UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-Q  (Mark One) xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE 
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedMarch 31, 2001 or oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE 
SECURITIES EXCHANGE ACT OF 1934 For the transition
period from________________to________________ Commission File Number:0-26524 MACKIE DESIGNS INC.(Exact
  name of registrant as specified in its charter)Washington
  91-1432133(State
  or other jurisdiction of incorporation or organization)
  (I.R.S.
  Employer Identification No.)16220 Wood-Red Road, N.E., Woodinville,
  Washington
  98072(Address
  of principal executive offices)
  (Zip
  Code)(425) 487-4333(Registrant's
  telephone number, including area code)(Former
  name, former address and former fiscal year, if changed since last report) Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   YesxNoo APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date. Common Stock, no par value
  12,372,358Class
  Number
  of Shares Outstanding(as
  of May 1, 2001)
   MACKIE DESIGNS INC.

FORM
10-Q
For the quarter ended March 31, 2001

INDEX

PART I.  FINANCIAL
  INFORMATIONItem 1.
  Financial Statements (Unaudited)Condensed
  consolidated balance sheets  March 31, 2001 and December 31, 2000Condensed
  consolidated statements of income  Three months
  ended March 31, 2001 and 2000Condensed
  consolidated statements of cash flows  Three months ended March 31, 2001 and
  2000Notes
  to condensed consolidated financial statementsItem 2.
  Management's
  Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
  Quantitative
  and Qualitative Disclosures About Market RiskPART II.  OTHER
  INFORMATIONItem 1.
  Legal ProceedingsItem 2.
  Changes in SecuritiesItem 3.
  Defaults Upon
  Senior SecuritiesItem 4.
  Submission
  of Matters to a Vote of Security HoldersItem 5.
  Other InformationItem 6.
  Exhibits and
  Reports on Form 8-KSIGNATURESEXHIBITS

PART I.  FINANCIAL
INFORMATION

Item 1.  Financial
Statements

MACKIE DESIGNS INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)

In
thousands, except per share data

March 31,
  2001
  December
  31,
  2000ASSETSCurrent assets:Cash and cash equivalents
  $3,590
  $3,838Available-for-sale securities
  
  509Accounts receivable, net
  42,239
  39,085Inventories
  59,308
  63,471Prepaid expenses and other current
  assets
  1,753
  1,514Deferred income taxes
  3,125
  3,148Total current assets
  110,015
  111,565Property, plant and
  equipment, net
  23,860
  23,568Intangible assets, net
  23,592
  24,419Bonds
  3,688
  3,891Other assets, net
  1,425
  1,755Total assets
  $162,580
  $165,198LIABILITIES AND SHAREHOLDERS'
  EQUITYCurrent liabilities:Short-term borrowings
  $30,933
  $31,281Accounts payable
  20,492
  21,912Accrued expenses
  10,329
  10,503Income taxes payable
  1,368
  706Current portion of long-term debt
  6,335
  5,025Total current liabilities
  69,457
  69,427Long-term debt,
  excluding current portion
  27,929
  29,971Other long-term
  liabilities
  3,572
  3,932Deferred income taxes
  3,891
  4,098Contingency and
  subsequent eventShareholders' equity:Common stock
  27,897
  27,720Retained earnings
  32,847
  31,885Accumulated other comprehensive loss
  (3,013)
  (1,835)Total shareholders' equity
  57,731
  57,770Total liabilities and
  shareholders' equity
  $162,580
  $165,198See accompanying Notes to Condensed Consolidated Financial
Statements.

MACKIE
DESIGNS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)

In thousands,
except per share data

Three
  months endedMarch 31,2001
  2000Net sales
  $58,626
  $45,191Cost of goods sold
  38,854
  29,000Gross profit
  19,772
  16,191Operating expenses:Selling, general and administrative
  13,804
  9,838Research and development
  2,949
  1,939Total operating expenses
  16,753
  11,777Operating income
  3,019
  4,414Interest income
  102
  196Interest expense
  (1,458)
  (646)Other income
  (expense), net
  (103)
  19Income before income taxes
  1,560
  3,983Income taxes
  598
  1,564Net income
  $962
  $2,419Basic and diluted net
  income per share:
  $0.08
  $0.20Weighted average common and potential
  common shares used in computing net income per share:Basic
  12,372
  12,110Diluted
  12,795
  12,338See accompanying Notes to Condensed Consolidated Financial
Statements.



