CREATIVE SELLS ZIILABS TO INTEL

Creative Labs has sold their ZiiLabs subsidiary to Intel. ZiiLabs was created when 3Dlabs was rebranded in 2009 when Creative originally acquired them and integrated them with other assets.

The Company is a contract design entity engaged in, primarily on behalf of ZiiLABS, the research and development of various silicon solutions, including the ZMS chips for Creative.

This transaction is in line with the strategic direction that Creative has undertaken to streamline its businesses. With the highly complex and very expensive development costs for future advance media-rich processors, it will be more cost effective and speedier for Creative to collaborate with partners on future advanced chips for its products, while allowing Creative to focus on its core strength – the designing and marketing of more innovative and exciting products for its customers.

Creative will receive $25.5 million immediately and addition funds upon the closing of the deal. Completion of this transaction is expected to take place in the current quarter ending 31 December 2012. Completion is conditional upon certain customary closing conditions, including no material adverse changes in the business conditions of the Company.