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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q/A

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2001
or

|/ / | TRANSITION 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

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MACKIE DESIGNS INC.(Exact name of registrant as specified in its charter)

|Washington(State or other jurisdiction of incorporation or organization)                   |  | 91-1432133(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------------ |  | ----------------------------------------------
|16220 Wood-Red Road, N.E., Woodinville, Washington(Address of principal executive offices) |  | 98072(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)

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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. Yes /x/  No / /

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 valueClass |  | 12,381,858Number of Shares Outstanding (as of August 7, 2001)
|------------------------------- |  | -------------------------------------------------------------

EXPLANATORY NOTE

This
Quarterly Report on Form 10-Q/A is being filed as Amendment No. 1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001, filed on August 14, 2001, to correct the effects of a clerical error related to the elimination of intercompany sales (made at cost) and cost of goods sold from our
condensed consolidated statements of operations. As a result of this clerical error, net sales and cost of goods sold as originally reported for the quarter and six months ended June 30, 2001
were overstated by approximately $2.5 million and $3.9 million, respectively. The impact of this clerical error resulted in amendments to the following sections: Item 1, Condensed
consolidated statements of operations; Item 1,

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Notes to condensed consolidated financial statements; Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations.

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MACKIE DESIGNS INC.

FORM 10-Q/A
For the quarter ended June 30, 2001

INDEX

|PART I.    |  | FINANCIAL INFORMATION                                                                             |  |   
|---------- |  | ------------------------------------------------------------------------------------------------- |  | --
|Item 1.    |  | Financial Statements (Unaudited)                                                                  |  | 3 
|           |  | Condensed consolidated balance sheetsJune 30, 2001 and December 31, 2000                         |  | 3 
|           |  | Condensed consolidated statements of operationsThree and Six months ended June 30, 2001 and 2000 |  | 4 
|           |  | Condensed consolidated statements of cash flows  Six months ended June 30, 2001 and 2000         |  | 5 
|           |  | Notes to condensed consolidated financial statements                                              |  | 6 
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations             |  | 10
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                        |  | 14
|PART II.   |  | OTHER INFORMATION                                                                                 |  |   
|Item 1.    |  | Legal Proceedings                                                                                 |  | 16
|Item 2.    |  | Changes in Securities                                                                             |  | 16
|Item 3.    |  | Defaults Upon Senior Securities                                                                   |  | 16
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                               |  | 16
|Item 5.    |  | Other Information                                                                                 |  | 16
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                  |  | 16
|SIGNATURES |  | 17                                                                                               
|EXHIBITS   |  |                                                                                                  

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MACKIE DESIGNS INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (Unaudited)

In thousands, except per share data

|                                           |                                                   | June 30, 2001              |         | December 31, 2000 |        
|------------------------------------------ | ------------------------------------------------- | -------------------------- | ------- | ----------------- | -------
|ASSETS                                     |                                                   |                            |         |                   |        
|Current assets:                            |                                                   |                            |         |                   |        
|                                           | Cash and cash equivalents                         |                            | $       | 2,787             |        
|                                           | Available-for-sale securities                     |                            |         |                  |        
|                                           | Accounts receivable, net                          |                            |         | 41,005            |        
|                                           | Inventories                                       |                            |         | 55,615            |        
|                                           | Prepaid expenses and other current assets         |                            |         | 1,673             |        
|                                           | Income taxes receivable                           |                            |         | 651               |        
|                                           | Deferred income taxes                             |                            |         | 3,015             |        
|                                           |                                                   |                            |         |                   |        
|                                           |                                                   | Total current assets       |         |                   | 104,746
|Property, plant and equipment, net         |                                                   |                            | 25,028  |                   |        
|Intangible assets, net                     |                                                   |                            | 27,416  |                   |        
|Bonds                                      |                                                   |                            | 3,646   |                   |        
|Other assets, net                          |                                                   |                            | 1,228   |                   |        
|                                           |                                                   |                            |         |                   |        
|Total assets                               |                                                   | $                          | 162,064 |                   | $      
|                                           |                                                   |                            |         |                   |        
|LIABILITIES AND SHAREHOLDERS' EQUITY       |                                                   |                            |         |                   |        
|Current liabilities:                       |                                                   |                            |         |                   |        
|                                           | Short-term borrowings                             |                            | $       | 32,164            |        
|                                           | Accounts payable                                  |                            |         | 20,515            |        
|                                           | Accrued expenses                                  |                            |         | 10,506            |        
|                                           | Income taxes payable                              |                            |         |                  |        
|                                           | Long-term debt callable under covenant provisions |                            |         | 28,819            |        
|                                           | Current portion of long-term debt                 |                            |         | 746               |        
|                                           |                                                   |                            |         |                   |        
|                                           |                                                   | Total current liabilities  |         |                   | 92,750 
|Long-term debt, excluding current portion  |                                                   |                            | 5,728   |                   |        
|Other long-term liabilities                |                                                   |                            | 3,521   |                   |        
|Deferred income taxes                      |                                                   |                            | 4,143   |                   |        
|                                           |                                                   |                            |         |                   |        
|Total liabilities                          |                                                   | $                          | 106,142 |                   | $      
|Shareholders' equity:                      |                                                   |                            |         |                   |        
|                                           | Common stock                                      |                            |         | 28,173            |        
|                                           | Retained earnings                                 |                            |         | 31,050            |        
|                                           | Accumulated other comprehensive loss              |                            |         | (3,301            | )      
|                                           |                                                   |                            |         |                   |        
|                                           |                                                   | Total shareholders' equity |         |                   | 55,922 
|                                           |                                                   |                            |         |                   |        
|Total liabilities and shareholders' equity |                                                   | $                          | 162,064 |                   | $      
|                                           |                                                   |                            |         |                   |        