MACKIE
DESIGNS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)



In thousands, except per share
  data
  Three
  months endedMarch 31,2001
  2000Operating activitiesNet income
  $962
  $2,419Adjustments to reconcile net income to
  net cash provided by operating activities:Depreciation and amortization
  2,051
  1,849Deferred stock compensation
  177
  Deferred income taxes
  (144)
  (410)Changes in operating assets
  and liabilities:Accounts receivable
  (4,594)
  (3,783)Inventories
  2,237
  (1,225)Prepaid expenses and other
  current assets
  (226)
  123Other assets
  693
  225Accounts payable and
  accrued expenses
  450
  1,960Income taxes payable
  740
  704Other long term
  liabilities
  (82)
  101Cash provided by operating
  activities
  2,264
  1,963Investing activitiesPurchases of available-for-sale
  securities
  
  (2,066)Proceeds from sales of
  available-for-sale securities
  515
  Proceeds from maturities of
  available-for-sale securities
  
  3,394Purchases of property, plant and
  equipment
  (2,736)
  (614)Cash (used) / provided by
  investing activities
  (2,221)
  714Financing activitiesProceeds from long-term debt
  
  1,077Payments on long-term debt
  (164)
  (4,747)Net proceeds on bank line of credit
  and short-term borrowings
  980
  4,383Proceeds from the exercise of stock
  options
  
  58Cash provided by financing
  activities
  816
  771Effect of exchange
  rate changes on cash
  (1,107)
  (310)(Decrease) / increase
  in cash and cash equivalents
  (248)
  3,138Cash and cash
  equivalents at beginning of period
  3,838
  4,629Cash and cash
  equivalents at end of period
  $3,590
  $7,767Supplemental disclosuresCash paid for income
  taxes
  $31
  $336Cash paid for interest
  $1,395
  $378See accompanying Notes to Condensed Consolidated Financial
Statements.



MACKIE DESIGNS INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSMarch 31, 2001
(Unaudited)

In
thousands, except per share data1.     Basis of Presentation

The accompanying unaudited condensed
consolidated financial statements have been prepared by Mackie Designs, Inc.
(the "Company") in accordance with generally accepted accounting
principles for interim financial statements and with the instructions to Form
10-Q and Article 10 of Regulation S-X. 
Accordingly, they do not include all of the information and disclosures
required by generally accepted accounting principles for complete financial
statements.  In the opinion of the
Company's management, all adjustments, consisting of normal recurring items,
necessary for a fair presentation have been included.  The results of operations for interim periods are not necessarily
indicative of future financial results. 
For further information, refer to the consolidated financial statements
and footnotes thereto for the year ended December 31, 2000 included in the
Company's Form 10-K filed with the Securities and Exchange Commission.  Certain amounts reported in previous years
have been reclassified to conform to the 2001 presentation.

In
June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
133, as amended, requires that all derivative instruments be recorded on the
balance sheet at their fair value.  Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction.  This statement, as amended,
became effective for the Company on January 1, 2001.  The adoption of SFAS
No. 133 did not have an impact on the Companys consolidated financial position
or results of operations.

2.Inventories

Inventories consisted of the following:

March
  31,
  2001
  December
  31,
  2000Raw materials
  $26,344
  $31,579Work in process
  6,372
  4,831Finished goods
  26,592
  27,061$59,308
  $63,4713.Intangible assets

Intangible assets consist of the
following:

March
  31,
  2001
  December
  31,
  2000Goodwill
  $17,473
  $17,974Developed technology
  5,200
  5,200Assembled workforce
  1,660
  1,660Trademark
  1,380
  1,38025,713
  26,214Less accumulated amortization
  2,121
  1,795$23,592
  $24,4194.Net Income per Share

Basic
net income per share is based on the weighted-average number of common shares
outstanding for the period. Diluted net income per share includes the effect of
potential dilutive common shares outstanding, consisting of stock options using
the treasury stock method.  The
denominators of the diluted net income per share calculations exclude the
effect of unexercised stock options representing the potential rights to
1,705,599 and 1,360,175 shares for the first quarters of 2001 and 2000,
respectively, as including the effect of such instruments would be
antidilutive.  The following schedule
represents a reconciliation of the numerators and denominators of basic and
diluted net income per share calculations.



