November 5, 2007

Sonic Innovations Inc, a producer of advanced digital hearing aids  announced results for the third quarter 2007.  Net sales for the third quarter 2007 of $30.8 million were up 19.0% over the $25.9 million for the third quarter of 2006.  The auditory testing equipment division was sold in February 2007 and has been reflected as a discontinued operation.

 North American sales of $12.6 million in the third quarter 2007 increased 28.5% from $9.8 million in the third quarter of 2006.  European sales of

 $11.5 million in the third quarter 2007 increased 13.8% from $10.1 million in the third quarter 2006.  Rest-of-world sales of $6.7 million in the third quarter 2007 were up 12.4% from 2006.

 Gross profit was $19.3 million in the third quarter 2007, up 28.4%, from the same period in 2006.  Gross margin of 62.7% in the third quarter 2007 was up from the third quarter of 2006 level of 58.2% as a result of cost reductions in manufacturing, distribution activities, lower warranty costs and reduced returns.

 Selling, general and administrative expense increased from $13.3 million in the third quarter 2006 to $17.0 million in the third quarter 2007 due to the costs of integrating and expanding distribution channels, increased spending on marketing and selling initiatives, and litigation costs and severance.  Research and development expense in the third quarter 2007 of $2.1 million was up $0.1 million, or 5.9%, from $2.0 million in the prior year, primarily due to increased expenses relating to the development of our Velocity product line.

 The Company recorded $973,000 of expenses during the third quarter related to settlement of a patent infringement lawsuit and associated legal costs.  While these costs had a material effect on the Company’s results of operations for the third quarter of 2007, the Company believes that the settlement was in the Company’s best interest.  The Company also reduced a previously recorded liability by approximately $365,000 as a result of an anticipated settlement of an appealed lawsuit.

 Sam Westover, President and CEO, stated, "We are pleased with our record sales for the quarter and our earnings improvements.  We were able to absorb nearly a million dollars of legal costs and still generate a 400% increase in year-to-date pre-tax income.  We look forward to continuing revenue and earnings growth in the fourth quarter."

 Income from continuing operations for the quarter was $0.5 million, up $0.9 million from the loss from continuing operations of $0.4 million from the third quarter 2006.  Net income improved from $0.8 million loss in the third quarter of 2006 to a gain of $0.5 million this year.  Year-to-date income before income taxes improved 419% over the prior year.

 As of September 30, 2007, Sonic Innovations had cash and marketable securities of $22.9 million and a line of credit of $6.0 million.