<PAGE>

================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ------------

                                    FORM 10-K

                                   ------------

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

COMMISSION FILE   REGISTRANT, STATE OF INCORPORATION OR     I.R.S. EMPLOYER
   NUMBER        FORMATION, ADDRESS AND TELEPHONE NUMBER   IDENTIFICATION NO.
---------------  ---------------------------------------   ------------------

333-115009             TELEX COMMUNICATIONS                    20-0406594
                       INTERMEDIATE HOLDINGS, LLC
                       (FORMED IN DELAWARE)
                       12000 PORTLAND AVENUE SOUTH
                       BURNSVILLE, MINNESOTA  55337
                       TELEPHONE: (952) 884-4051

333-112819             TELEX COMMUNICATIONS, INC.              11-3707780
                       (INCORPORATED IN DELAWARE)
                       12000 PORTLAND AVENUE SOUTH
                       BURNSVILLE, MINNESOTA  55337
                       TELEPHONE: (952) 884-4051

        Securities registered pursuant to Section 12(b) of the Act: NONE

        Securities registered pursuant to Section 12(g) of the Act: NONE

      Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

      Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [ ]

      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 [ ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):

Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]

      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

      The common stock of each registrant is not publicly traded. Therefore, the
aggregate market value is not readily determinable.

      As of February 28, 2006, Telex Communications, Inc. had outstanding 500
shares of Common Stock, $0.01 par value, all of which are owned beneficially and
of record by Telex Communications Intermediate Holdings, LLC. Telex
Communications Intermediate Holdings, LLC has one member interest outstanding,
which is owned by Telex Communications Holdings, Inc.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE
      Telex Communications, Inc. and Telex Communications Intermediate Holdings,
LLC meet the conditions set forth in General Instruction (I)(1)(a) and (b) of
the Form 10-K and are therefore filing this Form 10-K with the reduced
disclosure format.

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>           <C>                                                               <C>
PART I

  ITEM 1.     BUSINESS                                                          3

  ITEM 1A.    RISK FACTORS                                                      10

  ITEM 1B.    UNRESOLVED STAFF COMMENTS                                         12

  ITEM 2.     PROPERTIES                                                        12

  ITEM 3.     LEGAL PROCEEDINGS                                                 13

  ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               13

PART II

  ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED
              STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES    14

  ITEM 6.     SELECTED FINANCIAL DATA                                           14

  ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS                                         16

  ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        26

  ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                       27

  ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE                                          27

  ITEM 9A.    CONTROLS AND PROCEDURES                                           27

  ITEM 9B.    OTHER INFORMATION                                                 27

PART III

  ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                28

  ITEM 11.    EXECUTIVE COMPENSATION                                            30

  ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT AND RELATED STOCKHOLDER MATTERS                        33

  ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    35

  ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES                            35

PART IV

  ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                        36
</TABLE>

                                       2
<PAGE>

FILING FORMAT

This Annual Report on Form 10-K is a combined report being filed by two
registrants: Telex Communications Intermediate Holdings, LLC ("Intermediate")
and Telex Communications, Inc., a wholly-owned subsidiary of Intermediate
("Telex").

      Except as otherwise indicated by the context, references in this report to
"Successor," "company," "we," "our," or "us," and similar expressions, include
Intermediate, its subsidiary, Telex, and its predecessor companies. With regard
to events occurring (and financial information related to) periods prior to
November 2003, the terms refer to Telex Communications Holdings, Inc., the
predecessor to Intermediate. We operate on a December fiscal year-end.
Intermediate is a holding company whose assets consist primarily of its
investment in Telex. Telex is our operating company.

                                     PART I

ITEM 1. BUSINESS

OVERVIEW

      We are a worldwide industry leader in the design, manufacture and
marketing of audio and communication products and systems to commercial,
professional and industrial customers. Our product lines include sophisticated
loudspeaker systems, wired and wireless intercom systems, mixing consoles,
digital audio duplication products, amplifiers, wired and wireless microphones,
military and aviation products, land mobile communications systems, wireless
assistive listening systems and other related products. We market over 30
product lines that span the professional audio and communication sectors. While
we face competition in many of our business lines, we focus on sectors in which
we believe we can be market leaders. As a result, we believe we have developed
solid brand value, which has become a significant barrier to competition.

      We, through our predecessors, have been in operation since 1927 and
currently market our products in over 80 countries worldwide. By leveraging our
strong brand names, including Telex(R), Electro-Voice(R), RTS(TM), Dynacord(R),
Midas(R) and Klark-Teknik(R), and developing leading edge technologies, we have
created an international reputation for quality, reliability, innovative design
and overall value. Since our founding, we have developed a number of
technological innovations, which are now commonly used throughout the industry,
and we have received numerous industry awards, including Emmy Awards from the
National Academy of Television Arts and Sciences and other industry awards from
numerous trade associations and publications.

      Telex is a wholly-owned subsidiary of Intermediate. Intermediate is a
wholly-owned subsidiary of Telex Communications Holdings, Inc. ("Old Telex" or
"Predecessor"), which is not a registrant. Telex and Intermediate were formed in
connection with the November 19, 2003 refinancing of Old Telex's debt
obligations and related corporate restructuring.

      Immediately prior to the closing of the November 2003 restructuring, Old
Telex transferred to Telex substantially all of Old Telex's assets and
liabilities except, principally, its 13% Senior Subordinated Discount Notes due
2006, in exchange for Telex's common stock. Old Telex then contributed Telex's
common stock to Intermediate, a new limited liability company, in exchange for
Intermediate's sole membership interest. Telex became a wholly-owned subsidiary
of Intermediate and Intermediate became a wholly-owned subsidiary of Old Telex.
The subsidiaries of Old Telex became Telex's subsidiaries as part of the asset
transfer. Upon the closing of the restructuring, Old Telex changed its name to
"Telex Communications Holdings, Inc." and Telex was renamed "Telex
Communications, Inc."

      Intermediate and Telex were formed on October 21, 2003, with principal
executive offices located at 12000 Portland Avenue South, Burnsville, Minnesota
55337. Our telephone number is (952) 884-4051.

      CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

      This report contains forward-looking statements, such as statements that
relate to our business objectives, plans, strategies, and expectations or
describe the potential markets for our products, that are based on management's
current opinions, beliefs, or expectations as to future results or future
events. The words "believe," "anticipate," "project," "plan," "expect,"
"intend," "will likely result," and similar expressions identify forward-looking
statements. While made in good faith and with a reasonable basis on information
currently available to management, we cannot assure you that such opinions,
beliefs, or expectations will be achieved or accomplished. Various factors,
including those described in "Item 1B. Risk Factors" and elsewhere in this
report, could cause actual

                                       3
<PAGE>

results and events to vary significantly from those expressed in any
forward-looking statement. Such types of statements are intended to be
"forward-looking statements" for purposes of Section 27A of the Securities Act
and Section 21E of the Securities Exchange Act and should be read in conjunction
with the cautionary statements set forth under the caption "Item 1B. Risk
Factors." We are under no obligation to update any forward-looking statements to
the extent we become aware that they will not be achieved for any reason.

PRODUCTS AND SERVICES

      We have two business segments: Professional Audio and Advanced
Communication Technologies (formerly known as Audio and Wireless Technology).
Financial information for our two business segments for the years ended December
31, 2005 and 2004, the one-month period ended December 31, 2003 and the
eleven-month period ended November 30, 2003 is set forth in Note 12 to our
consolidated financial statements included elsewhere in this report.

PROFESSIONAL AUDIO

      Professional Audio consists of five lines of business within the overall
professional audio market:

            -     Fixed Installation, or permanently installed sound systems;

            -     Professional Music Retail, or sound products used by
                  professional musicians and sold principally through retail
                  channels;

            -     Concert/Recording/Broadcast, or sound products used in
                  professional concerts, recording projects, and radio and
                  television broadcast;

            -     Professional Communications Systems, including advanced
                  digital matrix intercoms used by broadcasters (including all
                  major television networks) to control production
                  communications; intercoms, headsets and wireless
                  communications systems used by professional, college, and high
                  school football teams and stadiums and other professional and
                  school sports teams as well as by utilities, aerospace and
                  industrial organizations.

            -     Microphones, wired and wireless, used in the education,
                  sports, broadcast, music and religious markets.

      Fixed Installation. Fixed Installation encompasses permanently installed
sound systems in airports, sports arenas, theaters, concert halls, cinemas,
stadiums, convention centers, houses of worship and other venues where music or
speech is amplified. The market for Fixed Installation products is generally
driven by new construction and upgrades of existing installations. We believe
that more dynamic sound and music, requiring more sophisticated audio products,
are increasingly being used in cinemas, religious services and sporting events.
For example, most professional sporting events now include musical performances
that require increased sound quality and amplification. We believe that
audiences have become increasingly accustomed to improved sound quality while
event producers and live musicians have become accustomed to more advanced
technology. Abroad, the development of infrastructure and the upgrading of
existing facilities, such as auditoriums, public places, theaters and sports
facilities, in emerging economies is also a source of increasing demand.

      The Fixed Installation line of business serves venues with widely varying
requirements, ranging from concert halls and theatres, which need the highest
quality of fidelity output and broad frequency response, to mass transit
facilities and office buildings, where sound communication is important but
full-range output is not needed. The products sold for each type of installation
vary widely in characteristics and price and are sold generally through
professional audio contractors and distributors.

      Professional Music Retail. Professional Music Retail products are used
mainly by musicians for live performance, recording, and reproduction of
recording material and are generally sold directly to end users through
specialized retail stores that market to musicians, bands, and local
entertainment venues. Our Professional Music Retail products appeal to
performers seeking an improved level of sound system performance, reliability
and quality. Demand for Professional Music Retail products is driven primarily
by an increase in both the number of new users and the number of users upgrading
to take advantage of enhanced sound technology. Sales are also driven by demand
for smaller and lighter weight products that are easier to use and transport.

      Concert/Recording/Broadcast. Our Concert/Recording/Broadcast lines of
business include sound systems for musical concerts and theater productions,
sound recording, and radio and television broadcast and production. Sales of
these products are generally made through distributors and retailers or directly
to touring companies. We believe that sales in the Concert/Recording/Broadcast
line of business to established, high-profile touring companies influence and
stimulate purchases of products by smaller groups and lesser known professional
musicians.

                                       4
<PAGE>

      A combination of the factors that determine growth in the Fixed
Installation and Professional Music Retail lines of business drive demand,
including technological improvement and an increase in product applications. For
example, most professional sporting events now include musical performances that
require increased sound quality and amplification. The demand for smaller,
lighter weight products is another driver of growth as such products reduce
operating costs for touring applications. In addition, an increase in the
popularity of remote electronic news gathering is driving the demand for wired
and wireless microphones as well as portable broadcast mixers.

      Professional Communications Systems. We produce a broad line of
professional communications equipment for end markets such as sports events,
news broadcasting, utilities, military, aerospace, and state and local
government agencies. Our smallest system, the Telex(R) Audiocom(R) modular
intercom system, is used by theaters, small sporting arenas, network affiliates,
and independent cable channels for their communications needs. Typically, these
systems are used to link 20 to 30 people so that they can communicate during an
event or performance. Our middle market offering, the RTS(TM) TW intercom
system, is used by larger broadcast network affiliates, larger sporting venues,
and production studios. This system is also used in broadcast trucks as a
remote, portable studio for news gathering or sporting events and typically
provides communications links for 50 to 60 people at a time. Our high-end
product, the RTS(TM) ADAM(TM), Advanced Digital Audio Matrix intercom system, is
used by the major networks in order to cover large events such as the Olympics
and the Super Bowl.

      We also provide wired and wireless communication systems and related
components to professional, college, and high school football teams. In 1996, we
began providing professional, college, and high school coaches with an encrypted
wireless intercom system, which allows the head coach to communicate
confidentially with other team personnel on the sidelines and in the booths
above the fields.

      Our wired and wireless intercom products are also used in communication
systems during refueling of nuclear power plants to provide increased efficiency
and safety and in simulators and training systems for military and aerospace
applications.

      Microphones. Our wired and wireless microphones serve the professional
needs of sound contractors, entertainers, and speakers and are used in a variety
of settings such as theaters, stadiums, and hotels. We believe that we offer one
of the industry's most extensive lines of wireless microphone, receiver, and
transmitter systems, including a wide variety of handheld, lapel, and guitar
microphone options. We offer microphones, including those with noise canceling
features, with a wide variety of directional patterns to meet the needs for
general sound reinforcement as well as the specific needs of users such as
drummers, vocalists, and public address announcers. Many of these lines
incorporate our Posi-Phase(TM) true diversity antenna circuitry, which produces
a stronger signal for higher quality sound over a longer distance without the
signal dropouts or switching noise common in other systems. Some of our wireless
microphones also incorporate an advanced proprietary multi-crystal tuning
system, Clean Scan(TM), that allows any specific frequency to be used within the
operating limits of the receiver. The crystal control and associated radio
frequency filtering provide superior radio frequency performance and maximum
protection from interference.

ADVANCED COMMUNICATION TECHNOLOGIES (FORMERLY KNOWN AS AUDIO AND WIRELESS
TECHNOLOGY)

      Our Advanced Communication Technologies segment consists of five
businesses targeting the following markets:

            -     Digital Audio Duplication products for the religious,
                  education and enterprise markets;

            -     Military/Aviation Communications audio products for the
                  military and aviation markets;

            -     Antenna products for original equipment manufacturers (OEMs)
                  of wireless communications devices;

            -     Land Mobile and Dispatch communication products for the public
                  safety, military and industrial markets; and

            -     Audio and Wireless Education products for classroom and
                  computer based education markets.

      Digital Audio Duplication. We offer CD and DVD duplicators primarily for
copying the spoken word in religious, education, training/seminar and enterprise
markets. The SpinWise(TM) CD Duplicator, available in desktop, tower, and rack
mount configurations, operates at 52x recording speed, can make one to seven
copies at once, and a robotic unit has a 50-disc capacity. Our cassette
duplicators and copiers primarily serve the same markets as our CD/DVD products.
We sell a line of high-speed audiocassette duplicators designed for
"in-cassette" copying of standard audiocassette tapes. In addition, we produce a
unique cassette player sold under an exclusive contract to the Library of
Congress that is used in its Talking Book program for the blind and physically


                                       5
<PAGE>
handicapped. The Talking Book Players are designed to incorporate special
features for ease of use and to facilitate playing the books back at different
speeds. A unique tape format ensures that these tapes cannot be played on
standard equipment. Talking Book players have also been sold internationally
under similar programs in Canada, New Zealand, and Australia. A Talking Book
line of products in digital format has many of the same features and benefits as
the tape format with the added advantage of instant access to specific pages and
chapters. This line includes the Scholar(R), EzDaisy(R) and the Professor(TM)
disc-based Talking Book products.

      Military/Aviation Communications. We design, manufacture, and market a
broad line of Federal Aviation Administration ("FAA") certified aviation
communication headsets, headphones, microphones, and intercoms to major
commercial and commuter airlines, and private pilots. Our products hold Type
Certification with major airframe manufacturers such as Boeing, Airbus, Cessna,
and Gulfstream. Our advanced digital Active Noise Reduction technology provides
us with a competitive advantage in high noise environments. In addition, we
design, manufacture, and market military certified microphones, earphones,
headsets, and acoustic components to military and OEM customers for critical
military, security, and heavy industrial communication applications.

      Antenna. We have been designing, manufacturing, and marketing antenna
products for the past 45 years and are a leading manufacturer of antennas for
Wi-Fi (802.11b, 802.11a, 802.11g) and other microwave and satellite frequencies.
We supply antenna products to numerous market-leading OEMs including Cisco
Systems, Proxim, General Electric, Qualcomm, and General Dynamics, as well as to
government and military customers.

      Land Mobile and Dispatch Communications. We produce a broad line of
communication products such as headsets, ear-microphones, remote control radio
dispatch consoles, voice-over-internet protocol ("VoIP") dispatch consoles,
audio surveillance products, and microphones for the citizens' band radio
market. Primary customers include federal, state, and local public safety
agencies, military organizations, and other markets such as utilities,
railroads, and airlines. We believe we have an established reputation within
these markets for providing high quality, reliable communication products, which
is a key requirement for users.

      Audio and Wireless Education Products. We produce and distribute a broad
line of communication products that enhance student and teacher performance in
the classroom. Telex has developed a line of products that ensure clear,
balanced sound distribution throughout the classroom environment where there are
often high levels of background noise and poor building acoustics. For
individual students with mild to profound hearing loss, Telex has developed a
number of wireless assistive listening systems, such as personal assistive
listening devices that ensure that these students hear the instructor clearly.
The advancement of technology has brought audiocassettes, digital CDs, DVDs and
interactive computer programs into the classroom, requiring students to interact
with multiple educational media and audio sources. Through innovation Telex has
developed headsets and headphones that keep pace with technology, but remain
practical for classroom use. We produce high quality listening centers, stereo
and mono-headphones and a line of interactive headsets for use with software
applications. All of these products were designed to withstand the normal "wear
and tear" of daily use in the classroom.

INTERNATIONAL OPERATIONS

      We market our products in over 80 countries worldwide, which reduces our
dependence on any single geographic market. We have substantial assets located
outside of the United States and a substantial portion of our sales and earnings
are attributable to operations conducted abroad. For the twelve months ended
December 31, 2005, approximately 50% of our net revenue consisted of sales made
outside the United States, predominantly in Western Europe and Asia. Unlike many
of our competitors, which use independent foreign distributors that generally
sell a variety of competing products, the majority of our foreign sales efforts
are conducted through our foreign distribution subsidiaries. Although our
international operations have generally been profitable in the past, our efforts
to increase international sales may be adversely affected by, among other
things, changes in foreign import restrictions and regulations, taxes, currency
exchange rates, currency and monetary transfer restrictions and regulations, and
economic and political changes in the foreign nations or regions where we are
doing business.

      For the year ended December 31, 2005, our total net sales into each of our
principal geographic regions were as follows:

            United States - $154.9 million,
            Europe - $83.4 million,
            Asia - $48.7 million, and
            Other regions - $20.7 million.

      See Note 12 to our Consolidated Financial Statements included elsewhere in
this report for further information regarding our international operations.

                                       6
<PAGE>

PRODUCT DEVELOPMENT

      We believe that we are one of the most active developers of new products
in our industry. We have several product development projects planned or
currently in progress that are designed to yield new technological developments,
including numerous applications of digital technology, which are intended to
exploit the industry-wide transition from analog to digital processing. Other
engineering and development projects are principally for design maintenance or
to achieve product enhancements that have been requested by our customers. Both
of these activities are important for sustaining our product lines. Because we
produce a comprehensive range of products, we believe we have the capacity to
integrate technologies from one product line into another product line, which
ultimately leads to new products that are often less expensive, more feature
rich, or otherwise more desirable.

      We have a history of technological innovation and strong product
development and have introduced numerous technologies that are used throughout
the audio industry, including constant directivity and variable intensity horns,
manifold technology in loudspeaker systems, the application of neodymium in
loudspeaker systems and microphone magnets, and titanium in compression driver
diaphragms. In our Advanced Communication Technologies segment we also have a
strong history of technological innovation and product development in a number
of technologies, including digital active noise reduction (ANR), electret
microphone technology, voice-over-internet protocol and digital audio
processing.

      We have also implemented a number of strategic initiatives to identify new
market opportunities and to reduce our product development cycle in order to
facilitate the timely introduction of new and enhanced products. We maintain
close relationships with our institutional customers to develop products that
meet their requirements. We believe this has enabled us to design new products
offering enhanced features, product quality and reliability, and lower product
costs.

      For the years ended December 31, 2005 and 2004, the one-month period ended
December 31, 2003 and the eleven-month period ended November 30, 2003, our
engineering expenses for product development were $17.4 million, $15.4 million,
$1.2 million and $12.9 million, respectively.

MANUFACTURING

      We manufacture and service most of the products we sell, including the
active acoustic components contained in those products, in our facilities
located in the United States, Mexico, Germany, the United Kingdom and China. Our
manufacturing processes are substantially integrated and, in addition to the
assembly-only processes typically found among our competitors, include surface
mount and printed circuit board assembly, fiberglass horn lay-up, plastic
injection molding, transformer and coil winding, sheet metal stamping and
forming, metal machining, cabinet fabrication, and painting. We purchase certain
electrical components, magnets, wood products, and large plastic components.

      We believe that our integrated manufacturing capabilities are important
factors in maintaining and improving the quality, performance, availability, and
cost of our products and decreasing the time to market of our new product
introductions. We also believe that we can respond more effectively to changing
customer delivery and product feature requirements by doing the majority of our
own manufacturing and that this gives us an advantage over many of our
competitors. We continuously assess our manufacturing operations to control or
reduce costs.

      We also sell a limited number of outsourced finished products under our
brand names, including certain electronic products and loudspeaker systems,
where low cost is essential. In addition, we purchase certain other non-Telex
branded finished products to supplement the offerings of our distribution and
marketing operations in Japan, Hong Kong, and France.

RAW MATERIALS/SUPPLIERS

      Our extensive vertical integration enables us to manufacture many of the
parts for our products internally. We believe that this gives us a competitive
advantage in controlling quality and ensuring timely availability of parts.

      Our products contain electronic and mechanical components that are
provided by a wide range of suppliers. Certain of these components are standard
products, while others are manufactured to our specifications. We have, and may
in the future, experience occasional delays in obtaining timely delivery of
materials or components. Many components are available from multiple suppliers,

                                       7
<PAGE>

but we obtain a significant quantity from sole sources. Although we believe that
with adequate notice we can secure, if necessary, alternate suppliers, our
inability to do so could result in increased development costs and product
shipment delays. Any prolonged inability to obtain adequate supplies, or any
other circumstance that would require us to seek alternative sources of supply,
could have a material adverse effect on our business, financial condition, and
results of operations.

COMPETITION

      The markets within both the Professional Audio and Advanced Communication
Technologies segments are highly competitive and fragmented. We face meaningful
competition in both segments and in most of our product categories and markets.
We believe that the key factors necessary to maintain our position in our
markets are the recognition of our several key brand names, superior
distribution networks, large customer base, and large number of products,
together with our extensive experience in designing safe and reliable products,
dealing with regulatory agencies, and servicing and repairing our products.

      While many of our current competitors are generally smaller than we are,
certain of our competitors are substantially larger and have greater financial
resources. We believe that our major competitor in providing a full line of
professional audio products is Harman International Industries, Incorporated,
one of whose three segments competes in the professional audio products market.
David Clark is our largest competitor in the military/aviation communication
markets.

PATENTS, TRADEMARKS AND LICENSES

      Among our significant assets are our intellectual property rights. We rely
on a combination of copyright, trademark, and patent laws to protect these
assets and, to a significant degree, on protection of our trade secrets through
confidentiality procedures and contractual provisions that may afford more
limited legal protections.

      We own several trademarks in the United States and various foreign
countries, including:

           - Audiocom(R)       - Midas(R)     - Klark-Teknik(R)  - ClassMate(R)
           - Electro-Voice(R)  - Dynacord(R)  - EV(R)            - Road King(R)
           - Telex(R)          - RTS(R)       - Radiocom (TM)

      A number of our trademarks are identified with and important to the sale
and marketing of our products in both of our business segments. Our operations
are not dependent upon any single trademark other than the Telex and
Electro-Voice trademarks.

      We have not registered our trademarks in all foreign jurisdictions in
which we do business, although we believe that our most significant trademarks
have been registered in many foreign jurisdictions where sales of our products
under those trademarks are substantial. We are aware that, in certain foreign
jurisdictions, unaffiliated third parties have applied for and/or obtained
registrations for marks that are similar to marks owned or used by us for
products similar to ours. In certain instances we have filed formal oppositions
to such applications for registration. In light of this and because many foreign
jurisdictions operate on a "first-to-file" basis for registrations of
intellectual property, we may be prohibited from registering our trademarks in
certain foreign countries and in some cases be prohibited from selling our
products in certain countries under the same trademarks, and our business may be
materially adversely affected by such prohibition.

      Our operations are not dependent to any significant extent on any single
or related group of patents, licenses, franchises, or concessions. We believe
our most significant patents are patents relating to time division multiplex
digital matrix intercom systems and the design of our EVID (Electro-Voice
innovative design) surface-mount loudspeakers, which expire in 2014 and 2016,
respectively. We also own a number of patents related to the design and
manufacture of several of our other products, including speakers, headsets,
headphones, boom-mounted microphones, various transducer devices, multiple-band
directional antennas, certain intercom-related devices, and active noise
reduction headsets. We have not registered our patents in all foreign
jurisdictions in which we do business, and attempts at registration in such
foreign jurisdictions may not be possible or successful. We do not believe that
the expiration of any of our patents or absence of patent protection in foreign
jurisdictions will have a material adverse effect on our financial condition or
results of operations. We do not believe that any of our products currently
infringes upon the proprietary rights of third parties in any material respect.

BACKLOG

      As is the case with other companies in our businesses, backlog is not
necessarily a meaningful indicator of the condition of the business since we
typically receive and ship orders representing a major portion of our quarterly
non-contract revenues in the current

                                       8
<PAGE>

quarter. As of December 31, 2005, we had a backlog of approximately $23.8
million compared to approximately $31.0 million as of December 31, 2004.

ENVIRONMENTAL MATTERS

      Our operations are subject to extensive and changing U.S. federal, state,
local and foreign environmental laws and regulations, including, but not limited
to, laws and regulations that impose liability on responsible parties to
remediate, or contribute to the costs of remediating, currently or formerly
owned or leased sites or other sites where solid or hazardous wastes or
substances were disposed of or released into the environment. These remediation
requirements may be imposed without regard to fault or legality at the time of
disposal or release. Although we believe that our current manufacturing
operations comply in all material respects with applicable environmental laws
and regulations, environmental legislation has been enacted and may in the
future be enacted or interpreted to create environmental liability with respect
to our facilities or operations.

      Our site in Buchanan, Michigan, formerly owned by Mark IV Industries, Inc.
(Mark IV), has been designated a Superfund site under the federal Comprehensive
Environmental Response, Compensation and Liability Act, and we are a responsible
party, under Tennessee law, at two other sites that we acquired from Mark IV and
which were subsequently sold in 2002 and 2003. Mark IV has agreed to indemnify
us under certain contractual arrangements for specified contamination at the
Michigan site, excluding any contamination that exits within the manufacturing
facility and for the future monitoring and remediation of soil and/or
groundwater required at the Newport and Sevierville, Tennessee sites. Mark IV
has performed under these arrangements with respect to these properties since
1996 with no expenses incurred by Telex, with the exception of those voluntarily
assumed associated with the sale of one of the Tennessee sites.

      Telex is responsible for any contamination that may exist within the
Buchanan facility. Third party environmental studies we have requested related
to this facility indicate no exposure or remediation is necessary at this time
unless the concrete flooring within the facility is disturbed. We ceased
manufacturing operations at this facility in 2002 and are actively marketing the
property. We would be financially responsible for any remediation that would be
required within the manufacturing facility; accordingly, in 2004, we recorded a
charge of $0.3 million in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 144, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" ("SFAS 144") to reduce the carrying
value of the asset to fair market value, less cost to sell.

      The two sites in Tennessee are also covered by the Mark IV contractual
arrangements. One site requires on-going groundwater monitoring and received a
No Further Action notice in 2001 from the Tennessee Department of Environment
and Conservation (TDEC) related to contaminated soils. Telex has agreed to
indemnify the purchaser of the other Tennessee site until a No Further Action
notice is received from TDEC. Mark IV continues to pay the expenses related to
the monitoring activities at both of these sites.

      We have not recorded an environmental loss contingency accrual for either
of the Tennessee sites or the Buchanan site because we have determined that an
environmental loss is remote given that Mark IV has assumed direct
responsibility for the remediation of the sites under its contractual
requirements and has continued to perform in accordance with these arrangements.

      We also believe our exposure is remote related to any contamination within
the Buchanan site based on third party environmental evaluations. We will
reassess this position if new information indicates a need to recognize an
accrual.

      We are party to a 1988 Consent Decree with the Nebraska Department of
Environmental Quality (NDEQ) relating to the cleanup of hazardous waste at our
Lincoln, Nebraska facility. In December 1997, we entered into an Administrative
Order on Consent with the U.S. Environmental Protection Agency (U.S. EPA) under
the Resource Conservation and Recovery Act (RCRA) to further investigate and
remediate contaminants at the Lincoln facility and an adjacent property (Lincoln
site). The 1997 Administrative Order on Consent has expired and we are in the
process of negotiating a replacement Administrative Order on Consent with the
U.S. EPA. We do not believe that the costs related to our responsibilities at
this site under a new Administrative Order on Consent will result in a material
adverse effect on our results of operations or financial condition. Through
December 31, 2005, we had accrued approximately $2.0 million over the life of
the project for anticipated costs to be incurred for the Lincoln site cleanup
activities, of which approximately $1.7 million has been paid. See Note 11 to
our Consolidated Financial Statements included elsewhere in this report.

      We cannot assure you that our estimated environmental accruals, which we
believe to be reasonable, will cover in full the actual amounts of environmental
obligations we incur, that Mark IV will pay in full the indemnified
environmental liabilities when they are incurred, that new or existing
environmental laws will not affect us in currently unforeseen ways, or that our
present or future

                                       9
<PAGE>

activities will not result in additional environmentally related expenditures.
However, we believe that compliance with U.S. federal, state, local and foreign
environmental protection laws and provisions should have no material adverse
effect on our results of operations or financial condition.

EMPLOYEES

      As of December 31, 2005, we employed 1,800 persons worldwide, of which
1,729 were full-time employees.

AVAILABLE INFORMATION

      We are subject to the informational requirements of the Securities
Exchange Act of 1934 (Exchange Act). We therefore file periodic reports and
other information with the Securities and Exchange Commission (SEC). Such
reports may be obtained by visiting the Public Reference Room of the SEC at 100
F Street NE, Washington D.C. 20549 or by calling the SEC at (800) SEC-0330. In
addition the SEC maintains a website (www.sec.gov) that contains reports, proxy
information statements and other information regarding issuers that file
electronically.

ITEM 1A. RISK FACTORS

      The following risk factors and other information included in this report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not currently
known to us or that our management currently deems immaterial also may impair
our business operations. If any of the risks described below were to occur, our
business, financial condition, operating results and cash flows would be
materially adversely affected.

WE OPERATE IN AN ENVIRONMENT IN WHICH PRODUCT INNOVATION AND CHANGING TECHNOLOGY
ARE CRITICAL. WE MAY BE UNABLE TO RESPOND TO THESE CHANGES AND DEVELOP PRODUCTS
INCORPORATING THE LATEST TECHNOLOGY, AND, AS A RESULT, WE WOULD LIKELY LOSE
SALES. FURTHER, OTHERS MAY DEVELOP PRODUCTS THAT RENDER OUR PRODUCTS OBSOLETE,
AND WE MAY NOT BE ABLE TO DEVELOP PRODUCTS TO REPLACE OUR OLD PRODUCTS OR
COMPETE WITH ANY NEW PRODUCTS PRODUCED BY COMPETITORS. ANY OF THESE DEVELOPMENTS
WOULD ADVERSELY AFFECT OUR SALES AND FINANCIAL PERFORMANCE.

      Technological innovation and leadership are among the important factors in
competing successfully in the professional audio and advanced communication
technologies markets. Our future results will depend, in part, upon our ability
to make timely and cost-effective enhancements and additions to our technology
and to introduce new products that meet customer demands, including products
utilizing digital technology, which are increasingly being introduced in many of
our markets. The success of our current and new product offerings is dependent
on several factors, including proper identification of customer needs,
technological development, research and development cost, timely completion and
introduction, differentiation from offerings of our competitors, and market
acceptance. Maintaining flexibility to respond to technological and market
dynamics may require substantial expenditures. We may not be able to
successfully identify and develop new products in a timely manner. Products or
technologies developed by others may render our products obsolete or
noncompetitive, and constraints on our financial resources may adversely affect
our ability to develop and implement technological advances.

      Moreover, to the extent the pace of product obsolescence increases,
disposing of inventories of obsolete products may result in reduced operating
margins and materially adversely affect our earnings and results of operations.

WE COULD HAVE REDUCED REVENUES AND INCREASED COSTS IF OUR SUPPLIERS DO NOT MEET
OUR PRODUCT OR DELIVERY REQUIREMENTS

      Certain components and materials that we use in manufacturing our products
may be in short supply from time to time because of high industry demand or the
inability of a supplier to meet our quality or delivery requirements. If any of
our suppliers were to fail to deliver acceptable materials in accordance with
the manufacturing schedule needed to satisfy customer orders for our products,
we could lose time-sensitive customer orders, be forced to find alternative
materials, perhaps at higher cost, and have significantly decreased revenues and
earnings, which would have a material adverse effect on our business, results of
operations, and financial condition. Further, we could lose suppliers as a
result of their financial failure, bankruptcy, or otherwise, and such loss could
have a material adverse effect on our business, results of operations, or
financial condition.

WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT. IF WE ARE UNABLE TO DEVELOP
PRODUCTS THAT COMPETE WITH THOSE OFFERED BY OTHER MANUFACTURERS, OR ARE UNABLE
TO PRODUCE AND SELL OUR PRODUCTS AT COMPETITIVE PRICES, OUR SALES AND INCOME
COULD BE ADVERSELY AFFECTED.