Three
  months endedMarch 31,2001
  2000Numerator:Numerator for basic and diluted net
  income per share - net income
  $962
  $2,419Denominator:Denominator for basic net income per
  share  weighted average common shares
  12,372
  12,110Effect of dilutive stock options
  423
  228Denominator for diluted net income per
  share
  12,795
  12,338Basic net income per
  share
  $0.08
  $0.20Diluted net income per
  share
  $0.08
  $0.20

5.Comprehensive Income (Loss)

Comprehensive
income (loss) for the three-month period ended March 31, 2001 and 2000, is
detailed below:



Three
  months endedMarch 31,2001
  2000Net income
  $962
  $2,419Other comprehensive
  loss:Foreign currency translation
  adjustments, net of tax
  (1,178)
  (649)Comprehensive income
  (loss)
  $(216)
  $1,7706.Segment
Information

The
Company identifies its business segments based on management responsibility
using a combination of products and geographic factors.  The Company has three reportable
segments:  Mackie Designs, Inc.
(Mackie), its Italian subsidiary, Mackie Designs (Italy) S.p.A. (Mackie
Italy), and its U.S. subsidiary, Eastern Acoustic Works, Inc. (EAW).  The Mackie segment offers audio mixers and
other professional audio equipment.  The
Mackie Italy segment offers loudspeakers, loudspeaker components and Mackie
product offerings.  The EAW segment
offers loudspeakers targeted at the mid to high-end of the installed and
touring sound markets.  A summary of key
financial data by segment is as follows:



Mackie
  MackieItaly
  EAW
  Elimination of
  intercompany
  amounts
  TotalThree months
  ended March 31, 2001:Net sales, to external customers
  $30,379
  $18,061
  $10,186
  $
  $58,626Net sales, intersegment
  5,010
  7,413
  665
  (13,088)
  Operating income
  2,343
  488
  38
  150
  3,019Total assets
  118,102
  81,455
  36,306
  (73,283)
  162,580Three months
  ended March 31, 2000:Net sales, to external customers
  $26,865
  $18,326
  $
  $
  $45,191Net sales, intersegment
  3,723
  1,880
  
  (5,603)
  Operating income
  3,695
  1,356
  
  (637)
  4,414Total assets
  79,254
  71,120
  
  (26,940)
  123,434The
net assets of foreign operations of the Company were approximately $13.8
million at March 31, 2001.

7.    Contingency

EAW
has subrogated claims asserted against it from insurance companies who paid
claims made by EAW's landlord and other tenants in the building who were
affected by a fire started by a loaned employee in a portion of the building
occupied by EAW in 1996.  The insurance
company for the landlord alleges that EAW is liable for up to $2.1 million for
damages to the building.  The Company
believes that these losses are not attributable to it under Massachusetts
law.  The Company is vigorously
defending these claims.  The claims of
the other tenants have been covered by EAW's insurance carrier.  The ultimate resolution of this matter is
not known at this time.  No provision
has been made in the Company's consolidated financial statements related to
these claims.

8.    Financing
Arrangements

In
March 2001, the Company received approval for the restructuring of its U.S.
long-term debt and its U.S. line of credit. 
Under the terms of the amended agreements, the Company will receive
additional long-term funding of $2.5 million for the acquisition of Sydec (See
Note 9 of Notes to Condensed Consolidated Financial Statements).  Interest and principal payments on the loan
will be payable in monthly installments of $0.5 million.  The new line of credit provides up to $15.0
million of short-term borrowing subject to certain limitations and expires
April 30, 2002.

9.    Subsequent Event

In
January 2001, the Company entered into an agreement to acquire all the
outstanding shares of Sydec NV (Sydec) for a total of approximately $4.5
million in cash.  The transaction closed
in early April 2001.  Based in Belgium,
Sydec is recognized as a leading developer of products and services in the area
of embedded electronics & software, networking, digital signal processing
and Windows 95/98/NT/2000 driver and application development.

Item 2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations

General

The
following information contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 (the Act).  Forward-looking statements include, without
limitation, any statement that may predict, forecast, indicate, or imply future
results, performance, or achievements, and may contain the words believe,
anticipate, expect, estimate, project, will be, will continue,
will likely result, or words or phrases of similar meaning.  Forward-looking statements involve risks and
uncertainties, which may cause actual results to differ materially from the
forward-looking statements.

