CREATIVE'S PURCHASE OF AUREAL'S ASSETS APPROVEDSINGAPORE -- September 22, 2000 - Creative Technology Ltd. (NASDAQ: CREAF) today announced that on September 21, 2000, the U.S. Bankruptcy Court for the Northern District of California, Oakland Division entered the final order approving the sale to Creative of substantially all of the assets of Aureal Semiconductor, Inc., including patents, trademarks and other intellectual property. The sale will also include settlement of all outstanding litigation claims between Aureal and Creative. Creative will pay US$28 million in cash, plus two new shares of Creative stock for every 100 outstanding shares of Aureal stock, or 208,079 shares of Creative stock. The Creative shares are valued at approximately US$4.35 million, based on the fair market value of Creative stock on September 21, 2000. The new Creative shares constitute approximately 0.26 percent of the enlarged issued share capital of Creative.
"We're pleased that the court has entered the order approving the sale to Creative," said Craig McHugh, president of Creative Labs, Inc. "Since Creative would not be able to recover significant damages given Aureal's bankruptcy, there was no upside in continuing this protracted litigation. As a result, we believe that this outcome is the best we could have expected. Without further distraction by the litigation, Creative's management will be able to focus on delivering the digital entertainment experience consumers are demanding."
As a result of the settlement of outstanding litigation with Aureal, Creative expects that a significant portion of the value of the cash and shares, as well as the associated costs, will be recorded as a pre-tax charge against previously announced fiscal 2000 earnings. Since the litigation was ongoing at June 30, 2000 and the settlement was reached after release of Creative's fiscal 2000 earnings, but before distribution of Creative's financial statements, generally accepted accounting principles in the United States require that this charge be reflected in Creative's fiscal 2000 financial statements. Creative is currently evaluating the assets to be acquired, and does not believe that the value of such assets to Creative will be significant. The value of such assets, if any, will be recorded by Creative in the period that the purchase is completed.
None of the directors or substantial shareholders of Creative has any interest, direct or indirect, in the acquisition.