                                       10
<PAGE>

      The professional audio and advanced communication technologies markets are
highly competitive and fragmented, and we face meaningful competition in most of
our product categories and markets. While many of our current competitors are
smaller than we are, some of our competitors are substantially larger and have
greater financial resources than we do. As we develop new products and enter new
markets we may encounter new competitors, and other manufacturers and suppliers
who currently do not offer competing products may enter the markets in which we
currently operate. Such new competitors may be larger, offer broader product
lines, and have substantially greater financial and other resources than we do.
Competition could negatively affect our pricing and gross margins. As a result,
we may not be able to compete successfully in our current market or in new
markets.

WE ARE ATTEMPTING TO INCREASE OUR INTERNATIONAL SALES AND, IN CONNECTION WITH
SUCH EFFORTS, FACE THE RISKS ASSOCIATED WITH INTERNATIONAL TRADE, SUCH AS
FLUCTUATING CURRENCIES, POLITICAL UNCERTAINTIES, REGULATORY REQUIREMENTS, AND
MANAGEMENT OF A GLOBAL BUSINESS. IF WE ARE UNABLE TO MANAGE THESE CHALLENGES
SUCCESSFULLY, OUR EFFORTS TO PENETRATE THE INTERNATIONAL MARKET MAY NOT BE
SUCCESSFUL AND OUR FINANCIAL RESULTS COULD SUFFER FROM REDUCED REVENUE AND
HIGHER COSTS.

      Our efforts to increase international sales may be adversely affected by,
among other things, changes in foreign import restrictions and regulations,
taxes, currency exchange rates, currency and monetary transfer restrictions and
regulations, and economic and political changes in the foreign nations in which
our products are manufactured and/or sold. Although our international operations
have generally been profitable in the past, one or more of these factors could
have a material adverse effect on our financial position or results of
operations in the future. In addition, we have not registered our trademarks and
patents in all foreign jurisdictions in which we do business, and attempts at
registration in such foreign jurisdictions may not be possible or successful. We
are aware that, in certain foreign jurisdictions, unaffiliated third parties
have applied for and/or obtained registrations for trademarks that are identical
or similar to trademarks owned or used by us. In view of this and because many
foreign jurisdictions operate on a "first-to-file" basis for registrations of
intellectual property, we may be prohibited from registering our trademarks and
patents in certain foreign countries and in some cases we may be prohibited from
selling our products in certain countries, or at least from selling our products
under the same trademarks in certain countries.

      We have substantial assets located outside of the United States, and a
substantial portion of our sales and earnings are attributable to operations
conducted abroad and to export sales, predominantly in Western Europe and Asia
Pacific. Our international operations subject us to certain risks, including
increased exposure to currency exchange rate fluctuations. We hedge a portion of
our foreign currency exposure by incurring liabilities, including bank debt,
denominated in the local currencies of those countries where our subsidiaries
are located and manage our currency risk exposure on foreign currency
denominated intercompany balances through forward foreign exchange contracts.
Our international operations also subject us to certain other risks, including
adverse political or economic developments in the foreign countries in which we
conduct business, foreign governmental regulation, dividend restrictions,
tariffs and potential adverse tax consequences, including payment of taxes in
jurisdictions that have higher tax rates than the United States.

WE ARE SUBJECT TO VARIOUS REGULATORY REQUIREMENTS IN CONNECTION WITH OUR
BUSINESS. IF WE ARE NOT ABLE TO COMPLY WITH THESE REQUIREMENTS, OUR SALES AND
BUSINESS PERFORMANCE COULD BE ADVERSELY AFFECTED.

      Our products must meet the requirements set by regulatory authorities in
the numerous jurisdictions (foreign and domestic) in which we sell them. As
regulations and local laws change, we must modify our products or manufacturing
processes to address those changes. Regulatory restrictions may increase the
costs to design and manufacture our products, resulting in a decrease in demand
for our products if the costs are passed along or a decrease in our margins.
Compliance with regulatory restrictions may require substantial expense and
adversely affect the technical quality and capabilities of our products,
reducing their marketability.

      Significant regulations with which we must comply are two European Union
("EU") directives aimed at the disposal of wastes from electrical and electronic
equipment ("WEEE") and the restriction of the use of certain hazardous
substances ("RoHS" in manufacturing processes and finished product.
Specifically, the RoHS directive prohibits the use of certain types of
materials, such as lead, in the manufacturing of electronic products. As of July
1, 2006 products sold within the EU, a market in which we sell a significant
amount of our products, must be RoHS compliant. Failure to comply with such
legislation could result in our customers refusing to purchase our products and
subject us to significant monetary penalties in connection with a violation,
both of which could have a material adverse effect on our business, financial
condition and results of operations.

                                       11
<PAGE>

WE RELY ON VARIOUS PATENTS AND TRADEMARKS IN MANUFACTURING AND MARKETING OUR
PRODUCTS. IF OUR OWNERSHIP OR USE OF OUR INTELLECTUAL PROPERTY WERE TO BE
CHALLENGED, WE MAY BE REQUIRED TO SPEND SIGNIFICANT FUNDS TO DEFEND OUR RIGHTS
AND WE MIGHT ULTIMATELY BE UNSUCCESSFUL IN OUR DEFENSE AND BE FORCED TO STOP
USING SUCH PATENTS OR TRADEMARKS. IN EITHER CASE, OUR BUSINESS COULD BE
ADVERSELY AFFECTED.

      If we are unable to enforce or defend our ownership and use of our
intellectual property, our business may decline. We seek to protect our
intellectual property rights, but our actions may not adequately protect the
rights covered by our patents, patent applications, trademarks and other
proprietary rights, and prosecution of our claims could be time consuming and
costly. A number of our trademarks are important to our business and we are
dependent on two of our trademarks, namely the Telex(R) and Electro-Voice(R)
marks. In addition, the intellectual property laws of some foreign countries do
not protect our proprietary rights as do the laws of the U.S. Despite our
efforts to protect our intellectual property or proprietary information, third
parties may obtain, disclose or use our intellectual property or proprietary
information without our authorization, or claim we infringe their proprietary
rights, any of which could adversely affect our business. From time to time,
third parties have alleged that we infringe their proprietary rights. These
claims or similar future claims could subject us to significant liability for
damages, result in the invalidation of our proprietary rights, limit our ability
to use infringing intellectual property or force us to use alternative
trademarks or obtain licenses to third-party technology rather than dispute the
merits of any infringement claim. Even if we prevail, any associated litigation
could be time-consuming and expensive and could result in the diversion of our
time and resources.

WE MAY BE SUBJECT TO ENVIRONMENTAL LIABILITY FOR VARIOUS PROPERTIES THAT WE OWN
OR OPERATE, BOTH IN THE U.S. AND IN FOREIGN COUNTRIES. IF THE COSTS OF
REMEDIATING ANY CONTAMINATED AREA WERE TO EXCEED OUR CURRENT ESTIMATES, OUR
OPERATING RESULTS COULD BE ADVERSELY AFFECTED. IN ADDITION, ANY CONTAMINATION
FOUND ON ANY PROPERTY THAT WE OWN OR OPERATE MAY REDUCE OUR ABILITY TO TRANSFER
SUCH PROPERTY TO NEW OWNERS OR USERS.

      We are subject to various foreign, federal, state and local environmental
protection, chemical control, and health and safety laws and regulations. We own
and lease real property, and some environmental laws hold current or previous
owners or operators of businesses and real property liable for contamination on
or originating from that property, even if they did not know of or were not
responsible for the contamination. The presence of hazardous substances on any
of our properties or the failure to meet environmental regulatory requirements
may materially adversely affect our ability to use the property as collateral
for borrowing and may cause us to incur substantial remediation or compliance
costs. If hazardous substances are released from or located on any of our
properties, we could incur substantial liabilities through a private party
personal injury or property damage claim or a claim by a governmental entity for
other damages. If we incur material costs or liabilities in the future under
environmental laws for any reason, our results of operations may be materially
adversely affected. We are indemnified by the former owner of certain sites
purchased by us against environmental liabilities that may result from these
sites. We cannot assure you that the former owner will fulfill its
indemnification obligations.

      IF WE LOSE THE SERVICES OF KEY MEMBERS OF OUR MANAGEMENT AND CANNOT FIND
APPROPRIATE REPLACEMENT PERSONNEL, WE MAY NOT BE ABLE TO MANAGE OUR OPERATIONS
AND IMPLEMENT OUR GROWTH STRATEGY EFFECTIVELY.

      Our future success depends, in large part, on the continued service of
several key members of our management team, and some of our other key executives
and officers and managers who possess significant expertise and knowledge of our
business and markets. We do not maintain key man life insurance on any of our
officers or managers. Any loss or interruption of the services of these
individuals could reduce our ability to effectively manage our operations and
implement our strategy because we may not be able to find appropriate
replacements.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      Not applicable

ITEM 2. PROPERTIES

      Our principal manufacturing, sales, administrative, product development,
marketing, distribution, and service facilities are described in the table
below. In addition, we have other sales facilities throughout the world. We
believe that our plants and facilities are maintained in good condition and,
except as noted below, are suitable and adequate for our present needs.
Currently, our manufacturing plants are operating at an average of 75% of
capacity based on a single shift.

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                     SIZE
LOCATION                         OWNED/LEASED    (SQUARE FEET)                   FACILITY TYPE(a)
-----------------------------    ------------    -------------    -----------------------------------------------------
<S>                              <C>             <C>              <C>
UNITED STATES:
Blue Earth, Minnesota(b).....       Owned           141,000       Manufacturing/Distribution
Burnsville, Minnesota........       Leased          114,100       Corporate Headquarters/Marketing/
                                                                  Administration/Product Development/Sales
Glencoe, Minnesota...........       Owned           100,000       Manufacturing/Distribution
Lincoln, Nebraska............       Owned           135,000       Manufacturing/Distribution/Product
                                                                  Development/Sales
Morrilton, Arkansas..........       Owned           202,000       Manufacturing/Distribution

INTERNATIONAL:
Dongguan, China..............       Leased           67,800       Manufacturing/Warehouse
Hermosillo, Sonora, Mexico...       Leased           32,500       Manufacturing
Hohenwarth, Germany..........       Leased           16,500       Manufacturing/Warehouse
Kidderminster, England.......       Owned            35,800       Manufacturing/Sales/Marketing/Administration/
                                                                  Product Development/Service
Kowloon, Hong Kong...........       Leased            5,700       Sales/Marketing/Administration/Distribution/Service
London, England..............       Leased           11,500       Sales/Marketing/Administration/Distribution/Service
Paris, France................       Leased            4,100       Sales/Marketing/Administration/Distribution/Service
Shanghai, China..............       Leased            5,400       Sales/Marketing/Administration/Distribution/Warehouse
Singapore  ..................       Leased            6,800       Sales/Distribution/Service
Straubing, Germany...........       Owned           132,000       Manufacturing/Sales/Marketing/Administration/
                                                                  Product Development/ Distribution/Service
Straubing, Germany...........       Leased           11,000       Warehouse
Tokyo, Japan.................       Leased           25,100       Sales/Marketing/Administration/Distribution/Service
</TABLE>


(a)   Our Morrilton, Arkansas, Kidderminster, England, Straubing, Germany, and
      Hohenwarth, Germany facilities are dedicated to the Professional Audio
      business segment. Our Hermosillo, Mexico and Dongguan, China facilities
      are dedicated to the Advanced Communication Technologies business segment.
      All other facilities are used for both of our business segments.

(b)   The Company announced in August 2005 its decision to close this facility
      by the end of 2006 with production shifting throughout 2006 to other owned
      or leased facilities.

      Our Glencoe, Minnesota, Kidderminster, England, and Hermosillo, Sonora,
Mexico facilities have been certified under International Organization for
Standards (ISO) 9002, and our Straubing, Germany facility has been certified
under ISO 9001.

ITEM 3. LEGAL PROCEEDINGS

      From time to time we are a party to various legal actions in the normal
course of business, none of which we believe would have a material adverse
effect on our financial condition or results of operations.

      The Company has been named as a defendant in a lawsuit filed by Ace Pro
Sound and Recording, LLC in the United States District Court, Southern District
of Florida on November 29, 2005. The Company is one of nine named defendants,
who are various suppliers of musical, sound and recording equipment. The
plaintiff alleges that the defendants violated various provisions of the Sherman
Act, the Florida Deceptive and Unfair Practices Act, and committed civil
conspiracy under Florida law by conspiring with one another not to deal with Ace
and seeks more than $1 billion in damages. The Company believes that the claims
against the Company are without merit and is vigorously contesting these
allegations. In response to the defendants' motion to dismiss the claims, filed
in March 2006, the plaintiff has expressed its intention to file a motion to
amend the complaint. It is anticipated that the plaintiff's motion will be
granted and its amended complaint will be filed in April 2006.

      For a discussion of certain environmental matters, see "Item 1. Business
-- Environmental Matters."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      There were no matters submitted to a vote of security holders of either
Intermediate or Telex during the fourth quarter of the fiscal year ended
December 31, 2005.


                                       13
<PAGE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES

      There is no established public trading market for Intermediate's
membership interest or Telex's common stock. Intermediate's sole membership
interest is owned by Old Telex, and all of Telex's outstanding common stock is
owned by Intermediate.

      Telex may from time to time pay cash dividends on its common stock to
permit Intermediate to make required payments relating to its 13% senior
subordinated discount notes and to pay for other operating expenses of
Intermediate and Old Telex. Intermediate will pay a dividend to Old Telex in
2006 to provide cash for Old Telex to pay the notes that mature in November
2006.

ITEM 6. SELECTED FINANCIAL DATA

      The table below sets forth selected historical consolidated financial,
operating and balance sheet data relating to Intermediate (Successor) and Old
Telex (Predecessor). The selected historical financial data as of December 31,
2005 and 2004 and for the years ended December 31, 2005 and 2004, the one month
period ended December 31, 2003 and the eleven month period ended November 30,
2003 have been derived from the audited consolidated financial statements and
notes thereto of Intermediate and Old Telex, appearing elsewhere in this report,
which have been audited by Ernst & Young LLP, independent registered public
accountants. The selected historical consolidated financial data as of December
31, 2001, 2002 and 2003 and the years ended December 31, 2001 and 2002 were
derived from audited consolidated financial statements and notes thereto not
included herein. You should read the information set forth below in conjunction
with our "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the audited consolidated financial statements and
related notes included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                 PREDECESSOR                            SUCCESSOR
                                                 ---------------------------------------  --------------------------------------
                                                        FISCAL YEAR         ELEVEN MONTHS   ONE MONTH         FISCAL YEAR
                                                           ENDED                ENDED        ENDED              ENDED
                                                         DECEMBER 31,        NOVEMBER 30,  DECEMBER 31,        DECEMBER 31,
                                                 -------------------------- ------------- ------------- -------------------------
                                                     2001          2002         2003          2003          2004          2005
                                                 ------------ ------------- ------------- ------------- ------------ ------------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                              <C>          <C>           <C>           <C>           <C>          <C>
STATEMENT OF OPERATIONS DATA:
Net sales .....................................  $ 284,459    $ 266,521       $ 243,106   $  25,433     $ 296,828    $ 307,733
Cost of sales .................................    185,051      155,832         140,863      14,957       163,206      172,469
                                                 ---------    ---------       ---------   ---------     ---------    ---------
Gross profit ..................................     99,408      110,689         102,243      10,476       133,622      135,264
Engineering ...................................     12,736       12,424          12,947       1,224        15,423       17,392
Selling, general and administrative ...........     88,690       71,010          67,816       6,232        80,899       84,349
Restructuring charges .........................     11,475(a)       478              --          --            --        1,763(b)
Goodwill and asset impairment charges .........         --           --              --          --         7,915(c)        --
Corporate charges .............................      1,667          541              --          --            --           --
Pension curtailment gain ......................         --           --          (2,414)         --            --           --
                                                 ---------    ---------       ---------   ---------     ---------    ---------
Operating (loss) income .......................    (15,160)      26,236          23,894       3,020        29,385       31,760
Interest expense ..............................    (38,173)     (26,563)        (26,897)     (2,589)      (27,346)     (28,763)
Other income ..................................      1,111        2,727             529          85         1,124          870
Gain (loss) on early extinguishment of debt ...    115,897(d)        --              --      (1,186)(e)        --           --
                                                 ---------    ---------       ---------   ---------     ---------    ---------
Income (loss) before income taxes and
  cumulative effect of accounting change ......     63,675        2,400          (2,474)       (670)        3,163        3,867
Provision for income taxes ....................      2,685        2,618           3,585       1,171         8,544        6,896
                                                 ---------    ---------       ---------   ---------     ---------    ---------
Income (loss) before cumulative effect of
  accounting change ...........................     60,990         (218)         (6,059)     (1,841)       (5,381)      (3,029)
Cumulative effect of change in accounting .....         --      (29,863)(f)          --          --            --           --
                                                 ---------    ---------       ---------   ---------     ---------    ---------
Net income (loss) .............................  $  60,990    $ (30,081)      $  (6,059)  $  (1,841)    $  (5,381)   $  (3,029)
                                                 =========    =========       =========   =========     =========    =========
FINANCIAL DATA:
Adjusted EBITDA(g) ............................  $   3,356    $  32,716       $  29,506   $   3,502     $  43,368    $  39,550
Capital expenditures ..........................  $   6,121    $   4,834       $   5,165   $     546     $   7,722    $  15,758
Cash (used in) provided by  operating
  activities ..................................  $  (2,688)   $  18,964       $  15,289   $   5,631     $  12,923    $  16,110
Cash used in investing activities .............  $  (5,601)   $     (42)      $  (3,841)  $    (546)    $  (5,163)   $ (15,537)
Cash provided by (used in) financing
  activities ..................................  $   8,775    $ (18,888)      $  (9,450)  $  (4,274)    $     167    $  (1,467)
</TABLE>

<TABLE>
<CAPTION>
                                                 DECEMBER 31,  DECEMBER 31,  DECEMBER 31,  DECEMBER 31,  DECEMBER 31,
                                                     2001          2002         2003           2004          2005
                                                 ------------  ------------  ------------  ------------  ------------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Working capital...............................    $  27,059     $  42,851     $  63,158     $  79,769     $  81,117
Total assets..................................      187,601       157,878       171,128       180,020       181,996
Long term debt, less current maturities.......      147,430       154,630       187,629       197,065       207,949
Member/Shareholder's deficit..................      (39,974)      (68,008)      (68,374)      (72,491)      (81,274)
</TABLE>

                                       14
<PAGE>

NOTES TO SELECTED FINANCIAL DATA

(a)   Included in the restructuring charges for the year ended December 31, 2001
      is a $7.4 million charge attributed to impairment of fixed assets. The
      remaining restructuring charge amount of $4.1 million is for severance,
      lease termination and other exit costs.

(b)   Included in the restructuring charges for the year ended December 31, 2005
      is a $0.8 million charge attributed to impairment of fixes assets. The
      remaining restructuring charges amount of $1.0 million is for severance
      and other exit costs.

(c)   We recognized a $7.9 million loss in 2004, including goodwill impairment
      charges associated with our Germany electronics operating unit ($7.6
      million) and asset impairment charges associated with our idle Buchanan,
      Michigan manufacturing facility ($0.3 million).

(d)   On November 21, 2001, Old Telex completed a debt restructuring, pursuant
      to which $224.5 million, or 99.8% of the total, of its 10-1/2% and 11%
      senior subordinated notes were exchanged for senior subordinated discount
      notes due 2006 at a deemed issue price of $56.1 million, 5.0 million
      shares of Series B preferred stock, and warrants to purchase 1.7 million
      shares of Series B preferred stock or common stock, all issued by Old
      Telex. As part of this debt restructuring, Old Telex recorded $115.9
      million of gain on early extinguishment of debt in its statement of
      operations and recorded $52.7 million of gain, for the senior subordinated
      notes exchanged by related parties, as contributed capital in the
      statement of shareholders' deficit.

(e)   We recognized a $1.2 million loss in the one-month period ended December
      31, 2003 from the write-off of deferred financing costs and discounts
      associated with repaid debt instruments.

(f)   We completed an initial impairment review of our goodwill in the fourth
      quarter of 2002. The review resulted in an impairment loss of $29.9
      million that was accounted for as a cumulative effect of change in
      accounting in accordance with SFAS 142.

(g)   EBITDA for each period is defined as income (loss) before cumulative
      effect of accounting change plus (i) income taxes, (ii) interest expense
      and (iii) depreciation and amortization. Adjusted EBITDA is defined as
      EBITDA plus (i) loss on early extinguishment of debt, (ii) non-cash
      restructuring charges and (iii) goodwill and asset impairment charges,
      minus (iv) other income and (v) gain on early extinguishment of debt.

      Management uses EBITDA and Adjusted EBITDA as measurement tools for
      evaluating our actual performance compared to budget and prior periods. We
      also use EBITDA as a measurement associated with our credit agreement.
      Other companies in our industry may calculate EBITDA and Adjusted EBITDA
      differently than we do. EBITDA and Adjusted EBITDA are not measures of
      performance under generally accepted accounting principles (GAAP) and
      should not be considered as a substitute for net income calculated in
      accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as an
      analytical tool, and you should not consider it in isolation or as a
      substitute for analysis of our results as reported under GAAP. EBITDA and
      Adjusted EBITDA have some of the following limitations:

      EBITDA does not reflect our cash expenditures, or future requirements for
      capital expenditures, or contractual commitments; EBITDA does not reflect
      the significant interest expense, or the cash requirements necessary to
      service interest or principal payments, on our debt; EBITDA does not
      reflect tax expense or the cash requirements necessary to pay for tax
      obligations; Although depreciation and amortization are non-cash charges,
      the asset being depreciated and amortized will often have to be replaced
      in the future, and EBITDA does not reflect any cash requirements for such
      replacements; and EBITDA does not reflect the impact of earnings or
      charges resulting from matters we consider not to be indicative of our
      ongoing operations.

      We compensate for these limitations by relying primarily on our GAAP
      results and using EBITDA and adjusted EBITDA only as supplements.

                                       15
<PAGE>

      The following table reconciles income (loss) before the cumulative effect
      of an accounting change to EBITDA, Adjusted EBITDA and net cash provided
      by (used in) operating activities:

<TABLE>
<CAPTION>
                                                             PREDECESSOR                            SUCCESSOR
                                                 ------------------------------------  -----------------------------------
                                                                           ELEVEN
                                                       FISCAL YEAR          MONTHS      ONE MONTH         FISCAL YEAR
                                                         ENDED              ENDED         ENDED              ENDED
                                                      DECEMBER 31,       NOVEMBER 30,  DECEMBER 31,      DECEMBER 31,
                                                    2001        2002         2003          2003         2004        2005
                                                 ----------  ----------  ------------  ------------  ----------  ----------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                              <C>         <C>         <C>           <C>           <C>         <C>
Income (loss) before cumulative effect of
  accounting change ............................ $  60,990   $    (218)  $  (6,059)     $  (1,841)   $  (5,381)  $  (3,029)
Income taxes ...................................     2,685       2,618       3,585          1,171        8,544       6,896
Interest expense ...............................    38,173      26,563      26,897          2,589       27,346      28,763

Depreciation and amortization ..................    11,160       6,480       5,612            482        6,068       6,954
                                                 ---------   ---------   ---------      ---------    ---------   ---------
  EBITDA ....................................... $ 113,008   $  35,443   $  30,035      $   2,401    $  36,577   $  39,584
Other income ...................................    (1,111)     (2,727)       (529)           (85)      (1,124)       (870)
(Gain) loss on early extinguishment of debt ....  (115,897)         --          --          1,186           --          --
Non-cash restructuring charges .................     7,356          --          --             --           --         836
Goodwill and asset impairment charges ..........        --          --          --             --        7,915          --
                                                 ---------   ---------   ---------      ---------    ---------   ---------
  Adjusted EBITDA .............................. $   3,356   $  32,716   $  29,506      $   3,502    $  43,368   $  39,550
Income tax expense .............................    (2,685)     (2,618)     (3,585)        (1,171)      (8,544)     (6,896)
Interest expense ...............................   (38,173)    (26,563)    (26,897)        (2,589)     (27,346)    (28,763)
Amortization of deferred financing charges and
  pay-in-kind interest charge ..................     7,186      19,076      21,017          1,233       11,390      12,971
Other income ...................................     1,111       2,727         529             85        1,124         870
(Gain) loss on sale of product lines and other
  assets .......................................       181      (2,151)       (319)            --         (268)         --
Pension curtailment gain .......................        --          --      (2,414)            --           --          --
Cash restructuring charges .....................     4,119         478          --             --           --         927
Deferred income taxes ..........................        (3)        (76)         18           (391)         367         (54)
Provision for bad debts ........................     4,509         240         869           (279)         828         976
Changes in operating assets and liabilities:
   Accounts receivable .........................      (184)     (1,448)     (2,410)         2,589       (2,262)     (5,245)
   Inventories .................................     7,824       5,706       3,800          1,404       (5,682)       (261)
   Other current assets ........................     3,737          88      (2,210)         1,000       (1,077)     (2,534)
   Accounts payable and accrued liabilities.....     7,720      (9,944)     (1,761)           527          109       4,126
   Income taxes ................................    (1,661)       (370)     (1,840)            56         (869)     (3,047)
   Other long-term assets and long-term
       liabilities .............................       275       1,103         986           (335)       1,785       3,490
                                                 ---------   ---------   ---------      ---------    ---------   ---------
Net cash provided by (used in) operating
  activities.................................... $  (2,688)  $  18,964   $  15,289      $   5,631    $  12,923   $  16,110
                                                 =========   =========   =========      =========    =========   =========
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      This Management's Discussion and Analysis of Financial Condition and
Results of Operations, as well as other sections of this report, contains
forward-looking statements, including, without limitation, statements relating
to our plans, strategies, objectives, and expectations, that are based on
management's current opinions, beliefs, or expectations as to future results or
future events and are made pursuant to the "safe harbor" provisions of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act. Any
such forward-looking statements involve known and unknown risks and
uncertainties and our actual results may differ materially from those
forward-looking statements. While made in good faith and with a reasonable basis
in information currently available to management, we cannot assure you that such
opinions or expectations will be achieved or accomplished. We do not undertake
to update, revise or correct any of the forward-looking information contained in
this report.

      The following factors, in addition to those discussed elsewhere in this
report, are representative of those factors that could affect our future results
and could cause results to differ materially from those expressed in such
forward-looking statements:

            -     the timely development and market acceptance of new products;

            -     the financial resources of competitors and the impact of
                  competitive products and pricing;

            -     changes in general and industry specific economic conditions
                  on a national, regional, or international basis;

            -     changes in laws and regulations, including changes in
                  accounting standards;

            -     the timing and success of the implementation of changes in our
                  operations to effect cost savings;

            -     opportunities that may be presented to and pursued by us;

            -     our financial resources, including our ability to access
                  external sources of capital; and

                                       16
<PAGE>

            -     such risks and uncertainties as are detailed from time to time
                  in our reports and filings with the Securities and Exchange
                  Commission.

      Management's Discussion and Analysis of Financial Condition and Results of
Operations are provided solely with respect to Telex and its subsidiaries since
substantially all of the Company's operations are conducted by Telex. However,
Intermediate has additional debt securities. Accordingly, information with
respect to interest expense and income taxes of Intermediate is also provided
herein. The discussion of liquidity and capital resources pertains to Telex and
its consolidated subsidiaries. Telex and Intermediate were formed in connection
with the November 19, 2003 restructuring of Old Telex's debt obligations. The
term the "Company" throughout the remainder of this Management's Discussion and
Analysis of Financial Condition and Results of Operations refers to Predecessor
or Telex for the relevant period(s).

      Financial information in this Management's Discussion and Analysis of
Financial Condition and Results of Operations for the twelve-month period ended
December 31, 2003 combines information for Telex for the one-month period ended
December 31, 2003 and information for Old Telex for the eleven-month period
ended November 30, 2003. Subsequent to November 2003, Old Telex is a holding
company and has no business operations. The financial information is combined to
provide a more meaningful presentation for the twelve-month period ended
December 31, 2003. The following discussion should be read in conjunction with
our Consolidated Financial Statements and Notes thereto contained elsewhere in
this report.

DESCRIPTION OF BUSINESS

      We are a worldwide industry leader in the design, manufacture, and
marketing of audio and communications products and systems to commercial,
professional, and industrial customers. Our product lines include sophisticated
loudspeaker systems, wired and wireless intercom systems, mixing consoles,
digital audio duplication products, amplifiers, wired and wireless microphones,
military and aviation products, land mobile communication systems, wireless
assistive listening systems and other related products. We have two business
segments: Professional Audio and Advanced Communication Technologies (formerly
known as Audio and Wireless Technology). Financial information for our two
business segments for the year ended December 31, 2005, the year ended December
31, 2004, the one-month period ended December 31, 2003, and the eleven-month
period ended November 30, 2003 is set forth in Note 12 to our consolidated
financial statements included elsewhere in this report.

      Approximately 50% of our sales are made internationally, in over 80
countries. We conduct our foreign sales through our foreign subsidiaries in
Germany, the United Kingdom, Japan, Hong Kong, Singapore, France, and China, and
we export products from our manufacturing locations in the United States,
Germany, the United Kingdom, Mexico and China for sales through our independent
distributors and dealers in other countries.

      Overall, our business is not subject to significant seasonal fluctuations.
We do not believe that inflation has had a material impact on our financial
position or results of operations during the past three years. We have generally
been able to effect price increases equal to any inflationary increase in costs.

      We maintain assets and/or operations in a number of foreign jurisdictions,
the most significant of which are Germany, the United Kingdom, Japan, Singapore,
and Hong Kong. In addition, we conduct business in local currency in many
countries, the most significant of which are Germany, the United Kingdom, Japan,
Hong Kong, Singapore, and France. Exposure to U.S. dollar/Euro and U.S.
dollar/British pound exchange rate volatility is mitigated to some extent by our
ability to source our production needs with existing manufacturing capacity in
Germany and Great Britain, and the exposure to U.S. dollar/Japanese yen exchange
rate volatility is to some extent mitigated by sourcing products denominated in
yen from Japan or through contractual provisions in sales agreements with
certain customers. Nevertheless, we have a direct and continuing exposure to
both positive and negative foreign currency movements.

      We report foreign exchange gains or losses on transactions as part of
other (income) expense. Gains and losses on translation of foreign currency
denominated balance sheets are classified as currency translation adjustments
and are included in "accumulated other comprehensive loss" as part of
shareholder's deficit.

CRITICAL ACCOUNTING POLICIES

      This Management's Discussion and Analysis of Financial Condition and
Results of Operations is based upon our Consolidated Financial Statements, which
have been prepared in accordance with the accounting principles generally
accepted in the United States. The preparation of these consolidated financial
statements requires us to make estimates and judgments, which we evaluate on an

                                       17
<PAGE>

ongoing basis, that affect the reported amounts of assets, liabilities,
revenues, and expenses, and related disclosure of contingent assets and
liabilities. We base our estimates on historical experience and on various other
assumptions that we believe are reasonable. Accordingly, actual results may
differ from these estimates under different assumptions or conditions.

      We have identified several accounting policies, discussed below, that are
critical to our business operations and the understanding of our results of
operations. For further discussion of accounting policies, see Note 1 to our
Consolidated Financial Statements included elsewhere in this report.

      Revenue Recognition. We recognize revenue from product sales at the time
of shipment provided that persuasive evidence of a sales arrangement exists, the
price is fixed, title has transferred, collection of resulting receivables is
reasonably assured, there are no customer acceptance requirements and there are
no remaining significant obligations. We also offer customers certain rights to
return products. We continuously monitor and track such product returns and
record a provision for the estimated amount of such future returns, based on
historical experience and any notification we receive for known pending returns.
While such returns have historically been within our expectations and provisions
established, we cannot guarantee that our historical experience will continue.

      Allowance for Doubtful Accounts. We perform ongoing credit evaluations of
our customers and consider adjustments to credit limits based upon payment
history and the customer's current creditworthiness. We continuously monitor
collections from customers and maintain a provision for estimated credit losses
based on historical experience and any specifically identified collection
issues. However, we cannot guarantee that we can accurately predict the future
creditworthiness of our customers and, accordingly, accurately estimate credit
losses on our accounts receivable.

      Inventories. Inventories are valued at lower-of-cost or market. We
regularly review inventory quantities on hand and record a provision, charged to
cost of sales, for excess and obsolete inventory based primarily on estimated
demand for product and for production requirements, generally for the next 12 to
24 months. Demand for certain of our products can fluctuate significantly. In
addition, some of our products are affected by technology changes and new
product introductions that could result in an increase in the amount of excess
and obsolete inventory quantities on hand. Additionally, our estimates of future
forecasted product demand is impacted by revisions, cancellations and
rescheduling of our order backlog. In that case, our provision for excess and
obsolete inventory would be misstated. Therefore, any unanticipated decline in
future demand or technological developments could have a significant impact on
the value of our inventory and reported operating results.

      Determination of Functional Currencies for the Purpose of Consolidation.
We have several foreign subsidiaries for which the local currency is the
functional currency. These subsidiaries accounted for approximately 45% of our
consolidated net sales for the year ended December 31, 2005, and 58% of our
consolidated assets and 23% of our consolidated liabilities at December 31,
2005.