The
following discussions, including but not limited to, the sections entitled
"Cautionary Factors That May Affect Future Results" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," describe some, but not all, of the factors that could
cause the actual results to differ materially from the forward-looking
statements.  These factors include,
among others, the following: international, national and local general economic
and market conditions; the size and growth of the professional audio equipment
market; competition with other marketers, distributors and sellers of
professional audio equipment; the Company's ability to develop and introduce
new products; the Company's ability to sustain, manage or forecast its growth
and inventories; the Company's ability to integrate the operations of companies
acquired; the Company's ability to secure and protect trademarks, patents, and
other intellectual property; the performance and reliability of the Company's
products; customer service; the loss of significant customers or suppliers;
dependence on distributors; management of increased costs of freight and
transportation; the Company's ability to meet delivery deadlines; general risks
associated with doing business in foreign countries, including, without
limitation, import duties, tariffs, foreign currency fluctuations, and
political and economic instability; changes in government regulations; its
ability to attract and retain qualified employees; liability and other claims
asserted against the Company; and other factors referenced or incorporated by
reference in this report and other reports filed with the Securities and
Exchange Commission.

The risks
included above are not exhaustive. The Company operates in a very competitive
environment and new risk factors may emerge from time to time. Management
cannot predict all such risk factors, nor can it assess the impact of all such
risk factors on the Company's business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking
statements as a prediction of actual results.

The Company derives its operating revenue
from worldwide sales of digital and analog audio mixers, speakers, amplifiers
and other professional audio equipment. 
A significant portion of the Companys total sales is to customers
outside the U.S.  International sales
volumes have historically been affected by foreign currency fluctuations
relative to the U.S. Dollar.  When
weaknesses of local currencies have made the Company's products more expensive,
sales in those countries have declined.

The Company's gross margins are also
affected by its international sales. 
Typically, gross margins from products exported by Mackie are lower than
those sold in the U.S. due to discounts offered to its international
distributors.  Mackie Italy does not
offer discounts to its distributors. 
The discounts offered by Mackie are given because the international
distributors typically incur certain expenses, including technical support,
product service and in-country advertising that the Company normally incurs for
domestic sales.  The Company offered its
international distributors a weighted-average discount of approximately 4.4% in the first three months
of 2001 and 3.7% for
the corresponding period in 2000.  The
increase in discounts in 2000 relates to higher international discounts granted
by EAW.

The
Company will continue to introduce new products and product revisions as it has
in the past.  Some anticipated new
products will require the implementation of manufacturing practices for which
the Company is not familiar.  This could
result in lower margins as the Company becomes more familiar with new
manufacturing procedures.

Results of
Operations

Quarter Ended
March 31, 2001 as Compared with Quarter Ended March 31, 2000

Net
sales increased 29.7% to $58.6 million in the firstquarter of 2001 from $45.2 million in the first quarter of 2000.  Of the $13.4 million increase, $10.2 million was attributable to the
addition of EAW.  New product offerings
in the digital product families as well as the speaker product family accounted
for an additional $6.3 million of the growth. 
These increases were partially offset by an unfavorable foreign exchange
effect of $1.3 million and lower sales in the compact mixer and power amplifier
markets of $2.3 million.  Sales outside
the U.S. decreased to 36.1%
of the Companys total net sales in the first quarter of 2001 from 48.0% in the first quarter of 2000.  The decrease was due mainly to the inclusion
of sales by EAW whose sales outside of the U.S. comprised only 14.9% of its
total net sales for the first quarter of 2001.

Gross
margin decreased to 33.7%
in the first quarter of 2001 from 35.8%
in the first quarter of 2000. This decline was primarily due to reduced sales
in the higher margin compact mixer market and higher sales in the lower margin
speaker market along with an unfavorable foreign currency exchange effect of
approximately 0.8%.  These declines were
offset partially by increased sales in the high margin digital product market
and declines in the lower margin amplifier market.  Gross profit increased to $19.8 million in the first quarter of
2001 from $16.2 million in the corresponding period of 2000 for the same
reasons affecting net sales noted above.

Selling, general and administrative
expense increased to $13.8
million in the first quarter of 2001 from $9.8 million in the corresponding period of
2000.  Of the $4.0 million increase,
$2.7 million is attributable to the inclusion of EAW.  Costs related to increased headcount and the non-capitalized
portion of the Oracle implementation made up the remainder of the
increase.  These costs were partially
offset by a $0.5 million favorable impact of foreign exchange.  As a percentage of net sales, selling,
general and administrative expenses
increased to 23.5% in the first quarter of 2001 from 21.8% in the
corresponding period in 2000.  This
increase is primarily due to incremental headcount costs associated with the
build-up of corporate infrastructure that began during the second half 2000 as
well as non-capitalized costs related to the Oracle implementation.