See accompanying Notes to Condensed Consolidated Financial Statements

3

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

In thousands, except per share data

|                                                                                                   |                                     | Three months ended
June 30, |        | Six months ended
June 30, |       
|-------------------------------------------------------------------------------------------------- | ----------------------------------- | --------------------------- | ------ | ------------------------- | ------
|
|Net sales                                                                                          |                                     | $                           | 54,046 |                           | $     
|Cost of goods sold                                                                                 |                                     |                             | 37,915 |                           |       
|                                                                                                   |                                     |                             |        |                           |       
|Gross profit                                                                                       |                                     |                             | 16,131 |                           |       
|Operating expenses:                                                                                |                                     |                             |        |                           |       
|                                                                                                   | Selling, general and administrative |                             |        | 13,309                    |       
|                                                                                                   | Research and development            |                             |        | 3,300                     |       
|                                                                                                   |                                     |                             |        |                           |       
|                                                                                                   |                                     | Total operating expenses    |        |                           | 16,609
|                                                                                                   |                                     |                             |        |                           |       
|Operating income (loss)                                                                            |                                     |                             | (478   | )                         |       
|Interest income                                                                                    |                                     |                             | 100    |                           |       
|Interest expense                                                                                   |                                     |                             | (1,393 | )                         |       
|Other expense, net                                                                                 |                                     |                             | (790   | )                         |       
|                                                                                                   |                                     |                             |        |                           |       
|Income (loss) before income taxes                                                                  |                                     |                             | (2,561 | )                         |       
|Income tax expense (benefit)                                                                       |                                     |                             | (764   | )                         |       
|                                                                                                   |                                     |                             |        |                           |       
|Net income (loss)                                                                                  |                                     | $                           | (1,797 | )                         | $     
|                                                                                                   |                                     |                             |        |                           |       
|Net income (loss) per share:                                                                       |                                     |                             |        |                           |       
|                                                                                                   | Basic                               |                             | $      | (0.15                     | )     
|                                                                                                   | Diluted                             |                             | $      | (0.15                     | )     
|Weighted average common and potential common shares used in computing net income (loss) per share: |                                     |                             |        |                           |       
|                                                                                                   | Basic                               |                             |        | 12,373                    |       
|                                                                                                   | Diluted                             |                             |        | 12,373                    |       

See accompanying Notes to Condensed Consolidated Financial Statements.

