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Sales for the fourth quarter of fiscal 1998 were US$253.0 million as compared to US$280.1 million for the same quarter last year. This reduction in sales is consistent with the company's June earnings alert. Sales for fiscal 1998 were US$1.234 billion, compared to US$1.233 billion for fiscal year 1997.

Before one time write-offs and gains from investments, the quarterly and yearly results were:

    * Net income for the quarter of US$13.1 million, as compared to

      US$44.4 million for the same quarter last year.

    * Earnings per share for the quarter of US$0.14, versus US$0.48 per share

      for the same quarter last year.

    * Net income for the fiscal year 1998 -- at a record of US$184.9 million

      -- is an increase of 15.4 percent from US$160.2 million for the previous

      year.

    * Earnings per share for the fiscal year at US$1.95, versus US$1.77 per

      share for the previous fiscal year.

(The results for the fiscal year 1998 exclude: A one time write-off of US$8.3 million in the fourth quarter relating to the cessation of certain activities; a gain of US$18.5 million from the sale of quoted investments in the first quarter; and a one-time write-off for in-process technology of US$60.3 million in the second quarter. The results for fiscal 1997 exclude a gain of US$6.8 million from the sale of investments in the fourth quarter of that year.)

After one time write-offs and including gains from investments, the quarterly and yearly results were:

    * Net income for the quarter of US$4.8 million and earnings per share of

      US$0.05.

    * Net income for the fiscal year 1998 of US$134.8 million and earnings per

      share of US$1.42.

``Although this was a challenging period for Creative -- and for the industry -- we were able to produce results in line with our most recent guidance,'' said Sim Wong Hoo, chairman and chief executive officer of Creative Technology Ltd. ``I am especially pleased with the systems we have put in place that enabled us to reduce our inventories and to grow our cash position.

``Market acceptance of our products has been strong. In each of our product categories, Creative's solutions are either the number one or number two best-selling products in US retail! With over 50 million Sound Blaster solutions installed worldwide, we are, of course, broadly recognized as the standard for PC audio. And, according to PC Data, our PC-DVD drives have captured market share approaching 90 percent, our graphics solutions own three of the top five best-selling positions, and our speaker business has taken the number two position in less than one year.

``Preparing for the year ahead, we have the best product line-up in our history. With the shipment of our much anticipated Sound Blaster Live! last week; the growing acceptance of our PC-DVD drives; the strength of our speaker business; and the phenomenal popularity of our graphics solutions, we anticipate a solid fiscal year ahead.''

Business Developments

Creative made a number of announcements in the past several months that further its leadership position in the industry. These announcements include:

    * The launch of Sound Blaster Live!, Creative's premiere audio platform

      and the most advanced, powerful, true hardware 3D audio accelerator and

      integrated audio effects processor currently available today -- and the

      first sound card from Creative that delivers Environmental Audio.

    * The introduction of Environmental Audio, the new sound standard

      developed by Creative that creates interactive audio experiences that

      rival real-world audio events on the PC.

    * The announcement of support from top developers for Creative's newly

      announced Environmental Audio Extensions -- the latest applications

      programming interface (API) which lets developers optimize their newest

      games to use the features in Sound Blaster Live!

    * The announcement of Creative's Graphics Blaster RIVA TNT, utilizing the

      RIVA TNT chipset from NVIDIA Corp., providing the fastest 2D/3D graphics

      acceleration possible.

    * The introduction of Sound Blaster PCI128 and PCWorks FourPointSurround

      -- the first complete audio system for multi-channel surround sound

      -- at a highly attractive estimated street price of US$149.99.

    * The acquisition of Silicon Engineering, Inc., a key innovator in the

      design and development of integrated circuits for the multimedia,

      storage and communications markets.