Research and development (R&D)
expense increased to $2.9
million in the first quarter of 2001 from $1.9 million in the corresponding period of
2000.  Of the $1.0 million increase,
$0.8 million is attributable to the inclusion of EAW.  As a percentage of net sales, these expenses increased to 5.0% in the first quarter of 2001 from 4.3%
in the corresponding period of 2000. 
The increase is primarily due to EAWs higher R&D expense as a
percentage of its sales.

Interest
income decreased to $0.1
million in the first quarter of 2001 compared with $0.2 million in the first quarter of 2000 due
to a decrease in invested cash during the corresponding periods.  Interest expense increased to $1.5 million in the
first quarter of 2001 from $0.6
million in the corresponding period of 2000. 
The increase was primarily attributable to the increase in borrowings
due to the purchase of EAW and to higher levels of short-term borrowing.

Income tax expense for the first quarter
of 2001 was $0.6 million
representing an overall effective rate of 38.3% compared to $1.6 million and 39.3% for the same period of
2000, respectively.

Liquidity and
Capital Resources

During the
first three months of 2001, the Company's operating activities provided $2.3
million in cash.  Net cash provided by
operating activities was primarily attributable tonet income, decreases in inventory and other assets and an increase in taxes
payable offset partially by an increase in accounts receivable.  The increase in accounts receivable was
attributable to the increased revenues realized by the Company during the first
quarter of 2001.  The decline in
inventory is also related to the high sales volume above the Companys build
plan as well as a concerted effort by the Company to reduce its inventory
levels.  Net cash used by investing
activities totaled $2.2
million in the first three months of 2001, due principally to acquisition of property, plant and
equipment offset partially by sales of available-for-sale securities.The large increase in property, plant and equipment acquisitions over
the corresponding period in 2000 relates primarily to the capitalization of
elements of the Companys Oracle software implementation and strengthening of
its computer and communications infrastructure.Net cash provided by financing activities in the
first three months of 2001 was $0.8
million, due principally to net proceeds from short-term borrowings offset
partially by payments on long-term debt.

In
March 2001, the Company received approval for the restructuring of its U.S.
long-term debt.  Under the terms of the
amended agreement, the Company will receive additional funding of $2.5 million
for the acquisition of Sydec (See Note 9 of Notes to Condensed Consolidated
Financial Statements).  Interest and
principal payments on the loan will be payable in monthly installments of $0.5
million.  The outstanding balance on
this debt at March 31, 2001 was $27.7 million, which includes $8.7 million outstanding
on the Mackie Italy acquisition loan and $19.0 million outstanding on the EAW
acquisition loan.  The loan, which is
secured by all of the Companys assets, bears interest at the banks prime
rate, or at a specified LIBOR rate plus a specified margin, whichever the
Company chooses.

In
March 2001, the Company also received approval for the restructuring of its
U.S. line of credit.  The new line
provides up to $15.0 million of short-term borrowing subject to certain
limitations.  This line of credit is
secured by all of the Company's U.S. based assets.  At March 31, 2001 there was $11.6 million outstanding on the line
of credit, as well as a $1.5 million guarantee on debt of Mackie Italy, leaving
an available balance on the line of $1.9 million.  This credit facility expires April 30, 2002.

Under
the terms of the U.S. credit agreements, the Company must maintain certain
financial ratios and tangible net worth.The
agreements also provide, among other matters, restrictions on additional
financing, dividends, mergers, acquisitions, and an annual capital expenditure
limit of $10.0 million.  The Company was in compliance with all
covenants at March 31, 2001.

Mackie
Italy also has agreements with several banks in Italy that provide short-term
credit facilities totaling approximately $25.2 million.  At March 31, 2001, there was approximately $18.6 million outstanding
under these facilities.  The majority of
these credit facilities are secured by Mackie Italys receivables.  Interest rates on these credit facilities
range from 4.8% to 13.5%.

Mackie
Italy also has various long-term loans outstanding at March 31, 2001, totaling
approximately $6.2
million, which bear interest at rates from 6.3% to 8.9%. 
These loans, certain of which are secured by specific assets of Mackie
Italy, mature at varying dates up to 2013.

The
Company believes that its existing cash, cash equivalents and credit facilities
will be sufficient to provide adequate working capital to fund operations over
the next twelve months. However, there can be no assurance that the Company
will not be required to seek other financing or that such financing, if
required, will be available on terms satisfactory to the Company.  The Company may also utilize cash to acquire
or invest in complementary businesses or products or to obtain the right to use
complementary technologies  (see Note 9
of Notes to Condensed Consolidated Financial Statements).