4

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

In thousands, except per share data

|                                                 |                                                                                          | Six months ended
June 30,             |                                             
|------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------- | --------------------------------------------
|
|Operating activities                             |                                                                                          |                                       |                                             
|                                                 | Net income (loss)                                                                        |                                       | $                                           
|                                                 | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                       |                                             
|                                                 |                                                                                          | Depreciation and amortization         |                                             
|                                                 |                                                                                          | Deferred stock compensation           |                                             
|                                                 |                                                                                          | Deferred income taxes                 |                                             
|                                                 |                                                                                          |                                       | Changes in operating assets and liabilities:
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          | Cash provided by operating activities |                                             
|Investing activities                             |                                                                                          |                                       |                                             
|                                                 | Acquisition of business, net of cash acquired                                            |                                       |                                             
|                                                 | Purchases of available-for-sale securities                                               |                                       |                                             
|                                                 | Proceeds from sales of available-for-sale securities                                     |                                       |                                             
|                                                 | Proceeds from maturities of available-for-sale securities                                |                                       |                                             
|                                                 | Purchases of property, plant and equipment                                               |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          | Cash used by investing activities     |                                             
|Financing activities                             |                                                                                          |                                       |                                             
|                                                 | Proceeds from long-term debt                                                             |                                       |                                             
|                                                 | Payments on long-term debt                                                               |                                       |                                             
|                                                 | Net short-term borrowings                                                                |                                       |                                             
|                                                 | Proceeds from the exercise of stock options                                              |                                       |                                             
|                                                 |                                                                                          |                                       |                                             
|                                                 |                                                                                          | Cash provided by financing activities |                                             
|Effect of exchange rate changes on cash          |                                                                                          |                                       | 931                                         
|                                                 |                                                                                          |                                       |                                             
|Decrease in cash and cash equivalents            |                                                                                          |                                       | (1,051                                      
|Cash and cash equivalents at beginning of period |                                                                                          |                                       | 3,838                                       
|                                                 |                                                                                          |                                       |                                             
|Cash and cash equivalents at end of period       |                                                                                          | $                                     | 2,787                                       
|                                                 |                                                                                          |                                       |                                             
|Supplemental disclosures                         |                                                                                          |                                       |                                             
|Cash paid for income taxes                       |                                                                                          | $                                     | 1,116                                       
|                                                 |                                                                                          |                                       |                                             
|Cash paid for interest                           |                                                                                          | $                                     | 2,037                                       
|                                                 |                                                                                          |                                       |                                             

See accompanying Notes to Condensed Consolidated Financial Statements.

5

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MACKIE DESIGNS INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  June 30, 2001  (Unaudited)

In thousands, except per share data

1.  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 periods 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.

On
July 20, 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that all business combinations be accounted for under a single methodthe purchase method. Use of the pooling-of-interests method is no longer permitted. Statement
141 requires that the purchase method be used for business combinations initiated after June 30, 2001. Statement 142 requires that goodwill no longer be amortized to earnings, but instead be
reviewed for impairment. The amortization of goodwill ceases upon adoption of the Statement, which will be adopted by the Company on January 1, 2002. Because of the extensive effort needed to
comply with adopting statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report,
including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle. As of June 30, 2001 the Company had
$27.4 million in goodwill and intangible assets and related amortization for the six-month period then ended of $0.9 million.

2.  Acquisition

In April 2001, the Company acquired 100% of the capital stock of Sydec N.V. ("Sydec"). Based in Belgium, Sydec is a developer of products and services
in the area of embedded electronics & software, networking, digital signal processing and Windows 95/98/NT/2000 driver applications. The acquisition was accounted for under the
purchase method of accounting. The aggregate purchase price, plus related acquisition costs, was approximately $4.4 million. The excess of the purchase price over the fair value of net tangible
assets acquired approximating $4.6 million, is included in intangible assets. A total of $1.0 million of the purchase consideration was specifically allocated to developed technology.
The remaining $3.6 million is goodwill. Goodwill is being amortized on the straight-line method over

6

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10 years, while the developed technology is being amortized on the straight-line method over 5 years. The Company is still refining its purchase price allocation and there
could be some adjustments in the future. The results of Sydec have been included in the Company's consolidated results of operations from the date of acquisition.

The
following table presents unaudited pro forma consolidated financial information for the six-month periods ended June 30, 2001 and 2000 as if the acquisition of
Sydec had occurred on January 1 of those years:

In thousands, except per share data

|                                |  | Six months ended June 30,
|------------------------------- |  | -------------------------
|
|Revenue                         |  | $                        
|Net income (loss)               |  | $                        
|Diluted income (loss) per share |  | $                        

The
unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the
acquisition taken place on the basis assumed above. In addition, the pro forma results are not intended to be a projection of the future results and do not reflect any synergies that might have been
achieved from the combined operations.