      Under the relevant accounting standards, we have determined the functional
currency to be the local currency for all of our international subsidiaries. In
preparing our Consolidated Financial Statements, we are required to translate
the foreign subsidiaries' financial statements from their respective local
currencies into United States dollars. This process results in translation gains
and losses that are included in shareholder's equity as a component of
"accumulated other comprehensive loss." The magnitude of the translation gains
and losses is dependent upon the movement in the exchange rates of the foreign
currencies of our subsidiaries against the United States dollar. The foreign
currencies of our subsidiaries for which the local currency is the functional
currency include the Euro, the Great Britain pound, the Japanese yen, the
Singapore dollar, the Hong Kong dollar and the Chinese renminbi. Any future
translation gains or losses could be higher than those recorded in prior years
because of the unpredictability of the movement in exchange rates. If a
subsidiary were disposed of, any cumulative translation adjustment would be
realized in the statement of operations.

      Valuation of Long-Lived and Intangible Assets and Goodwill. We have
identifiable intangibles and long-lived assets. We assess the impairment of
those assets annually or more frequently whenever events and circumstances
trigger an impairment review. We record impairment loss on these assets when the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of those assets. The cash flow estimates are based on
historical results adjusted to reflect the best estimate of future market and
operating conditions. Because of the unpredictability of future market and
operating conditions, there is no guarantee that we will not have to record
impairment charges in the future.

      We have business unit level goodwill that we amortized until December 31,
2001. Effective with the beginning of 2002, we adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142"), and stopped amortizing our goodwill. We perform annual impairment
reviews at the beginning of our fourth quarter. The annual review for 2005 and
2003 did not indicate any additional goodwill impairment. The annual review for
2004 did indicate an additional impairment of goodwill in our Professional Audio
business segment and a $7.6 million charge was taken. Further information on
this

                                       18
<PAGE>

charge is set forth in Note 6 to our consolidated financial statements included
elsewhere in this report.

RESULTS OF OPERATIONS

      The following table sets forth, for the periods indicated, the percentage
relationship of certain items in our consolidated statements of operations to
net sales.

<TABLE>
<CAPTION>
                                                    PERCENTAGE OF NET SALES
                                             ------------------------------------------
                                                                             TWELVE-
                                                                             MONTH
                                                                             PERIOD
                                             YEAR ENDED     YEAR ENDED       ENDED
                                             DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                2005            2004          2003
                                             ------------   ------------   ------------
<S>                                          <C>            <C>            <C>
Net Sales:
  Professional Audio .....................       79.7%          81.0%         77.8%
  Advanced Communication Technologies ....       20.3           19.0          22.2
                                               ------          -----         -----

Total net sales...........................      100.0%         100.0%        100.0%
                                               ------          -----         -----
Total gross profit .......................       44.0%          45.0%         42.0%
Operating expenses .......................       33.6           35.1          31.9
                                               ------          -----         -----
Operating income .........................       10.4%           9.9%         10.1%
                                               ======          =====         =====

Net income (loss) ........................        4.3%           1.8%         (2.5)%
                                               ======          =====         =====
</TABLE>

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

      Net Sales. Our net sales increased 3.7%, or $10.9 million, from $296.8
million in 2004 to $307.7 million in 2005. Sales in our Professional Audio and
Advanced Communication Technologies segments both increased in 2005. We
experienced higher sales in all of our geographic marketplaces in the
Professional Audio segment with the most substantial increase achieved in Asia.
Sales in the Advance Communication Technologies segment increased in the
Americas and Europe and remained flat in Asia.

      Net sales in our Professional Audio segment increased $4.6 million, or
1.9%, from $240.5 million in 2004 to $245.1 million in 2005. The increase is
attributable primarily to higher sales of speakers, which was partially offset
by a decline in sales of large format consoles as customers were migrating to
digital offerings and lower sales of digital matrix intercoms. We are launching
our digital console product offering in early 2006.

      Net sales in our Advanced Communication Technologies segment increased
$6.3 million, or 11.2%, from $56.3 million in 2004 to $62.6 million in 2005. The
sales increase for 2005 compared to 2004 is primarily from increased landmobile
and antenna products.

      Gross Profit. Our gross profit increased $1.7 million, or 1.2%, from
$133.6 million in 2004 to $135.3 million in 2005. As a percentage of sales the
gross margin rate of 44.0%, for 2005, decreased from 45.0% for 2004. The
decrease in the gross margin rate for 2005 compared to 2004 is attributable
mainly to a decrease in sales of higher margin intercom and console products and
lower speaker margins resulting from manufacturing inefficiencies.

      The gross margin rate for our Professional Audio segment decreased from
45.1% for 2004 to 43.6% for 2005. The decrease in the gross margin rate for 2005
compared to 2004 is attributable to lower speaker margins resulting from
manufacturing inefficiencies experienced in 2005 and decreased sales of
high-margin intercom and console products as a percentage of Professional Audio
sales. Net sales for these product areas decreased 4.6% in 2005 compared to
2004. These product areas represent approximately 34% of Professional Audio net
sales.

      The gross margin rate for our Advanced Communication Technologies segment
increased from 44.7% in 2004 to 45.3% for 2005. The increase in the gross margin
rate for 2005 over the 2004 period is attributable primarily to increased sales
and increased margins in our landmobile product offerings. This product area
represents approximately 19% of the Advanced Communication Technologies segment
net sales and net sales increased 60% in 2005 as compared to 2004.

      Engineering. Our engineering expenses increased $2.0 million, or 12.8%,
from $15.4 million in 2004 to $17.4 million in 2005. We continue to invest in
new product development across both of our business segments with more focus in
our professional audio segment in 2005. We invested in our engineering staff in
2005, hiring 15 additional engineers to help us increase new product

                                       19
<PAGE>

offerings.

     Selling, General and Administrative. Selling, general and administrative
expenses increased $3.4 million, or 4.2%, from $80.9 million in 2004 to $84.3
million in 2005. Our 2005 expense increase over 2004 is primarily due to higher
selling and marketing expenses associated with the increased sales levels we
have experienced. We invested in additional sales and marketing personnel in
2005, similar to 2004, to penetrate new markets and to introduce certain product
offerings into new geographic regions.

     Restructuring Charges. During 2005, Telex recorded pretax restructuring
charges of $1.8 million attributable to restructuring of manufacturing
operations in the United States. The restructuring will result in a loss of
approximately 165 employees from the Blue Earth, Minnesota manufacturing
facility. The restructuring charges are anticipated to total $2.5 million and
include expected cash expenditures of $1.7 million, to be completed by the end
of the fourth quarter of 2006, primarily for severance costs, with the remaining
$0.8 million of the restructuring charges representing non-cash charges
associated with the write-down of fixed assets.

     Goodwill and Asset Impairment Charges. In 2005 we performed our annual
goodwill impairment evaluation and determined no impairment was present. In 2004
we recorded a goodwill impairment charge of $7.6 million associated with our
Germany electronics operating unit within the Professional Audio segment, in
accordance with SFAS 142. No goodwill impairment was indicated for other
operating units in 2004.

     In 2004, we also recorded an asset impairment charge of $0.3 million, in
accordance with SFAS No. 144. The charge was associated with an idle
manufacturing facility in the U.S.

     Interest Expense. Interest expense consists of (in thousands):

<TABLE>
<CAPTION>
                                                         Year ended
                                                      December 31, 2005
                                                  --------------------------
                                                   Telex        Intermediate
                                                  --------------------------
<S>                                               <C>           <C>
Cash interest
      11.5 % Senior Secured Notes                 $14,375         $ 14,375
      13.0% Senior Subordinated Discount Notes          -              880
      Other                                           536              536
                                                  ------------------------
      Total cash interest                          14,911           15,791
Non-cash interest:
      Amortization of deferred financing costs      1,369            1,569
      Amortization of debt issuance discount           80           11,403
                                                  ------------------------
      Total non-cash interest                       1,449           12,972
                                                  ------------------------
Total interest expense                            $16,360         $ 28,763
                                                  ------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                         Year ended
                                                      December 31, 2004
                                                  --------------------------
                                                   Telex        Intermediate
                                                  --------------------------
<S>                                               <C>           <C>
Cash interest
      11.5 % Senior Secured Notes                 $ 14,375        $ 14,375
      13.0% Senior Subordinated Discount Notes           -             783
      Other                                            798             798
                                                  ------------------------
      Total cash interest                           15,173          15,956
Non-cash interest:
      Amortization of deferred financing costs       1,337           1,526
      Amortization of debt issuance discount            95           9,864
                                                  ------------------------
      Total non-cash interest                        1,432          11,390
                                                  ------------------------
Total interest expense                            $ 16,605        $ 27,346
                                                  ------------------------
(Decrease) increase in interest expense           $   (245)       $  1,417
                                                  ========================

</TABLE>

                                       20

<PAGE>

     Interest expense for Telex decreased from $16.6 million in 2004 to $16.4
million in 2005. Interest expense decreased primarily because of the decrease in
overall outstanding debt, including short-term borrowings under existing credit
facilities. Components of 2005 interest expense include $14.4 million associated
with the $125 million of 11-1/2% Senior Secured Notes issued in 2003, $1.4
million of amortization of deferred financing costs and $0.6 million of other
interest expense.

     Intermediate Incremental Interest Expense. Incremental interest expense for
Intermediate was $12.4 million in 2005 and includes $11.3 million of pay-in-kind
interest associated with our 13% Senior Subordinated Discount Notes, $0.9
million of cash paid interest on the 13% Senior Subordinated Discount Notes, and
$0.2 million of amortization of deferred financing costs. Holders of the 13%
Senior Subordinated Discount Notes receive cash interest payments of 1% per
annum, paid semi-annually, on the accreted value of the notes, which accrete at
a rate of 12% per annum. A significant portion of Intermediate interest expense
for 2005 and 2004 was non-cash. Non-cash interest expense in 2005 was $11.3
million compared to $9.8 million in 2004.

     Other Income. Other income decreased from $1.1 million in 2004 to $0.9
million in 2005. The significant components of other income in 2005 were $0.4
million of interest income received from the Internal Revenue Service ("IRS") on
a Research and Development tax credit for taxable years 1990 through 1995 and
adjustment of previously recognized interest on amounts owed to the IRS and a
$0.4 million gain on foreign exchange. The significant components of other
income in 2004 were a $0.4 million gain on foreign exchange, a $0.3 million gain
on the sale of our Australian subsidiary and $0.4 million from amortization of
deferred revenue for a patent license fee, trademark license fee and non-compete
agreement associated with the sale of our hearing instrument product lines in
2002.

     Income Taxes. Intermediate and Telex file a consolidated U.S. federal
income tax return with Old Telex. The tax provision recorded by Telex is
calculated on a separate company basis required under a tax sharing agreement
with Old Telex. Income taxes were $3.2 million in 2005 and our effective tax
rate, excluding the benefit associated with the removal of the deferred tax
asset valuation allowance and tax effecting non-U.S. unremitted earnings that
management has determined will not be reinvested indefinitely, was 42.3%. Income
taxes were $8.5 million in 2004 and the effective tax rate for 2004, excluding
the non-deductible goodwill and asset impairment charges, was 39.1%. The
effective tax rate increase, excluding one-time items, reflects an increase in
our U.S. and foreign subsidiary taxable income. Telex has established a net
deferred tax asset valuation allowance of $0.8 million due to the uncertainty of
the realization of future tax benefits. This amount relates entirely to foreign
deferred tax assets resulting from net operating carryforwards because of the
uncertainty regarding their realization. Management has considered this factor
in reaching our conclusion as to the adequacy of the valuation allowance for
financial reporting purposes.

     Telex reduced the deferred tax valuation allowance by $7.2 million in 2005
as we have generated positive taxable income in the U.S. and have determined the
deferred tax assets are realizable. Telex also expects to continue to generate
future taxable income in the U.S.in future years.

     Intermediate, which includes Telex and its consolidated subsidiaries, has
significant U.S. deferred tax assets resulting from deductible temporary
differences, which consists mainly of interest expense of its Senior
Subordinated Discount Notes. Unlike Telex, Intermediate has a history of losses
in the U.S., which weighs heavily in determining the need for a valuation
allowance. Given Intermediate's history of losses and expected continuation of
the losses, we have established a valuation allowance for all of Intermediate's
U.S. net deferred tax assets as of December 31, 2005. Intermediate will reduce
the valuation when and if Intermediate determines that the deferred tax assets
are more likely than not to be realized.

     As of December 31, 2005, the Company had foreign net operating loss
carryforwards of $0.8 million, which expire between 2006 and 2013. As a result
of the November 2003 debt restructuring, the U.S. net operating loss
carryforward generated through November 2003 was retained by Old Telex. Telex
has a payable to Old Telex of $6.2 million and $3.3 million as of December 31,
2005 and 2004, respectively, associated with Telex utilizing the net operating
loss of Old Telex.

As of December 31, 2004, the Company had a reserve of $3.7 million included in
income taxes payable related to a settlement with the Internal Revenue Service
(IRS) for the expected tax liability, penalties and accrued interest (as of the
settlement date) related to a dispute for taxable years 1990 through 1995. The
Company agreed with the IRS on the final amount of the tax liability to be paid
and had been making monthly payments. In March 2005, the Company received a
research and development credit, plus interest, of $0.6 million for taxable
years 1990 through 1995. This amount was applied to the outstanding $3.7 million
payable. In August 2005, the Company paid off the outstanding balance.

     With the exception of Japan, accumulated and current unremitted earnings of
the Company's foreign subsidiaries are deemed to be reinvested in each country
and are not expected to be remitted. As such, no U.S. taxes have been provided
for such foreign earnings.

                                       21

<PAGE>

     During 2005, we repatriated $2.8 million of earnings from our Japanese
subsidiary. We were unable to utilize any foreign tax credits generated in
connection with this distribution. We also recorded a deferred income tax
liability of $2.6 million related to approximately $7.5 million of unremitted
Japanese earnings that are no longer considered permanently reinvested.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO TWELVE-MONTH PERIOD ENDED DECEMBER 31,
2003

     Net Sales. Our net sales increased 10.5%, or $28.3 million, from $268.5
million in 2003 to $296.8 million in 2004. Approximately $10.4 million, or 36.7%
of the 2004 increase resulted from stronger foreign currencies compared to the
U.S. dollar. Sales in our Professional Audio segment increased in 2004 while
sales in our Advanced Communication Technologies segment declined slightly. We
experienced higher sales in all of our geographic marketplaces as the
professional audio marketplace experienced increased customer purchasing
activity and new products we introduced in 2004 were well received. Sales in the
Advanced Communication Technologies segment declined principally due to lower
sales of our cassette duplication products in the audio duplication marketplace.

     Net sales in our Professional Audio segment increased $31.5 million, or
15.1%, from $209.0 million in 2003 to $240.5 million in 2004. The increase is
attributable primarily to new product sales and higher sales of consoles,
intercoms and speakers as customers continued to make upgrades to their
equipment.

     Net sales in our Advanced Communication Technologies segment decreased $3.2
million, or 5.7%, from $59.5 million in 2003 to $56.3 million in 2004. The
decrease for 2004 compared to 2003 is primarily from lower duplication product
sales that were offset somewhat by higher sales of products to the aviation and
transportation marketplaces and to governmental agencies as they were upgrading
their communications equipment.

     Gross Profit. Our gross profit increased $20.9 million, or 18.5%, from
$112.7 million in 2003 to $133.6 million in 2004. As a percentage of sales, the
gross margin rate was 45.0% for 2004, an increase from 42.0% for 2003. Included
in the 2003 period are impairment charges of $1.4 million for inventories and
fixed assets associated with the discontinuance of our computer audio product
line. Excluding these charges, gross margin as a percentage of net sales for
2003 would have been 42.5%. The increase in the gross margin rate for 2004 over
2003, excluding the charges, is attributable mainly to increased sales of higher
margin products in our landmobile, military/aviation and console product lines,
strengthening of our intercom products and improved manufacturing efficiencies
at our United Kingdom facility.

     The gross margin rate for our Professional Audio segment increased from
43.2% for 2003 to 45.1% for 2004. The increase in the gross margin rate for 2004
over 2003, excluding the impairment charges, is attributable primarily to the
continued sale of high-margin products in our intercom offerings and the launch
of new console products. Net sales for these product areas grew 34.1% in 2004 as
compared to 2003. These product areas represent approximately 36% of
Professional Audio segment sales. We also achieved increased manufacturing
efficiencies at our United Kingdom facility, where gross profit margin improved
more than 8 percentage points.

     The gross margin rate for our Advanced Communication Technologies segment
increased from 37.6% in 2003 to 44.7% for 2004. The gross margin rate for 2003,
excluding impairment charges discussed previously, was 40.0%. The increase in
the gross margin rate for 2004 is attributable primarily to increased sales of
higher-margin landmobile and military/aviation products. These product areas saw
a net sales increase of 14.8% and represent approximately 42% of the Advance
Communication Technologies segment net sales.

     Engineering. Our engineering expenses increased $1.2 million, or 8.5%, from
$14.2 million in 2003 to $15.4 million in 2004. We continue to invest in new
product development across all of our business segments and in 2004 focused more
effort in our Professional Audio segment.

     Selling, General and Administrative. Selling, general and administrative
expenses increased $7.0 million, or 9.5%, from $73.9 million in 2003 to $80.9
million in 2004. The 2004 increase is primarily due to higher selling and
marketing expenses associated with the increased sales levels we have
experienced. We invested in additional sales and marketing personnel in 2004 to
penetrate new markets and to introduce certain product offerings into new
geographic regions. In addition, some of the increase resulted from converting
stronger foreign currencies to U.S. dollars.

     Goodwill and Asset Impairment Charges. In 2004, we recorded a goodwill
impairment charge of $7.6 million associated with our Germany electronics
operating unit within the Professional Audio segment, in accordance with SFAS
142, as part of our annual

                                       22

<PAGE>

impairment evaluation. This impairment charge, which is non-deductible for
income tax purposes, adjusted the carrying value of the operating unit's
goodwill to its implied fair value. In 2004, the operating unit experienced a
decline in operating performance compared to prior years and budgeted 2004
results. Additionally, we had forecasted similar operating results for 2005. No
goodwill impairment was indicated for other operating units.

     We also recorded an asset impairment charge of $0.3 million associated with
an idle manufacturing facility in the U.S. that we have been actively marketing.
In the fourth quarter of 2004, we updated our evaluation of the recoverability
of the asset and recorded an impairment charge in accordance with SFAS No. 144.
The charge represents the amount by which the carrying value exceeded fair
value, less cost to sell.

     Pension Curtailment Gain. We recorded a pension curtailment gain of $2.4
million in 2003 resulting from our decision to freeze certain future pension
plan benefits effective June 30, 2003. Our decision resulted in recognition of
previously unrecognized prior service benefits in accordance with SFAS No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits" ("SFAS 88").

     Interest Expense. Interest expense for Telex decreased from $28.3 million
in 2003 to $16.6 million in 2004. Interest expense decreased primarily because
of the November 2003 debt restructuring that resulted in Telex having lower
outstanding indebtedness compared to Old Telex. Components of 2004 interest
expense included $14.4 million associated with our 11-1/2% Senior Secured Notes
issued in 2003, $1.4 million of amortization of deferred financing costs and
$0.8 million of foreign interest expense.

     Intermediate Incremental Interest Expense. Incremental interest expense for
Intermediate was $10.7 million in 2004 and included $9.8 million of pay-in-kind
interest associated with our 13% Senior Subordinated Discount Notes, $0.8
million of cash paid interest on the 13% Senior Subordinated Discount Notes, and
$0.1 million of amortization of deferred financing costs. Holders of the 13%
Senior Subordinated Discount Notes receive cash interest payments of 1% per
annum, paid semi-annually, on the accreted value of the notes, which accrete at
a rate of 12% per annum. A significant portion of Intermediate interest expense
for 2004 and 2003 was non-cash although this declined substantially in 2004.
Non-cash interest expense in 2004 was $9.8 million compared to $20.1 million in
2003.

     Other Income. Other income increased from $0.6 million in 2003 to $1.1
million in 2004. The significant components of 2004 other income were a $0.4
million gain on foreign exchange, a $0.3 million gain on the sale of our
Australian subsidiary and $0.4 million from amortization of deferred revenue for
a patent license fee, trademark license fee and non-compete agreement associated
with the sale of our hearing instrument product lines in 2002. The amortization
of the patent fee deferred revenue continued in 2005. The significant components
of 2003 other income were a gain of $0.3 million from the sale of production
assets related to the shutdown of certain manufacturing facilities and $0.4
million of amortization of deferred revenue for a patent license fee, trademark
license fee, and non-compete agreement associated with the 2002 sale of our
hearing instrument product lines.

     Loss on Early Extinguishment of Debt. We recorded a $1.2 million loss in
2003 resulting from early extinguishment of debt. We completed a debt
restructuring in November 2003 pursuant to which Telex issued $125.0 million of
11 1/2% Senior Secured Notes, with the proceeds used to repay existing debt of
Old Telex. The loss results primarily from the write-off of deferred financing
costs and discounts associated with the repaid debt instruments.

     Income Taxes. Intermediate and Telex file a consolidated U.S. tax return
with Old Telex. The tax provision recorded by Telex is calculated on a separate
company basis under a tax sharing agreement with Old Telex. Income taxes were
$8.5 million in 2004, and our effective tax rate, excluding the non-deductible
goodwill and asset impairment charges, was 39.1%. Income taxes include a $0.4
million expense recognized for additional income taxes for our German subsidiary
related to an audit of the 2002 tax year. Income taxes were $4.8 million in
2003. The tax provision recorded relates only to the countries in which we are
profitable. The income tax expense increase in 2004 compared to 2003 is
associated with an increase in both our U.S and foreign subsidiary taxable
income.

LIQUIDITY AND CAPITAL RESOURCES

     The following discussion about liquidity and capital resources pertains to
Telex and its consolidated subsidiaries.

                                       23

<PAGE>

     Our cash and cash equivalents balance of $13.2 million at December 31, 2005
was lower than our balance of $15.0 million at December 31, 2004. Our cash
provided from operations of $17.0 million was offset principally by $11.8
million of cash used for capital expenditures, $3.9 million of cash used for the
acquisition of a business and various intangible assets and $2.4 million of net
cash used in financing activities. For the year ended December 31, 2004, our
cash and cash equivalents increased from $6.7 million at December 31, 2003 to
$15.0 million at December 31, 2004. In 2004, our cash provided from operations
of $13.7 million and the $2.3 million generated from the sale of our Australian
subsidiary were offset principally by $7.7 million of cash used for capital
expenditures and $0.6 million cash used in financing activities.

     Operating Activities. Our net cash provided by operating activities was
$17.0 million for 2005 compared to $13.7 million for 2004. In 2005, net cash
provided by operating activities was comprised of net income of $13.1 million
adjusted for non-cash items of $5.7 million and net cash consumed by changes in
operating assets and liabilities of $3.5 million. Included in non-cash items
were $9.4 million of charges that reduced our net income, consisting mainly of
restructuring charges, depreciation and amortization, and amortization of
deferred financing costs. Offsetting the non-cash charges was a $3.7 million tax
benefit from adjustment of our deferred tax assets. Changes in net cash used in
operating assets and liabilities were mainly due to increases in accounts
receivable and other current assets and a reduction of income taxes payable,
offset by an increase in accounts payable and accrued liabilities and other
long-term assets and long-term liabilities.

     Our accounts receivable of $51.0 million as of December 31, 2005 increased
$0.8 million from $50.2 million at December 31, 2004. Excluding the impact of
foreign currency exchange rate movements, our accounts receivable balance
increased $3.5 million from December 31, 2004. Sales increased $3.0 million
during November and December 2005 compared to November and December 2004, which
contributed to the higher December 31, 2005 accounts receivable balance.

     Our inventories of $51.7 million as of December 31, 2005 decreased $0.9
million from $52.6 million at December 31, 2004. Excluding the impact of foreign
currency exchange rate movements and the acquisition of our China facility,
there was no change in our inventories compared to December 31, 2004 levels.

     Investing Activities. Our investing activities consist mainly of capital
expenditures to maintain facilities, acquire machinery and tooling, update
certain manufacturing processes, update information systems and improve
efficiency. Our net cash used in investing activities was $15.5 million for 2005
compared to $5.2 million for 2004. Cash was used during each period primarily
for capital expenditures, which amounted to $11.8 million and $7.7 million in
2005 and 2004, respectively. Capital expenditures in 2005 of $5.3 million
related primarily to information technology investments. We are improving our
global infrastructure and our U.S. based operating system has been expanded to
most of our foreign locations. In December 2005, we also completed a $3.2
million purchase of inventory and fixed assets from a supplier based in Hong
Kong, with manufacturing operations in China. Contingency payments of $1.2
million each are payable to the supplier in May 2007 and May 2008 upon the
achievement of certain future operating objectives. Capital expenditures in 2004
were largely for information technology investments. This spending was partially
offset by the receipt of $2.3 million in proceeds from the sale of our
Australian subsidiary. We anticipate that our capital expenditures for 2006 will
be in the range of $10.0 million to $12.0 million.

     Financing Activities. Net cash used in financing activities was $2.4
million and $0.6 million for 2005 and 2004, respectively. During the 2005 period
we repaid $0.5 million of long-term debt and $1.0 million on our foreign working
capital lines. During the 2004 period we repaid $0.4 million of long-term debt
and borrowed $1.0 million on our foreign working capital lines. In 2004 we
incurred deferred financing costs of $0.3 million. Deferred financing costs in
2004 were necessary to fulfill requirements associated with our November 2003
debt restructuring. In each of 2005 and 2004 dividends of $0.9 million were paid
to Intermediate to enable Intermediate to make its 1% per annum, semi-annual
interest payments, on its 13% Senior Subordinated Discount Notes.

     Indebtedness. Our consolidated indebtedness was $126.1 million at December
31, 2005. The debt consists of $125.0 million of 11 1/2% Senior Secured Notes
("Senior Secured Notes") due October 2008 and $1.1 million of other debt in the
U.S. and Germany. In conjunction with our 2003 debt restructuring we established
a $15.0 million senior secured credit facility, subject to certain borrowing
base limitations. The credit facility is secured by substantially all of our and
our domestic subsidiary's current and future assets, and a pledge of 65% of the
voting stock and 100% of the non-voting stock of our first-tier foreign
subsidiaries. The credit facility includes certain financial covenants. The
credit facility was undrawn at December 31, 2005 and 2004. In addition, we have
foreign working capital lines (with on demand repayment provisions), subject to
certain limitations, of $9.4 million. In certain instances the foreign working
capital lines are secured by a lien on foreign real property, leaseholds,
accounts receivable and inventory or are guaranteed by another subsidiary.

                                       24

<PAGE>

     At December 31, 2005, we had no borrowings outstanding under our foreign
working capital lines. The net availability, after deduction for open letters of
credit and borrowing base limitations, under the credit facility and foreign
working capital lines was $21.9 million.

     Pension Costs. We recorded a pension expense of approximately $0.2 million
in 2005 as the annual interest cost on the accumulated benefit obligations was
greater than the expected return on plan assets. Pension expense is estimated to
be $0.5 million in 2006. During 2005 we made employer contributions to the
pension plan of approximately $12,000. We expect to make contributions of
approximately $1.6 million for the 2005 and 2006 plan years in 2006.

     Future Cash Needs. Our primary future cash needs will be to fund working
capital, capital expenditures and debt service obligations. Additionally, the
ability of our direct parent, Intermediate, to make semiannual interest payments
on its notes and of our indirect parent, Old Telex, to pay its notes when they
mature in 2006 is dependent on our ability to generate sufficient cash flow to
fulfill these obligations. We believe that our existing cash and cash flows from
operations will be sufficient to meet our future cash needs. If we do not
generate sufficient cash from operations to meet our cash needs, we may need to
incur additional debt through borrowing under our senior secured credit facility
or otherwise. Our ability to fund working capital, capital expenditures and debt
service will depend on our ability to generate cash in the future, which is
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond our control. Our senior secured credit facility and the
indenture governing our notes impose, and any future indebtedness may impose,
various restrictions and covenants which could limit our ability to respond to
market conditions, to provide for unanticipated capital investments or to take
advantage of business opportunities.

DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     Contractual obligations for Telex and Intermediate consist of the following
at December 31, 2005 (in thousands):

<TABLE>
<CAPTION>
                                                                           PAYMENT DUE BY PERIOD
                                                      --------------------------------------------------------------
                                                                  LESS THAN                               MORE THAN
                                                        TOTAL      1 YEAR      1-3 YEARS    3-5 YEARS      5 YEARS
                                                      --------    ---------    ---------    ----------    ----------
<S>                                                   <C>         <C>          <C>          <C>           <C>
Long-term debt - Telex .............................  $126,099    $     458    $ 125,641    $       --    $       --
Interest payments on long-term debt - Telex ........    43,125       14,375       28,750            --            --
Capital lease obligations ..........................        --
Operating lease obligations ........................    10,796        3,118        4,177         2,395         1,106
Purchase obligations ...............................        --
Other long-term liabilities ........................    13,855          323        3,932         3,202         6,398
                                                      --------    ---------    ---------    ----------    ----------
      Total Telex obligations ......................   193,875       18,274      162,500         5,597         7,504

Long-term debt - Intermediate ......................   129,116           --           --       129,116            --
Interest payments on long-term debt - Intermediate..     3,299          974        2,325            --            --
                                                      --------    ---------    ---------    ----------    ----------
      Total Intermediate obligations ...............  $326,290    $  19,248    $ 164,825      $134,713      $  7,504
                                                      ========    =========    =========    ==========    ==========
</TABLE>

     Other long-term liabilities are substantially represented by payments
required under a tax sharing agreement that Telex and Intermediate have with Old
Telex (Intermediate's parent) and future obligations of the U.S. and Japanese
pension plans. Excluded from the schedule of contractual obligations are 2006
expected contributions to our U.S. and Japanese pension plans of $1.6 million.
Also excluded are benefit payments to be made under Telex's defined benefit
pension plans. (See estimated benefit payments for the next ten fiscal years in
Note 10 "Pension and Postretirement Benefits" in Notes to Consolidated Financial
Statements).

     Old Telex will retire its notes, totaling $3.0 million, in November 2006.
Old Telex will receive a dividend from Telex to pay the obligation.

OFF-BALANCE SHEET ARRANGEMENTS

     As of December 31, 2005 the lease of our headquarters facility is a
significant off-balance sheet arrangement. In 2000, Telex relocated its
corporate headquarters to a facility leased from DRF 12000 Portland LLC (the
LLC), an entity in which Telex has a 50% interest. Telex contributed cash of
$0.6 million to the LLC and the investment is accounted for under the equity
method. Telex's allocable share of the LLC income is included as a component of
other income in the accompanying consolidated statements of operations. The LLC
financed the purchase of the facility with a mortgage secured by the facility.
At December 31, 2005, the remaining balance on the mortgage was $6.5 million.

                                       25

<PAGE>

     The annual lease payments to the LLC are $1.1 million for years 1 to 5 and
$1.2 million for years 6 to 10. We began lease year 6 in May 2005. Telex may
renew the lease at the end of the initial lease for three renewal terms of five
years each. The lease has been classified as an operating lease and the lease
obligations are recorded as rent expense.

     In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46).
This was an interpretation of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," and addresses the consolidation of variable interest
entities by businesses. We used the guidelines in FIN 46 (primarily the
guidelines in paragraph 5a, b and c) to analyze Telex's relationship with the
LLC and concluded that the LLC is not a variable interest entity to Telex and,
therefore, the current method of consolidation remains appropriate.

The LLC results of operations and Telex's equity in earnings of the LLC were (in
thousands):

<TABLE>
<CAPTION>
                                                                                        SUCCESSOR             PREDECESSOR
                                                                                --------------------------    -----------
                                                                                 2005      2004      2003        2003
                                                                                ------    ------    ------      -------
<S>                                                                             <C>       <C>       <C>         <C>
Gross revenue ..............................................................    $1,776    $1,736    $  144      $ 1,584
Costs and expenses .........................................................     1,439     1,464       123        1,358
                                                                                ------    ------    ------      -------
Net income .................................................................    $  337    $  272    $   21      $   226
                                                                                ======    ======    ======      =======
Equity share in earnings of the LLC ........................................    $  168    $  136    $   10      $   113
                                                                                ======    ======    ======      =======
</TABLE>

     Condensed balance sheet information for the LLC as of December 31 was (in
thousands):

<TABLE>
<CAPTION>
                           2005      2004
                          ------    ------
<S>                       <C>       <C>
Current assets            $  221    $   69
Noncurrent assets          8,834     9,137
Current liabilities          372       357
Noncurrent liabilities     7,299     7,359
</TABLE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

     We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The counterparties to our financial
instruments are major financial institutions.

     We do not enter into derivatives or other financial instruments for trading
or speculative purposes.

EXCHANGE RATE SENSITIVITY ANALYSIS

     We enter into forward exchange contracts principally to hedge the currency
fluctuations in transactions denominated in foreign currencies, thereby limiting
our exposure to changes in exchange rates. During 2005, we principally hedged
transactions involving certain intercompany balances related primarily to
intercompany sales. Gains and losses on forward exchange contracts and the
offsetting losses and gains on the hedged transactions are reflected in our
statement of operations.

     At December 31, 2005, we had outstanding foreign forward exchange contracts
with a notional amount of $14.8 million with a weighted average maturity of 56
days.

     At December 31, 2005, the difference between the fair value of all
outstanding contracts, as estimated by the amount required to enter into
offsetting contracts with similar remaining maturities based on quoted prices,
and the contract amounts was immaterial. A 10% fluctuation in exchange rates for
these currencies would change the fair value by approximately $1.5 million.
However, since these contracts hedge foreign currency denominated transactions,
any change in the fair value of the contracts would be offset by changes in the
underlying value of the transaction being hedged.

