LOUD Technologies Reports Second Quarter Results

August 10, 2006 – Woodinville, Wash. - LOUD Technologies Inc. (LOUD) (NASDAQ:LTEC) today announced results of operations for the three and six month periods ended June 30, 2006, highlighted by net income of $0.3 million for the second quarter. Diluted earnings per share on the second quarter 2006 net income was $0.06 versus a loss of $0.36 per diluted share in the second quarter of 2005.

Second Quarter Results (unaudited)
Revenue for the second quarter of 2006 decreased $0.8 million to $53.5 million from $54.3 million for the second quarter of 2005.

Gross profit increased by $2.2 million to $17.8 million, or 33.2% of net sales, in the second quarter of 2006 compared to $15.6 million, or 28.8% of net sales, in the comparable period in 2005. The gross profit for 2005 was reduced by $2.4 million, or 4.4% of net sales, by the impact of recording St. Louis Music’s inventories at fair value as a result of the purchase price allocation of St. Louis Music.

SG&A expenses decreased to $12.0 million for the second quarter of 2006 compared to $12.9 million in the second quarter of 2005. This decrease was primarily attributable to the benefit of lower commission costs related to our new direct sales program. We expect lower selling, general and administrative costs in future quarters due to the effects of our restructuring plan related to the consolidation of the St. Louis Music operations, along with the ongoing cost benefits of our new direct sales program.

Operating income for the second quarter of 2006 was $2.1 million, which included restructuring costs of $0.5 million for severance payments related to reductions in workforce in the consolidation of the St. Louis Music and service operations. This compares to operating income of $0.1 million for the second quarter of 2005.

Six Month Results (unaudited)
Revenue for the six months ended June 30, 2006 increased by $17.9 million to $112.1 million compared to $94.2 million for the six months ended June 30, 2005. The 2006 period includes a full six months of sales from the historical St. Louis Music brands as opposed to the comparable period in 2005 which includes sales from the historical St. Louis Music brands only from the acquisition date of March 5 through June 30.

Operating income for the six months ended June 30, 2006 was $3.5 million, which included restructuring costs of $0.6 million for severance payments related to reductions in workforce in the consolidation of the St. Louis Music and service operations. This compares to operating income of $1.9 million for the comparable period in 2005.

The net loss for the six months ended June 30, 2006 was $0.3 million, or $0.06 per diluted share. This compares to net income of $1.6 million, or $0.35 per diluted share, in the comparable period in 2005. Included in the 2005 number is a gain from the discontinued operations of the Company’s former Italian subsidiary of $2.8 million, or $0.60 per diluted share.