EXHIBIT 99.1
DTS Reports Fourth Quarter and Fiscal 2011 Results
Network-Connected Markets and Blu-ray Expected to Drive Growth in 2012
CALABASAS, Calif., Feb. 22, 2012 (GLOBE NEWSWIRE) -- DTS, Inc. (Nasdaq:DTSI) today announced financial results for the fourth quarter and fiscal year ended December 31, 2011.
For the fourth quarter of 2011 revenue increased 8% to $29 million, and net income from continuing operations increased 15% to $7.1 million, or $0.42 per diluted share. This compares to revenue of $26.9 million and net income from continuing operations of $6.1 million, or $0.34 per diluted share, reported in the same period of 2010. Revenue from royalty recoveries was $1.6 million in the fourth quarter of 2011 as compared to $1.7 million in the same period of the prior year.
Non-GAAP income from continuing operations increased 14% to $8.8 million, or $0.52 per diluted share net of tax, compared to $7.7 million, or $0.43 per diluted share, reported in the fourth quarter of 2010.
For fiscal year 2011, revenue increased 11% to $96.9 million, as compared to revenue of $87.1 million in the prior year. Revenue from royalty recoveries for 2011 was $2.0 million as compared to $3.6 million in the prior year. Net income from continuing operations increased 22% to $18.3 million, or $1.04 per diluted share, in 2011, as compared to $15.0 million, or $0.84 per diluted share, reported in 2010.
Non-GAAP income from continuing operations increased 20% to $24.7 million, or $1.40 per diluted share as compared to $20.5 million, or $1.15 per diluted share, reported in the prior year.
The GAAP to non-GAAP reconciling items for the quarters and fiscal years ended December 31, 2011 and 2010 can be found in the "Non-GAAP Financial Metrics" schedule attached to this press release and on the investor relations portion of our website at www.DTS.com.
During the year DTS repurchased 1,000,000 shares of common stock in the open market at an average per share cost of $32.30. The Company closed the year with cash and investments of $92.6 million.
"We achieved a number of important milestones in 2011, generating $96.9 million in revenue, $1.40 in non-GAAP EPS and over $24 million in cash from operations," commented Jon Kirchner, chairman and CEO of DTS, Inc. "We made important strategic progress across the business, including significant strides in expanding our business into the network-connected space, which contributed nearly 20% of total revenues in 2011. In physical media, Blu-ray represented over 35% of total revenue in 2011, and we expect it to contribute to growth in our business over the next few years.
"The industry trend toward cloud-based entertainment delivery has substantially expanded our addressable market with mobile phones, tablets, network-connected TV's and digital media players increasingly being used to playback high definition entertainment. DTS technologies are an essential part of that experience. We are pleased with our progress with key partners such as Fujitsu, Huawei, Intel, LG, Panasonic, Pantech, Samsung and Sharp, and we look forward to expanding upon these relationships in 2012.
"Currently, based on accelerating growth in network-connected entertainment and contributions from the Blu-ray and automotive markets, we expect 2012 revenue to be in the range of $112 to $116 million, non-GAAP operating margins of approximately 40%, and non-GAAP EPS to be in the range of $1.60 to $1.65 per diluted share, excluding the impact of both stock-based compensation and amortization of intangibles, and the estimated tax impact of those items. The company expects stock-based compensation in the range of $0.37 to $0.38 per share net of tax in 2012. On a GAAP basis, we expect operating margins to remain at approximately 30%, and EPS to be in the range of $1.18 to $1.22 per diluted share. Finally, we believe the substantial share repurchase program announced today communicates our confidence in our long-term prospects as well as our commitment to building shareholder value," concluded Kirchner.
Use of Non-GAAP Financial Information
Included within this press release are non-GAAP financial measures that supplement the Company's Consolidated Statements of Income prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP to exclude charges and the related income tax effect for stock-based compensation, the amortization of intangible assets, and certain restructuring charges. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Income. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate DTS's financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.
Conference Call Information for Wednesday, February 22, 2012
DTS will broadcast a conference call today, Wednesday, February 22, 2012, starting at 1:30 p.m. Pacific Time. To access the conference call, dial 1-877-941-2068 or 1-480-629-9712 (outside the U.S. and Canada). The live webcast of the call will be available from the Investor Relations section of the Company's corporate website at www.dts.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 3:30 p.m. Pacific Time on February 22, 2012 through March 1, 2012, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering the pass code 4505402#.
About DTS, INC.
