Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
DTS REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS
Agoura Hills, Calif. – August 1, 2005 – DTS, Inc. (Nasdaq: DTSI) today reported results for the second quarter ended June 30, 2005.
For the second quarter of 2005, DTS reported revenue of $17.7 million, up 34% over $13.3 million in revenue reported in the second quarter of 2004. DTS reported net income for the second quarter of 2005 of $1.8 million, or $0.10 per diluted share, which compares to net income of $3.1 million, or $0.17 per diluted share, reported in the second quarter of 2004. Included in second quarter 2004 results was $2.6 million, or $0.09 per share net of tax, in other income related to our legal settlement with Mintek Digital, Inc. in June of 2004.
“We are pleased with our financial performance in the second quarter, reporting good growth in many areas of our business,” commented Jon Kirchner, president and CEO of DTS. “Especially noteworthy was growth in our digital images business, where revenue more than doubled over the prior period, as we began to realize some of the results from our new investment in this business. We continue to believe that the digital images business offers us significant upside over time and that we are in a strong position to capitalize on the emerging need for digital image enhancement.
“Consumer licensing was solid, with noteworthy growth in revenue from the car and PC markets, while DVD-related revenues were down slightly, in line with recent industry trends. In addition, we continued to engage successfully in IP enforcement and royalty recovery activities during the quarter. We remain focused on building our capabilities with newer technologies and helping customers through the transition to the next generation optical disc standards.
“Growth in our cinema business, particularly our hardware business, was notable in the quarter, as interest in our new XD10 family of products continues to increase. Our film licensing business was relatively flat as we experienced changes and delays in domestic and international release schedules and the industry continues to experience weaker than expected box office demand.
“As we look ahead, we have great enthusiasm for the opportunity ahead of us, but are appropriately cautious in the near term, as the consumer electronics industry transitions through a major upgrade cycle to high definition delivery. We believe that we continue to make the right decisions and investments that will allow us to maintain our leadership position and build a stronger, more profitable company over time,” concluded Jon Kirchner.
Conference Call Information
DTS will broadcast a conference call discussing the company’s second quarter results today, Monday, August 1, 2005, starting at 5:00 p.m. Eastern Time. The live webcast of the call will be available from the Investor Relations section of the company’s corporate website at www.dtsonline.com. A replay of the webcast will begin two hours after the completion of the call. An audio replay of the call will also be available to investors beginning at 7:00 p.m. ET on August 1, 2005, through August 4, 2005, by dialing 800-405-2236 and entering the passcode 11034579.
About DTS
DTS, Inc. (Nasdaq: DTSI) is a digital technology company dedicated to delivering the ultimate entertainment experience. DTS decoders are in virtually every major brand of 5.1-channel surround processors, and there are more than 300 million DTS-licensed consumer electronics products available worldwide. A pioneer in multi-channel audio, DTS technology is in home theatre, car audio, PC and game console products, as well as DVD-Video, Surround Music and DVD-ROM software. DTS audio products are featured on more than 24,000 motion picture screens worldwide. Additionally, DTS provides imaging technology and services for the motion picture industry; Lowry Digital Images, a wholly-owned subsidiary of DTS, is an industry leader in image restoration and
enhancement. Founded in 1993, DTS is headquartered in Agoura Hills, California and has offices in the United Kingdom, France, Italy, Canada, Hong Kong, Japan and China. For further information, please visit www.dts.com.
DTS is a registered trademark of DTS, Inc.
Investor Relations Contacts: | | Press Contact: |
Erica Abrams or Vanessa Lehr | | Kristin Thomson |
The Blueshirt Group for DTS | | Director of Public Relations |
415-217-7722 | | DTS |
erica@blueshirtgroup.com | | 818-706-3525 |
vanessa@blueshirtgroup.com | | kthomson@dtsonline.com |
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause DTS’ results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words “planned,” “expects,” “believes,” “strategy,” “opportunity,” “anticipates” and similar words. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or financial or operating performance; statements of belief and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to, the rapidly changing and competitive nature of the digital audio, consumer electronics and entertainment markets, the company’s inclusion in or exclusion from governmental and industry standards, customer acceptance of the company’s technology, products, services and pricing, risks related to ownership and enforcement of intellectual property, the continued release and availability of entertainment content containing DTS audio soundtracks, changes in domestic and international market and political conditions, risks related to integrating acquisitions and other risks and uncertainties more fully described in DTS’ public filings with the Securities and Exchange Commission, available at www.sec.gov. DTS assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.