                                       26

<PAGE>

INTEREST RATE AND DEBT SENSITIVITY ANALYSIS

     For fixed rate debt, interest rate changes affect the fair market value of
the debt but do not impact our earnings or cash flows. Conversely, for floating
rate debt, interest rate changes generally do not affect the fair market value
of the debt but do impact our earnings and cash flows, assuming other factors
are held constant.

     At December 31, 2005, Telex had fixed rate debt of $125.4 million and an
interest-free loan of $0.7 million. Holding all other variables constant, such
as foreign exchange rates and debt levels, a one-percentage point decrease in
interest rates would increase the unrealized fair market value of these debts by
approximately $3.0 million. Intermediate had fixed rate debt of $82.3 million
and a one-percentage point decrease in interest rates would increase the
unrealized fair market value of this debt by approximately $2.3 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Report of Independent Registered Public Accounting Firm and
Consolidated Financial Statements and Supplementary Data required by this Item 8
are set forth immediately following the signatures page of this report and are
incorporated herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     There were no changes in or disagreements with our independent registered
public accounting firm on accounting or financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

     An evaluation was performed under the supervision and with the
participation of our management, including the Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), of the effectiveness of the design and operation
of Telex's disclosure controls and procedures (as defined in Exchange Act Rules
13a-14(c) and 15d-14(c)) as of December 31, 2005. Based on that evaluation, our
management, including the CEO and CFO, concluded (i) that our disclosure
controls and procedures were effective as of the end of the period to ensure
that the information that we are required to disclose in the reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission's rules and forms, and (ii)
that the information that is required to be reported is accumulated and
communicated to management, including our principal executive and financial
officers, as appropriate, to allow timely decisions regarding required
disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

     There were no changes in our internal control over financial reporting
which materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. The Company is in the process of
implementing its U.S. based information technology application globally to our
foreign locations. Our England and China subsidiaries went live on the system in
the first quarter of 2005. Our Hong Kong and Japan subsidiaries went live on the
system in the third quarter of 2005. Management does not currently believe that
these implementations will adversely affect the Company's internal control over
financial reporting.

ITEM 9B. OTHER INFORMATION

     None.

                                       27

<PAGE>

                                    PART III

     INFORMATION REQUIRED BY ITEMS 10-14 WITH RESPECT TO TELEX HAS BEEN OMITTED
PURSUANT TO GENERAL INSTRUCTION I OF FORM 10-K. INFORMATION REQUIRED BY ITEMS
10-14 WITH RESPECT TO INTERMEDIATE IS DESCRIBED BELOW.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth the name, age and position of individuals
who are serving as directors and executive officers of Intermediate as of March
15, 2006. With the exception of Mr. Berneke, all officers and directors hold
identical positions in Telex Communications Holdings, Inc. and Telex. Each such
person was elected or appointed to the identical offices and/or directorships
with respect to both Intermediate and Telex in November 2003 upon the
consummation of the debt restructuring. Intermediate is managed by a Board of
Managers. References below to "Director" also refer to the substantially similar
position of "Manager" at Intermediate.

<TABLE>
<CAPTION>
NAME                                         AGE                          POSITION
----------------------------------------     ----     ----------------------------------------------------
<S>                                          <C>      <C>
Raymond V. Malpocher....................      60      Chief Executive Officer and President, Director
Gregory W. Richter......................      44      Vice President and Chief Financial Officer
Mathias von Heydekampf..................      43      President, Worldwide Professional Audio
Thomas J. Kulikowski....................      48      President, Advanced Communication Technologies
                                                      (formerly known as Audio and Wireless Technology)
Ralph K. Strader........................      52      President, Critical Communication Systems (formerly
                                                      known as Intercom Systems)
Kathleen A. Curran......................      54      Vice President, Human Resources
Kristine L. Bruer.......................      55      Vice President and General Counsel
Leigh P. Hart...........................      45      Vice President, Finance
Terrence E. Martin......................      49      Vice President, North American Operations
Lutz Berneke............................      43      Executive Director, Germany Operations and Pro Audio
                                                      Europe, Africa and Middle East
Brian P. Friedman.......................      50      Chairman of the Board, Director
Keith W. Abell..........................      48      Director
Patrick J. Halloran.....................      46      Director
Stuart B. Katz..........................      51      Director
Edgar S. Woolard, Jr....................      71      Director
</TABLE>

     Raymond V. Malpocher. Mr. Malpocher was appointed Chief Executive Officer
and President in April 2003. Prior thereto, Mr. Malpocher was at Teleflex
Incorporated from 1999 until 2002, where he served as head of its
Marine/Industrial Division with the title of Group President.

     Gregory W. Richter. Mr. Richter joined us in September 1998 as Vice
President and Treasurer. He became Vice President International - ROW (Rest of
World) in November 2000. While retaining these responsibilities, he was promoted
to Chief Financial Officer and Secretary in February 2002. Effective October
2003, his duties for International -- ROW were redistributed to other employees.

     Mathias von Heydekampf. Mr. von Heydekampf joined us in February 1997 as
Managing Director, Germany and for our subsidiary in France. From December 1999
to March 2001, he was President, Electronics business unit and Managing Director
for Europe. He was promoted in March 2001 to the position of President,
Worldwide Electronics/Europe and ROW. He was promoted in May 2002 to the
position of President, Worldwide Professional Audio.

     Thomas J. Kulikowski. Mr. Kulikowski joined Telex in July 2003 as
President, Advanced Communication Technologies. Prior to joining us, he had
served as Vice President of Marketing for the Marine/Industrial Division of
Teleflex Incorporated since 2000.

     Ralph K. Strader. Mr. Strader joined us in December 1993 as Engineering
Manager, Intercom Products Group. Mr. Strader has held various product
management positions and was promoted in October 2000 to the position of Vice
President, Intercom Products. In January 2005 Mr. Strader was promoted to his
current position of President, Critical Communication Systems.

                                       28

<PAGE>

     Kathleen A. Curran. Ms. Curran joined us in February 1990 as Director,
Human Resources and was promoted in January 1995 to her current position of Vice
President, Human Resources.

     Kristine L. Bruer. Ms. Bruer joined us in January 1999 as Vice President
and General Counsel.

     Leigh P. Hart. Mr. Hart joined Telex in May 1999 as Director of Operations,
Planning & Analysis. He became Global Director of Operations Planning & Analysis
in April 2000 and was promoted in January 2003 to his current position of Vice
President, Finance.

     Terrence E. Martin. Mr. Martin joined us in October 1999 as Plant
Manager-Rochester (Minnesota). He was promoted in March 2002 to the position of
Vice President, Manufacturing Services. In September 2003, he was promoted to
his current position of Vice President, North American Operations.

     Lutz Berneke. Mr. Berneke joined us in April 2005 as Executive Director,
Germany and Pro Audio Europe, Africa and Middle East. Prior to joining us, he
had served as Managing Director of Siempelkamp Maschinen-und Anlagenbau GmbH &
Co. KG since 2002 and held various management positions with GEA AG from 1995 to
2002.

     Brian P. Friedman. Mr. Friedman became a director in November 2001 and was
appointed Chairman of our Board of Directors in November 2003. He has been a
Managing Member of Jefferies Capital Partners since 1997. Jefferies Capital
Partners is the manager of several investment funds that, together, own a
significant portion of Old Telex's common stock. Mr. Friedman is also the
Chairman of the Executive Committee of Jefferies & Company, Inc. He is serving
on the Board of Directors at the request of Jefferies Capital Partners. Mr.
Friedman also serves as a member of the board of directors of Jefferies Group,
Inc., Pacific Basin, Real Mex Restaurants, Inc. and K-Sea Transportation
Partners L.P.

     Keith W. Abell. Mr. Abell became a director in December 1997. Mr. Abell is
the Vice Chairman and Co-founder of GSCP (NJ), Inc., the general partner of GSCP
(NJ), L.P. ("GSC"), which he joined at its inception in 1994. GSC manages
several entities that, together, own a significant portion of Old Telex's common
stock. Mr. Abell is serving on the Board of Directors at the request of GSC.

     Patrick J. Halloran. Mr. Halloran became a director in November 2001. He
became the Co-founder and Managing Member of Wayzata Investment Partners LLC in
May 2004. Wayzata Investment Partners LLC is the manager of several investment
funds that own Old Telex's common stock. Prior thereto, he was a Vice President
and a member of the Board of Directors of CSFC Wayland Investment Advisers, Inc.
and has had been a portfolio manager since 1990. Mr. Halloran is serving on the
Board of Directors at the request of Jefferies Capital Partners.

     Stuart B. Katz. Mr. Katz became a director in July 2002. He has been a
Managing Director at Jefferies Capital Partners since 2001. Prior to that he had
been employed as an investment banker by Furman Selz Incorporated and its
successors since 1985. Jefferies Capital Partners is the manager of several
investment funds, that, together, own a significant portion of Old Telex's
common stock. Mr. Katz is serving on the Board of Directors at the request of
Jefferies Capital Partners. Mr. Katz also serves as a member of the board of
directors of Ascent Energy Inc., SkyNetix LLC, SouthView Energy LLC, and W&T
Offshore, Inc.

     Edgar S. Woolard, Jr. Mr. Woolard became a director in January 1998 and
served as Chairman of our Board of Directors from March 2000 through November
2003. Mr. Woolard is the former Chairman of the Board of Directors of DuPont. He
joined DuPont in 1957 and held a variety of engineering, manufacturing, and
management positions before being elected President and Chief Operating Officer
in 1987 and Chairman and Chief Executive Officer in 1989. He retired from DuPont
in 1995. He also serves as a member of the Board of Directors of the New York
Stock Exchange. Mr. Woolard is serving on the Board of Directors at the request
of GSC.

CODE OF BUSINESS CONDUCT AND ETHICS

     We have a Code of Business Conduct and Ethics that applies to our
directors, officers and employees. A copy of the Code was filed as an exhibit to
our 2004 Annual Report on Form 10-K and is available free of charge upon written
request to the Corporate Secretary, Telex Communications, Inc., 12000 Portland
Avenue South, Burnsville, MN 55337.


                                       29

<PAGE>
AUDIT COMMITTEE FINANCIAL EXPERT

     The Board of Directors of the Company does not maintain a separate audit
committee. Mr. Stuart B. Katz is an audit committee financial expert as defined
by the SEC rules and Mr. Katz is "independent," as the term is used in Item
401(h)(2) of Regulation S-K under the Securities Exchange Act of 1934.

ITEM 11. EXECUTIVE COMPENSATION

DIRECTOR COMPENSATION

     All of our directors are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
Board meetings and other business requiring their presence on our behalf.

EXECUTIVE COMPENSATION

     The following table sets forth information with respect to all compensation
paid for services rendered in all capacities during the last three fiscal years
by our Chief Executive Officer and the four most highly compensated executive
officers whose cash compensation exceeded $100,000 for the year ended December
31, 2005 (collectively, the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                       ANNUAL COMPENSATION
                                                                      ----------------------
                                                              FISCAL                             OTHER ANNUAL        ALL OTHER
NAME AND PRINCIPAL POSITION                                    YEAR   SALARY ($)   BONUS ($)   COMPENSATION ($)   COMPENSATION ($)
------------------------------------------------------------   ----   ----------  ----------   ----------------   ----------------
<S>                                                            <C>    <C>         <C>          <C>                  <C>
Raymond V. Malpocher .......................................   2005    $401,366    $     --     $       --           $    6,300(1)
Chief Executive Officer and President (2)                      2004     366,345     320,458             --               66,091
                                                               2003     230,560     100,000             --               24,756

Mathias von Heydekampf .....................................   2005     278,702          --             --                   --
President, Worldwide Professional Audio                        2004     269,653     166,126          1,620                   --
                                                               2003     268,708      94,500             --              128,046

Gregory W. Richter .........................................   2005     226,494          --             --                6,300(1)
Vice President and Chief Financial Officer                     2004     215,060      90,402          1,620                6,500
                                                               2003     202,345      50,673             --                5,719

Thomas J. Kulikowski .......................................   2005     201,128          --             --               63,092(3)
President, Advanced Communication Technologies                 2004     185,417      71,192          1,620               27,457
                                                               2003      75,933      36,869             --               24,300

Lutz Berneke ...............................................   2005     178,237      51,800             --                   --
Executive Director, Germany Operations and Pro Audio Europe,
Africa and Middle East (4)

</TABLE>

----------

(1)  Except as otherwise noted, represents Company matching contribution to the
     401(k) plan.

(2)  Mr. Malpocher was appointed as the Company's Chief Executive Officer in
     April 2003. For a description of Mr. Malpocher's annual compensation, see
     "- Employment Agreements" below.

(3)  Includes 401(k) matching contribution of $6,300 and relocation expenses of
     $56,792.

(4)  Mr. Berneke started his employment with our German subsidiary in April
     2005. Mr. Berneke received a guaranteed bonus as a condition of his
     employment. For a description of Mr. Berneke's annual compensation, see " -
     Employment Agreements" below.

OPTION GRANTS IN FISCAL 2005

No options were granted to the Named Executive Officers in 2005.

                                       30

<PAGE>

AGGREGATED STOCK OPTION EXERCISES IN FISCAL 2005 AND OPTION VALUE AT DECEMBER
31, 2005

The following table provides information with respect to our Chief Executive
Officer concerning stock options to acquire Common Stock of Old Telex. No other
Named Executive Officer exercised or held stock options in 2005. No stock
appreciation rights have been granted under any plan.

<TABLE>
<CAPTION>
                                NUMBER OF                            NUMBER OF SECURITIES               VALUE OF
                                 SHARES              VALUE            UNDERLYING OPTIONS          IN-THE-MONEY OPTIONS
                               ACQUIRED ON          REALIZED             EXERCISABLE/                 EXERCISABLE/
NAME                            EXERCISE              ($)               UNEXERCISABLE              UNEXERCISABLE($)(a)
----------------------         -----------          --------         --------------------         --------------------
<S>                            <C>                  <C>              <C>                          <C>
Raymond V. Malpocher                -                  -                  100,000/0                       $0/$0
</TABLE>

(a)  There is no established public market for shares of Old Telex common stock.
     Based on customary corporate valuation techniques, including an analysis of
     the discounted value of Old Telex's potential earnings and cash flow and
     the valuation of comparable companies, the value of a share of Old Telex
     common stock was estimated to be less than the exercise price of the option
     ($15.00) as of December 31, 2005.

2004 STOCK OPTION PLAN

     On October 29, 2004, Old Telex's Board of Directors adopted the 2004 Stock
Option Plan of Telex Communications Holdings, Inc. Under Old Telex's 2004 Option
Plan, Old Telex may grant options to purchase its common stock to (i) directors
of Old Telex or a subsidiary thereof, (ii) employees of Old Telex or a
subsidiary thereof, and (iii) consultants and independent contractors used by
Old Telex or a subsidiary thereof. Old Telex may issue options to purchase up to
an aggregate of 140,000 shares of its common stock under the plan. Options under
Old Telex's 2004 Option Plan vest at the rate of 20% on and after each of the
first five anniversaries of the date of grant, provided that the optionholder is
still in the employ or service of Old Telex or a subsidiary thereof on the
applicable vesting date. Subject to certain exceptions, all or any part of any
option, to the extent unexercised, terminates immediately (i) in the case of an
employee, upon the cessation or termination for any reason of the optionholder's
employment by Old Telex and all subsidiaries thereof, or (ii) in the case of a
director, consultant or independent contractor of Old Telex or a subsidiary
thereof who is not also an employee of Old Telex or a subsidiary thereof, upon
the holder's ceasing to serve as a director, consultant or independent
contractor of Old Telex or a subsidiary thereof. None of the Named Executive
Officers has received any options under Old Telex's 2004 Option Plan. Options
for 95,000 shares have been granted to persons who are not Named Executive
Officers.

ANNUAL BONUS PROGRAMS

     We have an annual bonus plan for management employees. Participants in the
plan are eligible to receive annual bonuses of between 20% and 200% of base
salary depending on the level of achievement of the specified performance
targets. No bonuses were earned under this plan in 2005.

     For a description of bonuses payable to Messr. Malpocher, von Heydekampf
and Berneke, see "Employment Agreements." Messrs. Malpocher and von Heydekampf
did not receive any bonuses in 2005. Mr. Berneke received a bonus of $51,800
pursuant to the terms of his employment agreement with an indirect subsidiary of
the Company.

PENSION PLAN

     We maintain a defined benefit pension plan qualified under the Internal
Revenue Code that provides a benefit upon retirement to eligible employees.
Since July 1, 1999, the pension plan has been a cash balance pension plan. Under
the terms of the pension plan, accrued benefits are expressed as "account
balances" for each participant. Each active participant's account receives a
benefit credit each year based on the participant's age, vesting service, and
total remuneration covered by the pension plan, consisting of base salary,
commission, overtime and bonuses paid to the participant, as illustrated in the
following table. Effective June 30, 2003, the pension plan was frozen, with no
future benefit credit for participants after this date.

                                       31

<PAGE>

BENEFIT CREDIT CHART

<TABLE>
<CAPTION>
                                                                         BENEFIT CREDIT AS A PERCENTAGE OF
                                                         ------------------------------------------------------------------
                  AGE + YEARS OF                                                             PENSION EARNINGS FOR THE YEAR
                VESTING SERVICE ON                                                               THAT ARE GREATER THAN
                   JANUARY 1                             PENSION EARNINGS FOR THE YEAR           THE INTEGRATION LEVEL
--------------------------------------------------       -----------------------------       ------------------------------
<S>                                                      <C>                                 <C>
Under 40 .........................................                    1.5%                                 1.5%
40-49 ............................................                    2.0                                  2.0
50-59 ............................................                    2.6                                  2.6
60-69 ............................................                    3.2                                  3.2
70-79 ............................................                    4.2                                  4.2
80-89 ............................................                    5.4                                  5.4
90 and above .....................................                    6.8                                  5.4
</TABLE>

     Through 2003 the integration level was equal to one-half of the Social
Security taxable wage base for the year. For 2003 the integration level was
$43,500. For plan years through 2003, annual compensation taken into account for
purposes of calculating benefits is limited to $200,000.

      The accounts are also credited with an interest credit, which is based on
the average six-month Treasury bill rate for November 1 of the prior year, plus
one percent. The interest credit for a full calendar year will not be less than
5 percent, nor greater than the interest rate used to determine lump sum
payments. With the plan frozen, participant accounts will continue to receive
interest credits.

     The estimated projected annual single life annuity benefit for the Named
Executive Officers, assuming they continue with Telex to age 65, and their
compensation, the maximum recognizable compensation, and the integration level
do not change, would be as follows:

<TABLE>
<CAPTION>
<S>                                               <C>
Mr. Richter.............................          $8,075
</TABLE>

     Messrs. Malpocher and Kulikowski were not eligible to participate in the
Pension Plan because they were not participants in the plan before the plan was
frozen effective June 30, 2003. Messrs. von Heydekampf and Berneke were not
eligible to participate in the Pension Plan because they are not United States
citizens.

EMPLOYMENT AGREEMENTS

     Effective April 14, 2003, we entered into an employment agreement with Mr.
Malpocher, which was subsequently amended on January 14, 2004 and which
terminates on April 30, 2007. The agreement provides that Mr. Malpocher will
receive:

     -    An annual base salary of $350,000, subject to annual increases;

     -    An annual bonus payment based on the objectives and awards established
          by the Board of Directors; and

     -    In the event his employment is terminated without cause, or he
          terminates employment for good reason, one year's base annual salary
          and an amount equal to his bonus earned prorated as of the date of
          termination payable as and when paid to other eligible bonus plan
          participants.

     Pursuant to Mr. Malpocher's subscription and option agreement associated
with his amended employment agreement, he purchased 300,000 shares of Old Telex
common stock at a purchase price of $.327 per share and was granted options to
purchase one hundred thousand shares of Old Telex common stock at an exercise
price of $15 per share, exercisable until the earlier of September 30, 2008 or
upon the occurrence of certain specified events.

     Effective January 5, 2003, we entered into an agreement with Mr. von
Heydekampf, pursuant to which he will receive:

     -    A base salary of $270,000 per year, subject to annual increases;

     -    A bonus payment of between 40% and 140% of his annual base salary upon
          the achievement of certain specified performance objectives; and

     -    In the event his employment is terminated without cause, or he
          terminates his employment for good reason, we will pay a lump-sum
          payment of 150% of his annual base salary plus 150% of his annual
          target bonus (which target bonus is 70% of his annual base salary).


                                       32

<PAGE>
     Effective October 29, 2004, EVI Audio GmBH, an indirect subsidiary of the
Company, entered into an executive director agreement with Mr. Berneke,
commencing April 1, 2005, pursuant to which he will receive:

     -    A base salary of Euro 175,000 (approximately $210,000) per year,
          subject to annual increases;

     -    A bonus payment of between 15% and 60% of his annual base salary upon
          the achievement of certain specified performance objectives; and

     -    A guaranteed bonus for 2005 of 30% of his annual base salary.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     The authorized common stock of Telex as of March 14, 2006 consists of 1,000
shares of common stock, par value $.01 per share, of which 500 shares are issued
and outstanding. All of our common stock is owned by our direct parent,
Intermediate, and all of our direct parent's limited liability company interests
are owned by Old Telex.

     The following table sets forth information with respect to the beneficial
ownership of the common stock of Old Telex as of March 14, 2006 by

     -    each person who is known by us to beneficially own more than five
          percent of Old Telex securities,

     -    each director,

     -    each Named Executive Officer as listed in the Summary Compensation
          Table above, and

     -    all directors and executive officers as a group.

     Except as otherwise indicated, each holder has sole voting and sole
investment power with respect to the securities shown.

<TABLE>
<CAPTION>
                                                                             NUMBER OF UNDERLYING      PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER                    NUMBER OF SHARES          OPTIONS (a)              CLASS
---------------------------------------------------     ----------------     --------------------     ---------------
<S>                                                     <C>                  <C>                      <C>
GSCP Recovery, Inc.(b)(c) .........................          943,786                    --                 13.7%
GSC Partners CDO Fund, Limited(b)(c) ..............          468,497                    --                  6.8
TCI Investment II, LLC(c)(d) ......................        1,028,612                    --                 14.9
ING Furman Selz Investors III, L.P.(e)(f) .........        1,140,616                    --                 16.5
ING Barings U.S. Leveraged Equity Plan LLC (e)(f)..          356,734                    --                  5.2
Wayzata Investment Partners LLC  (g)(h) ...........          401,535                    --                  5.8
Brian P. Friedman(i) ..............................                0                    --                    *
Keith W. Abell(j) .................................                0                    --                    *
Patrick J. Halloran(k) ............................                0                    --                    *
Stuart B. Katz (l) ................................                0                    --                    *
Edgar S. Woolard, Jr.(d) ..........................           10,884                    --                    *
Raymond V. Malpocher(m)(n) ........................          300,000               100,000                  4.4
Mathias von Heydekampf ............................           60,000                    --                    *
Gregory W. Richter ................................           60,000                    --                    *
Thomas J. Kulikowski ..............................           60,000                    --                    *
Lutz Berneke ......................................                0                    --                    *
All directors and executive officers as a group (15
  persons)(d)(i)(j)(k)(l)(n) ......................          550,884               100,000                  9.6
</TABLE>

* Less than 1%.

     (a)  The shares listed include shares of Old Telex that may be acquired
          upon exercise of presently exercisable options to acquire Old Telex
          common stock and all options that will become exercisable within 60
          days from the date as of which such information is given.

     (b)  The address of GSCP Recovery, Inc., GSC Partners CDO Fund, Limited,
          and TCI Investment II, LLC is c/o GSC, 500 Campus Drive, Suite 220,
          Florham Park, New Jersey 07932.

     (c)  Greenwich Street Capital Partners II, L.P., TRV Executive Fund, L.P.,
          Greenwich Street Employees Fund, L.P., GSCP Offshore Fund, L.P. and
          Greenwich Fund, L.P. are the controlling members of GSCP Recovery
          (US), LLC. GSCP Recovery (US), LLC is the sole stockholder of GSCP
          Recovery, Inc. Greenwich Street Investments II, L.L.C. is the general
          partner of each of the controlling members of GSCP Recovery (US), LLC;
          GSC is the manager of each of the controlling members of

                                       33

<PAGE>

          GSCP Recovery (US), LLC, and the collateral manager of GSC Partners
          CDO Fund, Limited. GSCP (NJ), Inc. is the general partner of GSC.

          Keith W. Abell, a director, is an executive officer and stockholder of
          GSCP (NJ), Inc., a limited partner of GSC.

          Each of the above entities and Mr. Abell disclaim beneficial ownership
          of Old Telex's common stock except to the extent that each holds
          pecuniary interest in Old Telex's common stock.

     (d)  The members of TCI Investment II, LLC are Greenwich Street Capital
          Partners, L.P. and New Century Enterprises, Ltd. Greenwich Street
          Investments, L.P. is the general partner of Greenwich Street Capital
          Partners, L.P. Greenwich Street Investments, L.L.C. is the general
          partner of Greenwich Street Investments, L.P. The Travelers Insurance
          Company is the sole member of Greenwich Street Investments, L.L.C. GSC
          is the manager of Greenwich Street Capital Partners, L.P. and GSCP
          (NJ), Inc. is the general partner of GSC. Keith W. Abell is an
          executive officer and stockholder of GSCP (NJ), Inc. and a limited
          partner of GSC. Edgar S. Woolard, one of our directors, is the
          President and the owner of 92.7% of the equity interest in New Century
          Enterprises, Ltd. Each of the above entities and individuals disclaim
          beneficial ownership of Old Telex's common stock except to the extent
          that each holds a pecuniary interest in Old Telex's common stock.

     (e)  The address for ING Furman Selz Investors III, L.P. and ING Barings
          U.S. Leveraged Equity Plan LLC is c/o Jefferies Capital Partners, 520
          Madison Avenue, New York, New York 10022.

     (f)  ING Furman Selz Investors III, L.P. and ING Barings U.S. Leveraged
          Equity Plan LLC may be deemed to be beneficial owners of the
          securities held by the other and of 139,596 shares held by ING Barings
          Global Leveraged Equity Plan Ltd. (such parties referred to,
          collectively, as the ING Funds). Jefferies Capital Partners controls
          the investment decisions of the ING Funds in its capacity as Manager
          of each of the funds. Messrs. Katz and Friedman, a director and the
          Chairman of our Board of Directors, respectively, are an officer and
          the Managing Member, respectively, of Jefferies Capital Partners.
          Messrs. Katz and Friedman disclaim beneficial ownership of the shares
          owned by the ING Funds.

     (g)  The address of Wayzata Investment Partners LLC is 701 East Lake
          Street, Suite 300, Wayzata, Minnesota 55391.

     (h)  Wayzata Investment Partners LLC is the manager of Wayland Investment
          Fund, LLC and Wayland Recovery Fund, LLC and is the investment adviser
          for Wayland Investment Fund II, LLC (collectively, the Wayland Funds).
          Wayland Investment Fund, LLC owns 225,636 shares. Wayland Recovery
          Fund, LLC owns 145,571 shares. Wayland Investment Fund II, LLC owns
          30,328 shares. Mr. Halloran is the Managing Member of Wayzata
          Investment Partners LLC. Mr. Halloran disclaims beneficial ownership
          of the shares owned by the Wayland Funds.

     (i)  See note (f).

     (j)  See notes (c) and (d) above.

     (k)  See note (h) above.

     (l)  See note (f) above.

     (m)  Mr. Malpocher's address is 12000 Portland Avenue South, Burnsville,
          Minnesota, 55337.

     (n)  Includes 100,000 shares subject to a currently exercisable option.

                                       34
<PAGE>

      The following table summarizes share and exercise price information about
Old Telex's equity compensation plans as of December 31, 2005:

<TABLE>
<CAPTION>
                                                                                                         NUMBER OF SECURITIES
                                                                                                        REMAINING AVAILABLE FOR
                                       NUMBER OF SECURITIES TO BE                                     FUTURE ISSUANCE UNDER EQUITY
                                        ISSUED UPON EXERCISE OF        WEIGHTED-AVERAGE EXERCISE          COMPENSATION PLANS
                                          OUTSTANDING OPTIONS,       PRICE OF OUTSTANDING OPTIONS,   (EXCLUDING SECURITIES REFLECTED
       PLAN CATEGORY                      WARRANTS AND RIGHTS            WARRANTS AND RIGHTS                 IN COLUMN (a))
                                                  (a)                            (b)                               (c)
<S>                                    <C>                           <C>                             <C>
Equity compensation plans
approved by security holders                         --                         $    --                              --
Equity compensation plans
not approved by security holders (1)            195,000                         $ 10.62                          45,000
Total                                           195,000                         $ 10.62                          45,000
</TABLE>

     (1)    See "Item 11, Executive Compensation - 2004 Stock Option Plan" for a
            description of Old Telex's stock option plan and Employment
            Agreements" for a description of Mr. Malpocher's nonqualified stock
            option plan.

ITEM  13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Not applicable.

ITEM  14. PRINCIPAL ACCOUNTING FEES AND SERVICES

      The following table shows the fees billed by Ernst & Young LLP for the
fiscal years ended December 31, 2005 and 2004.

<TABLE>
<CAPTION>
                           2005              2004
                       ------------      ------------
<S>                    <C>               <C>
Audit Fees              $  552,400        $  557,300
Audit Related Fees          79,200            37,700
Tax Fees                   124,600           110,800
                       -----------       -----------
  Total                 $  756,200        $  705,800
                       ===========       ===========
</TABLE>

      AUDIT FEES. This category includes fees for the audit of the Company's
annual financial statements and for the review of the Company's interim
financial statements on Form 10-Q. This category also includes statutory audits
required by non-U.S. jurisdictions and work related to our 2004 registration
statements.

      AUDIT RELATED FEES. This category includes assurance and related services
that are reasonably related to the performance of the annual audit, including
primarily benefit plan audits, due diligence related to an acquisition and
consultation concerning financial accounting and reporting standards.

      TAX FEES. This category consists of fees for tax compliance, tax advice
and tax planning services.

      The Board of Directors approved the engagement of Ernst & Young LLP for
the purpose of performing audit, audit related and tax services for the Company
for Fiscal 2005.

                                       35
<PAGE>
                                    PART IV

ITEM  15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

<TABLE>
<CAPTION>
                                                                            PAGE
<S>   <C>                                                                   <C>
1.    Financial Statements:

      Report of Independent Registered Public Accounting
      Firm.................................................................   40

TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC

      Consolidated Balance Sheets as of December 31, 2005 and
      2004.................................................................   41

      Consolidated Statements of Operations for the years
      ended December 31, 2005 and 2004, the one-month period ended
      December 31, 2003 and the eleven-month period ended
      November 30,2003.....................................................   42

      Consolidated Statements of Member's/Shareholders' Deficit
      and Comprehensive Income for the years ended December 31, 2005
      and 2004, the one-month period ended December 31, 2003 and the
      eleven-month period ended November 30, 2003..........................   43

      Consolidated Statements of Cash Flows for the years ended
      December 31, 2005 and 2004, the one-month period ended December 31,
      2003 and the eleven-month period ended November 30, 2003.............   44

TELEX COMMUNICATIONS, INC.

      Consolidated Balance Sheets as of December 31, 2005 and 2004.........   45

      Consolidated Statements of Operations for the years ended
      December 31, 2005 and 2004, the one-month period ended December 31,
      2003 and the eleven-month period ended November 30, 2003.............   46

      Consolidated Statements of Shareholder's Deficit and Comprehensive
      Income for the years ended December 31, 2005 and 2004, the one-month
      period ended December 31, 2003 and the eleven-month period ended
      November 30, 2003 ...................................................   47

      Consolidated Statements of Cash Flows for the years ended
      December 31, 2005 and 2004, the one-month period ended December 31,
      2003 and the eleven-month period ended November 30, 2003.............   48

      Notes to Consolidated Financial Statements...........................   49

</TABLE>

                                       36
<PAGE>

2.    Financial Statement Schedules:

   TELEX COMMUNICATIONS, INC.

<TABLE>
<S>      <C>                                                                      <C>
         Condensed Consolidating Balance Sheets as of December 31,
         2005 and 2004..........................................................  70

         Condensed Consolidating Statements of Operations for the years
         ended December 31, 2005 and 2004, the one-month period ended
         December 31, 2003 and the eleven-month period ended
         November 30, 2003 .....................................................  72

         Condensed Consolidating Statements of Cash Flows for the years ended
         December 31, 2005 and 2004, the one-month period ended December 31,
         2003 and the eleven-month period ended November 30, 2003 ..............  76

         The following supplemental schedule is filed as part of this report:

         Schedule II - Valuation and Qualifying Accounts for the years
         ended December 31, 2005 and 2004, the one-month period ended
         December 31, 2003 and the eleven-month period ended November 30, 2003..  81

         All other schedules are omitted because they are inapplicable, not
         required, or the information is in the consolidated financial
         statements or related notes.
</TABLE>

   3.    Exhibits:

         The Exhibits are listed in the Exhibit Index required by Item 601 of
         the Regulation S-K and included immediately following the Consolidated
         Financial Statements.

(b)   The Exhibit Index and required Exhibits are included following the
      Consolidated Financial Statements. The Company will furnish to any
      security holder, upon written request, any exhibit listed in the
      accompanying Exhibit Index upon payment by such security holder of the
      Company's reasonable expenses in furnishing any such exhibit.

(c)   See Item 15(a)(2) above.

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT:

      We intend to send to our security holders this Report on Form 10-K
covering the year ended December 31, 2005. We have not sent any proxy material
relating to any annual or other meeting of security holders.