DTS, Inc. (Nasdaq:DTSI) is dedicated to making digital entertainment exciting, engaging and effortless by providing state-of-the-art audio technology to hundreds of millions of DTS-licensed consumer electronics products worldwide. From a renowned legacy as a pioneer in multi-channel audio, DTS became a mandatory audio format in the Blu-ray Disc™ standard and is now increasingly deployed in enabling digital delivery of movies and other forms of digital entertainment on a growing array of network-connected consumer devices. DTS technology is in home theaters, car audio systems, PCs, game consoles, DVD players, televisions, digital media players, set-top boxes, smart phones, surround music software and every device capable of playing Blu-ray™ discs. Founded in 1993, DTS' corporate headquarters are located in Calabasas, California with its licensing operations headquartered in Limerick, Ireland. DTS also has offices in Silicon Valley, Washington, China, France, Hong Kong, Japan, South Korea, Taiwan, Singapore, and the United Kingdom. For further information, please visit www.dts.com. DTS, the Symbol, and DTS and the Symbol together, are registered trademarks of DTS, Inc. All other trademarks are the properties of their respective owners. © 2012 DTS, Inc. All rights reserved.
DTS-I
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 transition to the next generation optical drives and consumer adoption of such technology, 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, continued 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, success of the Company's research and development efforts, risks related to integrating acquisitions, greater than expected costs, the departure of key employees, the current financial crisis and global economic downturn, a loss of one or more of our key customers or licensees, changes in domestic and international market and political conditions, and other risks and uncertainties more fully described in DTS' public filings with the Securities and Exchange Commission, available at www.sec.gov. DTS does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.
| |
| DTS, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (Amounts in thousands, except per share amounts) |
| | | |
| | As of | As of |
| | December 31, | December 31, |
| | 2011 | 2010 |
| | | |
| | (Unaudited) |
| ASSETS |
| Current assets: | | |
| Cash and cash equivalents | $ 46,944 | $ 41,744 |
| Short-term investments | 38,697 | 54,387 |
| Accounts receivable, net of allowance for doubtful accounts of $251 and $226 at December 31, 2011 and 2010, respectively | 5,322 | 6,078 |
| Deferred income taxes | 1,296 | 5,551 |
| Prepaid expenses and other current assets | 1,823 | 1,666 |
| Income taxes receivable, net | 2,591 | 2,099 |
| Total current assets | 96,673 | 111,525 |
| Property and equipment, net | 32,800 | 33,638 |
| Intangible assets, net | 6,549 | 7,525 |
| Goodwill | 1,257 | 1,257 |
| Deferred income taxes | 13,574 | 12,192 |
| Long-term investments | 6,922 | 5,313 |
| Other assets | 1,695 | 845 |
| Total assets | $ 159,470 | $ 172,295 |
| | | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities: | | |
| Accounts payable | $ 1,056 | $ 774 |
| Accrued expenses | 3,605 | 9,659 |
| Deferred revenue | 1,121 | 5,698 |
| Total current liabilities | 5,782 | 16,131 |
| Other long-term liabilities | 7,886 | 8,596 |
| | | |
| Stockholders' equity: | | |
| Preferred stock -- $0.0001 par value, 5,000 shares authorized at December 31, 2011 and 2010; no shares issued and outstanding | — | — |
| Common stock -- $0.0001 par value, 70,000 shares authorized at December 31, 2011 and 2010; 20,536 and 20,325 shares issued at December 31, 2011 and 2010, respectively; 16,536 and 17,325 outstanding at December 31, 2011 and 2010, respectively | 3 | 3 |
| Additional paid-in capital | 192,819 | 180,708 |
| Treasury stock, at cost - 4,000 and 3,000 shares at December 31, 2011 and 2010, respectively | (107,222) | (74,923) |
| Accumulated other comprehensive income | 644 | 491 |
| Retained earnings | 59,558 | 41,289 |
| Total stockholders' equity | 145,802 | 147,568 |
| | | |
| Total liabilities and stockholders' equity | $ 159,470 | $ 172,295 |
| |
| |
| DTS, INC. |
| CONSOLIDATED STATEMENTS OF INCOME |
| (Amounts in thousands, except per share amounts) |
| | | | | |
