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CS II Sets New Standard for MultichannelEntertainment Through Features Such asDialog Clarity, Bass Enhancement and 6.1 Surround Sound From Any Entertainment Medium

SANTA ANA, Calif., June 20, 2002 – SRS Labs, Inc. (NASDAQ: SRSL), a leading provider of innovative audio, voice and ASIC technology solutions, today announced the commercial availability of its Circle Surround II™ ("CS II") 6.1 multichannel audio decoding technology in a new line of audio/video receivers from longtime SRS Labs licensee, Kenwood USA Corporation. Incorporated with the CS II technology featuring patented SRS Labs’ Dialog Clarity and TruBass audio technologies, Kenwood’s new VR-6070, VR-6060 and VR-6050 audio/video receivers are ideal devices for the multichannel playback of all audio content, including standard television programming, music, Internet streaming, PC and console gaming. Under the terms of the agreement, SRS Labs will receive a per-unit license fee for receiver models that are shipped with the CS II technology and the company expects to begin receiving revenue from this agreement beginning in Q3 2002.

Multichannel audio is rapidly migrating beyond feature films. Yet true 5.1 and 6.1 multichannel audio remains restricted to digital cinema, DVDs, and a sparse number of digital cable and satellite programs. The majority of the worldwide television broadcast market; the Internet, music, and computer gaming still utilize low-bandwidth, two-channel carriers. Circle Surround encoding enables multichannel entertainment through these transmission vehicles, which previously were unable to support 5.1 and 6.1 channels of surround sound. For playback, CS II decoding bridges the gap between older mono, stereo, and surround encoded content and new multi-speaker home theater systems by delivering up to 6.1 channels of compelling surround sound from all such sources. SRS Labs’ proprietary technologies Dialog Clarity and TruBass provide consumers with the most compelling and realistic surround sound experience available in the home today.

Kenwood’s new line of A/V receivers bring the latest audio advancements to a broader range of consumers who wish to upgrade their sound systems to multichannel. Increasingly gamers are plugging their consoles into A/V receivers to enjoy cinema-like surround sound from console games. In addition, both Microsoft and RealNetworks have separately announced their support of multichannel audio for their next generation of computer software media technology. Circle Surround is the ideal surround decoding method as it creates up to 6.1 channels of surround sound from any mono, stereo, Dolby^® Surround or Circle Surround-encoded material. Moderately priced at $300-$600, these three new CS II-enabled products from Kenwood are well timed to meet the needs of this evolving multichannel marketplace.

Jennifer Drescher, vice president of marketing for SRS Labs said, "Kenwood and SRS Labs once again bring the latest advancements in home theater audio to consumers around the world. We are very pleased to continue our relationship with Kenwood through these exciting new products, which are the first implementations of our new CS II technology that was launched just a few months ago. At this price point and with Circle Surround’s unique ability to create surround sound from non-surround encoded material, television viewers, gamers and internet streaming enthusiasts alike can enjoy the ultimate 6.1 channel home entertainment experience."

"Circle Surround II is a revolutionary technology that provides the ultimate home theater surround sound experience from any audio material, including mono and stereo," said Brian Towne, national product manager, home and mobile electronics for Kenwood USA Corporation. "We are very pleased to be offering the first U.S. consumer products incorporating CS II and we anticipate that it will generate significant interest and enthusiasm from consumers who want to enjoy their multichannel home theater system for all their entertainment needs."

Circle Surround II is the most powerful and advanced matrix surround decoder available on the market today. It delivers up to 6.1 channels of full-bandwidth audio with incredible rear surround separation from mono, stereo, Dolby Surround and Circle Surround encoded material. This backward compatibility provides a thrilling cinema-like audio experience from all content — CDs, video games, VHS movies or television programming. Two advanced audio features from SRS Labs that further make CS II the compelling choice for matrix surround decoding are SRS Dialog Clarity and TruBass. SRS Dialog Clarity enables the listener to more easily and clearly discern actors’ dialog from the rest of the soundtrack. TruBass technology creates the sensation of deep, rich bass over the front channels and subwoofer through monitoring the original program for low frequency audio.

These receivers implement the CS II technology using the new Melody 32 digital audio processor from Analog Devices. For more information on ADI’s Melody 32 decoder, please visit Analog Devices’ web site at www.analog.com. CS II technology is available through chip solutions from Analog Devices, Cirrus Logic and Texas Instruments. CS II can be licensed by product manufacturers or software publishers by contacting SRS Labs, Inc. Visit http://www.srslabs.com/demonstrations.asp#CS2 to hear an online demo of CS II and other SRS Labs technologies.

Founded in 1961, Kenwood USA Corporation is a leading developer and manufacturer of audio and video products for home and car. Offering more than 250 products, Kenwood is one of the three largest selling brands of audio and video entertainment products in the United States and is recognized by consumers and the consumer electronics industry for providing superior sound quality, reliability and value. Kenwood USA Corporation, based in Long Beach, Calif., is the largest subsidiary of Kenwood Corporation (Japan). For more information on Kenwood USA go to www.kenwoodusa.com.

SRS Labs, Inc. (www.srslabs.com) and its subsidiaries provide advanced sound solutions for high growth consumer markets, including home theater, DVD, portable audio, wireless devices, game consoles, automotive, broadcast, Internet and personal computer software. SRS Labs, the parent company, develops the core technologies and licenses these patented technologies to over 200 well-known manufacturers and semiconductor companies, including Sony, RCA, Philips, Kenwood, Mitsubishi, Hitachi, Microsoft, and Pioneer. ValenceTech, Ltd., (www.valencetech.com) SRS Labs’ Hong Kong-based subsidiary, is a leading fabless ASIC design and manufacturing company providing analog and digital ASIC solutions to the world’s leading manufacturers of consumer electronics, gaming, telecommunications and computer products. SRS Labs’ subsidiary, SRSWOWcast Technologies, (www.srstechnologies.com) focuses on the Internet and broadcast markets by developing and licensing customized hardware and software products incorporating SRS Labs’ patented technologies.

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