3.  Inventories

Inventories consisted of the following:

June 30,
2001

December 31,
2000Raw materials

$
23,195

$
31,579Work in process


4,827


4,831Finished goods


27,593


27,061$
55,615

$
63,471


4.  Intangible assets

Intangible assets consist of the following:

June 30,
2001

December 31,
2000Goodwill

$
20,827

$
17,974Developed technology


6,158


5,200Assembled workforce


1,660


1,660Trademark


1,380


1,38030,025


26,214Less accumulated amortization


2,609


1,795$
27,416

$
24,419


7

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5.  Financing

The Company has a U.S. based revolving note related to the acquisitions of Mackie Designs (Italy) S.p.A. ("Mackie Italy") and Eastern Acoustic
Works, Inc. ("EAW"). At June 30, 2001 there was $28.8 million outstanding on this note. Of this balance, $6.0 million is scheduled for payment within twelve months of the
balance sheet date. This credit agreement requires the Company to maintain certain financial ratios and tangible net worth. The agreement also provides, among other matters, restrictions on additional
financing, dividends, mergers, acquisitions, and an annual capital expenditure limit of $10.0 million.

At
June 30, 2001, the Company was out of compliance with certain of its financial covenants. The Company is currently in negotiations with its U.S. lender to obtain a waiver
for this non-compliance and/or a restructuring of the covenants. If the lender does not waive this failure to comply and/or restructure the covenants, it could declare an event of default,
which would allow the lender to accelerate payment of all amounts due under the U.S. based revolving note and line of credit. The balances outstanding on the revolving note and the line of credit at
June 30, 2001 were $28.8 million and $11.3 million, respectively. This noncompliance may also result in higher interest costs. The Company is highly leveraged and would be unable
to pay the accelerated amounts that would become immediately payable if a default is declared. As a result of this non-compliance, the entire U.S. based revolving note as of
June 30, 2001 ($28.8 million) that is potentially due within one year, has been classified as a current liability in the balance sheet under the caption, "Long-term debt
callable under covenant provisions".

6.  Net Income (Loss) per Share

Basic net income (loss) per share is based on the weighted-average number of common shares outstanding for the period. Diluted net income (loss) 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 (loss) per share
calculations exclude the effect of unexercised stock options representing the potential rights to 4,541,305 and 300,000 shares for the second quarters of 2001 and 2000, respectively, as well as
4,541,305 and 975,175 shares for the first six months of 2001 and 2000, respectively, as including the effect would be antidilutive. The following schedule represents a reconciliation of the
numerators and denominators of basic and diluted net income (loss) per share calculations.

|                                    |                                                                                  | Three months ended
June 30, |       | Six months ended
June 30,
|----------------------------------- | -------------------------------------------------------------------------------- | --------------------------- | ----- | -------------------------
|
|Numerator:                          |                                                                                  |                             |       |                          
|                                    | Numerator for basic and diluted net income (loss) per sharenet income (loss)    |                             | $     | (1,797                   
|                                    |                                                                                  |                             |       |                          
|Denominator:                        |                                                                                  |                             |       |                          
|                                    | Denominator for basic net income (loss) per shareweighted average common shares |                             |       | 12,373                   
|                                    | Effect of dilutive stock options                                                 |                             |       |                         
|                                    |                                                                                  |                             |       |                          
|                                    | Denominator for diluted net income (loss) per share                              |                             |       | 12,373                   
|                                    |                                                                                  |                             |       |                          
|Basic net income (loss) per share   |                                                                                  | $                           | (0.15 | )                        
|                                    |                                                                                  |                             |       |                          
|Diluted net income (loss) per share |                                                                                  | $                           | (0.15 | )                        
|                                    |                                                                                  |                             |       |                          

8

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7.  Comprehensive Income (Loss)

Comprehensive income (loss) for the three and six month periods ended June 30, 2001 and 2000, is detailed below:

|                                   |                                          | Three months ended
June 30, |        | Six months ended
June 30, |  
|---------------------------------- | ---------------------------------------- | --------------------------- | ------ | ------------------------- | -
|
|Net income (loss)                  |                                          | $                           | (1,797 | )                         | $
|Other comprehensive income (loss): |                                          |                             |        |                           |  
|                                   | Foreign currency translation adjustments |                             |        | (288                      | )
|                                   |                                          |                             |        |                           |  
|                                   | Comprehensive income (loss)              |                             | $      | (2,085                    | )
|                                   |                                          |                             |        |                           |  

