accolades
    -- The NOMAD MuVo won:
       -- The "Kick-Ass Award" from Maximum PC
       -- "Gadget of the Month" from PC Magazine
       -- "Gadget of the Week" from Time.com
       -- The "Editor's Choice Award" from Computer Shopper
       -- The "Editor's Choice Award" from globetechnology.com
       -- "Best Retail Product" at the Latin Channels Show
       -- The "PC Format Gold Award" from the U.K's PC Format magazine

    -- The NOMAD Jukebox 3 won:
       -- The "Editor's Choice" Award from Computer Shopper magazine

    -- The Sound Blaster Audigy won:
       -- "Best Hardware" at the Latin Channels Show

    -- The Sound Blaster Audigy Platinum EX won:
       -- "Gear of the Year" from Home Theater Buyer's Guide

    -- The Sound Blaster Extigy won:
       -- "Best Audio Hardware of 2002" from Computer Shopper

    -- The Cambridge SoundWorks MegaWorks 510D won:
       -- "Best 5.1 Speaker System of 2002" from Computer Shopper

    -- The 3Dlabs Wildcat VP870 won:
       -- 5 out of 5 Stars and a "Highly Recommended" from Cadalyst magazine

About Creative

Creative is the 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 is subject to change. Sound Blaster and the Creative logo are registered trademarks and Live! is a trademark of Creative Technology Ltd. in the United States and other countries. Cambridge SoundWorks is a registered trademark of Cambridge SoundWorks, Inc. in the United States and/or other countries. 3Dlabs and Wildcat are trademarks or 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 either trademarks or registered 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 products, including Creative's products, as a result of poor economic conditions and social and political turmoil; 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; and fluctuations in the value and liquidity of Creative's investee companies. For further information regarding the risks and uncertainties associated with Creative's business, please refer to its filings with the SEC, its press release, dated March 11, 2002, announcing the signing of a definitive agreement to acquire 3Dlabs and its Form 20-F for fiscal 2002 to be 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.

                           CREATIVE TECHNOLOGY LTD.
                         CONSOLIDATED BALANCE SHEETS
                                (In US$' 000)

                                                  (Unaudited)
                                                 September 30,     June 30,
                                                     2002              2002
    ASSETS

    Current Assets:
    Cash and cash equivalents                       $182,047       $166,917
    Marketable equity securities                         615          1,388
    Accounts receivable, net                          85,631         85,193
    Inventory                                        109,167        108,549
    Other assets and prepaids                         16,725         17,773

    Total current assets                             394,185        379,820

    Property and equipment, net                      106,088        104,748
    Investments                                       55,352         66,688
    Other non-current assets                         112,238        115,122

    Total Assets                                    $667,863       $666,378

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities:
    Accounts payable                                 $81,773        $64,809
    Accrued liabilities                               92,271         77,831
    Income taxes payable                              43,367         43,794
    Current portion of long term
     obligations and others                           22,562         27,441

    Total current liabilities                        239,973        213,875

    Long term obligations                             16,227         16,782
    Minority interest in subsidiaries                  3,114         11,769
    Total shareholders' equity                       408,549        423,952

    Total Liabilities and Shareholders' Equity      $667,863       $666,378


                           CREATIVE TECHNOLOGY LTD.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In US$' 000, except per share data)
                                 (Unaudited)

                                                      Three months ended
                                                          September 30,
                                                      2002           2001

    Sales, net                                      $160,623       $180,442
    Cost of goods sold                               102,630        124,529
    Gross profit                                      57,993         55,913
    Operating expenses:
     Selling, general and administrative              42,155         43,427
     Research and development                         15,267          9,608
    Total operating expenses                          57,422         53,035
    Operating income                                     571          2,878
    Loss from investments, net                       (6,316)       (16,425)
    Interest income and other, net                       807          1,424
    Loss before income taxes and minority interest   (4,938)       (12,123)
    Provision for income taxes                          (57)          (230)
    Minority interest in (loss) income                    18          (495)
    Net loss                                        $(4,977)      $(12,848)
    Basic loss per share:                            $(0.06)        $(0.17)
    Weighted average ordinary shares
     outstanding ('000)                               78,877         73,854
    Diluted loss per share:                          $(0.06)        $(0.17)
    Weighted average ordinary shares**                78,877         73,854
     and equivalents outstanding ('000)

• In computing the diluted earnings per share for the current quarter, 2.4 million of potentially dilutive shares was not included since the company was in net loss position.