                                       37

<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, each Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, as of the 24th day
of March, 2006.

                            TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC
                            TELEX COMMUNICATIONS, INC.

                                   By:  /s/ Raymond V. Malpocher
                                        -------------------------------------
                                        Raymond V. Malpocher
                                        Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on behalf of each of the Registrants by the
following persons on the dates and in the capacities indicated (each person
serves in the indicated capacities for each of the Registrants):

<TABLE>
<CAPTION>
          SIGNATURE                              TITLE                                DATE
          ---------                              -----                                ----
<S>                               <C>                                           <C>
                                  Chief Executive Officer and President
                                  (principal executive officer) and
 /s/ Raymond V. Malpocher         Manager/Director                               March 24, 2006
-------------------------------
 Raymond V. Malpocher

                                  Chief Financial Officer, Secretary and
                                  Treasurer (principal financial and
 /s/ Gregory W. Richter           accounting officer)                            March 24, 2006
-------------------------------
 Gregory W. Richter

 /s/ Brian P. Friedman            Manager/Director                               March 24, 2006
-------------------------------
 Brian P. Friedman

 /s/ Edgar S. Woolard, Jr.        Manager/Director                               March 24, 2006
-------------------------------
 Edgar S. Woolard, Jr.

 /s/ Keith W. Abell               Manager/Director                               March 24, 2006
-------------------------------
 Keith W. Abell

 /s/ Patrick J. Halloran          Manager/Director                               March 24, 2006
-------------------------------
 Patrick J. Halloran

 /s/ Stuart B. Katz               Manager/Director                               March 24, 2006
-------------------------------
 Stuart B. Katz
</TABLE>

                                       38
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            PAGE

Report of Independent Registered Public Accounting firm....................   40

TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES:

Consolidated Balance Sheets as of December 31, 2005 and 2004...............   41

Consolidated Statements of Operations for the years ended
December 31, 2005 and 2004, the one-month period ended December 31, 2003,
and the eleven-month period ended November 30, 2003........................   42

Consolidated Statements of Member's/Shareholders' Deficit and
Comprehensive Income for the years ended December 31, 2005 and 2004,
the one-month period ended December 31, 2003, and the eleven-month
period ended November 30, 2003.............................................   43

Consolidated Statements of Cash Flows for the years ended December 31,
2005 and 2004, the one-month period ended December 31, 2003, and the
eleven-month period ended November 30, 2003................................   44

TELEX COMMUNICATIONS, INC. AND SUBSIDIARIES:

Consolidated Balance Sheets as of December 31, 2005 and 2004...............   45

Consolidated Statements of Operations for the years ended December 31,
2005 and 2004, the one-month period ended December 31, 2003, and the
eleven-month period ended November 30, 2003................................   46

Consolidated Statements of Shareholder's Deficit and Comprehensive
Income for the years ended December 31, 2005 and 2004, the
one-month period ended December 31, 2003, and the eleven-month
period ended November 30, 2003.............................................   47

Consolidated Statements of Cash Flows for the years ended
December 31, 2005 and 2004, the one-month period ended December 31,
2003, and the eleven-month period ended November 30, 2003..................   48

Notes to Consolidated Financial Statements.................................   49

                                       39
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BOARD OF DIRECTORS
TELEX COMMUNICATIONS HOLDINGS, INC.

      We have audited the accompanying consolidated balance sheets of Telex
Communications Intermediate Holdings, LLC and subsidiaries (Successor) and Telex
Communications, Inc. and subsidiaries (Successor) as of December 31, 2005 and
2004 and the related consolidated statements of operations,
member's/shareholder's deficit and comprehensive income, and cash flows for the
years ended December 31, 2005 and 2004 and for the one-month period ended
December 31, 2003. We also have audited the consolidated statements of
operations, shareholders' deficit and comprehensive income and cash flows for
the eleven-month period ended November 30, 2003 of Telex Communications
Holdings, Inc., formerly known as Telex Communications, Inc., and subsidiaries
(Predecessor). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Telex
Communications Intermediate Holdings, LLC and subsidiaries and Telex
Communications, Inc. and subsidiaries at December 31, 2005 and 2004 and the
related consolidated results of their operations and their cash flows for the
years ended December 31, 2005 and 2004 and for the one-month period ended
December 31, 2003 in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated results of operations
and cash flows of Telex Communications Holdings, Inc. and subsidiaries for the
eleven-month period ended November 30, 2003 in conformity with U.S. generally
accepted accounting principles.

ERNST & YOUNG LLP

Minneapolis, Minnesota
March 8, 2006

                                       40
<PAGE>

        TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                As of December 31

<TABLE>
<CAPTION>
                                                                  2005           2004
                                                              ------------   ------------
<S>                                                           <C>            <C>
                                     ASSETS
Current Assets:
 Cash and cash equivalents.................................    $   13,189     $   14,959
 Accounts receivable, net of allowance for doubtful
  accounts of $3,182 in 2005 and $2,878 in 2004............        51,018         50,177
 Inventories...............................................        51,742         52,573
 Deferred income taxes.....................................         1,899          1,088
 Prepaid expenses..........................................         3,233          1,942
 Other current assets......................................         1,502          1,953
                                                               ----------     ----------
   Total current assets....................................       122,583        122,692
Property, plant and equipment, net.........................        35,400         32,025
Deferred financing costs, net..............................         4,593          6,162
Goodwill...................................................        15,998         15,845
Other assets...............................................         3,422          3,296
                                                               ----------     ----------
                                                               $  181,996     $  180,020
                                                               ==========     ==========
                        LIABILITIES AND MEMBER'S DEFICIT
Current Liabilities:
 Revolving lines of credit.................................    $       --     $    1,011
 Current maturities of long-term debt......................           458            479
 Accounts payable..........................................        15,229         13,173
 Accrued wages and benefits................................        12,848         11,643
 Accrued interest..........................................         3,113          3,098
 Other accrued liabilities.................................         8,015          7,971
 Income taxes payable......................................         1,803          5,548
                                                               ----------     ----------
   Total current liabilities...............................        41,466         42,923
Long-term debt, net........................................       207,949        197,065
Payable to Telex Communications Holdings, Inc..............         6,183          3,273
Other long-term liabilities................................         7,672          9,250
                                                               ----------     ----------
   Total liabilities.......................................       263,270        252,511
                                                               ----------     ----------
Commitments and contingencies
Member's Deficit:
 Member interest...........................................        83,946         83,946
 Accumulated deficit.......................................      (157,470)      (154,441)
 Accumulated other comprehensive loss......................        (7,750)        (1,996)
                                                               ----------     ----------
   Total member's deficit..................................       (81,274)       (72,491)
                                                               ----------     ----------
                                                               $  181,996     $  180,020
                                                               ==========     ==========
</TABLE>
                See notes to consolidated financial statements.

                                       41
<PAGE>

        TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  SUCCESSOR                            PREDECESSOR
                                             ----------------------------------------------------    ---------------
                                                                                    ONE MONTH         ELEVEN MONTHS
                                               YEAR ENDED         YEAR ENDED           ENDED              ENDED
                                              DECEMBER 31,       DECEMBER 31,      DECEMBER 31,        NOVEMBER 30,
                                                  2005               2004              2003                2003
                                             ---------------    --------------    ---------------    ---------------
                                                                        (IN THOUSANDS)
<S>                                          <C>                <C>               <C>                <C>
Net sales..................................    $   307,733        $  296,828        $    25,433        $   243,106
Cost of sales..............................        172,469           163,206             14,957            140,863
                                               -----------        ----------        -----------        -----------
  Gross profit.............................        135,264           133,622             10,476            102,243
Operating expenses:
  Engineering..............................         17,392            15,423              1,224             12,947
  Selling, general and administrative......         84,349            80,899              6,232             67,816
  Restructuring charges....................          1,763                --                 --                 --
  Goodwill and asset impairment charges....             --             7,915                 --                 --
  Pension curtailment gain.................             --                --                 --             (2,414)
                                               -----------        ----------        -----------        -----------
                                                   103,504           104,237              7,456             78,349
                                               -----------        ----------        -----------        -----------
Operating income...........................         31,760            29,385              3,020             23,894
Interest expense...........................        (28,763)          (27,346)            (2,589)           (26,897)
Other income, net..........................            870             1,124                 85                529
Loss on early extinguishment of debt.......             --                --             (1,186)                --
                                               -----------        ----------        -----------        -----------
Income (loss) before income taxes..........          3,867             3,163               (670)            (2,474)
Provision for income taxes.................          6,896             8,544              1,171              3,585
                                               -----------        ----------        -----------        -----------
  Net loss.................................    $    (3,029)       $   (5,381)       $    (1,841)       $    (6,059)
                                               ===========        ==========        ===========        ===========
</TABLE>

                See notes to consolidated financial statements.

                                       42
<PAGE>


        TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF MEMBER'S/SHAREHOLDERS' DEFICIT AND
                              COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                          CAPITAL IN-
                                                                        EXCESS OF PAR -                ACCUMULATED
                                                     COMMON STOCK           MEMBER                        OTHER        MEMBER'S/
                                                 ----------------------    INTEREST/    ACCUMULATED COMPREHENSIVE  SHAREHOLDERS'
                                                   SHARES      AMOUNT    COMMON STOCK     DEFICIT        LOSS        DEFICIT
                                                 ----------- ---------- --------------- ----------- -------------  -------------
                                                                       (IN THOUSANDS, EXCEPT  SHARE DATA)
<S>                                              <C>         <C>        <C>             <C>         <C>            <C>
PREDECESSOR
BALANCE, December 31, 2002......................  4,987,127    $  50      $    80,130    $(141,159)  $    (7,029)   $  (68,008)
 Net loss.......................................         --       --               --       (6,059)           --            --
 Other comprehensive loss  --
  Foreign currency translation adjustments.....          --       --               --           --         4,441            --
  Minimum pension liability adjustments.........         --       --               --           --        (5,078)           --
  Comprehensive net loss........................         --       --               --           --            --        (6,696)
                                                 ----------  -------      -----------    ---------   -----------    ----------
BALANCE, November 30, 2003......................  4,987,127       50           80,130     (147,218)       (7,666)      (74,704)

SUCCESSOR
Net contribution of assets and liabilities from
  Predecessor...................................         --       --            3,766           --            --         3,766
 Share adjustment from Predecessor Common Stock,
   net.......................................... (4,987,127)     (50)              50           --            --            --
 Dividend to Parent.............................         --       --               --           (1)           --            (1)
 Net loss.......................................         --       --               --       (1,841)           --            --
 Other comprehensive income  --
  Foreign currency translation adjustments...            --       --               --           --         2,055            --
  Minimum pension liability adjustments.........         --       --               --           --         2,351            --
  Comprehensive net income......................         --       --               --           --            --         2,565
                                                 ----------  -------      -----------    ---------   -----------    ----------
BALANCE, December 31, 2003......................         --       --           83,946     (149,060)       (3,260)      (68,374)
 Net loss.......................................         --       --               --       (5,381)           --            --
Other comprehensive loss  --

  Foreign currency translation adjustments...            --       --               --           --         3,106            --
  Minimum pension liability adjustments.........         --       --               --           --        (1,842)           --
  Comprehensive net loss........................         --       --               --           --            --        (4,117)
                                                 ----------  -------      -----------    ---------   -----------    ----------
BALANCE, December 31, 2004......................         --       --           83,946     (154,441)       (1,996)      (72,491)
 Net loss.......................................         --       --               --       (3,029)           --            --
 Other comprehensive loss  --
  Foreign currency translation adjustments...            --       --               --           --        (5,477)           --
  Minimum pension liability adjustments.........         --       --               --           --          (277)           --
  Comprehensive net income......................         --       --               --           --            --        (8,783)
                                                 ----------  -------      -----------    ---------   -----------    ----------
BALANCE, December 31, 2005......................         --   $   --      $    83,946    $(157,470)  $    (7,750)   $  (81,274)
                                                 ==========   ======      ===========    =========   ===========    ==========
</TABLE>

                 See notes to consolidated financial statements.

                                       43
<PAGE>

        TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       SUCCESSOR                     PREDECESSOR
                                                                       ----------------------------------------     -------------
                                                                                                      ONE MONTH     ELEVEN MONTHS
                                                                        YEAR ENDED     YEAR ENDED       ENDED           ENDED
                                                                       DECEMBER 31,   DECEMBER 31,   DECEMBER 31,    NOVEMBER 30,
                                                                           2005          2004            2003           2003
                                                                       ------------   ------------   ------------   -------------
<S>                                                                    <C>            <C>            <C>            <C>
OPERATING ACTIVITIES:
  Net loss..........................................................    $  (3,029)     $  (5,381)     $  (1,841)     $   (6,059)
  Adjustments to reconcile net loss to cash flows
    from operations  --
    Depreciation....................................................        6,839          6,055            481           5,592
    Amortization of identifiable intangibles........................          115             13              1              20
    Amortization of deferred financing charges and
      pay-in-kind interest charges..................................       12,971         11,390          1,233          21,017
    Restructuring charges...........................................        1,763             --             --              --
    Goodwill and asset impairment charges...........................           --          7,915             --              --
    Provision for bad debts.........................................          976            828           (279)            869
    Gain on sale of product lines and other assets..................           --           (268)            --            (319)
    Loss on early extinguishment of debt............................           --             --          1,186              --
    Pension curtailment gain........................................           --             --             --          (2,414)
    Deferred income taxes...........................................          (54)           367           (391)             18
Change in operating assets and liabilities:
    Accounts receivable.............................................       (5,245)        (2,262)         2,589          (2,410)
    Inventories.....................................................         (261)        (5,682)         1,404           3,800
    Other current assets............................................       (2,534)        (1,077)         1,000          (2,210)
    Accounts payable and accrued liabilities........................        4,126            109            527          (1,761)
    Income taxes....................................................       (3,047)          (869)            56          (1,840)
    Other long-term assets and long-term liabilities................        3,490          1,785           (335)            986
                                                                        ---------      ---------      ---------      ----------
      Net cash provided by operating activities.....................       16,110         12,923          5,631          15,289
                                                                        ---------      ---------      ---------      ----------
INVESTING ACTIVITIES:
  Additions to property, plant and equipment........................      (11,814)        (7,722)          (546)         (5,165)
  Acquisition of business/intangible assets.........................       (3,944)            --             --              --
  Proceeds from sale of product lines and other assets..............           --          2,338             --           1,158
  Other.............................................................          221            221             --             166
                                                                        ---------      ---------      ---------      ----------
      Net cash used in investing activities.........................      (15,537)        (5,163)          (546)         (3,841)
                                                                        ---------      ---------      ---------      ----------
FINANCING ACTIVITIES:
  Borrowings (repayments) under revolving lines of credit,
    net.............................................................       (1,011)         1,011        (12,107)           (372)
  Proceeds from issuance of long-term debt..........................           --             --        125,000              --
  Repayment of long-term debt.......................................         (456)          (443)      (110,297)         (9,078)
  Payments for deferred financing costs.............................           --           (401)        (6,869)             --
  Dividends to shareholder..........................................           --             --             (1)             --
                                                                        ---------      ---------      ---------      ----------
      Net cash (used in) provided by financing activities...........       (1,467)           167         (4,274)         (9,450)
                                                                        ---------      ---------      ---------      ----------
Effect of exchange rate changes on cash and cash
  equivalents.......................................................         (876)           334            242             273
                                                                        ---------      ---------      ---------      ----------
CASH AND CASH EQUIVALENTS:
  Net (decrease) increase...........................................       (1,770)         8,261          1,053           2,271
  Balance at beginning of period....................................       14,959          6,698          5,645           3,374
                                                                        ---------      ---------      ---------      ----------
  Balance at end of period..........................................    $  13,189      $  14,959      $   6,698      $    5,645
                                                                        =========      =========      =========      ==========
SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
  Interest..........................................................    $  15,957      $  14,878      $     119      $    5,322
                                                                        =========      =========      =========      ==========
  Income taxes......................................................    $   7,014      $   6,547      $     403      $    5,419
                                                                        =========      =========      =========      ==========
  Noncash financing activities related to debt restructuring -
      Net contribution of assets and liabilities from Predecessor...    $      --      $      --      $   3,766      $       --
</TABLE>

                 See notes to consolidated financial statements.


                                       44
<PAGE>
                   TELEX COMMUNICATIONS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                 (In thousands, except share and per share data)

                                As of December 31

<TABLE>
<CAPTION>
                                                                                      2005           2004
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
                                     ASSETS
Current Assets:
  Cash and cash equivalents...................................................    $     13,189   $     14,959
  Accounts receivable, net of allowance for doubtful accounts of $3,182 in
   2005 and $2,878 in 2004....................................................          51,018         50,177
  Inventories.................................................................          51,742         52,573
  Deferred income taxes.......................................................           6,038          1,088
  Prepaid expenses............................................................           3,233          1,942
  Other current assets........................................................           1,502          1,953
                                                                                  ------------   ------------
   Total current assets.......................................................         126,722        122,692
Property, plant and equipment, net............................................          35,400         32,025
Deferred financing costs, net.................................................           3,981          5,350
Goodwill......................................................................          15,998         15,845
Other assets..................................................................           3,465          3,296
                                                                                  ------------   ------------
                                                                                  $    185,566   $    179,208
                                                                                  ============   ============
                         LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
  Revolving lines of credit...................................................    $         --   $      1,011
  Current maturities of long-term debt........................................             458            479
  Accounts payable............................................................          15,229         13,173
  Accrued wages and benefits..................................................          12,848         11,643
  Accrued interest............................................................           2,995          2,995
  Other accrued liabilities...................................................           8,019          7,971
  Income taxes payable........................................................           1,803          5,548
                                                                                  ------------   ------------
   Total current liabilities..................................................          41,352         42,820
Long-term debt, net...........................................................         125,641        126,079
Payable to Telex Communications Holdings, Inc.................................           6,183          3,273
Other long-term liabilities...................................................           7,672          9,250
                                                                                  ------------   ------------
   Total liabilities..........................................................         180,848        181,422
                                                                                  ------------   ------------
Commitments and contingencies
Shareholder's Equity (Deficit):
  Common stock, $0.01 par value, 1,000 shares authorized; 500 shares issued
   and outstanding -- 2005 and 2004...........................................              --             --
  Capital in excess of par -- common stock....................................         143,029        143,029
  Accumulated deficit.........................................................        (131,077)      (143,247)
  Accumulated other comprehensive loss........................................          (7,234)        (1,996)
                                                                                  ------------   ------------
   Total shareholder's equity (deficit).......................................           4,718         (2,214)
                                                                                  ------------   ------------
                                                                                  $    185,566   $    179,208
                                                                                  ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                       45
<PAGE>

                   TELEX COMMUNICATIONS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   SUCCESSOR                    PREDECESSOR
                                                   -----------------------------------------    -------------
                                                                                  ONE MONTH        ELEVEN
                                                    YEAR ENDED     YEAR ENDED       ENDED       MONTHS ENDED
                                                   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   NOVEMBER 30,
                                                       2005           2004          2003            2003
                                                   ------------   -----------    -----------    -------------
                                                                          (IN THOUSANDS)
<S>                                                <C>            <C>            <C>            <C>
Net sales.......................................      $ 307,733     $ 296,828      $  25,433      $  243,106
Cost of sales...................................        172,469       163,206         14,957         140,863
                                                      ---------     ---------      ---------      ----------
  Gross profit..................................        135,264       133,622         10,476         102,243
Operating expenses:
  Engineering...................................         17,392        15,423          1,224          12,947
  Selling, general and administrative...........         84,295        80,865          6,117          67,816
  Restructuring charges.........................          1,763            --             --              --
  Goodwill and asset impairment charges.........             --         7,915             --              --
  Pension curtailment gain......................             --            --             --          (2,414)
                                                      ---------     ---------      ---------      ----------
                                                        103,450       104,203          7,341          78,349
                                                      ---------     ---------      ---------      ----------
Operating income................................         31,814        29,419          3,135          23,894
Interest expense................................        (16,360)      (16,605)        (1,403)        (26,897)
Other income, net...............................            870         1,124             85             529
Loss on early extinguishment of debt............             --            --         (1,186)             --
                                                      ---------     ---------      ---------      ----------
Income (loss) before income taxes...............         16,324        13,938            631          (2,474)
Provision for income taxes......................          3,230         8,544          1,171           3,585
                                                      ---------     ---------      ---------      ----------
  Net income (loss).............................      $  13,094     $   5,394      $    (540)     $   (6,059)
                                                      =========     =========      =========      ==========
</TABLE>

                 See notes to consolidated financial statements.

                                       46
<PAGE>

                   TELEX COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (DEFICIT) AND COMPREHENSIVE
                                     INCOME

<TABLE>
<CAPTION>

                                                                       CAPITAL IN                      ACCUMULATED
                                               COMMON STOCK          EXCESS OF PAR-                      OTHER        SHAREHOLDER'S
                                      -----------------------------    COMMON          ACCUMULATED    COMPREHENSIVE      EQUITY
                                         SHARES          AMOUNT         STOCK             DEFICIT        LOSS          (DEFICIT)
                                      ------------     ------------   -------------   -------------   ------------   -------------
                                                                    (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                   <C>              <C>            <C>             <C>             <C>            <C>
PREDECESSOR
BALANCE, December 31, 2002 ........       4,987,127    $         50    $     80,130    $   (141,159)   $     (7,029)   $    (68,008)
 Net loss .........................              --              --              --          (6,059)             --              --
Other comprehensive loss --
  Foreign currency translation
   adjustments ....................              --              --              --              --           4,441              --
  Minimum pension liability
   adjustments ....................              --              --              --              --          (5,078)             --
  Comprehensive net loss ..........              --              --              --              --              --          (6,696)
                                         ----------    ------------    ------------    ------------    ------------    ------------
BALANCE, November 30, 2003 ........       4,987,127              50          80,130        (147,218)         (7,666)        (74,704)

SUCCESSOR
Net contribution of assets and
 liabilities from Predecessor .....              --              --          63,315              --              --          63,315
 Share adjustment from Predecessor
  Common Stock, net ...............      (4,986,627)            (50)             50              --              --              --
 Dividend to Parent ...............              --              --            (466)             --              --            (466)
 Net loss .........................              --              --              --            (540)             --              --
Other comprehensive income --
  Foreign currency translation
   adjustments ....................              --              --              --              --           2,055              --
  Minimum pension liability
   adjustments ....................              --              --              --              --           2,351              --
  Comprehensive net income ........              --              --              --              --              --           3,866
                                         ----------    ------------    ------------    ------------    ------------    ------------
BALANCE, December 31, 2003 ........             500              --         143,029        (147,758)         (3,260)         (7,989)

 Dividend to Parent ...............              --              --              --            (883)             --            (883)
 Net income .......................              --              --              --           5,394              --              --
Other comprehensive income                       --
  Foreign currency translation
   adjustments ....................              --              --              --              --           3,106              --
  Minimum pension liability
   adjustments ....................              --              --              --              --          (1,842)             --
  Comprehensive net income ........              --              --              --              --              --           6,658
                                         ----------    ------------    ------------    ------------    ------------    ------------
BALANCE, December 31, 2004 ........             500              --         143,029        (143,247)         (1,996)         (2,214)
 Dividend to Parent ...............              --              --              --            (924)             --            (924)
 Net income .......................              --              --              --          13,094              --              --
Other comprehensive income --
  Foreign currency translation
   adjustments (net of income tax
   of $413) .......................              --              --              --              --          (5,064)             --
  Minimum pension liability
   adjustments (net of income tax
   of $103) .......................              --              --              --              --            (174)             --
  Comprehensive net income ........              --              --              --              --              --           7,856
                                         ----------    ------------    ------------    ------------    ------------    ------------
BALANCE, December 31, 2005 ........             500      $       --    $    143,029    $   (131,077)   $     (7,234)   $      4,718
                                         ==========    ============    ============    ============    ============    ============
</TABLE>

                See notes to consolidated financial statements.

                                       47
<PAGE>

                   TELEX COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                    SUCCESSOR                       PREDECESSOR
                                                                    -------------------------------------------     ------------
                                                                                                     ONE MONTH      ELEVEN MONTHS
                                                                     YEAR ENDED      YEAR ENDED         ENDED           ENDED
                                                                    DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    NOVEMBER 30,
                                                                       2005             2004          2003              2003
                                                                    ------------    ------------    ------------    ------------
<S>                                                                 <C>             <C>             <C>             <C>
OPERATING ACTIVITIES:
Net income (loss) ...............................................   $     13,094    $      5,394    $       (540)   $     (6,059)
Adjustments to reconcile net income (loss) to cash flows
  from operations --                                                          --
  Depreciation ..................................................          6,839           6,055             481           5,592
  Amortization of identifiable intangibles ......................            115              13               1              20
  Amortization of deferred financing charges and
    pay-in-kind interest charges ................................          1,449           1,432             134          21,017
  Restructuring charges .........................................          1,763              --              --
                                                                                                                              --
  Goodwill and asset impairment charges .........................             --           7,915              --              --
  Provision for bad debts .......................................            976             828            (279)            869
  Gain on sale of product lines and other assets ................             --            (268)             --            (319)
  Loss on early extinguishment of debt ..........................             --              --           1,186              --
  Pension curtailment gain ......................................             --              --              --          (2,414)
  Deferred income taxes .........................................         (3,720)            367            (391)             18
Change in operating assets and liabilities:
  Accounts receivable ...........................................         (5,245)         (2,262)          2,589          (2,410)
  Inventories ...................................................           (261)         (5,682)          1,404            3800
  Other current assets ..........................................         (2,535)         (1,076)          1,000          (2,210)
  Accounts payable and accrued liabilities ......................          4,116             109             440          (1,761)
  Income taxes ..................................................         (3,047)           (886)             56          (1,840)
  Other long-term assets and long-term liabilities ..............          3,490           1,785            (335)            986
                                                                    ------------    ------------    ------------    ------------
    Net cash provided by operating activities ...................         17,034          13,724           5,746          15,289
                                                                    ------------    ------------    ------------    ------------
INVESTING ACTIVITIES:
  Additions to property, plant and equipment ....................        (11,814)         (7,722)           (546)         (5,165)
  Acquisition of business/intangible assets .....................         (3,944)             --              --              --
  Proceeds from sale of product lines and other assets ..........             --           2,338              --           1,158
  Other .........................................................            221             221              --             166
                                                                    ------------    ------------    ------------    ------------
      Net cash used in investing activities .....................        (15,537)         (5,163)           (546)         (3,841)
                                                                    ------------    ------------    ------------    ------------
FINANCING ACTIVITIES:
  Borrowings (repayments) under revolving lines of credit,
    net .........................................................         (1,011)          1,011         (12,107)           (372)
  Proceeds from issuance of long-term debt ......................             --              --         125,000              --
  Repayment of long-term debt ...................................           (456)           (443)       (110,297)         (9,078)
  Payments for deferred financing costs .........................             --            (319)         (6,519)             --
  Dividends to shareholder ......................................           (924)           (883)           (466)             --
                                                                    ------------    ------------    ------------    ------------
      Net cash used in financing activities .....................         (2,391)           (634)         (4,389)         (9,450)
                                                                    ------------    ------------    ------------    ------------
Effect of exchange rate changes on cash and cash
  equivalents ...................................................           (876)            334             242             273
                                                                    ------------    ------------    ------------    ------------
CASH AND CASH EQUIVALENTS:
  Net (decrease) increase .......................................         (1,770)          8,261           1,053           2,271
  Balance at beginning of period ................................         14,959           6,698           5,645           3,374
                                                                    ------------    ------------    ------------    ------------
  Balance at end of period ......................................   $     13,189    $     14,959    $      6,698    $      5,645
                                                                    ============    ============    ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
  Interest ......................................................   $     15,090    $     14,113    $        119    $      5,322
                                                                    ============    ============    ============    ============
  Income taxes ..................................................   $      7,014    $      6,547    $        403    $      5,419
                                                                    ============    ============    ============    ============
  Noncash financing activities related to debt restructuring -
    Net contribution of assets and liabilities from Predecessor     $         --     $        --    $     63,315     $        --
</TABLE>

                See notes to consolidated financial statements.

                                       48
<PAGE>

        TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2005 and 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

COMPANY STRUCTURE

      The consolidated financial statements included herein are:

      a.    Telex Communications Intermediate Holdings, LLC ("Intermediate" or
            "Successor"), which consists of the accounts of Intermediate and
            Telex Communications, Inc. ("Telex"). Intermediate is a holding
            company whose assets consist of its investment in Telex and its
            subsidiaries and some deferred financing costs related to
            Intermediate's debt. Telex is where operating activities take place.

      b.    Telex, which consists of the accounts of Telex Communications, Inc.
            and its wholly owned subsidiaries.

      Intermediate is a wholly owned subsidiary of Telex Communications
Holdings, Inc. ("Old Telex" or "Predecessor"), which is not a registrant. Telex
and Intermediate were formed in connection with the November 19, 2003
refinancing of Old Telex's debt obligations and related corporate restructuring.
Reference to "the Company" throughout the remainder of these footnotes means
Predecessor and/or Successor for the relevant period(s).

      Immediately prior to the closing of the November 2003 refinancing and
related corporate restructuring, Old Telex transferred to Telex substantially
all of Old Telex's assets and liabilities except, principally, its 13% Senior
Subordinated Discount Notes due 2006, in exchange for Telex's common stock. Old
Telex then contributed Telex's common stock to Intermediate, a new limited
liability company, in exchange for all of Intermediate's membership interests.
Telex became a wholly owned subsidiary of Intermediate and Intermediate became a
wholly owned subsidiary of Old Telex. The subsidiaries of Old Telex became
Telex's subsidiaries as part of the asset transfer.

      As a result of the November 2003 debt refinancing, which was accounted for
as being effective November 30, and the formation of a new entity, the
consolidated financial statements for 2003 are split into two periods. The
eleven-month period ended November 30, 2003 reflects the results of Old Telex
and the one-month period ended December 31, 2003 reflects the results of
Intermediate. The following table shows the pro forma results of operations for
the year ended December 31, 2003 as if the restructuring had occurred at the
beginning of 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                       2003
                                                                   -----------
<S>                                                                <C>
Net sales......................................................    $   268,539
Cost of sales..................................................        155,820
                                                                   -----------
  Gross profit.................................................        112,719
Operating expenses.............................................         85,805
Operating income...............................................         26,914
Interest expense...............................................        (28,854)
Other income, net..............................................            614
Loss on early extinguishment of debt...........................            (46)
                                                                   -----------
(Loss) income before income taxes..............................         (1,372)
Provision for income taxes.....................................          4,718
                                                                   -----------
  Net loss.....................................................    $    (6,090)
                                                                   ===========
</TABLE>

      The effects of the restructuring resulted in adjustments to the reported
amounts of interest expense, loss on early extinguishment of debt and provision
for income taxes when compared to the pro forma results.

                                       49
<PAGE>

DESCRIPTION OF BUSINESS

      The Company is a worldwide industry leader in the design, manufacture and
marketing of audio and communications products and systems to commercial,
professional and industrial customers. The Company's product lines include
sophisticated loudspeaker systems, wired and wireless intercom systems, mixing
consoles, digital audio duplication products, amplifiers, wired and wireless
microphones, military and aviation products, land mobile communication systems,
wireless assistive listening systems and other related products. The Company
markets over 30 product lines that span the professional audio and communication
sectors. Its products are used in airports, theaters, sports arenas, concert
halls, cinemas, stadiums, convention centers, television and radio broadcast
studios, houses of worship and other venues where music or speech is amplified
or transmitted, and by professional entertainers, television and radio on-air
talent, presenters, airline pilots and the hearing impaired in order to
facilitate speech or communications.

LIQUIDITY AND FINANCING

      The Company is highly leveraged and debt service obligations represent
substantial liquidity requirements for the Company.

      On November 19, 2003, in connection with the refinancing of the debt
obligations of Old Telex and a related corporate restructuring, Telex issued
$125 million of 11 1/2% Senior Secured Notes due 2008. Substantially all of the
proceeds were used to repay Old Telex's existing senior secured debt that had
been transferred to Telex. Old Telex also conducted an exchange offer, allowing
holders to exchange its 13% Senior Subordinated Discount Notes due 2006 for
Intermediate's 13% Senior Subordinated Discount Notes due 2009. Holders
exchanged Old Telex's 13% Senior Subordinated Discount Notes due 2006, having a
book value of $60.1 million, for Intermediate's 13% Senior Subordinated Discount
Notes due 2009.

      The Company's primary future cash needs will be to fund working capital,
capital expenditures and debt service obligations. Intermediate believes that
existing cash and cash flows from Telex's operations will be sufficient to meet
its future cash needs. If the Company does not generate sufficient cash from
operations to meet the cash needs, it may need to incur additional debt through
borrowing under its new senior secured credit facility or otherwise. The
Company's ability to fund working capital, capital expenditures and debt service
will depend on its ability to generate cash in the future, which is subject to
general economic, financial, competitive, legislative, regulatory and other
factors beyond the Company's control. The Company's senior secured credit
facility and the indenture governing its notes impose, and any future
indebtedness may impose, various restrictions and covenants which could limit
the Company's ability to respond to market conditions, to provide for
unanticipated capital investments or to take advantage of business
opportunities.

PRINCIPLES OF CONSOLIDATION

      The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. Significant intercompany transactions and
balances have been eliminated in consolidation.

USE OF ESTIMATES

      Preparation of the Company's consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts in the consolidated financial statements and accompanying notes.
Ultimate results could differ from those estimates.