8.  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 Italy, and its U.S. subsidiary, 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 |   | Mackie
Italy |   | EAW |        | Elimination of
intercompany
amounts |   | Total  |  
|--------------------------------- | -------------------------------- | ------ | - | ------------ | - | --- | ------ | ----------------------------------- | - | ------ | -
|Three months ended June 30, 2001: |                                  |        |   |              |   |     |        |                                     |   |        |  
|                                  | Net sales, to external customers |        | $ | 26,739       |   | $   | 18,753 |                                     | $ | 8,554  |  
|                                  | Net sales, intersegment          |        |   | 4,016        |   |     | 4,974  |                                     |   | 2,590  |  
|                                  | Operating income (loss)          |        |   | (612         | ) |     | (548   | )                                   |   | 314    |  
|                                  | Total assets                     |        |   | 122,202      |   |     | 77,619 |                                     |   | 36,055 |  
|Three months ended June 30, 2000: |                                  |        |   |              |   |     |        |                                     |   |        |  
|                                  | Net sales, to external customers |        | $ | 27,813       |   | $   | 17,741 |                                     | $ | 11,303 |  
|                                  | Net sales, intersegment          |        |   | 3,344        |   |     | 7,306  |                                     |   | 567    |  
|                                  | Operating income (loss)          |        |   | 3,723        |   |     | 1,737  |                                     |   | (136   | )
|                                  | Total assets                     |        |   | 106,768      |   |     | 74,359 |                                     |   | 27,605 |  
|Six months ended June 30, 2001:   |                                  |        |   |              |   |     |        |                                     |   |        |  
|                                  | Net sales, to external customers |        | $ | 57,117       |   | $   | 36,814 |                                     | $ | 17,322 |  
|                                  | Net sales, intersegment          |        |   | 9,026        |   |     | 12,387 |                                     |   | 4,673  |  
|                                  | Operating income (loss)          |        |   | 1,730        |   |     | (60    | )                                   |   | 352    |  
|Six months ended June 30, 2000:   |                                  |        |   |              |   |     |        |                                     |   |        |  
|                                  | Net sales, to external customers |        | $ | 55,275       |   | $   | 35,470 |                                     | $ | 11,303 |  
|                                  | Net sales, intersegment          |        |   | 7,067        |   |     | 9,186  |                                     |   | 567    |  
|                                  | Operating income (loss)          |        |   | 7,418        |   |     | 3,093  |                                     |   | (136   | )

The
net assets of foreign operations of the Company were approximately $12.5 million at June 30, 2001.

9

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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 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
"Quantitative and Qualitative Disclosures About Market Risk" 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 U.S. and foreign government regulations; the Company's 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 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

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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 June 30, 2001 as Compared with Quarter Ended June 30, 2000

Net sales decreased 4.9% to $54.0 million in the second quarter of 2001 from $56.9 million in the second quarter of 2000. The decline was caused
by lower sales in the 8.Bus, mixer, power amplifier, and digital markets of $4.7 million, an unfavorable foreign exchange effect of $1.9 million, and increased sales discounts of
$0.4 million. These declines were partially offset by $4.9 million in sales related to new product offerings in the speaker product family. Sales outside the U.S. increased to 46.3% of
the Company's total net sales in the second quarter of 2001 from 40.0% in the second quarter of 2000.

Gross
margin decreased to 29.8% in the second quarter of 2001 from 37.4% in the second quarter of 2000. This decline was primarily due to a partial shift in product mix from higher
margin compact mixer and digital products to lower margin speaker products along with a general increase in material and labor costs across multiple product lines. Gross margin was also reduced by
increased freight accommodations and sales discounts, as well as an unfavorable foreign currency exchange effect. Gross
profit decreased to $16.1 million in the second quarter of 2001 from $21.3 million in the corresponding period of 2000 for the same reasons affecting net sales and gross margin noted
above.

Selling,
general and administrative expense decreased slightly to $13.3 million in the second quarter of 2001 from $13.6 million in the corresponding period of 2000. As
a percentage of net sales, selling, general and administrative expenses increased slightly to 24.6% in the second quarter of 2001 from 24.0% in the corresponding period in 2000.

Research
and development (R&D) expense increased to $3.3 million in the second quarter of 2001 from $2.8 million in the corresponding period of 2000. This
$0.5 million increase was primarily due to the inclusion of Sydec with R&D expense of $0.7 in the second quarter of 2001. As a percentage of net sales, these expenses increased to 6.1% in the
second quarter of 2001 from 4.9% in the corresponding period of 2000 due to the inclusion of Sydec, which is principally an R&D operation.

