Microsoft and Euphonix Join Forces on Technology for Audio Professionals

REDMOND, Wash., and PALO ALTO, Calif., Oct. 1, 2001 — Microsoft Corp. and Euphonix Inc. today announced an agreement for Euphonix to manufacture, sell and support the HDCD Model Two Processor, a high-resolution analog-to-digital converter designed for DVD and CD mastering. The two companies will collaborate on marketing efforts to continue the growing adoption of HDCD (high-definition-compatible digital) technology by top recording artists, producers and engineers worldwide.

The Model Two processor encodes audio in HDCD format, dramatically improving sound playback in standard consumer devices and players with HDCD decoding. HDCD technology has been used in more than 5,000 recordings that have sold a total of more than 300 million individual CDs.

“The Model Two fits into our philosophy of offering the absolute highest quality audio equipment,”
said Dave Hansen, vice president of Product Marketing at Euphonix.
“With the addition of the Model Two, we now offer a powerful end-to-end audio solution for professional recording, mixing and mastering.”

Euphonix is recognized in the professional audio industry for offering exceptionally high-quality digital audio equipment for recording and mixing. The company’s premier product is the System 5 high-performance digital audio console, chosen for its reliability, pristine sound and ease of use during complex mixing tasks by some of the world’s most distinguished audio facilities in broadcast, film and TV post-production, and music recording. Under the agreement with Microsoft, Euphonix can use HDCD technology to enhance its future products.

“Euphonix is perfectly positioned to help the recording industry benefit from HDCD technology,”
said Dave Fester, general manager of the Digital Media Division at Microsoft.
“As a leader in the industry with a strong reputation as innovators of software-based professional audio equipment, Euphonix has the expertise to support the growing demand for HDCD technology among professionals and music lovers.”

Microsoft acquired the Model Two late last year with its purchase of Pacific Microsonics Inc., the developer of HDCD technology. HDCD recordings sound better because they are encoded with 20 bits of real musical information as compared to 16 bits for all other CDs. HDCD overcomes the limitation of the 16-bit CD format by using a sophisticated system to encode the additional four bits onto the CD. Those who listen to HDCD recordings can hear more dynamic range, a focused 3-D sound stage and extremely natural vocal and musical timbre. HDCD recordings are completely compatible with the CD format and provide improved sound even in conventional CD players, although best results are achieved with HDCD-compatible players.

HDCD-compatible consumer hardware is widely available from major manufacturers, including DENON Electronics, Harman Kardon, Kenwood Corp., Mitsubishi Consumer Electronics and Toshiba American Electronic Components Inc.

About Euphonix

Euphonix (OTCBB
) is a leading manufacturer of large format digital consoles and digital peripherals for broadcast, post- and music production. Euphonix consoles offer uncompromised digital audio with the highest audio resolution in the industry. The standard

of the future will be 24-bit 96 kHz and is available today from Euphonix. Euphonix consoles offer familiarity and ease of use through elegant control surface design, and are built with a modular approach offering flexibility and expandability to ensure reliability and a sound investment today and in the future. Founded in 1988 in Silicon Valley, Euphonix has satisfied more large format digital console users worldwide than any other manufacturer. More information is available at (650) 855-0400 or on the Euphonix Web site at .

About Microsoft

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 is a registered trademark of Microsoft Corp. in the United States and/or other countries.

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