Patrick Verderico, CFO       Rich Moore
Creative Labs, Inc.          Copithorne & Bellows 

Sales for the first fiscal quarter of 1996 were US$298.7 million compared with US$250.3 million for the same quarter last year (+19%). Net income for the quarter was US$6.6 million as compared to US$17.7 million for the same quarter last year. Earnings per share were US$0.08 compared to earnings of US$0.20 per share for the first quarter last year.

Reveal Acquisition

On October 25, 1995, Creative announced the acquisition of Reveal Computer Products, Inc., a supplier of peripherals for personal computers. "The acquisition is very strategic and accomplishes three significant objectives," said Sim Wong Hoo, Chairman and CEO. "First, it expands and diversifies our offering of multimedia upgrade products and permits a dual brand strategy serving different customer bases. Second, it expands our family of products to include memory upgrades, graphics accelerators, video editing boards, and mass storage devices. Third, it broadens our product distribution base to national network retailers and mass merchants."

Reveal will receive up to US$65 million in newly issued shares of Creative common stock and 2 million warrants. The acquisition is expected to close in December 1995 or January 1996. The transaction will be accounted for as a purchase and there may be a one-time write-off taken in the quarter in which the transaction closes. The amount of such write-off, if any, will be determined by the outcome of an independent appraisal.

NEW PRODUCTS

3D Blaster

On August 16, Creative introduced 3D Blaster, a gaming platform for the PC designed to bring highly accelerated graphics and 3D realism to gaming on a PC. 3D Blaster's focus is to turn the home PC into the entertainment platform of choice. 3D Blaster is targeted at the installed base of VL-BUS 486's, supports Win 95, Win 3.1, DOS and ships with five of the latest in 3D entertainment titles for the PC written specifically to take advantage of 3D Blaster technology. 3D Blaster will begin shipping this month and a PCI version of 3D Blaster will ship in Spring 1996.

Next Generation Sound Blaster

Transitioning to next generation audio in the Sound Blaster line is a very strong focus for Creative. Recent product introductions include Sound Blaster AWE32 PnP and Sound Blaster 32 PnP that provide Win 3.1, DOS, and Windows 95 compatibility with plug and play. These latest offerings include Creative's 3D Stereo Enhancement for richer, more spacious sound, and E-mu's 3D Positional Audio that allows sounds to be placed and travel along a positional pattern for a more immersive experience. Sound Blaster AWE32 and Sound Blaster 32 include EMU8000-based wavetable synthesis that provides real instrument sounds and special effects such as reverb, chorus, and panning.

Communications

Creative is now marketing a complete line of communications products for the PC ranging from the ShareVision desktop videoconferencing products that work over a regular phone line to modem products with instant Internet access. Recent product introductions include Modem Blaster 28.8 PCMCIA targeted at the portable PC market, and Modem Blaster 28.8 External with instant Internet access and on-line games targeted at the home PC user. The future focus for Creative's communications line is on the evolution of standards and technology for business and home use.

6x CD-ROM Drive Products

Creative recently introduced it's first 6x CD-ROM upgrade, the Blaster CD 6x, and has begun shipping the Sound Blaster Performance 6x, a high end multimedia kit that comes bundled with a next generation Sound Blaster 32 and Creative's own 6x CD-ROM drive.

Creative Technology Ltd. develops, manufactures and markets a family of sound, video, software and telephony multimedia products for PCs under the Blaster family name, and the ShareVision line of desktop video conferencing products for Macintoshes and PCs. The company's Sound Blaster sound platform enables PCs to produce high-quality audio for entertainment, educational, music and productivity applications, and has been accepted as the industry standard sound platform for PC-based software.

Creative Technology Ltd. was incorporated in 1983 and is based in Singapore. Creative Technology's U.S. subsidiaries include Creative Labs, Inc., E-mu Systems, Inc., Digicom Systems, Inc. and ShareVision Technology, Inc. Creative also has other subsidiaries in Australia, China, Europe, Japan, Malaysia, Singapore, South Korea and Taiwan. The company's stock is traded on Nasdaq under the symbol CREAF and on the Stock Exchange of Singapore.

Sound Blaster is a registered trademark and Blaster and CQM are trademarks of Creative Technology Ltd. E-mu is a registered trademark of E-mu Systems, Inc. and ShareVision is a registered trademark of ShareVision Technology, Inc. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such.