CASH AND CASH EQUIVALENTS

      All temporary investments with original maturities of three months or less
at the time of purchase are considered cash equivalents. These investments are
carried at cost, which approximates fair value.

ACCOUNTS RECEIVABLE

      The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and the customer's current
creditworthiness. The Company continuously monitors collections from customers
and maintains a provision for estimated credit losses based on historical
experience and any specifically identified collection issues.

                                       50
<PAGE>

INVENTORIES

      Inventories are stated at the lower of cost (first-in, first-out) or
market and include amounts for materials, labor and overhead.

PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are recorded at cost and are depreciated
primarily using the straight-line method over the estimated useful lives,
ranging from 5 to 31 years for buildings and improvements and 1.5 to 12 years
for machinery and equipment.

      The Company capitalizes certain software implementation costs in
accordance with Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." Direct internal and
all external implementation costs and purchased software have been capitalized
and depreciated using the straight-line method over estimated useful lives,
ranging from two to five years. As of December 31, 2005 and 2004, total
accumulated software implementation costs of $16.5 million and $12.6 million,
respectively, have been capitalized and are included in equipment and
construction in progress. The Company expenses reengineering costs as incurred.

DEFERRED FINANCING COSTS

      Deferred financing costs represent costs incurred to issue debt and obtain
related amendments. These costs are being amortized over the terms of the
related debt.

      Unamortized debt issuance costs are as follows:

<TABLE>
<CAPTION>
                                                               2005       2004
                                                             --------   ---------
<S>                                                          <C>        <C>
Intermediate.............................................    $    612   $     812
Telex....................................................       3,981       5,350
                                                             --------   ---------
                                                             $  4,593   $   6,162
                                                             ========   =========
</TABLE>

GOODWILL

      Goodwill represents the excess of the purchase price over the fair value
of identifiable net assets acquired in business combinations accounted for as
purchases. The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets" (SFAS 142) effective
January 1, 2002. Under SFAS 142, goodwill is no longer amortized, but is subject
to annual testing for impairment. Goodwill of a reporting unit is tested for
impairment on an annual basis or between annual tests if an event occurs or
circumstances change that would reduce the fair value of a reporting unit below
its carrying amount. If the carrying amount of assets of a reporting unit,
including goodwill, exceeds its fair value, then the amount of the impairment
loss must be measured. The Company incurred a goodwill impairment loss of $7.6
million in the year ended December 31, 2004. See note 6 for additional
disclosure.

LONG-LIVED ASSETS

      The Company reviews long-lived assets for impairment annually or more
frequently when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If impairment indicators are present
and the estimated future undiscounted cash flows are less than the carrying
value of the assets, the carrying value is reduced to the estimated fair value.

      In the year ended December 31, 2005, the Company incurred a restructuring
charge of $0.8 million related to an impairment loss due to the announced
closing of its Blue Earth, Minnesota manufacturing facility.

      In the year ended December 31, 2004, the Company incurred an impairment
loss of $0.3 million related to its idle Buchanan, Michigan manufacturing
facility. The Company complied with Statement of Financial Accounting Standards
("SFAS") No. 144, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," (SFAS 144) to reduce the carrying value of
the asset to fair market value, less cost to sell.

                                       51
<PAGE>

ACCUMULATED OTHER COMPREHENSIVE LOSS

      The components of accumulated other comprehensive loss for Intermediate
and Telex are as follows (in thousands):

<TABLE>
<CAPTION>

                                           2005          2004
                                        ----------    ----------
<S>                                     <C>           <C>
INTERMEDIATE
Foreign currency translation            $     (794)   $   (6,271)
Minimum pension liability                    8,544         8,267
                                        ----------    ----------
                                        $    7,750    $    1,996
                                        ==========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                           2005          2004
                                        ----------    ----------
<S>                                     <C>           <C>
TELEX
Foreign currency translation            $   (1,207)   $   (6,271)
Minimum pension liability                    8,441         8,267
                                        ----------    ----------
                                        $    7,234    $    1,996
                                        ==========    ==========
</TABLE>

Telex information is presented on a net of tax basis starting in 2005 after
Telex determined its deferred tax assets were realizable and accordingly removed
a valuation allowance.

REVENUE RECOGNITION

      Revenue from product sales is recognized at the time of shipment provided
that persuasive evidence of a sales arrangement exists, the price is fixed,
title has transferred, collection of resulting receivables is reasonably
assured, there are no customer acceptance requirements and there are no
remaining significant obligations. The Company also offers customers certain
rights to return products. The Company continuously monitors and tracks such
product returns and records a provision for the estimated amount of such future
returns, based on historical experience and any notification we receive for
known pending returns. While such returns have historically been within the
Company's expectations and provisions established, the Company cannot guarantee
that its historical experience will continue.

SHIPPING AND HANDLING COSTS

      The Company records shipping and handling costs billed to a customer in a
sales transaction as revenue. The amount included in revenue was $1.4 million,
$1.6 million, $0.1 million, and $1.4 million for the year ended December 31,
2005, the year ended December 31, 2004, the one-month period ended December 31,
2003, and the eleven-month period ended November 30, 2003, respectively. The
costs associated with shipping and handling are included as a component of
selling, general and administrative expenses. Shipping and handling costs for
the year ended December 31, 2005 and 2004, the one-month period ended December
31, 2003, and the eleven-month period ended November 30, 2003 were $4.8 million,
$4.1 million, $0.3 million, and $3.5 million, respectively.

WARRANTY COSTS

      The Company offers a warranty on certain of its products for workmanship
and performance for periods of generally up to one year. Warranty costs are
accrued at the time of sale and are based on expected average repair costs and
return rates developed by the Company using historical data. Warranty expenses
for the year ended December 31, 2005, the year ended December 31, 2004, the
one-month period ended December 31, 2003, and the eleven-month period ended
November 30, 2003 were $1.2 million, $2.2 million, $0.1 million, and $1.7
million, respectively.

PRODUCT DEVELOPMENT COSTS

      Engineering costs associated with the development of new products and
changes to existing products are charged to operations as incurred.

ADVERTISING COSTS

      Advertising costs are expensed when incurred. Advertising costs for the
year ended December 31, 2005, the year ended December 31, 2004, the one-month
period ended December 31, 2003, and the eleven-month period ended November 30,
2003 were $4.6 million, $4.8 million, $0.4 million, and $4.4 million,
respectively.

                                       52
<PAGE>

INCOME TAXES

      The Company accounts for income taxes utilizing the liability method of
accounting. Deferred income taxes are recorded to reflect the tax consequences
of differences between the tax and the financial reporting bases of assets and
liabilities. The Company's tax provision for the years ended December 31, 2005
and 2004 and for the one-month period ended December 31, 2003 was calculated on
a separate company basis under a tax sharing agreement with Old Telex. The
Company's taxable income is included with the consolidated federal income tax
return of Old Telex.

FOREIGN CURRENCY

      The balance sheets and results of operations of the Company's
international subsidiaries are measured using local currencies as the functional
currency. Income statement accounts are translated at the average exchange rates
in effect during the year. Assets and liabilities are translated at the exchange
rates at the balance sheet date. The resulting balance sheet translation
adjustments are included in accumulated other comprehensive loss in member's
deficit. Foreign exchange transaction gains and losses realized and those
attributable to exchange rate movements on intercompany receivables and payables
not deemed to be long-term investments are recorded in other income.

FINANCIAL INSTRUMENTS

      The Company uses foreign currency forward exchange contracts to manage and
reduce risk to the Company by generating cash flows which offset cash flows of
certain transactions in foreign currencies. The Company's derivative financial
instruments are used as risk management tools and not for speculative or trading
purposes. Although not material, these derivatives represent assets and
liabilities and are classified as other current assets or other current
liabilities on the accompanying Consolidated Balance Sheets.

      The Company has designated its forward contracts as fair value hedges and
recognizes the gains and losses on the changes in the fair values of the
Company's derivative instruments in other income. Historically, the gains and
losses on these transactions have not been significant.

STOCK-BASED COMPENSATION

      The Company accounts for stock-based compensation under Accounting
Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to
Employees" and related interpretations, using the intrinsic value method. In
addition, the Company has adopted the disclosure requirements related to its
stock plans according to SFAS No. 123 "Accounting for Stock-Based Compensation"
(SFAS 123), as amended by SFAS No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure" (SFAS 148).

      The fair values of the stock options under the Old Telex stock option plan
and the subscription and option agreement with our chief executive officer were
estimated as of the grant date using the minimum value option pricing model. The
minimum value model was originally developed for use in estimating the fair
value of traded options and requires the input of highly subjective assumptions
including expected stock price volatility. The Company's stock options have
characteristics significantly different from those of traded options, and
changes in the subjective input assumptions can materially affect the fair value
estimate. Calculated under SFAS 123, the per share fair values of stock options
granted in 2004 were zero. No stock options were granted in 2005.

      The Company considered the expected life of the options and the risk-free
interest rate at the time the options were granted. No dividends were expected
and the minimum value method does not consider volatility.

CONCENTRATIONS, RISKS AND UNCERTAINTIES

      The Company is highly leveraged. The Company's high degree of leverage
could have important consequences, including but not limited to the following:
(i) the Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be impaired in the future; (ii) a portion of the Company's cash flow from
operations must be dedicated to debt service, thereby reducing the funds
available to the Company for other purposes; and (iii) the Company's flexibility
to adjust to changing market conditions and the ability to withstand competitive
pressures could be limited, and the Company may be more vulnerable to a downturn
in general economic conditions or its business, or may be unable to carry out
capital spending that is important to its growth strategy.

                                       53
<PAGE>

      Technological innovation and leadership are among the important factors in
competing successfully in the Company's business. The Company's future results
in this segment will depend, in part, upon its ability to make timely and
cost-effective enhancements and additions to its technology and to introduce new
products that meet customer demands, including products utilizing digital
technology, which are increasingly being introduced in many of the Company's
markets. The success of the Company's current and new product offerings is
dependent on several factors, including proper identification of customer needs,
technological development, cost, timely completion and introduction,
differentiation from offerings of the Company's competitors and market
acceptance. Maintaining flexibility to respond to technological and market
dynamics may require substantial expenditures. There can be no assurance that
the Company will successfully identify and develop new products in a timely
manner, that products or technologies developed by others will not render the
Company's products obsolete or noncompetitive, or that constraints in the
Company's financial resources will not adversely affect its ability to develop
and implement technological advances.

      The Company has substantial assets located outside of the United States,
and a substantial portion of the Company's sales and earnings are attributable
to operations conducted abroad and to export sales, predominantly in Western
Europe and Asia Pacific. The Company's international operations subject the
Company to certain risks, including increased exposure to currency exchange rate
fluctuations. The Company hedges a portion of its foreign currency exposure by
incurring liabilities, including bank debt, denominated in the local currencies
of those countries where its subsidiaries are located and manages currency risk
exposure to foreign currency-denominated intercompany balances through forward
foreign exchange contracts. The Company's international operations also subject
it to certain other risks, including adverse political or economic developments
in the foreign countries in which it conducts business, foreign governmental
regulation, dividend restrictions, tariffs and potential adverse tax
consequences, including payment of taxes in jurisdictions that have higher tax
rates than the United States.

      From time to time, the Company enters into forward exchange contracts
primarily to hedge intercompany balances attributed to intercompany sales. It
does not engage in currency speculation. The Company's foreign exchange
contracts do not subject the Company to risk due to exchange rate movements
because gains and losses on these contracts offset gains and losses on the
intercompany sales. These foreign exchange contracts typically have maturity
dates which do not exceed one year and require the Company to exchange U.S.
dollars for foreign currencies at maturity, at rates agreed to at the inception
of the contracts. As of December 31, 2005, the Company had outstanding foreign
currency forward exchange contracts with a notional amount of $14.8 million and
with an average maturity of 56 days. The fair value of these contracts was not
material at December 31, 2005.

    The Company offers a range of products to a diverse customer base throughout
the world. Terms typically require payment within a short period of time;
however, the Company periodically offers extended payment terms to certain
qualified customers. As of December 31, 2005, the Company believes it has no
significant customer or geographic concentration of accounts receivable that
could expose the Company to a material short-term financial impact.

RECLASSIFICATIONS

      Certain prior year amounts have been reclassified to conform to the
current year presentation. These reclassifications had no effect on
member's/shareholders' deficit or net income (loss) as previously reported.

NEW ACCOUNTING STANDARDS

      In July 2005, the Financial Accounting Standards Board's Emerging Issues
Task Force ("EITF") issued EITF No. 05-5, "Accounting for Altersteilzeit Early
Retirement Programs and Similar Type Arrangements" (EITF 05-5). The EITF is
effective for fiscal years beginning after December 15, 2005. The EITF offers
two transition alternatives, either cumulative effect or retrospective
application. EITF 05-5 addresses accounting for the bonus feature in German
Altersteilzeit (ATZ) early retirement programs and requires recognition of the
program expenses beginning at the time the ATZ contracts are signed. Prior to
EITF 05-5 the Company was expensing the bonus feature at the beginning of the
active service period of the program. The Company is reviewing the impact of
EITF 05-5 and will recognize an expense under the cumulative effect option. The
additional expense for 2006 is currently estimated to be approximately $150,000.

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
FASB Statement No. 123(R), "Share-Based Payment" (SFAS 123R), which is a
revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation."
SFAS 123R supersedes Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and amends FASB No. 95, "Statement
of Cash Flows." Generally, the approach in SFAS 123R is similar to the approach
described in Statement No. 123. However, SFAS 123R requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative.

                                       54
<PAGE>
      SFAS 123R must be adopted by the Company no later than January 1, 2006.
Intermediate expects to adopt SFAS 123R on January 1, 2006 using the prospective
transition method. The "prospective transition" method is a method in which
compensation cost is recognized beginning with the effective date based on the
requirements of SFAS 123R for all share-based payments granted after the
effective date. All prior share-based arrangements continue to be recognized
under the previous APB 25 method.

      As permitted by Statement No. 123, the Company currently accounts for
share-based payments to employees using Opinion 25's intrinsic value method and,
as such, generally recognizes no compensation cost for employee stock options.
The impact of adopting SFAS 123R on future period earnings cannot be predicted
at this time because it will depend on levels of share-based payments granted in
the future.

      In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4" (SFAS 151). SFAS 151 clarifies the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and excessive spoilage and requires that those items be recognized as
current-period charges. Previous guidance mandated that these costs be charged
to earnings on a current basis only under certain circumstances. In addition,
SFAS 151 requires that allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. SFAS
151 is effective for fiscal years beginning after June 15, 2005 with earlier
application permitted. Adoption of SFAS 151 is not expected to have a material
impact on the Company's results of operations or financial position.

      In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" (FIN 46). This was an
interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," and addresses the consolidation of variable interest entities by
businesses. The Company used the guidelines in FIN 46 (primarily the guidelines
in paragraph 5a, b and c) to analyze the Company's relationship with DRF 12000
Portland LLC (owner of its corporate headquarters facility) and concluded that
DRF 12000 Portland LLC is not a variable interest entity to the Company, and
therefore the current method of consolidation remains appropriate.

      In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" (SFAS 145). SFAS 145 addresses reporting gains and losses from
extinguishment of debt as well as other matters. SFAS 145 eliminates FASB
Statement No. 4 that requires that gains or losses from the extinguishment of
debt be reported as an extraordinary item. As a result, gains and losses from
extinguishment of debt should be classified as extraordinary items only if they
meet the criteria in Opinion 30. The loss on early extinguishment of debt during
the one-month period ended December 31, 2003 did not meet the criteria in
Opinion 30 to be classified as an extraordinary item.

NOTE 2 - ACQUISITIONS AND DISPOSITIONS

BUSINESS ACQUISITION

      On December 1, 2005 the Company purchased the business assets of Shinwa
Teknik (H.K.) Co., Ltd. (Shinwa) for $3.2 million in cash, including related
costs. The purchase consisted of tangible assets acquired of $2.9 million and
goodwill of $0.3 million. Based in Dongguan, China, Shinwa manufactures products
for our Advanced Communication Technologies segment and establishes the
Company's manufacturing capabilities in Asia. The agreement also calls for
additional contingent consideration of $1.2 million annually for two years,
totaling $2.4 million, based on attainment of certain future operating
objectives. The acquisition has been accounted for as a purchase and,
accordingly, the results of Shinwa's operations have been included in the
consolidated financial statements of the Company from the date of acquisition.
Net sales and operating income of the business were not significant to the
Company's consolidated results of operations, financial position and cash flows.

BUSINESS DISPOSITIONS

    During the year ended December 31, 2004, the Company recognized a gain of
$0.3 million on cash proceeds of approximately $2.3 million related to the sale
of its Australian subsidiary on July 1, 2004.

    During the eleven months ended November 30, 2003, the Company recognized a
gain of $0.3 million on cash proceeds of approximately $1.2 million related to
the sales of its idle facilities in Rochester, Minnesota (May 2003) and Newport,
Tennessee (August 2003).

NOTE 3 - RESTRUCTURING CHARGES

      During the year ended December 31, 2005, Telex recorded pretax
restructuring charges of $1.8 million attributable to the consolidation of
certain manufacturing operations in the United States. The restructuring will
result in a reduction of approximately 165 employees from the Company's Blue
Earth, Minnesota manufacturing facility, with all employees expected to be
terminated as of

                                       55
<PAGE>

December 31, 2006. The pretax restructuring charges are anticipated to total
$2.5 million and will include expected cash expenditures of $1.7 million, to be
completed by the end of the fourth quarter of 2006, primarily for severance
costs, with the remaining $0.8 million of the restructuring charges representing
non-cash charges associated with the write-down of fixed assets.

      The Company has received a purchase offer on the Blue Earth facility that
is contingent on the Company completing certain activities. The closing is
scheduled for June 2006.

      The following table summarizes the status of Telex's restructuring reserve
and other related expenses during the year ended December 31, 2005 (in
thousands):

<TABLE>
<CAPTION>
                                                      EMPLOYEE        ASSET                     TOTAL
                                                     SEPARATION    IMPAIRMENT   OTHER EXIT   RESTRUCTURING
                                                        COSTS         COSTS        COSTS        RESERVE
                                                     ----------   -----------   ----------   -------------
<S>                                                  <C>          <C>           <C>          <C>
Charges...........................................   $      884   $       836   $       43   $      1,763
Asset impairments.................................                       (836)          --           (836)
Cash payments.....................................          (12)           --          (43)           (55)
                                                     ----------   -----------   ----------   ------------
Balance as of December 31, 2005...................   $      872   $        --   $       --   $        872
                                                     ==========   ===========   ==========   ============
</TABLE>

NOTE 4 - INVENTORIES

      Inventories consist of the following as of December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                   2005             2004
                                                                 --------         ---------
<S>                                                              <C>              <C>
Raw materials.................................................   $ 22,832         $  24,088
Work in process...............................................      3,558             8,006
Finished goods................................................     25,352            20,479
                                                                 --------         ---------
                                                                 $ 51,742         $  52,573
                                                                 ========         =========
</TABLE>

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consist of the following as of December 31
(in thousands):

<TABLE>
<CAPTION>
                                                                       2005         2004
                                                                    ----------     --------
<S>                                                                 <C>            <C>
Land and improvements............................................   $    2,662     $  2,094
Buildings and improvements.......................................       25,713       26,182
Machinery and equipment..........................................      121,883      115,304
Construction in progress.........................................        3,542        2,327
                                                                    ----------     --------
                                                                       153,800      145,907
Less- Accumulated depreciation...................................     (118,400)    (113,882)
                                                                    ----------     --------
                                                                    $   35,400     $ 32,025
                                                                    ==========     ========
</TABLE>

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

      Under SFAS 142, goodwill and other indefinite-lived intangible assets are
no longer amortized but are reviewed annually (or more frequently if impairment
indicators arise) for impairment. The Company has certain amounts of goodwill
denominated in foreign currencies that fluctuate with movement of exchange
rates.

      In 2005, the Company completed its annual impairment testing of goodwill
and determined there was no impairment.

      In 2004 the Company recorded a goodwill impairment charge of $7.6 million
based on the annual impairment evaluation. The charge is associated with the
Germany electronics operating unit within the Professional Audio segment. This
impairment charge, which is non-deductible for income tax purposes, adjusted the
carrying value of the operating unit's goodwill to its implied fair value. In
2004, the operating unit experienced a decline in operating performance compared
to prior year and budgeted 2004 results. No goodwill impairment was indicated
for other operating units.

                                       56
<PAGE>


      The changes in the carrying value of goodwill for the year ended December
31, 2005 and 2004, by operating segment are as follows:

<TABLE>
<CAPTION>
                                                                                                       ADVANCED
                                                                                                     COMMUNICATION
                                                                                 PROFESSIONAL AUDIO   TECHNOLOGIES    TOTAL
                                                                                 ------------------  -------------  -----------
<S>                                                                              <C>                 <C>            <C>
Balance as of November 30, 2003................................................  $     17,206        $    6,090     $    23,296
Foreign currency translation...................................................            57                --              57
                                                                                 ------------        ----------     -----------
Balance as of December 31, 2003................................................  $     17,263        $    6,090     $    23,353
Goodwill impairment............................................................        (7,604)               --          (7,604)
Foreign currency translation...................................................            96                --              96
                                                                                 ------------        ----------     -----------
Balance as of December 31, 2004................................................  $      9,755        $    6,090     $    15,845
Goodwill acquired..............................................................            --               321             321
Foreign currency translation...................................................          (168)               --            (168)
                                                                                 ------------        ----------     -----------
Balance as of December 31, 2005................................................  $      9,587        $    6,411     $    15,998
                                                                                 ============        ==========     ===========
</TABLE>

      Other intangible assets determined to have definite lives are amortized
over their remaining useful lives. The other intangible assets consist of dealer
and distributor lists, patents, engineering drawings, licenses, and tradenames.
The balance was less than $0.1 million, net, as of December 31, 2004. In 2005,
the Company purchased patents, designs, and licenses for technologies totaling
$0.7 million. These assets are included on the consolidated balance sheet as a
component of other assets and totaled less than $0.7 million, net of accumulated
amortization, as of December 31, 2005.

NOTE 7 - DEBT

REVOLVING LINES OF CREDIT

      In November 2003, Telex entered into a $15.0 million senior credit
facility (the Facility) as part of Old Telex's debt restructuring. Under the
Facility, Telex may borrow up to $15.0 million, subject to a borrowing base
limitation. At December 31, 2005, Telex's borrowing base limited Telex's
borrowing capacity under the Facility to $13.3 million. Interest on outstanding
borrowings is calculated, at Telex's option, using the lender's index rate plus
1.0% or LIBOR (4.84% at December 31, 2005) plus 2.5%. At December 31, 2005,
Telex had no borrowings under the Facility. The revolving line of credit expires
on July 12, 2008 unless earlier terminated. The Facility requires an annual
commitment fee of 0.5% of the unused portion of the commitment. Borrowings are
secured by substantially all domestic accounts receivable and inventories. Telex
had letters of credit outstanding of $0.3 million as of December 31, 2005.

      Certain foreign subsidiaries of Telex have entered into agreements with
banks to provide for local working capital needs. Under these agreements, Telex
may make aggregate borrowings of up to $9.4 million. At December 31, 2005, Telex
had no borrowings, and guarantees of $0.5 million under these facilities,
leaving $8.9 million available. The interest rates in effect on these
facilities, as of December 31, 2005, ranged from 6.45% to 6.50% and are
generally subject to change based upon prevailing local prime rates. In certain
instances, the facilities are secured by a lien on foreign real estate,
leaseholds or accounts receivable and inventories, or are guaranteed by another
subsidiary of Telex.

LONG-TERM DEBT

      Long-term debt consists of the following as of December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                                                 2005        2004
                                                                                              ----------   ----------
<S>                                                                                           <C>          <C>
TELEX
Senior Secured Notes, due October 15, 2008, bearing interest of 11.5% payable semiannually,
  secured by substantially all assets of the Company and 65% of the voting stock of foreign
  subsidiaries owned by the Company........................................................   $ 125,000    $  125,000
Interest-free loan, discounted at an effective interest rate of 10.5%, due in monthly
  installments beginning March 2002 through February 2010, secured by Morrilton, Arkansas
  building (net of unamortized discount of $179 and $259)..................................          706          838
Other......................................................................................          393          720
                                                                                              ----------   ----------
                                                                                                 126,099      126,558
Less - current portion.....................................................................         (458)        (479)
                                                                                              ----------   ----------
      Total Telex long-term debt...........................................................      125,641      126,079
</TABLE>

                                       57
<PAGE>

<TABLE>
<S>                                                                                                    <C>          <C>
INTERMEDIATE
Senior Subordinated Discount Notes, due January 15, 2009, with an effective interest rate,
  exclusive of capitalized debt issuance costs, of 15.4%, accreting at 12.0% on the deemed issue
  price of $60,139, unsecured (net of unamortized discount of $46,808 and $58,130)..................        82,308       70,986
                                                                                                       -----------  -----------
      Total Telex long-term debt....................................................................   $   207,949  $   197,065
                                                                                                       ===========  ===========
</TABLE>

      On November 19, 2003, in connection with the refinancing of the debt
obligations of Old Telex and related corporate restructuring, Telex issued $125
million of 11 1/2% Senior Secured Notes due 2008. Substantially all of the
proceeds were used to repay Old Telex's existing senior secured debt that had
been transferred to Telex. The 13% Senior Subordinated Discount Notes due 2006
remained debt obligations of Old Telex. As a result of this repayment the
Company recorded a $1.2 million pretax loss from the write-off of deferred
financing costs and discounts associated with the repaid debt instruments.

      The debt refinancing also included an exchange offer associated with Old
Telex's 13% Senior Subordinated Discount Notes due 2006. Holders of these notes
could consent to exchange them for new 13% Senior Subordinated Discount Notes
due 2009 issued by Intermediate, receiving a 1% premium on the then-current
accreted value of such notes and future cash interest payments of 1% per annum
on the accreted value of the notes (which accrete at a rate of 12% per annum) or
they could elect to retain their Old Telex 13% Senior Subordinated Discount
Notes due 2006. Holders of Old Telex's 13% Senior Subordinated Discount Notes
due 2006 with a book value of $60.1 million as of November 19, 2003 exchanged
their notes and holders of Old Telex 13% Senior Subordinated Discount Notes due
2006 with a book value of $1.8 million retained such notes.

      The Senior Secured Notes and the Senior Credit Facility contain certain
financial and nonfinancial restrictive covenants, including limitations on
additional indebtedness, payment of dividends, certain investments, sale of
assets, consolidations, mergers and transfers of all or substantially all of the
Company's assets and capital expenditures, subject to certain qualifications and
exceptions. The Company was in compliance with all covenants related to all debt
agreements at December 31, 2005 and 2004.

      Aggregate annual payments for maturities of long-term debt are as follows
for the years ended December 31 (in thousands):

<TABLE>
<S>                                                        <C>
2006....................................................   $     458
2007....................................................         359
2008....................................................     125,213
2009....................................................     129,329
2010....................................................          35
Thereafter..............................................          --
                                                           ---------
Total at maturity value.................................     255,394
                                                           ---------
Less- unamortized discount and interest to be accrued...     (46,987)
                                                           ---------
                                                           $ 208,407
                                                           =========
</TABLE>

NOTE 8 - INCOME TAXES

      Intermediate's pretax income (loss), before cumulative effect of change in
accounting, for U.S. and foreign subsidiaries was as follows for the years ended
December 31, 2005 and 2004, the one-month period ended December 31, 2003, and
the eleven-month period ended November 30, 2003(in thousands):

      INTERMEDIATE:

<TABLE>
<CAPTION>
                                                                                        SUCCESSOR              PREDECESSOR
                                                                          ----------------------------------   -----------
                                                                              2005         2004        2003       2003
                                                                          -----------   ---------   --------   -----------
<S>                                                                       <C>           <C>         <C>        <C>
United States...........................................................  $    (5,472)  $ (10,255)  $   (524)  $   (11,416)
Foreign.................................................................        9,339      13,418       (146)        8,942
                                                                          -----------   ---------   --------   -----------
Income (loss)...........................................................  $     3,867   $   3,163   $   (670)  $    (2,474)
                                                                          ===========   =========   ========   ===========
</TABLE>

                                       58
<PAGE>

      Significant components of the provision for income taxes are as follows
for the years ended December 31, 2005 and 2004, the one-month period ended
December 31, 2003, and the eleven-month period ended November 30, 2003 (in
thousands):

<TABLE>
<CAPTION>
                                                                                                 SUCCESSOR             PREDECESSOR
                                                                                  -----------------------------------  -----------
                                                                                     2005       2004          2003         2003
                                                                                  -----------  ---------  -----------  -----------
<S>                                                                               <C>          <C>        <C>          <C>
Current:
  Federal......................................................................   $     2,767  $   2,650  $       796  $       --
  State........................................................................           265        113           56          90
  Foreign.......................................................................        3,895      5,414          710       3,477
                                                                                  -----------  ---------  -----------  ----------
                                                                                        6,927      8,177        1,562       3,567
Deferred........................................................................          (31)       367         (391)         18
                                                                                  -----------  ---------  -----------  ----------
                                                                                  $     6,896  $   8,544  $     1,171  $    3,585
                                                                                  ===========  =========  ===========  ==========
</TABLE>

      A reconciliation of the income taxes computed at the federal statutory
rate to the Company's income tax provision is as follows for the years ended
December 31, 2005 and 2004, the one-month period ended December 31, 2003, and
the eleven-month period ended November 30, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                                      SUCCESSOR                   PREDECESSOR
                                                                           ------------------------------------   -----------
                                                                             2005        2004        2003             2003
                                                                           -----------  ---------  ------------   -----------
<S>                                                                        <C>          <C>        <C>            <C>
Federal tax (benefit) at statutory rate..................................  $     1,315  $   1,075  $       (228)  $      (841)
State tax (benefit), net of federal tax..................................          304         44            38          (316)
Nondeductible goodwill impairment and
  amortization...........................................................           --      2,691            --            --
Change in deferred tax asset valuation
  allowance..............................................................          933      1,706          (105)        4,003
Foreign tax rate differences.............................................          678      1,219           369           421
Foreign dividend income..................................................        3,112         --            --            --
Other....................................................................          554      1,809         1,097           318
                                                                           -----------  ---------  ------------   -----------
                                                                           $     6,896  $   8,544  $      1,171   $     3,585
                                                                           ===========  =========  ============   ===========
</TABLE>

      Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows as of December
31 (in thousands):

<TABLE>
<CAPTION>
                                                                                       2005          2004
                                                                                    ----------    ---------
<S>                                                                                 <C>           <C>
Deferred tax liabilities:
  Tax over book depreciation....................................................    $    1,127    $    1,019
  Tax on unremitted non-U.S. earnings...........................................         2,618            --
  Foreign related liability.....................................................           452           582
                                                                                    ----------    ----------
     Total deferred tax liabilities.............................................         4,197         1,601
                                                                                    ----------    ----------
Deferred tax assets:
  Interest expense at Intermediate not currently deductible.....................         6,994         3,828
  Pension accrual...............................................................         2,119         2,719
  Inventory reserves............................................................         1,785         1,788
  Bad debt reserves.............................................................           461           410
  Vacation accrual..............................................................           769           678
  Warranty reserves.............................................................           671           924
  Tax loss carryforward.........................................................           756           748
  Other.........................................................................         2,754         2,466
                                                                                    ----------    ----------
     Total deferred tax assets..................................................        16,309        13,561
Valuation allowance.............................................................       (11,933)      (11,812)
                                                                                    ----------    ----------
     Deferred tax assets, net of valuation allowance............................         4,376         1,749
                                                                                    ----------    ----------
Net deferred tax assets.........................................................    $      179    $      148
                                                                                    ==========    ==========
</TABLE>


                                       59
<PAGE>
      Telex:

      Telex's pretax income (loss), before cumulative effect of change in
accounting, for U.S. and foreign subsidiaries was as follows for the years ended
December 31, 2005 and 2004, the one-month period ended December 31, 2003, and
the eleven-month period ended November 30, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                                    SUCCESSOR                  PREDECESSOR
                                                                      --------------------------------------   -----------
                                                                          2005         2004         2003           2003
                                                                      -----------   ---------   ------------   -----------
<S>                                                                   <C>           <C>         <C>            <C>
United States.......................................................   $    6,985   $     520   $        777   $   (11,416)
Foreign.............................................................        9,339      13,418           (146)        8,942
                                                                      -----------   ---------   ------------   -----------
Income (loss).......................................................  $    16,324   $  13,938   $        631   $    (2,474)
                                                                      ===========   =========   ============   ===========
</TABLE>

      Significant components of the provision for income taxes are as follows
for the years ended December 31, 2005 and 2004, the one-month period ended
December 31, 2003, and the eleven-month period ended November 30, 2003 (in
thousands):

<TABLE>
<CAPTION>

                                                                                SUCCESSOR                     PREDECESSOR
                                                                       -----------------------------------    ------------
                                                                           2005       2004         2003           2003
                                                                       -----------   ---------   ---------    -----------
<S>                                                                    <C>           <C>         <C>          <C>
Current:
  Federal...........................................................   $     2,767   $   2,650   $     796    $        --
  State.............................................................           265         113          56             90
  Foreign...........................................................         3,895       5,406         710          3,477
                                                                       -----------   ---------   ---------    -----------
                                                                             6,927       8,169       1,562          3,567
Deferred............................................................        (3,697)        375        (391)            18
                                                                       -----------   ---------   ---------    -----------
                                                                       $     3,230   $   8,544   $   1,171    $     3,585
                                                                       ===========   =========   =========    ===========
</TABLE>

      A reconciliation of the income taxes computed at the federal statutory
rate to Telex's income tax provision is as follows for the years ended December
31, 2005 and 2004, the one-month period ended December 31, 2003, and the
eleven-month period ended November 30, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                                      SUCCESSOR                 PREDECESSOR
                                                                       --------------------------------------   -----------
                                                                           2005         2004         2003            2003
                                                                       -----------   ---------   ------------   -----------
<S>                                                                    <C>           <C>         <C>            <C>
Federal tax (benefit) at statutory rate.............................   $     5,550   $   4,738   $        215   $     (841)
State tax (benefit), net of federal tax.............................           304         407             85         (316)
Nondeductible goodwill impairment and amortization..................            --       2,691             --           --
Change in deferred tax asset valuation allowance....................        (6,303)     (1,742)          (482)       4,003
Foreign tax rate differences........................................           676       1,219            369          421
Foreign dividend income.............................................         3,112          --             --           --
Other...............................................................          (109)      1,231            984          318
                                                                       -----------   ---------   ------------   ----------
                                                                       $     3,230   $   8,544   $      1,171   $    3,585
                                                                       ===========   =========   ============   ==========
</TABLE>

      Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Telex's deferred tax liabilities and assets are as follows as of December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                                                        2005        2004
                                                                                    -----------   --------
<S>                                                                                 <C>           <C>
Deferred tax liabilities:
  Tax over book depreciation....................................................    $     1,127   $  1,019
  Tax on unremitted non-U.S. earnings...........................................          2,618         --
  Foreign related liability.....................................................            452        582
                                                                                    -----------   --------
     Total deferred tax liabilities.............................................          4,197      1,601
                                                                                    -----------   --------
Deferred tax assets:
  Pension accrual...............................................................          2,119      2,719
  Inventory reserves............................................................          1,785      1,788
  Bad debt reserves.............................................................            461        410
  Vacation accrual..............................................................            769        678
  Warranty reserves.............................................................            671        924
  Tax loss carryforward.........................................................            756        748
  Other.........................................................................          2,754      2,466
                                                                                    -----------   --------
     Total deferred tax assets..................................................          9,315      9,733
Valuation allowance.............................................................           (756)    (7,984)
                                                                                    -----------   --------
     Deferred tax assets, net of valuation allowance............................          8,559      1,749
                                                                                    -----------   --------
Net deferred tax assets.........................................................    $     4,362   $    148
                                                                                    ===========   ========
</TABLE>

                                       60
<PAGE>

      Telex has established a net deferred tax asset valuation allowance of $0.8
million due to the uncertainty of the realization of future tax benefits. This
amount relates entirely to foreign deferred tax assets resulting from net
operating carryforwards because of the uncertainty regarding their realization.
Management has considered this factor in reaching our conclusion as to the
adequacy of the valuation allowance for financial reporting purposes.

