Exhibit 99
SRS Labs Reports 2004 Second Quarter Results
Company Reports Q2 Consolidated Revenue Growth of 20% Over Same
Quarter in 2003
SANTA ANA, Calif., Aug. 10 /PRNewswire-FirstCall/ -- SRS Labs, Inc.
(Nasdaq: SRSL), a leading provider of audio, voice and semiconductor technology
solutions, today reported financial results for its second quarter and six
months ended June 30, 2004. For the three months ended June 30, 2004, the
company reported consolidated revenue of $5.4 million, a 20 percent increase
over consolidated revenue of $4.5 million for the same quarter in 2003. For the
quarter ended June 30, 2004, the company reported a net income of $248,093, or
$0.02 earnings per share, compared to a net loss of $33,882, or breakeven
earnings per share, for the same period last year.
For the second quarter, SRS Labs reported semiconductor revenue of $2.9
million from its Hong Kong-based subsidiary, Valence Technologies Limited,
representing an increase of 17 percent over last year's second quarter revenue
of $2.5 million. This increase was primarily attributable to sales growth of
ASP-branded standard chip products, some of which feature SRS audio
technologies.
The company reported licensing revenue of $2.5 million for the second
quarter, an increase of 24 percent over the same period in 2003. This growth was
attributable to the continued execution of the company's diversification
strategy, which resulted in increased revenue from the PC and mobile phone
markets. SRS Labs reported consolidated gross margin of 80 percent for the
second quarter 2004, consistent with last year's second quarter gross margin.
For the six months ended June 30, 2004, SRS Labs reported consolidated
revenue of $10.8 million with a net income of $383,022, or $0.02 per diluted
share, compared to revenue in the same period last year of $9.0 million and a
net income of $8,652, or breakeven earnings per share. The company's cash and
investments grew to $26.4 million as of June 30, 2004, compared to $25.7 million
reported on March 31, 2004 and $23.3 million reported on December 31, 2003. The
company generated net cash from operations of over $500,000 for the quarter and
over $800,000 for the year-to-date.
Thomas C.K. Yuen, chairman and CEO of SRS Labs said, "I am pleased with
our performance for the second quarter and first half of 2004, which
traditionally is a weaker period for the company. As a result of our ongoing
diversification strategies in both licensing and semiconductors, we were able to
increase revenue 20 percent for both the quarter and year-to-date.
"In our semiconductor business, we are seeing increased adoption of our
ASP branded chips which include SRS audio technologies," Yuen continued. "One of
our main challenges for accelerating growth is the ongoing foundry capacity
constraint that is affecting the industry. However, we are making progress with
our fabrication partners to resolve these issues. In our licensing business, our
investments in research and development continue to pay off, as we can offer
increased support for customers in our key growth markets and can quickly tailor
our technologies for new opportunities."
Yuen concluded, "We expect that operating expenses for the third quarter
will be impacted by costs related to severance payouts resulting from management
restructuring. However, we expect that the tax rate will be lower in the second
half of the year, due to the US/Japan tax treaty that went into effect on July 1
and eliminates source-country withholdings on royalties in Japan. Our key growth
drivers continue to be flat panel TVs, mobile phones and PCs. We are continuing
to see momentum in these markets and believe we can continue to increase top
line revenue and profitability."
Investors can listen to the company's conference call live today at 2:15
pm Pacific (5:15 pm Eastern) through the following link:
http://phx.corporate-ir.net/playerlink.zhtml?c=97327&s=wm&e=922921 or through
the investor section of SRS Labs' website http://www.srslabs.com/IREvents.asp.
Please log on at least 15 minutes early to register and follow the instructions
to download and install any necessary audio software. If you are unable to
listen to the live web cast, an online replay will be available shortly after
the call. To listen to the call live via telephone, dial (866) 246-6870, ask for
the "SRS Labs 2004 Q2 Conference Call," and provide the pass code 525975. To
access the taped replay, dial (866) 837-8032 and enter the same pass code. The
telephone replay will be available until August 11 at 12:00 a.m. PDT.
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, DVD players, cell phones, car audio systems, headphones 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. SRS Labs' subsidiary, Valence
Technologies Limited, is a Hong Kong-based semiconductor company that designs
and sells custom ASICs and standard ICs to leading manufacturers worldwide.
