An exemplary embodiment of the invention can generate multiple output audio signals from multiple input audio signals, in which the number of output signals is equal to or higher than the number of input signals. The embodiment includes computing one or more independent sound subbands representing signal components which are independent between the input subbands; computing one or more localized direct sound subbands representing signal components which are contained in more than one of the input subbands and direction factors representing the ratios with which these signal components are contained in two or more input subbands; generating the output subband signals, where each output subband signal is a linear combination of the independent sound subbands and the localized direct sound subbands; and converting the output subband signals to time domain audio signals.