T.Paul Jacobs

I know there have been many questions and concerns about how Klipsch might change under the ownership of Audiovox. Here is what I can contribute: I've spent the past 20 years making Klipsch my life. Music has always been part of my core. It's not likely either of these things will change. During those years, consumer electronics, the music industry, and Klipsch have all been in constant transformation. Under Audiovox, our evolution will continue. However, the core values of Klipsch have remained constant since the founding in 1946: premium, high performance sound. Even today we are experiencing a resurgence of high end American craftsmanship in unique, high performance audio products. Our factory in Hope, Arkansas is currently at capacity of manufacturing for the first time in 10 years. One of the key motivators in Audiovox's decision to partner with Klipsch is our dedication and commitment to the high performance audio experience and premium brand position. Audiovox is a global leader in CE based entertainment systems, particularly hi-end car audio. Their 47 years experience in delivering high performance systems is a key reason Porsche, BMW, and Bentley have chosen to make Audiovox a supplier of choice in their in car experience programs. Audiovox has a proven track record regarding acquisitions of premium companies, maintaining their commitment to performance, quality, and the essential understanding for these companies to maintain their unique DNA. Among these are Oehlbach, Heco, Mac Audio, Schwaiger, and Magnat, to name a few. Ultimately time will tell, but in my humble view this transformative action puts Klipsch group, our employees, and our business partners on a path to maintain and grow our global leadership in high performance sound. I ask our supporters to give this a chance. I, for one, would never have gone along with the change unless it was clear just how beneficial this transaction would be to our future. Paul

Sound Advice has always supported the Klipsch Brand Strategy, including top down selling and supporting a wide range of premium high performance Klipsch traditional enclosure, architectural and outdoor speaker products. Sound Advice was specifically left off of the recent press releases because of their longtime supportive relationship. We have had conversations about the viability of a Florida-ONLY strategy, but I certainly would not say for a fact that this will happen. We are most interested in finding ways to best support our end-user customers first, and our supportive retail partners second. In a situation like this, if we can accomplish both and continue as usual with Sound Advice in Florida, we would explore the possibilities. You can rest assured that during this transition period we have left no stone unturned and no opportunity to accomplish our above goals unexplored. We will continue to work on this closely with all of our business partners and we hope to make a final determination in the next 10 days.

Klipsch takes its leadership role as the number one supplier of high-performance loudspeakers seriously. The sale of audio separates has been declining at 15-20% per year for the last three years. The primary reasons are that times have changed, people have changed and consumer desires have changed. Most specialty manufacturers have remained focused on limited distribution, with little regard to the environment in which many consumers want to buy products. We feel an obligation to try and bring the experience of better audio to a larger audience. As a market leader, we refuse to sit by idly as the market continues to shrink. Klipsch firmly believes our state-of-the-art, high-performance products must always be represented by our highly trained and knowledgeable specialty retailers. We also believe that many consumers in many markets have never had the specialty retail experience, nor are they familiar with what it is. For 2-1/2 years, we have successfully executed our Klipsch ProMedia strategy through Best Buyconnecting with an entirely new customer, giving them their first step-up audio experience with a true high-end audio company in the multimedia space, and educating them on the advantages of our high-performance home loudspeakers, only available through our specialty retail partners. As many specialty retailers migrate toward custom installation, Best Buy is filling the lower mid-fi void in an environment where many highly educated, high-end consumers want to buy. Best Buy will do a great job representing our Synergy Series, enlightening significantly more people to the experience of high performance audio. The natural evolution will be converting many of our best Synergy customers to the ultimate in high-performance loudspeakersthe Reference Series. Paul Klipsch brought the Heresy (non-fully horn-loaded speakers) to market because times had changed, people had changed and consumer desires had changed. He too wanted to reach out and expose more people to the passion of high performance audio. With regard to the new Reference speakers, Klipschs top 25 retailers have been in Indianapolis over the last 3 weeks and their unanimous opinion is they are the best sounding line of speakers Klipsch has ever produced. You dont have to take my word for it, but I encourage you to audition the products when they hit the stores in May. Ive been with Klipsch for over 11 years and I think these new Reference products are the finest products weve ever taken to market.

