Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Contact:
Ulrich Gottschling
Chief Financial Officer
(949) 442-5596
ir@srslabs.com
SRS LABS REPORTS RESULTS FOR THIRD QUARTER 2007
Santa Ana, Calif., November 6, 2007 - SRS Labs, Inc. (NASDAQ: SRSL), a leading supplier of surround sound, audio, and voice technologies, announced today revenues for the three months ended September 30, 2007 of $4.8 million, as compared to $4.9 million for the same period in the prior year. Income from continuing operations for the three months ended September 30, 2007 increased $397 thousand or 31 percent to $1.7 million, or $0.10 per diluted share, compared to $1.3 million, or $0.08 per diluted share, for the same period in the prior year. Net income for the three months ended September 30, 2007 decreased $717 thousand, or 30 percent, to $1.7 million, or $0.10 per diluted share, compared to $2.4 million, or $0.15 per diluted share, for the same period in the prior year. During the three months ended September 30, 2006, the Company recognized net income of $1.1 million, or $0.07 per diluted share, from discontinued operations.
Thomas C.K. Yuen, Chairman and CEO of SRS Labs, Inc., commented on the results of the Company’s activities:
1. “Our revenues during the third quarter were negatively impacted by the declining use of our technologies at Sony Corporation and Toshiba PC. Additionally, earlier this year, we elected to modify our sales approach in our Greater China Region by allowing certain of our customers to license directly from us rather than through bundled arrangements with our integrated circuit partners. While this change of approach has impacted us unfavorably in the short term, we believe that in the long term having direct relationships with these customers will prove to be beneficial.
2. We are pleased to announce that during the quarter, we reached a non-exclusive agreement with LG Electronics to utilize our technologies through 2010 in their televisions and monitors. During the third quarter we recognized increased revenues from our largest licensee, Samsung Electronics, and entered into several new customer relationships, including a new relationship with a large China-based television manufacturer. Lastly, we continued to experience growth in our automotive segment, particularly with Japan-based car companies and suppliers.
3. We recently completed a strategic review of our business and are committed to continuing to invest in the growth of our business, particularly in our sales and marketing activities.
4. We have entered into a 30 day stand still agreement with Sony Corporation to allow both SRS and Sony Corporation the time to conduct additional evaluation and discussions regarding intellectual property issues. Sony Corporation has also dismissed its complaint for declaratory relief without prejudice.
5. The Company will commence a common stock repurchase program, in which SRS may acquire up to $10 million of its outstanding common stock. The repurchase program will commence November 12, 2007 and continue for a six month period.”
Conference Call
SRS Labs will host a conference call and webcast at 2 p.m. Pacific Time today (5 p.m. Eastern Time) to review its third quarter 2007 results. The dial-in number for the call is (866) 802-4355; ask for “SRS Labs Q3 Results Conference Call.” An audio replay of the conference call will be available until November 13, 2007 at 6:00 p.m. Pacific Time via telephone. The audio replay dial-in number is 866-837-8032, enter access code 994551.
The call will also be webcast live over the Internet. Simply log-on to http://investor.shareholder.com/media/eventdetail.cfm?mediaid=28010&c=SRSL&mediakey=D41BFB75208C6029EB76B4DF64D67A7C&e=0
The webcast will be archived on www.srslabs.com for 60 days following the call.
About SRS Labs, Inc.
SRS Labs is a recognized leader in the advancement of audio and voice technology. The Company works with the world’s top manufacturers to provide a richer entertainment experience through patented sound techniques. SRS Labs’ technologies can be heard through products ranging from televisions, LCD and plasma monitors, cell phones, MP3 players, car audio systems, and notebook and desktop computers. The Company also offers hardware and software tools to professionals and consumers for the creation, production and broadcast of content featuring SRS Labs’ technologies. Based in Santa Ana, Calif., the Company also has licensing representation in Hong Kong, Taiwan, Japan, China, Europe, and Korea. For more information about SRS Labs, Inc. please visit www.srslabs.com. The information on the aforementioned website is not incorporated by reference into this press release.
Except for historical information contained in this release, all statements in this release, including those of Mr. Yuen, are forward-looking statements that are based on management’s beliefs, as well as assumptions made by, and information currently available to management. While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that the Company’s goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect the Company’s actual results and may cause results to differ materially from those expressed in or implied by forward-looking statements made by or on behalf of the Company. These factors include, but are not limited to, the acceptance of new SRS Labs’ products and technologies, the impact of competitive products and pricing, the timely development and release of technologies by the Company, general business and economic conditions, especially in Asia, and other factors detailed in the Company’s Form 10-K and other periodic reports filed with the SEC. SRS Labs specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.