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(TABLES TO FOLLOW)
2
DTS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
| | As of | | As of | |
| | December 31, | | June 30, | |
| | 2004 | | 2005 | |
| | | | (Unaudited) | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 21,271 | | $ | 41,161 | |
Short-term investments and marketable securities | | 93,040 | | 66,449 | |
Accounts receivable, net of allowance for doubtful accounts of $402 and $405 at December 31, 2004 and June 30, 2005, respectively | | 4,649 | | 10,688 | |
Inventories | | 3,669 | | 3,787 | |
Deferred tax assets, net | | 9,144 | | 9,157 | |
Prepaid expenses and other | | 3,651 | | 2,721 | |
Income tax receivable | | 72 | | — | |
Total current assets | | 135,496 | | 133,963 | |
Long-term investments and marketable securities | | 2,657 | | — | |
Property and equipment, net | | 3,539 | | 6,496 | |
Goodwill | | — | | 3,853 | |
Intangible assets, net | | 1,779 | | 12,040 | |
Deferred tax assets | | 500 | | 1,863 | |
Other assets | | 718 | | 712 | |
Total assets | | $ | 144,689 | | $ | 158,927 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 3,716 | | $ | 4,454 | |
Accrued expenses | | 5,688 | | 6,510 | |
Deferred revenue | | 519 | | 2,643 | |
Income tax payable | | — | | 7 | |
Total current liabilities | | 9,923 | | 13,614 | |
Deferred tax liability | | — | | 4,174 | |
| | | | | |
Stockholders’ equity: | | | | | |
Preferred stock - $0.0001 par value, 5,000,000 shares authorized at December 31, 2004 and June 30, 2005; no shares issued and outstanding | | — | | | |
Common stock - $0.0001 par value, 70,000,000 shares authorized at December 31, 2004 and June 30, 2005; 17,067,573 and 17,370,368 issued and outstanding at December 31, 2004 and June 30, 2005, respectively | | 2 | | 2 | |
Additional paid-in capital | | 121,431 | | 122,432 | |
Retained earnings | | 13,333 | | 18,705 | |
Total stockholders’ equity | | 134,766 | | 141,139 | |
| | | | | |
Total liabilities and stockholders’ equity | | $ | 144,689 | | $ | 158,927 | |
DTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts)
| | For the Three Months Ended
June 30, | | For the Six Months Ended
June 30, | |
| | 2004 | | 2005 | | 2004 | | 2005 | |
| | (Unaudited) | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Technology and film licensing | | $ | 10,720 | | $ | 12,835 | | $ | 23,217 | | $ | 31,299 | |
Product sales and other revenues | | 2,532 | | 4,893 | | 5,632 | | 8,486 | |
Total revenues | | 13,252 | | 17,728 | | 28,849 | | 39,785 | |
Cost of goods sold: | | | | | | | | | |
Technology and film licensing | | 1,166 | | 1,035 | | 2,146 | | 2,317 | |
Product sales and other revenues | | 1,755 | | 3,995 | | 3,667 | | 7,176 | |
Total cost of goods sold | | 2,921 | | 5,030 | | 5,813 | | 9,493 | |
Gross profit | | 10,331 | | 12,698 | | 23,036 | | 30,292 | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative | | 6,798 | | 8,080 | | 13,238 | | 16,124 | |
Research and development | | 1,568 | | 2,532 | | 2,900 | | 4,626 | |
In-process research and development | | — | | — | | — | | 2,300 | |
Total operating expenses | | 8,366 | | 10,612 | | 16,138 | | 23,050 | |
Income from operations | | 1,965 | | 2,086 | | 6,898 | | 7,242 | |
Interest income, net | | 310 | | 835 | | 749 | | 1,189 | |
Other expense, net | | (17 | ) | (11 | ) | (31 | ) | (23 | ) |
Income from legal settlement | | 2,601 | | — | | 2,601 | | — | |
Income before provision for income taxes | | 4,859 | | 2,910 | | 10,217 | | 8,408 | |
Provision for income taxes | | 1,740 | | 1,094 | | 3,658 | | 3,036 | |
Net income | | $ | 3,119 | | $ | 1,816 | | $ | 6,559 | | $ | 5,372 | |
| | | | | | | | | |
Net income per common share: | | | | | | | | | |
Basic | | $ | 0.19 | | $ | 0.10 | | $ | 0.39 | | $ | 0.31 | |
Diluted | | $ | 0.17 | | $ | 0.10 | | $ | 0.36 | | $ | 0.30 | |
Weighted average shares used to compute net income per common share: | | | | | | | | | |
Basic | | 16,830,764 | | 17,331,602 | | 16,704,490 | | 17,206,415 | |
Diluted | | 18,268,283 | | 18,264,458 | | 18,134,231 | | 18,180,973 | |
