While listening to a DTS digital soundtrack at the Avoca Beach cinema, north of Sydney Australia, Ray Derrick noticed that "phantom" sound had been added to the soundtrack to expand the surround effect and fill the "hole in the middle" between the left and right wall speakers. Ray is the designer and manufacturer of the world's most technically advanced cinema sound processor, the Panastereo. He previously was a highly respected sound engineer for one of Australia's television networks. It was obvious that this additional sound material could be retrieved and sent to separate surround speakers on the back wall. The principle is the same as separating a center channel from a two channel stereo recording by using a matrix to steer the channels to the proper speakers. A professional matrix from a Panastereo processor was added to the system and audiences were delighted with the newly defined "center-surround channel". No longer did the phantom sound drift, but was clearly separated from the left and right surround channels for a more panoramic effect. Patrons sitting on the sides could also appreciate the additional sound that could be heard by patrons sitting dead center between the surround arrays. The original process was called Panastereo Surround SX.

The press release (PDF) sent to Panastereo dealers, film distribution companies, and members of Australia's motion picture industry was distributed on May 17, 1995. At that time the current Panalogic Corporation, Ltd. was known as Raidek Sound Industries. Panalogic manufactures and distributes an advanced cinema booth automation system, Panastereo processors, and premium sound accessories for professional cinemas. More information is available at www.panalogic.com Panalogic Corp was one of the first to offer a "studio grade" surround adapter using the matrix and equalization cards from the THX approved Panastereo CSP1200 cinema stereo processor. The product is called the SP23.

The Surround SX system installed in the Avoca Beach Cinema 4 years ago was used to present the "first" EX encoded movie STAR WARS - Episode 1.

Surround EX is a trademark of Dolby Labs Inc, San Francisco, CA - DTS is a trademark of Digital Theatre Systems, Augora hills, CA.