Interest
income was unchanged in the second quarter of 2001 compared to the second quarter of 2000 at $0.1 million. Interest expense increased to $1.4 million in the
second quarter of 2001 from $1.1 million in the corresponding period of 2000. The increase was primarily attributable to borrowings for the acquisition of Sydec and to higher levels of
short-term borrowing.

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Income
tax benefit for the second quarter of 2001 was $0.8 million representing an overall effective tax benefit of 29.8% compared to income tax of $1.6 million and an
effective tax rate of 41.8% for the same period of 2000, respectively. Fluctuations in the rate are primarily attributable to foreign operations.

Six Months Ended June 30, 2001 as Compared with Six Months Ended June 30, 2000

Net sales increased 9.0% to $111.3 million in the first six months of 2001 from $102.0 million in the first six months of 2000. Of the
$9.2 million increase, $6.0 million was due to the inclusion of a full six months of EAW in 2001 compared to three months for 2000. New product offerings in the digital and speaker
product families accounted for an additional $9.2 million of the growth. These increases were partially offset by lower sales in the compact mixer and power amplifier markets of
$5.3 million and an unfavorable foreign exchange effect of $2.2 million. Sales outside the U.S. decreased slightly to 42.9% of the Company's total net sales in the first six months of
2001 from 43.4% in the first six months of 2000.

Gross
margin decreased to 32.3% in the first six months of 2001 from 36.7% in the first six months of 2000. This decline was primarily due to a partial shift in product mix from
higher margin compact mixer and digital products to lower margin speaker products along with a general increase in material and labor costs across multiple product lines. Gross margin was also reduced
by increased freight accommodations and sales discounts, as well as an unfavorable foreign currency exchange effect. These declines were partially offset by increased sales in the
high-margin digital product market. Gross profit decreased to $35.9 million in the first six months of 2001 from $37.5 million in the corresponding period of 2000 for the
same reasons affecting net sales and gross margin noted above.

Selling,
general and administrative expense increased to $27.1 million in the first six months of 2001 from $23.5 million in the corresponding period of 2000. Of the
$3.6 million increase, $2.7 million was due to the inclusion of six months of EAW costs in 2001 compared to three months in 2000. 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 $0.7 million favorable impact of foreign exchange.
As a percentage of net sales, selling, general and administrative expenses increased to 24.4% in the first six months of 2001 from 23.0% in the corresponding period in 2000.

Research
and development (R&D) expense increased to $6.2 million in the first six months of 2001 from $4.7 million in the corresponding period of 2000. Of this
$1.5 million increase, $0.8 million was due to the inclusion of six months of EAW costs in 2001 compared to three months in 2000. The inclusion of Sydec in the second quarter of 2001
caused the remainder of the $0.7 million increase. As a
percentage of net sales, these expenses increased to 5.6% in the first six months of 2001 from 4.6% in the corresponding period of 2000 due to the inclusion of Sydec, which is principally an R&D
operation.

Interest
income decreased slightly to $0.2 million in the first six months of 2001 compared with $0.3 million in the first six months of 2000. Interest expense increased
to $2.9 million in the first six months of 2001 from $1.8 million in the corresponding period of 2000. The increase was primarily attributable to the increase in borrowings due to the
acquisitions of EAW and Sydec and to higher levels of short-term borrowing.

Income
tax benefit for the first six months of 2001 was $0.2 million representing an overall effective tax benefit of 16.6% compared to income tax of $3.2 million and an
effective tax rate of 40.5% for the same period of 2000, respectively. Fluctuations in the rate are primarily attributable to foreign operations.

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Liquidity and Capital Resources

During the first six months of 2001, the Company's operating activities provided $4.3 million in cash. Net cash provided by operating activities was
primarily attributable to a decrease in inventory and an increase in accounts payable and accrued expenses offset partially by a net loss, an increase in accounts receivable and a decrease in income
taxes. The decline in inventory is due to a concerted effort by the Company to reduce its inventory levels. Net cash used by investing activities totaled $9.0 million in the first six months of
2001, due to the purchase of Sydec and the 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 improvements to
its computer and communications infrastructure. Net cash provided by financing activities in the first six months of 2001 was $2.7 million due to net proceeds from short-term and
long-term borrowings offset partially by payments on long-term debt.

