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New CS II Technology Delivers 6.1 Surround Sound With Dialog Clarity Enhancement and Cinema-like Bass Enrichment From Any Audio Source

Circle Surround II is an extremely powerful and versatile surround decoder able to deliver up to 6.1 channel of full-bandwidth audio with incredible rear surround separation from mono, stereo, Dolby Surround and Circle Surround encoded material. This backward compatibility allows consumers to take advantage of their home entertainment systems when playing CDs, watching a video or television. The new dialog clarity enhancement feature acts much like a lens does for vision, bringing movie and television dialog ``into focus'' and enabling the listener to more easily and clearly discern the actors' dialog from the rest of the soundtrack.

Circle Surround II also provides the listener with deep, rich bass over the front channels and subwoofer by monitoring the original program for low frequency audio. It then re-produces it using the company's patented TruBass technology providing the listener with the sensation that the speakers are performing an octave below their physical capabilities -- sounding much more like a big-speaker, cinema experience.

    Key Circle Surround II Features
    --  Optimal 6.1 surround sound experience when used with Circle Surround
        encoded material
    --  Dialog clarity enhancement for mono, stereo, and Circle Surround
        programs
    --  Patented deep, rich bass enrichment
    --  Backward compatibility with Mono, Stereo and Dolby Surround
    --  Ability to apply Dialog Clarity and Bass enhancement features to Dolby
        Digital and DTS playback
    --  Dual band steering
    --  Full bandwidth quality for all channels
    --  Improved "rear to rear" and "rear to front" channel separation
    --  True Center channel dialog localization

``With new advances and the increased use of incredible surround sound special effects, it is often difficult to understand the dialog,'' said Alan Kraemer, executive vice president of technology and business development for SRS Labs, Inc. ``We solved this widespread problem by developing our new dialog clarity enhancement feature. We believe this advancement, along with the addition of bass enrichment technology, makes CS II the most powerful 6.1 surround sound system available to the home theater market. While Circle Surround decoding is designed to be backward compatible, the ultimate home theater experience is achieved when material has been encoded with Circle Surround.''

CS II is one of the most versatile and useful surround technologies on the market because it also has an encoding format that can be used to deliver full-bandwidth Circle Surround encoded programming via the Internet, broadcast and other media formats using existing stereo bandwidth. While CS II delivers fabulous 6.1 surround experience with CS II encoded material, it is also is backward compatible with Dolby® ProLogic decoding and stereo playback. A primary reason why CS II is desirable for A/V products is its unique ability to lend its dialog clarity and deep, cinema-like bass enrichment features to the Dolby Digital and DTS decoders.

Twenty-three percent of American households in January 2001 owned a home theater system, according to a CEA survey of consumers, an increase of 16 percent since January 1998. Surround-decoding components in these home theater systems unlock the potential of surround sound material encoded on videotapes, DVD discs, and a growing number of TV programs transmitted by TV stations, cable networks and satellite services. These factors, particularly the rapid acceleration in DVD player sales, will stimulate sales of surround- decoding gear and related home theater products. In only four years on the market, DVD players were in 14.5 million homes at the end of 2000, according to the DVD Entertainment Group http://www.dvdinformation.com , which also estimates that total hardware shipments will reach 17 million players in 2001, bringing the total number of players in the marketplace to more than 30 million.

Semiconductor Availability

Circle Surround II semiconductor solutions for A/V receiver manufacturers are available now through ADI on the 32-bit SHARC® DSP-based Melody(TM) decoder models ADSST-2106x and ADSST-21161x platforms and through Cirrus Logic on the Genesis CS 49300 DSP platform. SRS Labs' current CS 5.1 decoding technology is currently shipping in products from leading A/V receiver manufacturers such as Kenwood and Marantz. The company plans to license CS II technology to the home theater, pro-audio, Internet, computer, cinema and gaming product manufacturing markets worldwide. Other Circle Surround II semiconductor solutions will be available in early 2002.

For information about licensing Circle Surround II, call 949-442-1070, email sales@srslabs.com or visit the SRS Labs website at www.srslabs.com .

About SRS Labs

SRS Labs (http://www.srslabs.com ) is a leading worldwide provider of advanced audio and voice technology solutions to today's leading consumer electronics, telecommunications equipment, game developers, wireless and cellular phone manufacturers and also markets products for semi-pro and professional audio signal processing. The company's Hong Kong-based ASIC design subsidiary, ValenceTech, Ltd. (http://www.valencetech.com ) is a leader in the design, manufacturing and distribution of integrated circuit and sub- assembly solutions for leading consumer products. The Company's subsidiary, SRSWOWCast Technologies (http://www.srstechnologies.com ), licenses audio and voice technologies for broadcasting and streaming media.

Except for historical information contained in this release, statements in this release, including the statements in paragraph and are forward-looking statements and projections (which include statements concerning plans and objectives of management for future operations) that are based on management's belief, as well as assumptions made by, and information currently available to, management. While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that the Company's goals and strategy will be realized. Numerous factors (including risks and uncertainties) may affect the Company's actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company. Some of these factors include the continued growth of the home theater market, the acceptance of new SRS Labs' products and technologies, the impact of competitive products and pricing, the timely development and release of technologies by the Company, general business and economic conditions, especially in Asia, and the economic impact of recent or future terrorist actions and other risks detailed in the Company's Form 10-K and other periodic reports filed with the SEC.

For further information please contact: Media, Joanna Skrdlant, x 5138, joannas@srslabs.com, or Investors, Tami Yanito, x 3093, tami@srslabs.com, both of SRS Labs, Inc., +1-949-442-1070.

SOURCE: SRS Labs, Inc.