      Telex reduced the deferred tax valuation allowance by $7.2 million in 2005
as we have generated positive taxable income in the United States and determined
the deferred tax assets are realizable. Telex also expects to continue to
generate future taxable income in the United States.

      Intermediate has significant United States deferred tax assets resulting
from deductible temporary differences, which consists mainly of interest expense
of its Senior Subordinated Discount Notes. Unlike Telex, Intermediate has a
history of losses in the United States, which weighs heavily in determining the
need for a valuation allowance. Given Intermediate's history of losses and
expected continuation of the losses, we have established a valuation allowance
for all of Intermediate's U.S. net deferred tax assets as of December 31, 2005.
Intermediate will reduce the valuation when and if Intermediate determines that
the deferred tax assets are more likely than not to be realized.

      As of December 31, 2005, the Company has foreign net operating loss
carryforwards of $0.8 million, which expire between 2006 and 2013. As a result
of the November 2003 debt restructuring, the U.S. net operating loss
carryforward generated through November 2003 was retained by Old Telex.
Intermediate and Telex file a consolidated U.S. tax return with Old Telex. The
tax provision recorded by Telex is calculated on a separate company basis under
a tax sharing agreement with Old Telex. Telex has a payable to Old Telex of $6.2
million and $3.3 million as of December 31, 2005 and 2004, respectively,
associated with the utilization of Old Telex's net operating loss.

As of December 31, 2004, the Company had a reserve of $3.7 million included in
income taxes payable related to a settlement with the Internal Revenue Service
(IRS) for the expected tax liability, penalties and accrued interest (as of the
settlement date) related to a dispute for taxable years 1990 through 1995. The
Company agreed with the IRS on the final amount of the tax liability to be paid
and had been making monthly payments. In March 2005, the Company received a
research and development credit, plus interest, of $0.6 million for taxable
years 1990 through 1995. This amount was applied to the outstanding $3.7 million
payable. In August 2005, the Company paid off the outstanding balance.

      With the exception of Japan, accumulated and current unremitted earnings
of the Company's foreign subsidiaries are deemed to be reinvested in each
country and are not expected to be remitted. As such, no U.S. taxes have been
provided for such foreign earnings.

      During 2005, we repatriated $2.8 million of earnings from our Japanese
subsidiary. We were unable to utilize any foreign tax credits generated in
connection with this distribution. We also recorded a deferred income tax
liability of $2.6 million related to approximately $7.5 million of unremitted
Japanese earnings that are no longer considered permanently reinvested.

NOTE 9 - RELATED-PARTY TRANSACTIONS

      In 2000, the Company relocated its corporate headquarters to a facility
leased from DRF 12000 Portland LLC (the LLC), an entity in which the Company has
a 50% interest. The Company contributed cash of $0.6 million to the LLC and the
investment is accounted for under the equity method. The Company's allocable
share of the LLC income is included as a component of other income in the
accompanying consolidated statements of operations. The LLC financed the
purchase of the facility with a mortgage secured by the facility. At December
31, 2005, the remaining balance on the mortgage was $6.5 million. The annual
lease payments to the LLC are $1.1 million for years 1 to 5 and $1.2 million for
years 6 to 10. The Company is currently in year 6 of the lease. The Company may
renew the lease at the end of the initial lease for three renewal terms of five
years each. The lease has been classified as an operating lease and the Company
records the lease obligations as rent expense.

The LLC results of operations and the Company's equity in earnings of the LLC
were (in thousands):

<TABLE>
<CAPTION>
                                                                            SUCCESSOR               PREDECESSOR
                                                                  -------------------------------   ------------
                                                                   2005      2004        2003           2003
                                                                  -------   ---------   ---------   ------------
<S>                                                               <C>       <C>         <C>         <C>
Gross revenue..................................................   $ 1,776   $   1,736    $    144   $      1,584
Costs and expenses.............................................     1,439       1,464         123          1,358
                                                                  -------   ---------   ---------   ------------
Net income.....................................................   $   337   $     272   $      21   $        226
                                                                  =======   =========   =========   ============
Equity share in earnings of the LLC............................   $   168   $     136   $      10   $        113
                                                                  =======   =========   =========   ============
</TABLE>

                                       61
<PAGE>

      Condensed balance sheet information for the LLC as of December 31 was (in
thousands):

<TABLE>
<CAPTION>
                                                       2005          2004
                                                   ----------      --------
<S>                                                <C>             <C>
Current assets                                     $      221      $     69
Noncurrent assets                                       8,834         9,137
Current liabilities                                       372           357
Noncurrent liabilities                                  7,299         7,359
</TABLE>

NOTE 10 - PENSION AND POSTRETIREMENT BENEFITS

      The Company has one noncontributory defined benefit cash balance pension
plan as a result of a merger in August 2000 of the Company's union employee plan
with its nonunion employee plan. Two benefit structures, union and nonunion, are
maintained under the merged plan. Under the terms of the cash balance pension
plan, accrued benefits are expressed as "account balances" for each participant.
Through June 30, 2003, each active participant's account received a benefit
credit each year based on the participant's age, vesting service, and total
remuneration covered by the pension plan, consisting of base salary, commission,
overtime and bonuses paid to the participant. Each year the account balances are
increased by an interest credit based on the average six-month U.S. Treasury
bill rate for November 1 of the prior year, plus 1%. The interest credit for a
full calendar year will not be less than 5%, nor greater than the interest rate
used to determine lump sum payments. Effective June 30, 2003, the Company
decided to freeze future pension plan benefits. The decision resulted in
recognition of previously unrecognized prior service benefits in accordance with
SFAS No. 88. Plan participants will continue to receive interest credits, but
will no longer receive a benefit credit.

      Pension costs are funded annually, subject to limitations. The Company's
funding policy is to make annual contributions of not less than the minimum
required by applicable regulations.

      The following table presents the funded status of the plans as of and for
the years ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                               PENSION BENEFITS
                                                              2005          2004
                                                            ---------      -------
<S>                                                         <C>            <C>
Change in benefit obligation:
  Benefit obligation at beginning of period.............    $  23,896      $ 23,008
  Interest cost.........................................        1,204         1,337
  Actuarial loss (gain).................................          243         1,847
  Benefits paid.........................................       (2,226)       (2,296)
                                                            ---------      --------
Benefit obligation at end of period.....................       23,117        23,896
                                                            ---------      --------
Change in plan assets:
  Fair value of plan assets at beginning of period......       17,251        17,253
  Actual return on plan assets..........................        1,015         1,827
  Employer contribution.................................           12           467
  Benefits paid.........................................       (2,226)       (2,296)
                                                            ---------      --------
Fair value of plan assets at end of period..............       16,052        17,251
                                                            ---------      --------
Change in funded status:
  Funded status.........................................       (7,065)       (6,645)
  Unrecognized actuarial loss...........................        8,544         8,267
                                                            ---------      --------
Net amount recognized...................................    $   1,479      $  1,622
                                                            =========      ========
Amounts recognized in the consolidated balance sheets
  consist of:
  Accrued benefit liability.............................    $  (7,065)     $ (6,645)
  Accumulated other comprehensive loss..................        8,544         8,267
                                                            ---------      --------
Net amount recognized...................................    $   1,479      $  1,622
                                                            =========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                                           PENSION BENEFITS
                                            ----------------------------------------------------------------
                                                                 SUCCESSOR                      PREDECESSOR
                                            -----------------------------------------------    -------------
                                                 YEAR             YEAR           ONE MONTH     ELEVEN MONTHS
                                                 ENDED            ENDED            ENDED            ENDED
                                             DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     NOVEMBER 30,
                                                 2005             2004             2003            2003
                                            -------------    -------------    -------------    -------------
<S>                                         <C>              <C>              <C>              <C>
Weighted average assumptions used
  to determine benefit
  obligations at December 31:
  Discount rate.........................             5.25%            5.25%             6.0%             6.0%
  Rate of compensation
    increase............................              N/A              N/A              N/A              N/A
Weighted average assumptions used
  to determine net periodic
  pension cost:
  Discount rate.........................             5.25%             6.0%             6.5%             6.5%
  Expected return on plan
    assets..............................              8.5              8.5              8.5              8.5
  Rate of compensation
    increase............................              N/A              N/A              4.5              4.5
Components of net periodic
  benefit cost (income):
</TABLE>

                                       62
<PAGE>

<TABLE>
<S>                                         <C>              <C>                <C>            <C>
  Service cost..........................    $          --    $          --      $        40    $         445
  Interest cost.........................            1,204            1,337              118            1,297
  Expected return on plan
    assets..............................           (1,473)          (1,822)            (154)          (1,695)
  Amortization of prior service
    cost................................               --               --              (15)            (159)
  Recognized actuarial gain.............              424               --               --               --
  Curtailment gain .....................               --               --               --           (2,414)
                                            -------------    -------------      -----------    -------------
Net periodic benefit cost
  (income)..............................    $         155    $        (485)     $       (11)   $      (2,526)
                                            =============    =============      ===========    =============
</TABLE>

      The expected rate of return on pension plan assets is based on the
weighting of the Company's asset allocations and the 30-year rolling historical
averages during the period 1926-2001. The expected return ranged from 7.3% to
10.1% with a midpoint of approximately 8.5%, the expected return on plan assets
rate selected by the Company.

      The increase (decrease) in the minimum liability included in other
comprehensive loss was $277,000, $1,841,000, ($2,351,000), and $5,078,000 for
the years ended December 31, 2005 and 2004, the one-month period ended December
31, 2003, and the eleven-month period ended November 30, 2003, respectively.

      The pension plan asset allocations at December 31, 2005 and 2004, by asset
category are as follows:

<TABLE>
<CAPTION>
                                      2005        2004
                                     ------      -----
<S>                                  <C>         <C>
Asset Category
  Equity securities.............         61%        64%
  Debt securities...............         15         14
  Other.........................         24         22
                                     ------      -----
     Total......................        100%       100%
                                     ======      =====
</TABLE>

      The Company's investment policy is to maintain equity securities in the
range of 40% to 70% of plan assets, debt securities in the range of 20% to 30%
and other assets in the range of 15% to 25%. Pension plan asset performance and
allocations are reviewed quarterly with portfolio rebalancing completed in the
following quarter. If cash flows are not sufficient to bring the allocations
within the acceptable ranges, the Company's pension committee may balance the
component weightings to the target levels it deems necessary. The Company
expects to make contributions totaling $1.6 million in 2006 based on current
actuarial data.

      The Company provides a 401(k) savings plan for U.S. employees. Employee
contributions of up to 6% of eligible compensation are matched 50% by the
Company. The Company's contributions amounted to $0.9 million, $0.8 million,
$0.5 million and $0.3 million for the years ended December 31, 2005 and 2004,
the one-month period ended December 31, 2003, and the eleven-month period ended
November 30, 2003, respectively. The match was suspended between April and
October of 2003 with a retro contribution accrued in December 2003.

      The Company's Japanese subsidiary also has a retirement and termination
plan (the Retirement Plan), which provides benefits to employees in Japan upon
their termination of employment. The benefits are based upon a multiple of the
employee's monthly salary, with the multiple determined based upon the
employee's years of service. The multiple paid to employees who retire or are
involuntarily terminated is greater than the multiple paid to those who
voluntarily terminate their services. The Retirement Plan is unfunded, and the
accompanying consolidated balance sheet includes a liability of approximately
$0.9 million at December 31, 2005, which represents the actuarially determined
estimated present value of the Company's liability as of this date. In
developing this estimate, the actuary used discount and compensation growth
rates prevailing in Japan of 1.0% and 3.2%, respectively. The Company charged to
expense $0.2 million, $0.2 million, $17,000 and $0.2 million, respectively, for
the years ended December 31, 2005 and 2004, the one-month period ended December
31, 2003 and the eleven-month period ended November 30, 2003.

      The benefits expected to be paid over the next ten years are as follows,
for the years ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                            U.S. PLAN        JAPAN PLAN
                                            ---------       -----------
<S>                                         <C>             <C>
2006....................................    $   2,048       $        49
2007....................................        1,934                89
2008....................................        1,990                50
2009....................................        1,825               333
2010....................................        1,906                50
2011-2015...............................        8,623               257
</TABLE>

     The Company provides postretirement benefits of health and life insurance
to a limited number of its U.S. retirees. Contributions

                                       63
<PAGE>

paid by the employees toward the cost of the plan are a flat dollar amount per
month in certain instances or a range from 25% to 100% of the cost of the plan
in other instances. The accumulated postretirement benefit obligation recognized
by the Company was $92,000 and $122,000 as of December 31, 2005 and 2004,
respectively. The net periodic benefit (income) cost was $(30,000), $(47,000),
$2,000 and $(322,000) for the years ended December 31, 2005 and 2004, the
one-month period ended December 31, 2003 and the eleven-month period ended
November 30, 2003, respectively. The eleven-month period ended November 30, 2003
includes a benefit of $339,000 resulting from a curtailment due to the exclusion
of all nonunion participants as of June 30, 2003.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

LITIGATION

     From time to time the Company is a party to various legal actions in the
normal course of business. In November 2005 the Company was named as a defendant
in a lawsuit filed by Ace Pro Sound and Recording, LLC seeking more than $1.0
billion in damages. The Company is one of nine named defendants, who are various
suppliers of musical, sound and recording equipment. The Company believes the
claims asserted are without merit and is vigorously contesting the allegations.
In response to the defendants' motion to dismiss the claims, filed in March
2006, the plaintiff has expressed its intention to file a motion to amend the
complaint. It is anticipated that the plaintiff's motion will be granted and its
amended complaint will be filled in April 2006. The Company believes the outcome
to this litigation will not have a material adverse effect on its financial
condition or results of operations.

ENVIRONMENTAL MATTERS

      Our operations are subject to extensive and changing U.S. federal, state,
local and foreign environmental laws and regulations, including, but not limited
to, laws and regulations that impose liability on responsible parties to
remediate, or contribute to the costs of remediating, currently or formerly
owned or leased sites or other sites where solid or hazardous wastes or
substances were disposed of or released into the environment. These remediation
requirements may be imposed without regard to fault or legality at the time of
disposal or release. Although we believe that our current manufacturing
operations comply in all material respects with applicable environmental laws
and regulations, environmental legislation has been enacted and may in the
future be enacted or interpreted to create environmental liability with respect
to our facilities or operations.

      Our site in Buchanan, Michigan, formerly owned by Mark IV Industries, Inc.
(Mark IV), has been designated a Superfund site under the federal Comprehensive
Environmental Response, Compensation and Liability Act, and we are a responsible
party, under Tennessee law, at two other sites that we acquired from Mark IV and
which were subsequently sold in 2002 and 2003. Mark IV has agreed to indemnify
us under certain contractual arrangements for specified contamination at the
Michigan site, excluding any contamination that exists within the manufacturing
facility and for the future monitoring and remediation of soil and/or
groundwater required at the Tennessee sites. Mark IV has performed under these
arrangements with respect to these properties since 1996 with no expenses
incurred by Telex, with the exception of those voluntarily assumed associated
with the sale of one of the Tennessee sites.

      Telex is responsible for any contamination that may exist within the
Buchanan facility and third party environmental studies we have requested
indicate no exposure or remediation is necessary at this time unless the
concrete flooring within the facility is disturbed. We ceased manufacturing
operations at this facility in 2002 and are actively marketing the property. We
would be financially responsible for any remediation that would be required
within the manufacturing facility. In 2004 we recorded a charge of $0.3 million
in accordance with SFAS No. 144 to reduce the carrying value of the asset to
fair market value.

      The two sites in Tennessee are also covered by the Mark IV contractual
arrangements. One site requires on-going groundwater monitoring and received a
No Further Action notice in 2001 from the Tennessee Department of Environment
and Conservation (TDEC) related to contaminated soils. Telex has agreed to
indemnify the purchaser of the other Tennessee site until a No Further Action
notice is received from TDEC. Mark IV continues to pay the expenses related to
monitoring activities at these sites.

      We have not recorded an environmental loss contingency accrual for either
of the Tennessee sites or the Buchanan site because we have determined that an
environmental loss is remote given that Mark IV has assumed direct
responsibility for the remediation of the sites under its contractual
requirements and has continued to perform in accordance with the arrangements.

      We also believe our exposure is remote related to any contamination within
the Buchanan site based on third party environmental evaluations. We will
reassess this position if new information indicates a need to recognize an
accrual.

      We are party to a 1988 Consent Decree with the Nebraska Department of
Environmental Quality (NDEQ) relating to the cleanup of hazardous waste at our
Lincoln, Nebraska facility. In December 1997, we entered into an Administrative
Order on Consent with the U.S. Environmental Protection Agency (U.S. EPA) under
the Resource Conservation and Recovery Act (RCRA) to further investigate

                                       64
<PAGE>
and remediate contaminants at the Lincoln facility and an adjacent property
(Lincoln site). The 1997 Administrative Order on Consent has expired and we are
in the process of negotiating a replacement Administrative Order on Consent with
the U.S. EPA. We do not believe that the costs related to our responsibilities
at this site under a new Administrative Order on Consent will result in a
material adverse effect on our results of operations or financial condition.
Through December 31, 2005, we had accrued approximately $2.0 million over the
life of the project for anticipated costs to be incurred for the Lincoln site
cleanup activities, of which approximately $1.7 million has been paid.

      We cannot assure you that our estimated environmental accruals, which we
believe to be reasonable, will cover in full the actual amounts of environmental
obligations we incur, that Mark IV will pay in full the indemnified
environmental liabilities when they are incurred, that new or existing
environmental laws will not affect us in currently unforeseen ways, or that our
present or future activities will not result in additional environmentally
related expenditures. However, we believe that compliance with U.S. federal,
state, local and foreign environmental protection laws and provisions should
have no material adverse effect on our results of operations or financial
condition.

EMPLOYMENT CONTRACTS

      The Company has employment contracts with certain key executives that
require the Company to make payments of up to 12 months' salary in the event
such executives are terminated without cause.

      The chief executive officer (CEO) entered into an employment agreement
with the Company effective April 14, 2003, which was subsequently amended on
January 14, 2004, pursuant to which the CEO will receive (i) an annual base
salary of $350,000; (ii) an annual bonus based on the objectives and awards
established by the Board of Directors, and (iii) in the event his employment is
terminated without cause, or he terminates his employment for good reason, the
Company will pay one year's base annual salary and an amount equal to his bonus
earned prorated as of the date of termination payable as and when paid to other
eligible bonus plan participants.

      The president of worldwide pro audio entered into an employment agreement
with the Company effective January 5, 2003 pursuant to which he will receive (i)
an annual base salary of $270,000; (ii) a bonus payment of between 40% and 140%
of his annual base salary upon the achievement of certain specified performance
objectives, and (iii) in the event his employment is terminated without cause or
he terminates his employment for good reason, a lump-sum payment of 150% of his
annual base salary plus 150% of his annual target bonus (which target bonus is
70% of his annual base salary).

LEASE COMMITMENTS

      At December 31, 2005, the Company had various noncancelable operating
leases for corporate headquarters, manufacturing, distribution and office
buildings, warehouse space and equipment. Rental expense charged to operations
was $3.5 million, $3.4 million, $0.3 million, and $3.1 million for the years
ended December 31, 2005 and 2004, the one-month period ended December 31, 2003,
and the eleven-month period ended November 30, 2003, respectively.

      Approximate future minimum rental commitments under all noncancelable
operating leases are as follows for the years ended December 31 (in thousands):

<TABLE>
<S>                                         <C>
2006....................................    $ 3,118
2007....................................      2,297
2008....................................      1,880
2009....................................      1,646
2010....................................        749
2011 and thereafter.....................      1,106
                                            -------
  Total minimum lease commitments.......    $10,796
                                            =======
</TABLE>

NOTE 12 - SEGMENT INFORMATION

      The Company has two business segments: Professional Audio and Advanced
Communication Technologies (formerly known as Audio and Wireless Technology).


                                       65

<PAGE>
PROFESSIONAL AUDIO

      Professional Audio consists of five lines of business within the overall
professional audio market, including: (i) permanently installed sound systems;
(ii) sound products used by professional musicians and sold principally through
retail channels; (iii) sound products used in professional concerts, recording
projects and radio and television broadcast; (iv) professional communication
products, including advanced digital matrix intercoms, used by broadcasters
(including all major television networks) to control production communications,
intercoms, headsets and wireless communications systems used by professional,
college and high school football teams and stadiums and other professional and
school sports teams; and (v) wired and wireless microphones used in the
education, sports, broadcast, music and religious markets.

ADVANCED COMMUNICATION TECHNOLOGIES

      Advanced Communication Technologies targets five principal product markets
including: (i) digital audio duplication products for the religious, education
and enterprise markets; (ii) military/aviation communication products for the
military and aviation markets; (iii) antenna products serving the original
equipment manufacturer and government and military markets; (iv) land mobile and
dispatch communication products for the public safety, military and industrial
markets; and (v) audio and wireless education products for classroom and
computer based education markets.

      The following tables provide information by business segment (in
thousands):

<TABLE>
<CAPTION>
                                                                       ADVANCED
                                                      PROFESSIONAL   COMMUNICATION
                                                         AUDIO        TECHNOLOGIES     CORPORATE      CONSOLIDATED
                                                      ------------   -------------    ------------    ------------
<S>                                                   <C>            <C>              <C>             <C>
Net sales:
  2005 -- Successor...............................    $   245,139    $  62,594        $        --     $   307,733
  2004 -- Successor...............................        240,521       56,307                 --         296,828
  2003 -- Successor one month.....................         19,774        5,659                 --          25,433
  2003 -- Predecessor eleven months...............        189,196       53,910                 --         243,106
Operating income (loss):
  2005 -- Successor...............................         22,138       11,848             (2,226)         31,760
  2004 -- Successor...............................         19,310       10,122                (47)         29,385
  2003 -- Successor one month.....................          1,645          879                496           3,020
  2003 -- Predecessor eleven months...............         17,561        5,331              1,002          23,894
Depreciation expense:
  2005 -- Successor...............................          5,377          404              1,058           6,839
  2004 -- Successor...............................          4,904          354                797           6,055
  2003 -- Successor one month.....................            401           19                 61             481
  2003 -- Predecessor eleven months...............          4,635          347                610           5,592
Additions of property, plant, and equipment:
  2005 -- Successor...............................          6,477        1,066              4,271          11,814
  2004 -- Successor...............................          4,763          879              2,080           7,722
  2003 -- Successor one month.....................            326          108                112             546
  2003 -- Predecessor eleven months...............          2,691          426              2,048           5,165
Total assets:
  2005............................................        117,698       39,670             24,628         181,996
  2004............................................        122,557       36,077             21,386         180,020
  2003............................................        119,547       37,792             13,789         171,128
</TABLE>

      Corporate operating expenses include corporate engineering, selling,
general and administrative costs, amortization of other intangibles, and
restructuring charges. Corporate identifiable assets relate principally to the
Company's investment in information systems and corporate facilities, as well as
cash and deferred financing costs.

      The Company's net sales into each of its principal geographic regions were
as follows for the years ended December 31, 2005 and 2004, the one-month period
ended December 31, 2003, and the eleven-month period ended November 30, 2003 (in
thousands):

<TABLE>
<CAPTION>
                                                 SUCCESSOR                             PREDECESSOR
                                     -------------------------------------------   --------------------
                                                               ONE MONTH ENDED      ELEVEN MONTHS ENDED
                                        2005           2004    DECEMBER 31, 2003     NOVEMBER 30, 2003
                                     ------------   ---------  -----------------   ---------------
<S>                                  <C>            <C>        <C>                 <C>
United States.....................   $    154,923   $148,803       $ 12,830             $ 121,650
Europe ...........................         83,426     84,702          6,761                69,628
Asia .............................         48,681     41,539          4,476                30,470
Other foreign countries ..........         20,703     21,784          1,366                21,358
                                     ------------   --------       --------             ---------
                                     $    307,733   $296,828       $ 25,433             $ 243,106
                                     ============   ========       ========             =========
</TABLE>

                                       66

<PAGE>

      Long-lived assets of the Company's U.S. and international operations were
as follows at December 31 (in thousands):

<TABLE>
<CAPTION>
                                             2005           2004
                                          ----------    ------------
<S>                                       <C>           <C>
United States..........................   $  44,017     $   43,352
International..........................      15,396         13,976
                                          ---------     ----------
Consolidated...........................   $  59,413     $   57,328
                                          =========     ==========
</TABLE>

NOTE 13 -- EQUITY

      Telex was created in October 2003 with 1,000 shares of common stock, par
value of $0.01 per share authorized. There are 500 shares issued and outstanding
as of December 31, 2005 and 2004. The shares are 100% owned by Intermediate.

      Intermediate was created in October 2003 as a limited liability company
with its membership interest owned by Old Telex.

COMMON STOCK

      In the fourth quarter of 2001, prior to the November 2001 Debt
Restructuring, Old Telex's authorized shares of Common Stock were increased from
1,000 shares to 10 million shares. In 2004 certain members of Telex management
purchased 540,000 shares of common stock of Old Telex at prices ranging from
$0.30 to $0.327 per share. Total shares issued and outstanding as of December
31, 2005 were 6,675,702.

WARRANTS

      Warrants entitling the holders to purchase up to 1,666,155 shares (subject
to certain antidilution adjustments) of common stock were issued by Old Telex in
November 2001. In the November 2003 debt restructuring, Old Telex offered
holders of existing warrants the ability to exchange the warrants for common
stock of Old Telex at an exchange rate of 70% of the original warrant. The
exchange offer removed the requirement that Old Telex satisfy certain financial
performance targets prior to the warrant being exercisable. Holders of 1,640,821
warrants exchanged the warrants for 1,148,575 shares of common stock of Old
Telex. There are 25,334 warrants outstanding as of December 31, 2005. The number
of the warrants that can be exercised depends on EBITDA performance for the year
ended December 31, 2006.

STOCK OPTIONS

      In 2003, the Company's CEO was granted 100,000 shares of Old Telex common
stock in the form of nonstatutory stock options under a subscription and option
agreement. The options vested immediately upon grant and provide for early
termination in the event of termination of employment, a sale or liquidation of
Old Telex, and will expire on September 30, 2008.

      In 2004, Old Telex adopted a stock option plan under which 140,000 shares
of common stock of Old Telex were reserved for the granting of nonstatutory
stock options at exercise prices not less than 100% of the fair market value of
the Old Telex common stock on the date of grant. As of December 31, 2005 stock
options for 95,000 shares had been granted under the plan, leaving 45,000 shares
available for future grants. Options granted under the stock plan generally vest
over five years and expire after ten years.

      Options granted and outstanding at December 31, 2005 include 100,000 at an
exercise price of $15.00 per share and 95,000 at an exercise price of $6.00 per
share. No options were exercised or cancelled in 2005.

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, foreign currency forward contracts and the revolving line of
credit approximates fair value because of the short maturity of these
instruments.

      The carrying amount of the Company's long-term debt approximates fair
value because of the variability of the interest cost associated with these
instruments. The 2005 and 2004 fair value of Telex's Senior Secured Notes is
estimated at $133.1 million and $137.5 million, respectively, based on quoted
market values for the notes. The 2005 and 2004 fair value of Intermediate's
Senior Subordinated Discount Notes is estimated at $80.1 million and $81.3
million, respectively, based on quoted market values for the notes. The
estimates presented herein are not necessarily indicative of amounts the Company
could realize in a current market exchange.

                                       67

<PAGE>

NOTE 15 - QUARTERLY FINANCIAL DATA

        The following table shows the unaudited quarterly financial data for
Intermediate for the years ended December 31, 2005 and 2004 (in thousands):

<TABLE>
<CAPTION>
                               FIRST QUARTER      SECOND QUARTER    THIRD QUARTER     FOURTH QUARTER        TOTAL
                              ---------------    ---------------   ---------------    ---------------    ---------------
<S>                           <C>                <C>               <C>                <C>                <C>
2005
Net sales ..................  $        73,888    $        80,358   $        78,007    $        75,480    $       307,733
Operating income ...........            7,107             10,701             7,583              6,369             31,760
Net (loss) income ..........             (268)               985            (1,191)            (2,555)            (3,029)
</TABLE>

<TABLE>
<CAPTION>
                               FIRST QUARTER      SECOND QUARTER    THIRD QUARTER     FOURTH QUARTER        TOTAL
                              ---------------    ---------------   ---------------    ---------------    --------------
<S>                           <C>                <C>               <C>                <C>                <C>
2004
Net sales...................  $        67,266    $        77,729   $        77,374    $        74,459    $       296,828
Operating income............            6,851             10,455            11,073              1,006             29,385
Net (loss) income...........           (1,356)             1,599             1,797             (7,421)            (5,381)
</TABLE>

      The following table shows the unaudited quarterly financial data for Telex
for the years ended December 31, 2005 and 2004 (in thousands):

<TABLE>
<CAPTION>
                               FIRST QUARTER     SECOND QUARTER     THIRD QUARTER     FOURTH QUARTER         TOTAL
                              ---------------    ---------------   ---------------    ---------------    ---------------
<S>                           <C>                <C>               <C>                <C>                <C>
2005
Net sales...................  $        73,888    $        80,358   $        78,007    $        75,480    $       307,733
Operating income............            7,124             10,714             7,588              6,388             31,814
Net income..................            2,690              4,042             1,967              4,395             13,094
</TABLE>

<TABLE>
<CAPTION>
                               FIRST QUARTER     SECOND QUARTER     THIRD QUARTER     FOURTH QUARTER         TOTAL
                              ---------------    ---------------   ---------------    ---------------    ---------------
<S>                           <C>                <C>               <C>                <C>                <C>
2004
Net sales...................  $        67,266    $        77,729   $        77,374    $        74,459    $       296,828
Operating income............            6,861             10,469            11,078              1,011             29,419
Net income (loss)...........            1,196              4,248             4,529             (4,579)             5,394
</TABLE>

      In 2005, Telex recorded restructuring charges of $1.1 million and $0.7
million in the third and fourth quarters, respectively. Telex also recorded an
income tax benefit of $6.3 million related to reduction of its deferred income
tax valuation allowance and an income tax expense of $3.1 million related to
foreign dividend income in the fourth quarter

      In 2004, Telex recorded goodwill and asset impairment charges of $7.9
million in the fourth quarter.

      Intermediate results for 2005 and 2004 include all of the Telex
transactions discussed above with the exception of the income tax benefit
related to the reduction of the deferred income tax valuation allowance.

                                       68
<PAGE>

SUPPLEMENTARY FINANCIAL INFORMATION

      In connection with the November 2003 debt restructuring, a wholly-owned
domestic subsidiary of Telex, Telex Communications International, Ltd.
(Guarantor), guarantees the $125.0 million 11 1/2% senior secured notes of Telex
on a full, unconditional and joint and several basis.

