Microsoft Acquires Pacific Microsonics Inc.

REDMOND, Wash., and UNION CITY, Calif., Sept. 18, 2000 — Microsoft Corp. today announced that it has acquired Pacific Microsonics Inc. (PMI), the developer of HDCD digital audio technology. Microsoft will incorporate PMI’s pioneering technology into future offerings for the PC and will make it available for a wide range of consumer devices. PMI will continue to support and develop its existing products.

PMI brings to Microsoft unique strengths in digital audio signal processing that are increasingly important as digital media becomes a primary source of entertainment on both PC and non-PC devices.

“PMI has done amazing work to improve the sound quality of audio CDs with HDCD, which has been embraced by the recording industry,”
said Will Poole, vice president of the Digital Media Division at Microsoft.
“Its wealth of experience and innovative technology will be a tremendous addition to our industry-leading audio technology.”

“Joining Microsoft means we can continue to innovate for our existing customers while expanding our efforts to include a whole new range of customers,”
said Bennet Goldberg, CEO of PMI.
“We look forward to working with the great talent at Microsoft working on digital media technology and continuing to create exciting new innovations for the industry.”

PMI’s High Definition Compatible Digital® (HDCD® ) technology is a patented process used in top-end recording studios to correct the distortions found in current digital recording technology, delivering the full richness and detail of the original performance to compact disc and DVD audio. HDCD has been used in the recording of more than 5,000 CD titles, which include more than 225 Billboard Top 200 recordings and that account for more than 300 million CDs sold.

PMI also licenses the HDCD decoder and filter technology to most of the world’s leading audio IC manufacturers. Major consumer electronics makers employing HDCD technology include A & R Cambridge (Arcam), Denon Nippon Columbia Co. Ltd., Harman Kardon Inc., Kenwood Corp., Linn Products Ltd., Madrigal Audio Laboratories Inc., Marantz Japan Inc., Rotel, Sansui Electric Co. Ltd. and Toshiba Corp. HDCD-mastered CDs offer improved sound in standard CD players, and audio quality is improved even more in CD players equipped with HDCD playback technology.

PMI is based in Union City, Calif. Financial terms of the transaction were not disclosed.

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

Microsoft, High Definition Compatible Digital and HDCD are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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