Directed Electronics (NADSAQ: DEIX) is the largest designer and marketer of consumer branded vehicle security and convenience systems in the United States based on sales
and a leading supplier of home audio, mobile audio and video, and satellite radio products.

That’s boilerplate — a strictly factual description of what our company does. But what makes Directed tick? What is the company’s DNA? What values, strengths, and ambitions make us the kind of company you want to invest in?

Directed owns many powerful brands — that’s why we say Directed is The Brand Above many of the best-known trade names in consumer electronics including Viper, Python and Clifford in vehicle security; Orion, Precision Power, West Coast Customs and Xtreme in mobile audio; Definitive Technology and a/d/s/ in home audio; and Directed Video in mobile video. Plus do-it-yourself electronics products in the DesignTech and Boa lines. And now the company is entering the portable GPS Navigation business in the Directed Mobile Media line.

In addition to the brands that we own, Directed is also associated with another extraordinarily powerful brand: SIRIUS Satellite Radio. That’s because Directed is one of SIRIUS’ key business partners, and the exclusive supplier in our channels of a number of key SIRIUS receivers, tuners, interfaces and accessories. In addition to supplying SIRIUS products, Directed is also developing SIRIUS accessories like the Innovations Award-winning Executive Docking Station, as well as the SIRIUS Powered Subwoofer.

What are our channels? That’s another way of talking about our customers, the authorized retailers that sell our products to millions of consumers. Directed has thousands of customers in the retail mobile and home electronics aftermarket: national electronics retailers like Circuit City, Best Buy and Magnolia; mass merchants and nationwide auto parts retailers like Target, Napa, Advance Auto Parts and Autozone for Directed’s Do-It-Yourself (DIY) products; new car dealers like AutoNation and the expediters that service them; dozens of regional and local electronics chains; and our bread-and-butter: 3,000 single store mobile and home electronics specialist retailers. Plus international sales in more than 70 countries around the world.

Besides our valued customers, what else makes Directed a success? Our quality products, of course. Designed by installers for installers, in an ISO9001-registered Quality System so they work the first time, right out of the box. Backed up by world class technical support, warranty, same day shipping, field sales support and customer service — the list of dealer-friendly services goes on and on.

And our employees also make Directed successful: driven, dedicated, skilled, friendly employees who love what they do, and always strive to offer the highest level of service to our customers. Directed has other assets as well, including an intellectual property portfolio of key patents and trademarks that bring the company licensing revenue, and help to maintain value-added product differentiation.

During the past five years we have supported and given back to those communities where we work and do business as well, by raising nearly one million dollars for charity. The Directed Electronics Charitable Foundation, a not-for-profit 501(c)(3) organization, supports a number of Boys & Girls Clubs and is building an endowment that will allow it to help disadvantaged youth for years to come.

Directed has received its share of favorable press over the last few years, in the pages of BusinessWeek, Barrons, The Wall Street Journal, The New York Times, Time and Life Magazines, USA Today, and on the NBC Nightly News, CNN Headline News, The Tonight Show with Jay Leno and regularly on the popular Pimp My Ride television show. Our Viper brand was even a question on Jeopardy!

Where is Directed headed in the future? Our goal is simple: to continue to grow and prosper, for the benefit
of our shareholders, employees, customers and suppliers. Our successful business model has been in place for more than 20 years — to develop innovative new products, market them to a diversified customer base, and help
our customers sell them to satisfied end users, supporting them every step of the way in every way we can. That’s why Directed is Driven to Excel.

2006 will mark the 24th year since Directed Electronics was founded in 1982, and all of us are proud of the nearly one-quarter century of service to our customers. As you will see on the following pages, Directed continues to excel as we enter our first year as a publicly traded company on the NASDAQ Stock Exchange. We’re glad you’re along for the ride!

Best regards,