| | For the Three Months Ended | For the Twelve Months Ended |
| | December 31, | December 31, |
| | 2011 | 2010 | 2011 | 2010 |
| | (Unaudited) |
| | | |
| Revenue | $ 29,012 | $ 26,859 | $ 96,922 | $ 87,096 |
| Cost of revenue | 217 | 352 | 860 | 1,583 |
| Gross profit | 28,795 | 26,507 | 96,062 | 85,513 |
| Operating expenses: | | | | |
| Selling, general and administrative | 13,296 | 12,671 | 52,904 | 49,035 |
| Research and development | 3,780 | 3,918 | 13,539 | 12,075 |
| Total operating expenses | 17,076 | 16,589 | 66,443 | 61,110 |
| Operating income | 11,719 | 9,918 | 29,619 | 24,403 |
| Interest and other income (expense), net | (11) | 35 | 311 | 418 |
| Income from continuing operations before income taxes | 11,708 | 9,953 | 29,930 | 24,821 |
| Provision for income taxes | 4,631 | 3,806 | 11,661 | 9,781 |
| Income from continuing operations | 7,077 | 6,147 | 18,269 | 15,040 |
| Income from discontinued operations, net of tax | -- | 7 | -- | 1,001 |
| Net income | $ 7,077 | $ 6,154 | $ 18,269 | $ 16,041 |
| | | | | |
| Earnings per share - basic: | | | | |
| Income from continuing operations | $ 0.43 | $ 0.36 | $ 1.08 | $ 0.88 |
| Discontinued operations, net of tax | -- | -- | -- | 0.06 |
| Net income | $ 0.43 | $ 0.36 | $ 1.08 | $ 0.94 |
| | | | | |
| Earnings per share - diluted: | | | | |
| Income from continuing operations | $ 0.42 | $ 0.34 | $ 1.04 | $ 0.84 |
| Discontinued operations, net of tax | -- | -- | -- | 0.06 |
| Net income | $ 0.42 | $ 0.34 | $ 1.04 | $ 0.90 |
| | | | | |
| Weighted average shares used to compute net income per common share: | | | | |
| Basic | 16,541 | 17,002 | 16,982 | 17,041 |
| Diluted | 17,004 | 17,843 | 17,575 | 17,805 |
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| |
| DTS, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Amounts in thousands, except per share amounts) |
| | | | | |
| | For the Three Months Ended | For the Twelve Months Ended |
| | December 31, | December 31, |
| | 2011 | 2010 | 2011 | 2010 |
| | (Unaudited) |
| Cash flows from operating activities: | | |
| Net income | $ 7,077 | $ 6,154 | $ 18,269 | $ 16,041 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortization | 1,470 | 1,222 | 5,337 | 4,881 |
| Gain on sale of assets from discontinued operations | -- | -- | -- | (2,000) |
| Stock-based compensation charges | 2,527 | 1,959 | 9,283 | 7,325 |
| Deferred income taxes | 2,403 | 226 | 2,873 | 354 |
| Tax benefits (shortfalls) from stock-based awards | 238 | (140) | 314 | 628 |
| Excess tax shortfalls (benefits) from stock-based awards | (245) | 191 | (275) | (508) |
| Other | 92 | 104 | 454 | 163 |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable | (1,984) | 852 | 649 | (347) |
| Prepaid expenses and other assets | (235) | (171) | (1,044) | (307) |
| Accounts payable, accrued expenses and other liabilities | (978) | 2,508 | (5,600) | 5,646 |
| Deferred revenue | (894) | 1,780 | (5,537) | 6,615 |
| Income taxes receivable | 223 | 764 | (492) | 514 |
| Net cash provided by operating activities | 9,694 | 15,449 | 24,231 | 39,005 |
| Cash flows from investing activities: | | | | |
| Purchases of held-to-maturity investments | (4,077) | (26,506) | (40,660) | (69,143) |
| Purchases of available-for-sale investments | (10,641) | -- | (23,529) | -- |
| Maturities of held-to-maturity investments | 18,784 | 17,960 | 74,470 | 48,837 |
| Maturities of available-for-sale investments | 3,800 | -- | 3,800 | -- |
| Sales of available-or-sale investments | -- | -- | -- | 2,250 |
| Proceeds from the sale of assets from discontinued operations | -- | -- | -- | 2,000 |
| Purchase of property and equipment | (614) | (598) | (3,057) | (3,172) |
| Purchase of intangible assets | (132) | (88) | (545) | (2,384) |
| Net cash provided by (used in) investing activities | 7,120 | (9,232) | 10,479 | (21,612) |
| Cash flows from financing activities: | | | | |
| Proceeds from the issuance of common stock under stock-based compensation plans | 503 | 3,753 | 4,099 | 12,178 |
| Repurchase and retirement of common stock for restricted stock tax withholdings | (74) | (319) | (1,585) | (1,132) |
| Excess tax benefits (shortfalls) from stock-based awards | 245 | (191) | 275 | 508 |
| Purchase of treasury stock | (5,489) | (1,067) | (32,299) | (29,425) |