— More —
SRS Labs, Inc., 2909 Daimler Street, Santa Ana, CA 92705 Tel 949-442-1070 Fax 949-852-1099 www.srslabs.com
SRS LABS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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| September 30, 2007 |
| December 31, 2006 |
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| (unaudited) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
| $ | 40,075,552 |
| $ | 35,011,425 |
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Accounts receivable, net |
| 1,932,893 |
| 1,180,879 |
| ||
Prepaid expenses and other current assets |
| 655,518 |
| 808,940 |
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Total Current Assets |
| 42,663,963 |
| 37,001,244 |
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Investments available for sale |
| 5,353,920 |
| 5,226,705 |
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Property and equipment, net |
| 325,082 |
| 389,667 |
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Intangible assets, net |
| 2,250,553 |
| 2,045,139 |
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Deferred income taxes, net |
| 1,408,617 |
| 386,412 |
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Total Assets |
| $ | 52,002,135 |
| $ | 45,049,167 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable |
| $ | 360,455 |
| $ | 609,899 |
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Accrued liabilities |
| 806,077 |
| 1,295,236 |
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Deferred revenue |
| 457,006 |
| 399,565 |
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Total Current Liabilities |
| 1,623,538 |
| 2,304,700 |
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Commitments and contingencies |
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Stockholders’ Equity |
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Preferred stock—$.001 par value; 2,000,000 shares authorized; no shares issued or outstanding |
| — |
| — |
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Common stock—$.001 par value; 56,000,000 shares authorized; 16,946,377 and 16,561,036 shares issued; and 16,272,279 and 15,886,938 shares outstanding at September 30, 2007 and December 31, 2006, respectively |
| 16,947 |
| 16,562 |
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Additional paid-in capital |
| 73,705,815 |
| 70,574,176 |
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Accumulated other comprehensive loss |
| (146,080 | ) | (273,295 | ) | ||
Accumulated deficit |
| (20,194,640 | ) | (24,569,531 | ) | ||
Treasury stock at cost, 674,098 shares at September 30, 2007 and December 31, 2006 |
| (3,003,445 | ) | (3,003,445 | ) | ||
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Total Stockholders’ Equity |
| 50,378,597 |
| 42,744,467 |
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Total Liabilities and Stockholders’ Equity |
| $ | 52,002,135 |
| $ | 45,049,167 |
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SRS LABS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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| Three Months Ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Revenues |
| $ | 4,769,271 |
| $ | 4,910,203 |
| $ | 14,536,526 |
| $ | 13,505,710 |
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Cost of sales |
| 36,850 |
| 43,998 |
| 115,912 |
| 127,103 |
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Gross margin |
| 4,732,421 |
| 4,866,205 |
| 14,420,614 |
| 13,378,607 |
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Operating expenses: |
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Sales and marketing |
| 1,460,185 |
| 1,743,660 |
| 5,104,195 |
| 5,494,445 |
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Research and development |
| 689,901 |
| 628,227 |
| 2,366,121 |
| 1,914,255 |
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General and administrative |
| 1,436,184 |
| 1,277,601 |
| 4,105,792 |
| 4,272,598 |
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Total operating expenses |
| 3,586,270 |
| 3,649,488 |
| 11,576,108 |
| 11,681,298 |
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Operating income |
| 1,146,151 |
| 1,216,717 |
| 2,844,506 |
| 1,697,309 |
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Other income, net |
| 508,825 |
| 291,236 |
| 1,511,585 |
| 694,954 |
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Income from continuing operations before income taxes |
| 1,654,976 |
| 1,507,953 |
| 4,356,091 |
| 2,392,263 |
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Income taxes |
| (18,800 | ) | 231,620 |
| (18,800 | ) | 558,788 |
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Income from continuing operations |
| 1,673,776 |
| 1,276,333 |
| 4,374,891 |
| 1,833,475 |
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Discontinued operations: |
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Income from discontinued operations, net of income taxes |
| — |
| 853,523 |
| — |
| 1,017,079 |
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Gain on disposal |
| — |
| 260,763 |
| — |
| 632,058 |
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Income from discontinued operations |
| — |
| 1,114,286 |
| — |
| 1,649,137 |
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Net income |
| $ | 1,673,776 |
| $ | 2,390,619 |
| $ | 4,374,891 |
| $ | 3,482,612 |
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Income from continuing operations per common share: |
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Basic |
| $ | 0.10 |
| $ | 0.09 |
| $ | 0.27 |
| $ | 0.13 |
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Diluted |
| $ | 0.10 |
| $ | 0.08 |
| $ | 0.26 |
| $ | 0.11 |
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Income from discontinued operations per common share: |
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Basic |
| $ | 0.00 |
| $ | 0.07 |
| $ | 0.00 |
| $ | 0.11 |
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Diluted |
| $ | 0.00 |
| $ | 0.07 |
| $ | 0.00 |
| $ | 0.10 |
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Net income per common share: |
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Basic |
| $ | 0.10 |
| $ | 0.16 |
| $ | 0.27 |
| $ | 0.24 |
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Diluted |
| $ | 0.10 |
| $ | 0.15 |
| $ | 0.26 |
| $ | 0.21 |
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Weighted average shares used in the calculation of net income per common share: |
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Basic |
| 16,268,524 |
| 14,939,806 |
| 16,160,970 |
| 14,663,767 |
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Diluted |
| 16,978,841 |
| 16,479,112 |
| 17,100,334 |
| 16,428,894 |
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