Klipsch takes its leadership role as the number one supplier of high-performance loudspeakers seriously. The sale of audio separates has been declining at 15-20% per year for the last three years. The primary reasons are that times have changed, people have changed and consumer desires have changed. Most specialty manufacturers have remained focused on limited distribution, with little regard to the environment in which many consumers want to buy products. We feel an obligation to try and bring the experience of better audio to a larger audience. As a market leader, we refuse to sit by idly as the market continues to shrink. Klipsch firmly believes our state-of-the-art, high-performance products must always be represented by our highly trained and knowledgeable specialty retailers. We also believe that many consumers in many markets have never had the specialty retail experience, nor are they familiar with what it is. For 2-1/2 years, we have successfully executed our Klipsch ProMedia strategy through Best Buyconnecting with an entirely new customer, giving them their first step-up audio experience with a true high-end audio company in the multimedia space, and educating them on the advantages of our high-performance home loudspeakers, only available through our specialty retail partners. As many specialty retailers migrate toward custom installation, Best Buy is filling the lower mid-fi void in an environment where many highly educated, high-end consumers want to buy. Best Buy will do a great job representing our Synergy Series, enlightening significantly more people to the experience of high performance audio. The natural evolution will be converting many of our best Synergy customers to the ultimate in high-performance loudspeakersthe Reference Series. Paul Klipsch brought the Heresy (non-fully horn-loaded speakers) to market because times had changed, people had changed and consumer desires had changed. He too wanted to reach out and expose more people to the passion of high performance audio. With regard to the new Reference speakers, Klipschs top 25 retailers have been in Indianapolis over the last 3 weeks and their unanimous opinion is they are the best sounding line of speakers Klipsch has ever produced. You dont have to take my word for it, but I encourage you to audition the products when they hit the stores in May. Ive been with Klipsch for over 11 years and I think these new Reference products are the finest products weve ever taken to market.

Klipsch takes its leadership role as the number one supplier of high-performance loudspeakers seriously. The sale of audio separates has been declining at 15-20% per year for the last three years. The primary reasons are that times have changed, people have changed and consumer desires have changed. Most specialty manufacturers have remained focused on limited distribution, with little regard to the environment in which many consumers want to buy products. We feel an obligation to try and bring the experience of better audio to a larger audience. As a market leader, we refuse to sit by idly as the market continues to shrink. Klipsch firmly believes our state-of-the-art, high-performance products must always be represented by our highly trained and knowledgeable specialty retailers. We also believe that many consumers in many markets have never had the specialty retail experience, nor are they familiar with what it is. For 2-1/2 years, we have successfully executed our Klipsch ProMedia strategy through Best Buyconnecting with an entirely new customer, giving them their first step-up audio experience with a true high-end audio company in the multimedia space, and educating them on the advantages of our high-performance home loudspeakers, only available through our specialty retail partners. As many specialty retailers migrate toward custom installation, Best Buy is filling the lower mid-fi void in an environment where many highly educated, high-end consumers want to buy. Best Buy will do a great job representing our Synergy Series, enlightening significantly more people to the experience of high performance audio. The natural evolution will be converting many of our best Synergy customers to the ultimate in high-performance loudspeakersthe Reference Series. Paul Klipsch brought the Heresy (non-fully horn-loaded speakers) to market because times had changed, people had changed and consumer desires had changed. He too wanted to reach out and expose more people to the passion of high performance audio. With regard to the new Reference speakers, Klipschs top 25 retailers have been in Indianapolis over the last 3 weeks and their unanimous opinion is they are the best sounding line of speakers Klipsch has ever produced. You dont have to take my word for it, but I encourage you to audition the products when they hit the stores in May. Ive been with Klipsch for over 11 years and I think these new Reference products are the finest products weve ever taken to market.