| Net cash provided by (used in) financing activities | (4,815) | 2,176 | (29,510) | (17,871) |
| Net increase (decrease) in cash and cash equivalents | 11,999 | 8,393 | 5,200 | (478) |
| Cash and cash equivalents, beginning of period | 34,945 | 33,351 | 41,744 | 42,222 |
| Cash and cash equivalents, end of period | $ 46,944 | $ 41,744 | $ 46,944 | $ 41,744 |
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| |
| Non-GAAP Financial Metrics |
| (Amounts in thousands, except per share amounts) |
| | | | | |
| The following tables show the Company's GAAP financial metrics reconciled to non-GAAP financial metrics included in this release. |
| | | | | |
| | For the Three Months Ended | For the Twelve Months Ended |
| | December 31, | December 31, |
| | 2011 | 2010 | 2011 | 2010 |
| Cost of revenue: | | | | |
| GAAP cost of revenue | $ 217 | $ 352 | $ 860 | $ 1,583 |
| Amortization of intangible assets | 182 | 182 | 731 | 841 |
| Stock-based compensation | 4 | 1 | 12 | 10 |
| Restructuring costs | -- | 51 | -- | 51 |
| Non-GAAP cost of revenue | $ 31 | $ 118 | $ 117 | $ 681 |
| | | | | |
| Selling, general and administrative: | | | | |
| GAAP selling, general and administrative | $ 13,296 | $ 12,671 | $ 52,904 | $ 49,035 |
| Amortization of intangible assets | 140 | 95 | 462 | 402 |
| Stock-based compensation | 2,076 | 1,340 | 7,622 | 5,791 |
| Non-GAAP selling, general and administrative | $ 11,080 | $ 11,236 | $ 44,820 | $ 42,842 |
| | | | | |
| Research and development: | | | | |
| GAAP research and development | $ 3,780 | $ 3,918 | $ 13,539 | $ 12,075 |
| Amortization of intangible assets | 45 | 43 | 179 | 170 |
| Stock-based compensation* | 447 | 286 | 1,649 | 1,192 |
| Restructuring costs* | -- | 603 | -- | 603 |
| Non-GAAP research and development | $ 3,288 | $ 2,986 | $ 11,711 | $ 10,110 |
| | | | | |
| Operating income: | | | | |
| GAAP operating income | $ 11,719 | $ 9,918 | $ 29,619 | $ 24,403 |
| Amortization of intangible assets | 367 | 320 | 1,372 | 1,413 |
| Stock-based compensation* | 2,527 | 1,627 | 9,283 | 6,993 |
| Restructuring costs* | -- | 654 | -- | 654 |
| Non-GAAP operating income | $ 14,613 | $ 12,519 | $ 40,274 | $ 33,463 |
| Non-GAAP operating income as a % of revenue | 50% | 47% | 42% | 38% |
| | | | | |
| Income from continuing operations: | | | | |
| GAAP income from continuing operations | $ 7,077 | $ 6,147 | $ 18,269 | $ 15,040 |
| Amortization of intangible assets | 367 | 320 | 1,372 | 1,413 |
| Stock-based compensation* | 2,527 | 1,627 | 9,283 | 6,993 |
| Restructuring costs* | -- | 654 | -- | 654 |
| Tax impact of the above items | (1,158) | (1,040) | (4,262) | (3,624) |
| Non-GAAP income from continuing operations | $ 8,813 | $ 7,708 | $ 24,662 | $ 20,476 |
| | | | | |
| Non-GAAP diluted net income from continuing operations per share | $ 0.52 | $ 0.43 | $ 1.40 | $ 1.15 |
| Weighted average shares used to compute Non-GAAP net income from continuing operations per share | 17,004 | 17,843 | 17,575 | 17,805 |
| | | | | |
| * For the three and twelve months ended December 31, 2010, restructuring costs include $332 of stock-based compensation. |
| | | |
| | | |
| Non-GAAP Financial Targets | | |
| | | |
| The following tables show the Company's fiscal year 2012 GAAP guidance reconciled to non-GAAP financial targets included in this release. |
| | | |
| | Fiscal Year 2012 |
| | Low | High |
| | |
| Operating income as a % of revenue: | | |
| | | |
| GAAP operating income as a % of revenue | 29% | 31% |
| Amortization of intangible assets | 1 | 1 |
| Stock-based compensation | 9 | 10 |
| Non-GAAP operating income as a % of revenue | 39% | 42% |
| | | |
| | | |
| Income from continuing operations per diluted share: | | |
| | | |
| GAAP income from continuing operations per diluted share | $ 1.18 | $ 1.22 |
| Amortization of intangible assets | 0.08 | 0.09 |
| Stock-based compensation | 0.62 | 0.63 |
| Tax impact of the above items | (0.28) | (0.29) |
| Non-GAAP income from continuing operations per diluted share | $ 1.60 | $ 1.65 |
| | | |
| Weighted average shares used to compute Non-GAAP income from continuing operations per diluted share | 17.3 | 17.3 |
CONTACT: Investor Contacts:
Erica Abrams or Matthew Hunt
The Blueshirt Group for DTS
415-217-7722
erica@blueshirtgroup.com
matt@blueshirtgroup.com
Press Contact:
Alan L. Cohen
DTS, Inc.
818-436-1081
alan.cohen@dts.com