Euro Conversion

European business systems are being
forced to handle currencies in a new way with the introduction of the
Euro.  Mackie Italys computer system
does not support the Euro, and reprogramming the system is not an economically
viable option.  Although the date for
mandatory Euro compliance is January 1, 2002, it is believed that the existing
system can be utilized until early in the fourth quarter 2001 after which time
the transition to the new system would need to begin.  The Company has acquired an Oracle based software system and the
related computer hardware to run a single system for all worldwide operations.  Implementation procedures related to the
system began during the third quarter of 2000. 
This system will be Euro compliant and is scheduled to be in place in
Italy during the second half of 2001. 
The cost of this system is preliminarily estimated to be in the range of
$6.0 to $8.0 million dollars.

New Accounting
Pronouncement

In
June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
133, as amended, requires that all derivative instruments be recorded on the
balance sheet at their fair value.  Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction.  This statement,
as amended, became effective for the Company on January 1, 2001.  The
adoption of SFAS No. 133 did not have an impact on the Companys consolidated
financial position or results of operations.

Item 3.  Quantitative and Qualitative Disclosures
About Market Risk

Interest Rate Risk

The Company did not have any derivative
financial instruments as of March 31, 2001. 
However, the Company is exposed to interest rate risk. The Companys
interest income and expense are most sensitive to changes in the general level
of U.S. and European interest rates.  In
this regard, changes in U.S. and European interest rates affect the interest
earned on the Companys cash equivalents as well as interest paid on debt.

At
March 31, 2001, the Company had cash and cash equivalents, and bonds of $7.3 million and short-term
borrowings of $30.9
million, all subject to variable short-term interest rates.  A hypothetical change in the interest rate
of 10% (for example from 8% to 8.8%) would not have had a material effect on
the Company's earnings for the quarter.

Foreign Currency Risk

The
Company operates foreign subsidiaries in Canada, Italy, the United Kingdom, Germany,
France, the Netherlands, China and the Czech Republic.  The Companys business and financial
condition are, therefore, sensitive to currency exchange rates or any other
restrictions imposed on their currencies. 
Sales and expenses incurred by foreign subsidiaries are denominated in
the subsidiarys local currency and translated into U.S. Dollar amounts at
average rates during the period.  The
Company does not employ any derivative based hedging strategies, however, it
may do so in the future.  The Company
also has a significant natural hedge in the form of Italian based manufacturing
and European based operating, interest and tax expenses.

Foreign
exchange rate sensitivity analysis can be quantified by estimating the impact
on the Company's earnings as a result of hypothetical changes in the value of
the U.S. Dollar, the Company's functional currency, relative to the other
currencies in which the Company transacts business.  All other things being equal, an average 10% increase in the value
of the U.S. Dollar, throughout the three-month period ended March 31, 2001,
would not have had a material effect on the Companys earnings for the quarter.

PART II.  OTHER
INFORMATION

Item 1.Legal Proceedings

EAW has subrogated claims asserted
against it from insurance companies who paid claims made by EAWs landlord and
other tenants in the building who were affected by a fire started by a loaned
employee in a portion of the building occupied by EAW in 1996.  The insurance company for the landlord alleges
that EAW is liable for up to $2.1 million for damages to the building.  The Company believes that these losses are
not attributable to it under Massachusetts law.  The Company is vigorously defending these claims.  The claims of the other tenants have been
covered by EAWs insurance carrier.  The
ultimate resolution of this matter is not known at this time.  No provision has been made in the Companys
consolidated financial statements related to these claims.

The Company is also involved in various
legal proceedings and claims that arise in the ordinary course of
business.  Management currently believes
that these matters will not have a material adverse impact on the Companys
financial position, liquidity or results of operations.

Item 2.  Changes in
Securities

None.Item 3.  Defaults upon Senior Securities

None.Item 4.  Submission of Matters to a Vote of Security
Holders

None.Item 5.  Other
Information

None.Item
6.  Exhibits and Reports on Form 8-K

None.SIGNATURESPursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

Mackie Designs Inc.(Registrant)Dated:  May 14, 2001
  By:
  /s/ William A. GarrardWilliam A. GarrardVice
  President, Finance and Chief
  Financial Officer(Principal Financial
  and Accounting Officer)