The
Company's line of credit agreement 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 June 30, 2001 there was $11.3 million outstanding on the line of credit, as well as a $1.4 million guarantee on debt of Mackie Italy, leaving
an available balance on the line of $2.3 million. This credit facility expires April 30, 2002. While management expects renewal of this facility in the due course of business, it to is
subject to the covenant issues described below.

The
Company also has a U.S. based revolving note related to the acquisitions of Mackie Italy and EAW. This note, which is secured by all of the Company's U.S. based assets, bears
interest at the bank's prime rate, or at a specified LIBOR rate plus a specified margin, whichever the Company chooses. At June 30, 2001 there was $28.8 million outstanding on this note.
Of this balance, $6.0 million is scheduled for payment within twelve months of the balance sheet date.

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. At June 30, 2001, the Company was out of compliance with
certain of its financial covenants. The Company is currently in negotiations with its U.S. lender to obtain a waiver for this non-compliance and/or a restructuring of the covenants. If the
lender does not waive this failure to comply and/or restructure the covenants, it could declare an event of default, which would allow the lender to accelerate payment of all amounts due under the
U.S. based revolving note and line of credit. The balances outstanding on the revolving note and the line of credit at June 30, 2001 were $28.8 million and $11.3 million,
respectively. This noncompliance may also result in higher interest costs. The Company is highly leveraged and would be unable to pay the accelerated amounts that would become immediately payable if a
default is declared. As a result of this non-compliance, the entire U.S. based revolving note as of June 30, 2001 ($28.8 million) that is potentially due within one year, has
been classified as a current liability in the balance sheet under the caption, "Long-term debt callable under covenant provisions".

The
Company is taking various cost control measures including layoffs, office closures, reducing capital expenditures and increasing management controls over expenditures in order to
bring the Company into compliance with the covenants in the future. As part of the waiver negotiations, the Company is pursuing a restructuring of the existing credit agreements. The Company is also
evaluating a variety of alternative capital sources as part of an ongoing plan to enhance its capital structure.

Mackie
Italy also has agreements with several banks in Italy that provide short-term credit facilities totaling approximately $25.2 million. At June 30,
2001, there was approximately $18.8 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%.

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Provided the Company restructures and/or obtains a waiver with respect to its U.S. based debt, it 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 receive a waiver, restructure its debt or not be
required to seek other financing or that such financing, if required, will be available on terms satisfactory to the Company. It is the Company's belief that a waiver and/or restructuring of the
covenants will occur; however, if the debt is called and the Company is unable to obtain alternate financing, it may have to modify its current operations, liquidate assets or take other measures to
continue normal operations.

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 $7.0 to $9.0 million dollars.

New Accounting Pronouncements

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.

On
July 20, 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that all business combinations be accounted for under a single methodthe purchase method. Use of the pooling-of-interests method is no longer permitted. Statement
141 requires that the purchase method be used for business combinations initiated after June 30, 2001. Statement 142 requires that goodwill no longer be amortized to earnings, but instead be
reviewed for impairment. The amortization of goodwill ceases upon adoption of the Statement, which will be adopted by the Company on January 1, 2002. Because of the extensive effort needed to
comply with adopting statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report,
including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle. As of June 30, 2001 the Company had
$27.4 million in goodwill and intangible assets and related amortization for the six-month period then ended of $0.9 million.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

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,

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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
June 30, 2001, the Company had cash and cash equivalents, and bonds of $6.4 million and short-term borrowings of $61.7 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%) for the six month period ended June 30, 2001 would have increased
interest expense by $0.5 million.

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 foreign 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 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 six month period ended June 30, 2001, would not have had a material effect on the Company's loss for the six month period.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is 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

At the Annual Meeting of Shareholders held on May 16, 2001, the following proposal was adopted by the votes indicated:



|                  |  | Number of Shares For |  | Number of Shares Withheld
|----------------- |  | -------------------- |  | -------------------------
|Gregory C. Mackie |  | 10,346,857           |  | 104,373                  
|Gregory W. Riker  |  | 10,450,080           |  | 1,150                    
|James T. Engen    |  | 10,346,857           |  | 104,373                  

Item 5. Other Information



Item 6. Exhibits and Reports on Form 8-K

None.

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SIGNATURES

Pursuant 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: September 14, 2001 |  | By: | /s/WILLIAM A. GARRARDWilliam A. Garrard Vice President, Finance and Chief Financial Officer(Principal Financial and Accounting Officer)

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