Based in Santa Ana, Calif., the company also has licensing representation in
Hong Kong, Japan, 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, statements in
this release, including those made by Mr. Yuen are forward-looking statements
and projections (which include statements concerning plans and objectives of
management for future operations) that are based on management's belief, 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 forward-looking statements made by or on behalf of the
Company. Some of these factors include the general market conditions concerning
the semiconductor business, 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.
For further information, please contact: Investors, Tami Yanito of SRS
Labs, Inc., +1-949-442-1070, ext. 3093, tami@srslabs.com.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenues:
Semiconductor $2,932,495 $2,513,320 $5,348,213 $4,277,400
Licensing 2,485,404 2,012,526 5,412,731 4,718,820
Total revenues 5,417,899 4,525,846 10,760,944 8,996,220
Cost of sales 1,086,440 900,565 1,995,311 1,570,133
Gross margin 4,331,459 3,625,281 8,765,633 7,426,087
Operating expenses:
Sales and marketing 1,241,676 1,271,097 2,777,584 2,623,587
Research and
development 1,144,926 970,123 2,353,613 2,051,338
General and
administrative 1,484,299 1,210,033 3,038,496 2,524,643
Total operating
expenses 3,870,901 3,451,253 8,169,693 7,199,568
Income from operations 460,558 174,028 595,940 226,519
Other income, net 98,774 118,604 336,224 282,730
Minority interest -- -- -- 5,430
Income before
income tax expense 559,332 292,632 932,164 514,679
Income tax expense 311,239 326,514 549,142 506,027
Net income (loss) $248,093 $(33,882) $383,022 $8,652
Net income (loss) per common share:
Basic $0.02 $0.00 $0.03 $0.00
Diluted $0.02 $0.00 $0.02 $0.00
Weighted average shares used in the
calculation of net income per common share:
Basic 14,175,127 12,993,305 13,960,824 12,896,338
Diluted 15,348,428 12,993,305 16,267,317 13,142,519
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
June 30, 2004 2003
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $21,297,168 $12,795,620
Accounts receivable, net 1,302,283 1,230,423
Inventories, net 783,990 753,020
Prepaid expenses and other current assets 1,319,489 1,073,696
Deferred income taxes 23,406 23,406
Total Current Assets 24,726,336 15,876,165
Investments available for sale 5,148,343 10,490,210
Furniture, fixtures and equipment, net 1,853,928 1,661,980
Goodwill 533,031 533,031
Intangible assets, net 2,736,651 2,736,810
Deferred income taxes 213,262 193,134
Total Assets $35,211,551 $31,491,330
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $1,387,929 $1,503,851
Accrued liabilities 1,873,690 1,606,069
Income taxes payable 688,130 430,949
Total Current Liabilities 3,949,749 3,540,869
Commitments and contingencies
Stockholders' Equity
Preferred stock-$.001 par value;
2,000,000 shares authorized;
no shares issued or outstanding -- --
Common stock-$.001 par value;
56,000,000 shares authorized;
14,438,747 and 13,682,282 shares issued;
and 14,213,447 and 13,456,982 shares
outstanding at June 30, 2004 and
December 31, 2003, respectively 14,439 13,683
Additional paid in capital 61,450,865 58,423,249
Accumulated other comprehensive loss (436,399) (336,346)
Accumulated deficit (29,048,502) (29,431,524)
Treasury stock at cost,
225,300 shares at June 30, 2004
and December 31, 2003 (718,601) (718,601)
Total Stockholders' Equity 31,261,802 27,950,461
Total Liabilities and
Stockholders' Equity $35,211,551 $31,491,330
SOURCE SRS Labs, Inc.
-0- 08/10/2004
/CONTACT: Investors, Tami Yanito of SRS Labs, Inc., +1-949-442-1070,
ext. 3093, tami@srslabs.com/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.srslabs.com/IREvents.asp /
/Web site: http://www.srslabs.com /
(SRSL)
CO: SRS Labs, Inc.
ST: California
IN: CPR MLM SEM TLS ENT MUS
SU: ERN ERP CCA