Awards and Recommendations

In the last quarter, Creative garnered top-rate reviews and numerous recommendations from a variety of computer trade publications and organizations. These include the following:

    * 3D Blaster(TM) Voodoo2

      -Earned a "5-Star Review" from Game Buyer

      -Earned a "4-Star Review" from Computer Gaming World

      -Earned a "4-Star Review" from c/net Gamecenter

      -Made the  "WinList" from Windows Magazine

      -Received "Editors' Choice" from PC Gamer

    * Sound Blaster(R) AWE64 Gold

      -Awarded prestigious "Win 100" from Windows Magazine

      -Made the "A" List in PC Computing

      -Earned a "World Class Award" and "Best Sound Board" from PC World

    * PC-DVD Encore Dxr2(TM)

      -Recognized as the "Best DVD Drive" by PC World

      -Awarded prestigious "Win 100" from Windows Magazine

      -Earned a "World Class Award" from PC World

    * Cambridge SoundWorks Speaker Series

      -Received "Best Buy Award" from Consumers Digest

      -Recognized as the "Editor's Choice" by Computer Player

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. is the world's leading provider of advanced multimedia solutions for personal computers, including sound, graphics, communications and videoconferencing products. The company's Sound Blaster technology has been accepted as the worldwide standard sound platform for PCs, and the company's global distribution network is among the most extensive in the multimedia industry. Creative is focused on enhancing the overall user experience by providing powerful, enabling, high-value technology for the mass market.

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; 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; 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.

NOTE: Sound Blaster is a registered trademark and Blaster is a trademark of Creative Technology Ltd. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such.

                             CREATIVE TECHNOLOGY LTD.

                           CONSOLIDATED BALANCE SHEETS

                       (In US$' 000, except per share data)

                                   (Unaudited)



                                         June, 30             June, 30

                                           1998                 1997

    ASSETS



    Current Assets: -

     Cash and cash equivalents          $417,262              $417,943

     Accounts receivable,

      less allowances

      of $14,074 and $21,726             115,930               119,848

     Inventory                           144,320                69,250

     Other assets and prepaids            10,180                12,510

       Total current assets              687,692               619,551



    Property and equipment, net          100,767                94,582

    Investments and other

     non-current assets                   76,654               100,685

                                        $865,113              $814,818



    LIABILITIES AND SHAREHOLDERS' EQUITY



    Current Liabilities: -

     Accounts payable                    $90,544              $116,861

     Other accrued liabilities            61,381                94,843

     Income taxes payable                 45,002                35,711

     Current portion of

      long term obligations                5,973                   215

       Total current liabilities         202,900               247,630



    Long term obligations                 32,277                33,711



    Minority interest in subsidiaries      7,622                10,872



    Shareholders' equity:

     Ordinary Shares; S$0.25

      par value ('000);

      Authorized: 200,000 shares

       Outstanding : 92,914 and

        88,932 shares                      9,678                 9,060

     Additional paid-in capital          158,532               138,741

     Unrealized holding gains

      on quoted investments               13,719                70,343

    Retained earnings                    440,385               304,461

       Total shareholders' equity        622,314               522,605

                                        $865,113              $814,818



                             CREATIVE TECHNOLOGY LTD.

                        CONSOLIDATED STATEMENTS OF INCOME

                       (In US$' 000, except per share data)

                                   (Unaudited)



                             Three months ended       Twelve months ended

                                  June 30,                    June 30,

                             1998          1997         1998          1997



    Sales                 $253,009      $280,066   $1,234,208    $1,232,957

    Cost of goods sold     188,210       192,204      848,305       893,432

    Gross profit            64,799        87,862      385,903       339,525



    Operating expenses:

     Selling, general

      and administrative    43,899        35,370      162,464       135,644

     Research and

      development           10,615        10,094       41,723        35,164

     Other charges           8,268            --       68,568            --



    Total operating

     expenses               62,782        45,464      272,755       170,808



    Operating income         2,017        42,398      113,148       168,717

    Net gain from investments   --         6,803       18,469         6,803

    Interest income and

     other, net              3,172         7,276       21,183        11,579



    Income before income

     taxes and minority

     interest                5,189        56,477      152,800       187,099

    Provision for income

     taxes                   (883)       (4,968)     (19,805)      (20,073)

    Minority interest

     in loss (income)          491         (282)        1,779            20



    Net income              $4,797       $51,227     $134,774      $167,046

    Basic earnings

     per share :             $0.05         $0.58        $1.49         $1.89

    Average ordinary shares

     outstanding ('000)     92,218        88,743       90,654        88,422

    Diluted earnings

     per share :             $0.05         $0.55        $1.42         $1.84

    Average ordinary shares

     and equivalents

     outstanding ('000)     95,339        93,397       94,964        90,763

SOURCE: Creative Labs, Inc.