      The guarantee is a secured obligation of the Guarantor and ranks senior in
the right of payment to all existing and future subordinated indebtedness of the
Guarantor and ranks equally in the right of payment with all other existing and
future senior indebtedness of the Guarantor. The following condensed
consolidating financial information includes the accounts of the Guarantor and
the combined accounts of the Guarantor's direct and indirect foreign
subsidiaries (Non-Guarantors).

      The following tables present condensed consolidating balance sheets as of
December 31, 2005 and December 31, 2004, condensed consolidating statements of
operations for the years ended December 31, 2005 and 2004, the one-month period
ended December 31, 2003, and the eleven-month period ended November 30, 2003,
and condensed consolidating statements of cash flows for the years ended
December 31, 2005 and 2004, the one-month period ended December 31, 2003, and
the eleven-month period ended November 30, 2003. Intermediate's 13% senior
subordinated discount notes are unsecured and are not guaranteed by any other
party.

                                       69
<PAGE>
                           TELEX COMMUNICATIONS, INC.
                      CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 2005
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                             NON -
                                             ISSUER        GUARANTOR      GUARANTORS     ELIMINATIONS    CONSOLIDATED
                                           ------------   ------------   ------------    ------------    ------------
<S>                                        <C>            <C>            <C>             <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents               $      3,809   $        -     $      9,380    $        -      $     13,189
   Accounts receivable, net                      24,777            -           26,241             -            51,018
   Inventories                                   24,050            -           32,367        (4,675)           51,742
   Deferred income taxes                          5,704            -              334             -             6,038
   Prepaid expenses                               1,576            -            1,657             -             3,233
   Other current assets                             338       33,415            6,488       (38,739)            1,502
                                           ------------   ----------     ------------    ----------      ------------

      Total current assets                       60,254       33,415           76,467       (43,414)          126,722

Property, plant and equipment, net               23,590            -           11,810             -            35,400
Deferred financing costs, net                     3,981            -                -             -             3,981
Goodwill, net                                    14,500            -            1,498             -            15,998
Other assets                                      1,131            -            2,342            (8)            3,465
Investment in subsidiaries                       83,899       50,497                -      (134,396)                -
                                           ------------   ----------     ------------    ----------      ------------
                                           $    187,355   $   83,912     $     92,117    $ (177,818)     $    185,566
                                           ============   ==========     ============    ==========      ============

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
   Current maturities of long-term debt    $        212   $        -     $        246    $        -      $        458
   Accounts payable                               9,305            -            5,924             -            15,229
   Accrued wages and benefits                     6,009            -            6,839             -            12,848
   Accrued interest                               2,995            -              -               -             2,995
   Other accrued liabilities                     20,159            -           26,579       (38,719)            8,019
   Income taxes payable                           1,052            -              751             -             1,803
                                           ------------   ----------     ------------    ----------      ------------

      Total current liabilities                  39,732            -           40,339       (38,719)           41,352

Long-term debt, net                             125,493            -              148             -           125,641
Other long-term liabilities                      12,709           13            1,133             -            13,855
                                           ------------   ----------     ------------    ----------      ------------
      Total liabilities                         177,934           13           41,620       (38,719)          180,848
                                           ------------   ----------     ------------    ----------      ------------

Shareholder's equity (deficit)                    9,421       83,899           50,497      (139,099)            4,718
                                           ------------   ----------     ------------    ----------      ------------

                                           $    187,355   $   83,912     $     92,117    $ (177,818)     $    185,566
                                           ============   ==========     ============    ==========      ============
</TABLE>

                                       70

<PAGE>

                           TELEX COMMUNICATIONS, INC.
                      CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 2004
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                           ISSUER        GUARANTOR      NON-GUARANTORS    ELIMINATIONS     CONSOLIDATED
                                        -------------   -------------   --------------   --------------   --------------
<S>                                     <C>             <C>             <C>              <C>              <C>
ASSETS
   Current assets:
   Cash and cash equivalents            $       8,593   $         200   $       6,166    $           -    $      14,959
   Accounts receivable, net                    22,370               -          27,807                -           50,177
   Inventories                                 22,686               -          34,043           (4,156)          52,573
   Deferred income taxes                          358               -             730                -            1,088
   Prepaid expenses                             1,306               -             636                -            1,942
   Other current assets                           264          34,023          11,059          (43,393)           1,953
                                        -------------   -------------   -------------    -------------    -------------

      Total current assets                     55,577          34,223          80,441          (47,549)         122,692

Property, plant and equipment, net             21,328               -          10,697                -           32,025
Deferred financing costs, net                   5,350               -               -                -            5,350
Goodwill, net                                  14,500               -           1,345                -           15,845
Other assets                                    1,362               -           1,934                -            3,296
Investment in subsidiaries                     86,642          52,432               -         (139,074)               -
                                        -------------   -------------   -------------    -------------    -------------

                                        $     184,759   $      86,655   $      94,417    $    (186,623)   $     179,208
                                        =============   =============   =============    =============    =============

LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
   Revolving lines of credit            $           -   $           -   $       1,011    $           -    $       1,011
   Current maturities of long-term debt           212               -             267                -              479
   Accounts payable                             7,374               -           5,799                -           13,173
   Accrued wages and benefits                   5,276               -           6,367                -           11,643
   Accrued interest                             2,995               -               -                -            2,995
   Other accrued liabilities                   26,099               -          25,387          (43,515)           7,971
   Income taxes payable                         4,454               -           1,094                -            5,548
                                        -------------   -------------   -------------    -------------    -------------

      Total current liabilities                46,410               -          39,925          (43,515)          42,820

Long-term debt, net                           125,626               -             453                -          126,079
Other long-term liabilities                    10,903              13           1,607                -           12,523
                                        -------------   -------------   -------------    -------------    --------------
      Total liabilities                       182,939              13          41,985          (43,515)         181,422
                                        -------------   -------------   -------------    -------------    --------------

Shareholder's equity (deficit)                  1,820          86,642          52,432         (143,108)          (2,214)
                                        -------------   -------------   -------------    -------------    -------------
                                        $     184,759   $      86,655   $      94,417    $    (186,623)   $     179,208
                                        =============   =============   =============    =============    =============
</TABLE>

                                       71

<PAGE>

                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                         NON -
                                            ISSUER         GUARANTOR     GUARANTORS     ELIMINATIONS    CONSOLIDATED
                                         ------------    ------------   ------------    ------------    ------------
<S>                                      <C>             <C>            <C>             <C>             <C>
Net sales                                $    208,047    $          -   $    176,563    $    (76,877)   $    307,733
Cost of sales                                 124,339               -        124,212         (76,082)        172,469
                                         ------------    ------------   ------------    ------------    ------------
         Gross profit                          83,708               -         52,351            (795)        135,264
                                         ------------    ------------   ------------    ------------    ------------
Operating expenses:

   Engineering                                 10,035               -          7,357               -          17,392
   Selling, general and administrative         50,636               -         33,659               -          84,295
   Restructuring charges                        1,763               -              -               -           1,763
                                         ------------    ------------   ------------    ------------    ------------
                                               62,434               -         41,016               -         103,450
                                         ------------    ------------   ------------    ------------    ------------
      Operating income (loss)                  21,274               -         11,335            (795)         31,814

Interest expense                              (16,115)            473           (718)              -         (16,360)
Other income (expense), net                     1,374               -           (504)              -             870
Equity in earnings of subsidiaries              6,569           6,096              -          12,665)              -
                                         ------------    ------------   ------------    ------------    ------------
Income (loss) before income taxes              13,102           6,569         10,113         (13,460)         16,324
Provision for income taxes                       (787)              -          4,017               -           3,230
                                         ------------    ------------   ------------    ------------    ------------
      Net income (loss)                  $     13,889    $      6,569   $      6,096    $    (13,460)   $     13,094
                                         ============    ============   ============    ============    ============
</TABLE>

                                       72

<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2004
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            NON-
                                             ISSUER       GUARANTOR      GUARANTORS     ELIMINATIONS    CONSOLIDATED
                                         ------------    ------------   ------------    ------------    ------------
<S>                                      <C>             <C>            <C>             <C>             <C>
Net sales                                $    195,800    $          -   $    172,669    $    (71,641)   $    296,828
Cost of sales                                 116,163               -        117,787         (70,744)        163,206
                                         ------------    ------------   ------------    ------------    ------------
      Gross profit                             79,637               -         54,882            (897)        133,622
                                         ------------    ------------   ------------    ------------    ------------
Operating expenses:

   Engineering                                  9,074               -          6,349               -          15,423
   Selling, general and administrative         48,706               -         32,159               -          80,865
   Goodwill and asset impairment charges        7,915               -              -               -           7,915
                                         ------------    ------------   ------------    ------------    ------------
                                               65,695               -         38,508               -         104,203
                                         ------------    ------------   ------------    ------------    ------------

       Operating income (loss)                 13,942               -         16,374            (897)         29,419
Interest expense                              (16,478)            968         (1,095)              -         (16,605)
Other income (expense), net                       966           1,124         (1,319)            353           1,124
Equity in earnings of subsidiaries             10,407           8,328              -         (18,735)              -
                                         ------------    ------------   ------------    ------------    ------------

Income (loss) before income taxes               8,837          10,420         13,960         (19,279)         13,938
Provision for income taxes                      2,899              13          5,632               -           8,544
                                         ------------    ------------   ------------    ------------    ------------
      Net income (loss)                  $      5,938    $     10,407   $      8,328    $    (19,279)   $      5,394
                                         ============    ============   ============    ============    ============
</TABLE>

                                       73

<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                    FOR THE ONE MONTH ENDED DECEMBER 31, 2003
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            NON -
                                            ISSUER        GUARANTOR      GUARANTORS     ELIMINATIONS    CONSOLIDATED
                                         ------------    ------------   ------------    ------------    ------------
<S>                                      <C>             <C>            <C>             <C>             <C>
Net sales                                $     16,772    $          -   $     13,226    $     (4,565)   $     25,433
Cost of sales                                   9,987               -          9,940          (4,970)         14,957
                                         ------------    ------------   ------------    ------------    ------------
         Gross profit                           6,785               -          3,286             405          10,476
                                         ------------    ------------   ------------    ------------    ------------

Operating expenses:

   Engineering                                    773               -            451               -           1,224
   Selling, general and administrative          3,655               -          2,462               -           6,117
                                         ------------    ------------   ------------    ------------    ------------
                                                4,428               -          2,913               -           7,341
                                         ------------    ------------   ------------    ------------    ------------

      Operating income                          2,357               -            373             405           3,135

Interest expense                               (1,385)             89           (107)              -          (1,403)
Other (expense) income, net                       870               -           (785)              -              85
Loss on early extinguisment of debt            (1,140)              -            (46)              -          (1,186)
Equity in earnings of subsidiaries               (920)         (1,009)             -           1,929               -
                                         ------------    ------------   ------------    ------------    ------------
(Loss) income before income taxes                (218)           (920)          (565)          2,334             631
Provision for income taxes                        727              -             444               -           1,171
                                         ------------    ------------   ------------    ------------    ------------

   Net (loss) income                     $       (945)   $       (920)  $     (1,009)   $      2,334    $      (540)
                                         ============    ============   ============    ============    ============
</TABLE>

                                       74
<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                  FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 2003
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         NON -
                                             ISSUER      GUARANTOR    GUARANTORS    ELIMINATIONS     CONSOLIDATED
                                            ---------    ---------    ----------    ------------     ------------
<S>                                         <C>          <C>          <C>           <C>              <C>
Net sales                                   $ 158,900    $       -    $  134,703    $    (50,497)    $    243,106
Cost of sales                                  97,837            -        92,494         (49,468)         140,863
                                            ---------    ---------    ----------    ------------     ------------
                       Gross profit            61,063            -        42,209          (1,029)         102,243
                                            ---------    ---------    ----------    ------------     ------------
Operating expenses:

       Engineering                              8,426            -         4,521               -           12,947
       Selling, general and administrative     41,347            -        26,469               -           67,816
       Pension curtailment gain                (2,414)           -             -               -           (2,414)
                                            ---------    ---------    ----------    ------------     ------------
                                               47,359            -        30,990               -           78,349
                                            ---------    ---------    ----------    ------------     ------------
             Operating income (loss)           13,704            -        11,219          (1,029)          23,894

Interest expense                              (25,881)           -        (1,016)              -          (26,897)
Other income (expense), net                       732            -          (203)              -              529
Equity in earnings of subsidiaries              6,682        6,682             -         (13,364)               -
                                            ---------    ---------    ----------    ------------     ------------
(Loss) income before income taxes              (4,763)       6,682        10,000         (14,393)          (2,474)
Provision for income taxes                        267            -         3,318               -            3,585
                                            ---------    ---------    ----------    ------------     ------------

       Net (loss) income                    $  (5,030)   $   6,682    $    6,682    $    (14,393)    $     (6,059)
                                            =========    =========    ==========    ============     ============
</TABLE>

                                       75
<PAGE>

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               NON -
                                                         ISSUER   GUARANTOR  GUARANTORS   ELIMINATIONS  CONSOLIDATED
                                                       ---------  ---------  ----------   ------------  ------------
<S>                                                    <C>        <C>        <C>          <C>           <C>
TOTAL CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES      4,769       (200)     12,465              -        17,034
                                                       ---------  ---------  ----------   ------------  ------------

INVESTING ACTIVITIES:
      Additions to property, plant and equipment          (7,888)         -      (3,926)             -       (11,814)
      Acquisition of business/intangibles                   (750)         -      (3,194)             -        (3,944)
      Other                                                  221          -           -              -           221
                                                       ---------  ---------  ----------   ------------  ------------
      Net cash used in investing activities               (8,417)         -      (7,120)             -       (15,537)
                                                       ---------  ---------  ----------   ------------  ------------

FINANCING ACTIVITIES:
      Borrowings under revolving lines of credit, net          -          -      (1,011)             -        (1,011)

      Repayment of long-term debt                           (212)         -        (244)             -          (456)
      Dividend to parent                                    (924)         -           -              -          (924)
                                                       ---------  ---------  ----------   ------------  ------------
      Net cash used in financing activities               (1,136)         -      (1,255)             -        (2,391)
                                                       ---------  ---------  ----------   ------------  ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS                                           -          -        (876)             -          (876)
                                                       ---------  ---------  ----------   ------------  ------------

CASH AND CASH EQUIVALENTS:
      Net (decrease) increase                             (4,784)      (200)      3,214              -        (1,770)
      Balance at beginning of year                         8,593        200       6,166              -        14,959
                                                       ---------  ---------  ----------   ------------  ------------
      Balance at end of year                           $   3,809  $       -  $    9,380   $          -  $     13,189
                                                       =========  =========  ==========   ============  ============

SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
         Interest                                      $  14,376  $       -  $      714   $          -  $     15,090
                                                       =========  =========  ==========   ============  ============
         Income taxes                                  $   2,907  $       -  $    4,107   $          -  $      7,014
                                                       =========  =========  ==========   ============  ============
</TABLE>

                                       76
<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2004
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                       NON -
                                                               ISSUER    GUARANTOR   GUARANTORS   ELIMINATIONS   CONSOLIDATED
                                                              --------   ---------   ----------   ------------   ------------
<S>                                                           <C>        <C>         <C>          <C>            <C>
TOTAL CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES         $ 13,705   $  (2,147)  $    2,205   $        (39)  $     13,724
                                                              --------   ---------   ----------   ------------   ------------

INVESTING ACTIVITIES:
        Additions to property, plant and equipment              (5,570)        -         (2,152)             -         (7,722)
        Proceeds from sale of product lines and other assets         -       2,338            -              -          2,338
        Other                                                      221           -            -              -            221
                                                              --------   ---------   ----------   ------------   ------------
        Net cash (used in) provided by investing activities     (5,349)      2,338       (2,152)             -         (5,163)
                                                              --------   ---------   ----------   ------------   ------------

FINANCING ACTIVITIES:
        Borrowings under revolving lines of credit, net              -           -        1,011              -          1,011
        Repayment of long-term debt                               (212)          -         (231)             -           (443)
        Payment of deferred financing costs                       (319)          -            -              -           (319)
        Dividend to shareholder                                   (883)          -            -              -           (883)
        Change in intercompany receivable/payable                  (48)          9            -             39              -
                                                              --------   ---------   ----------   ------------   ------------
        Net cash (used in) provided by financing activities     (1,462)          9          780             39           (634)
                                                              --------   ---------   ----------   ------------   ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS         -           -          334              -            334
                                                              --------   ---------   ----------   ------------   ------------

CASH AND CASH EQUIVALENTS:
        Net increase                                             6,894         200        1,167              -          8,261
        Balance at beginning of year                             1,699           -        4,999              -          6,698
                                                              --------   ---------   ----------   ------------   ------------
        Balance at end of year                                $  8,593   $     200   $    6,166   $          -   $     14,959
                                                              ========   =========   ==========   ============   ============

SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:

          Interest                                            $ 13,018   $       -   $    1,095   $          -   $     14,113
                                                              ========   =========   ==========   ============   ============
          Income taxes                                        $    434   $       -   $    6,113   $          -   $      6,547
                                                              ========   =========   ==========   ============   ============
</TABLE>

                                       77
<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                    FOR THE ONE MONTH ENDED DECEMBER 31, 2003
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                       NON -
                                                               ISSUER     GUARANTOR   GUARANTORS   ELIMINATIONS   CONSOLIDATED
                                                             ----------   ---------   ----------   ------------   ------------
<S>                                                          <C>          <C>         <C>          <C>            <C>
TOTAL CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES        $   (1,353)  $   5,313   $    4,022   $     (2,236)  $      5,746
                                                             ----------   ---------   ----------   ------------   ------------

INVESTING ACTIVITIES:
        Additions to property, plant and equipment                 (370)          -         (176)             -           (546)
                                                             ----------   ---------   ----------   ------------   ------------
        Net cash used in investing activities                      (370)          -         (176)             -           (546)
                                                             ----------   ---------   ----------   ------------   ------------

FINANCING ACTIVITIES:
       Borrowings under revolving lines of credit, net          (10,439)          -       (1,668)             -        (12,107)
       Proceeds from issuance of long-term debt                 125,000           -            -              -        125,000
       Repayment of long-term debt                             (109,626)          -         (671)             -       (110,297)
       Payment of deferred financing costs                       (6,519)          -            -              -         (6,519)
       Dividend to shareholder                                     (466)          -            -              -           (466)
       Change in intercompany receivable/payable                  3,077      (5,313)           -          2,236              -
                                                             ----------   ---------   ----------   ------------   ------------
       Net cash provided by (used in) financing activities        1,027      (5,313)      (2,339)         2,236         (4,389)
                                                             ----------   ---------   ----------   ------------   ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS          -           -          242              -            242
                                                             ----------   ---------   ----------   ------------   ------------

CASH AND CASH EQUIVALENTS:
       Net (decrease) increase                                     (696)          -        1,749              -          1,053
       Balance at beginning of period                             2,395           -        3,250              -          5,645
                                                             ----------   ---------   ----------   ------------   ------------
       Balance at end of period                              $    1,699   $       -   $    4,999   $          -   $      6,698
                                                             ==========   =========   ==========   ============   ============

SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
          Interest                                           $       10   $       -   $      109   $          -   $        119
                                                             ==========   =========   ==========   ============   ============
          Income taxes                                       $       75   $       -   $      328   $          -   $        403
                                                             ==========   =========   ==========   ============   ============
</TABLE>

                                       78
<PAGE>

                           TELEX COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                  FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 2003
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              NON -
                                                                    ISSUER      GUARANTOR   GUARANTORS   ELIMINATIONS  CONSOLIDATED
                                                                   ---------    ---------   ----------   ------------  ------------
<S>                                                                <C>          <C>         <C>          <C>           <C>
TOTAL CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES              $  18,463    $ (15,436)  $    3,295   $      8,967  $     15,289
                                                                   ---------    ---------   ----------   ------------  ------------

INVESTING ACTIVITIES:
     Additions to property, plant and equipment                       (3,933)           -       (1,232)             -        (5,165)
     Proceeds from sale of product lines and other assets              1,130            -           28              -         1,158
     Other                                                               166            -            -              -           166
                                                                   ---------    ---------   ----------   ------------  ------------
     Net cash used in investing activities                            (2,637)           -       (1,204)             -        (3,841)
                                                                   ---------    ---------   ----------   ------------  ------------

FINANCING ACTIVITIES:
     Borrowings (repayments) under revolving lines of credit, net      1,876            -       (2,248)             -          (372)
     Repayment of long-term debt                                      (8,898)           -         (180)             -        (9,078)
     Change in intercompany receivable/payable                        (6,469)      15,436            -         (8,967)            -
                                                                   ---------    ---------   ----------   ------------  ------------
     Net cash (used in) provided by financing activities             (13,491)      15,436       (2,428)        (8,967)       (9,450)
                                                                   ---------    ---------   ----------   ------------  ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS               -            -          273              -           273
                                                                   ---------    ---------   ----------   ------------  ------------

CASH AND CASH EQUIVALENTS:
     Net decrease                                                      2,335            -          (64)             -         2,271
     Balance at beginning of period                                       60            -        3,314              -         3,374
                                                                   ---------    ---------   ----------   ------------  ------------
     Balance at end of period                                      $  2,395     $       -   $    3,250   $          -  $      5,645
                                                                   =========    =========   ==========   ============  ============

SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
       Interest                                                    $   4,301    $       -   $    1,021   $          -  $      5,322
                                                                   =========    =========   ==========   ============  ============
       Income taxes                                                $     348    $       -   $    5,071   $          -  $      5,419
                                                                   =========    =========   ==========   ============  ============
</TABLE>

                                       79
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BOARD OF DIRECTORS
TELEX COMMUNICATIONS HOLDINGS, INC.

We have audited the consolidated financial statements of Telex Communications
Intermediate Holdings, LLC and subsidiaries (Successor) and Telex
Communications, Inc. and subsidiaries (Successor) as of December 31, 2005 and
2004, and for the years ended December 31, 2005 and 2004 and for the one-month
period ended December 31, 2003. We have also audited the consolidated financial
statements of Telex Communications Holdings, Inc. and subsidiaries (Predecessor)
for the eleven-month period ended November 30, 2003 and have issued our report
thereon dated March 8, 2006 (included elsewhere in this Report). Our audit also
included the financial statement schedule listed in Item 15(a) of this Report.
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

Ernst & Young LLP

Minneapolis, Minnesota
March 8, 2006

                                       80
<PAGE>

                                                                     SCHEDULE II

                 TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC
                           TELEX COMMUNICATIONS, INC.

                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                  COLUMN A                                   COLUMN B    COLUMN C      COLUMN D        COLUMN E
-------------------------------------------------------     ---------   ----------    ----------      ----------
                                                            BALANCE AT   ADDITIONS    DEDUCTIONS      BALANCE AT
                                                            BEGINNING   CHARGED TO       FROM           END OF
DESCRIPTION                                                 OF PERIOD    EXPENSES      RESERVES         PERIOD
-----------                                                 ---------   ----------    ----------      ----------
<S>                                                         <C>         <C>           <C>             <C>
PREDECESSOR
ELEVEN MONTH PERIOD ENDED NOVEMBER 30, 2003
Allowance for doubtful accounts........................     $   3,362   $      869    $      673(a)   $   3,558
                                                            =========   ==========    ==========      =========
Restructuring accrual..................................     $      96   $        -    $       96(b)   $       -
                                                            =========   ==========    ==========      =========

SUCCESSOR
ONE MONTH PERIOD ENDED DECEMBER 31, 2003
Allowance for doubtful accounts........................     $   3,558   $     (279)   $      140(a)   $   3,139
                                                            =========   ==========    ==========      =========

YEAR  ENDED DECEMBER 31, 2004
Allowance for doubtful accounts........................     $   3,139   $      828    $    1,089(a)   $   2,878
                                                            =========   ==========    ==========      =========

YEAR  ENDED DECEMBER 31, 2005
Allowance for doubtful accounts........................     $   2,878   $      976    $      672(a)   $   3,182
                                                            =========   ==========    ==========      =========
Restructuring accrual..................................     $       -   $      884    $       12(b)   $     872
                                                            =========   ==========    ==========      =========
</TABLE>

(a)   Uncollectible accounts written off and adjustments to the allowance.

(b)   Adjustments to the accrual account reflect payments or non-cash charges
      associated with the accrual.

                                       81
<PAGE>

                                  EXHIBIT INDEX
                                       for
                                    Form 10-K

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                    DESCRIPTION
------                                    -----------
<S>               <C>
                               ARTICLES OF INCORPORATION AND BY-LAWS

3.1(a)            Certificate of Incorporation of Telex Communications, Inc. ("Telex" or the
                  "Company"), dated October 21, 2003 (incorporated by reference to Exhibit 3.1(a) to
                  Telex Registration Statement on Form S-4, filed on February 13, 2004, File No.
                  333-112819 ("Telex Registration Statement").

3.1(b)            Certificate of Amendment to Certificate of Incorporation of Telex, dated November
                  19, 2003 (incorporated by reference to Exhibit 3.1(b) to Telex Registration
                  Statement).

3.2(a)            By-Laws of the Company dated October 30, 2003 (incorporated by reference to
                  Exhibit 3.2 to Telex Registration Statement).

3.3               Certificate of Formation of Telex Communications Intermediate Holdings, LLC
                  ("Intermediate Holdings"), dated October 21, 2003 (incorporated by reference to
                  Exhibit 3.1 to Intermediate Holdings Registration Statement on Form S-4, filed on
                  April 29, 2004, File No. 333-115009 ("Intermediate Holdings Registration
                  Statement").

3.4               Limited Liability Company Agreement of Intermediate Holdings dated as of November
                  19, 2003 (incorporated by reference to Exhibit 3.2 to Intermediate Holdings
                  Registration Statement).

                       INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES

4.1(a)            Indenture (the "Indenture"), dated as of November 19, 2003, among the Company, as
                  Issuer, and BNY Midwest Trust Company ("BNY"), as Trustee and Collateral Agent
                  related to the 11 -1/2% Senior Secured Notes due 2008 of Telex (incorporated by
                  reference to Exhibit 4.1(a) to Telex Registration Statement).

4.1(b)            Pledge and Security Agreement (the "Pledge and Security Agreement"), dated as of
                  November 19, 2003 among Telex, Telex Communications International, Ltd.
                  ("International") and BNY, as Collateral Agent (incorporated by reference to
                  Exhibit 4.1(b) to Telex Registration Statement).

4.2(a)            Credit Agreement, dated as of November 19, 2003 (the "Credit Agreement"), among
                  Telex, Telex Communications Holdings, Inc. ("Holdings"), Intermediate Holdings,
                  and International, as Credit Parties, General Electric Capital Corporation ("GE"),
                  as Agent, L/C Issuer and a Lender and the other financial institutions parties
                  thereto, as Lenders (incorporated by reference to Exhibit 4.2(a) to Telex
                  Registration Statement).

4.2(b)            Guaranty, dated as of November 19, 2003, between by and among Holdings,
                  Intermediate Holdings, the Company and International, as Guarantors, and GE, as
                  Agent (incorporated by reference to Exhibit 4.2(b) to Telex Registration
                  Statement).

4.2(c)            Security Agreement, dated as of November 19, 2003, by and among Holdings,
                  Intermediate Holdings, the Company, International and GE, as Agent (incorporated
                  by reference to Exhibit 4.2(c) to Telex Registration Statement).

4.2(d)            Pledge Agreement, dated as of November 19, 2003, by and among Holdings,
                  Intermediate Holdings, the Company and International, as Pledgors, and GE, as
                  Agent (incorporated by reference to Exhibit 4.2(d) to Telex Registration
                  Statement).

4.3               Intercreditor Agreement, dated as of November 19, 2003, among GE, as Agent, BNY,
                  as trustee and collateral agent, and the Company, Holdings, Intermediate Holdings
                  and International (incorporated by reference to Exhibit 4.3 to Telex Registration
                  Statement).

4.4               Indenture (the "Indenture"), dated as of November 19, 2003, among Intermediate
                  Holdings, as Issuer, and BNY, as Trustee and Collateral Agent related to the 13%
                  Senior Subordinated Discount Notes due 2009 of Intermediate Holdings (incorporated
                  by reference to Exhibit 4.1(a) to Intermediate Holdings Registration Statement).

4.5               Pledge Agreement (the "Pledge Agreement"), dated as of November 19, 2003, between
                  Intermediate Holdings and BNY, as Trustee and Collateral Agent under the Indenture
                  (incorporated by reference to Exhibit 4.1(b) to Intermediate Holdings Registration
                  Statement).

                                        MATERIAL CONTRACTS

10.1              Assignment and Assumption Agreement, dated November 19, 2003, made by Holdings in
                  favor of the Company (incorporated by reference to Exhibit 10.1 to Telex
                  Registration Statement).

10.2              Indemnification Agreement, dated as of May 6, 1997, by and between GST Acquisition
                  Corp. and Greenwich Street Capital Partners, Inc. (incorporated by reference to
                  Exhibit 10.2 to Telex Registration Statement).

10.3(a)           Member Control Agreement of DRF 12000 Portland LLC, dated as of March 16, 2000, by
                  and between Holdings and DRF TEL LLC (incorporated by reference to Exhibit 10.3(a)
                  to Telex Registration Statement).

10.3(b)           Lease, dated March 16, 2000, by and between Holdings and DRF 12000 Portland
</TABLE>

                                       82
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                    DESCRIPTION
------                                    -----------
<S>               <C>
                  LLC for the property located at 12000 Portland Avenue South, Burnsville, Minnesota
                  (incorporated by reference to Exhibit 10.3(b) to Telex Registration Statement).

                           MANAGEMENT CONTRACTS AND COMPENSATORY PLANS AND ARRANGEMENTS

*10.4(a)          Employment Agreement, dated as of April 14, 2003, between Raymond V. Malpocher and
                  Holdings (the "Malpocher Employment Agreement") (incorporated by reference to
                  Exhibit 10.4(a) to Telex Registration Statement).

*10.4(b)          Amendment to the Malpocher Employment Agreement dated as of January 14, 2004
                  (incorporated by reference to Exhibit 10.4(b) to Telex Registration Statement).

*10.5             Subscription and Option Agreement, dated as of January 14, 2004, between Holdings
                  and Raymond V. Malpocher (incorporated by reference to Exhibit 10.5 to Telex
                  Registration Statement).

*10.6             Purchase Agreement, dated March 26, 2004 between Holdings and Raymond V. Malpocher
                  (incorporated by reference to Exhibit 10.1 to the Company's Report on Form 10-Q
                  for the quarter ended March 31, 2004, filed on April 28, 2004).

*10.7             Subscription and Option Agreement, dated March 28, 2004 between Telex
                  Communications Holdings, Inc. and Raymond V. Malpocher (incorporated by reference
                  to Exhibit 10.2 to the Company's Report on Form 10-Q for the quarter ended March
                  31, 2004, filed on April 28, 2004).

*10.8(a)          Employment Agreement, dated as of January 5, 2003, between Holdings and Mathias
                  Stieler von Heydekampf (incorporated by reference to Exhibit 10.7(a) to Telex
                  Registration Statement).

*10.8(b)          Secondment Agreement, dated as of January 5, 2003, among EVI Audio GmbH, Holdings
                  and Mathias Stieler von Heydekampf (incorporated by reference to Exhibit 10.7(b)
                  to Telex Registration Statement).

*10.9(a)          Service Agreement signed February 21, 1997 between EVI Audio GmbH and Mathias von
                  Heydekampf (the "Service Agreement") (incorporated by reference to Exhibit 10.8(a)
                  to Telex Registration Statement).

*10.9(b)          Amendment dated January 5, 2003 to Service Agreement (incorporated by reference to
                  Exhibit 10.8(b) to Telex Registration Statement).

*10.10            Subscription Agreement, dated March 2, 2004 between Holdings and Mathias Stieler
                  von Heydekampf (incorporated by reference to Exhibit 10.3 to the Company's Report
                  on Form 10-Q for the quarter ended June 30, 2004, filed on August 10, 2004).

*10.11            Subscription Agreement, dated March 2, 2004 between Holdings and Gregory W.
                  Richter (incorporated by reference to Exhibit 10.2 to the Company's Report on Form
                  10-Q for the quarter ended June 30, 2004, filed on August 10, 2004).

*10.12            Subscription Agreement, dated March 2, 2004 between Holdings and Thomas J.
                  Kulikowski (incorporated by reference to Exhibit 10.12 to the Company's Annual
                  Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 24,
                  2005, SEC No. 333-112819 ("2004 10-K")).

*10.13            Subscription Agreement, dated March 2, 2004 between Holdings and Ralph K. Strader
                  (incorporated by reference to Exhibit 10.13 to 2004 10-K).

*10.14            2004 Stock Option Plan of Holdings (incorporated by reference to Exhibit 10.14 to
                  2004 10-K).

                                                OTHER

14                Code of Business Conduct and Ethics of the Company (incorporated by reference to
                  Exhibit 14 to 2004 10-K).

21.1              Subsidiaries of Intermediate Holdings (filed as an Exhibit herewith).

31.1              Certification of Chief Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002 (filed as an Exhibit herewith).

31.2              Certification of Chief Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002 (filed as an Exhibit herewith).

32.1              Certification of Chief Executive Officer and Chief Financial Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002 (filed as an Exhibit herewith).
</TABLE>

*     Management contract or compensatory plan, contract, or arrangement
      required to be filed as an exhibit to this report.

                                       83