(DTS LOGO)
DTS REPORTS SOLID SECOND QUARTER FINANCIAL RESULTS
COMPANY POSTS CONTINUED REVENUE AND EARNINGS GROWTH
AGOURA HILLS, CALIF. - August 7, 2003 - Digital Theater Systems, Inc. (DTS)
(Nasdaq: DTSI) today announced financial results for the three and six months
ended June 30, 2003.
For the second quarter of 2003, DTS reported total revenues of $11.7 million, an
increase of 40% over $8.4 million in the second quarter of 2002. Gross margins
for the second quarter were strong at 76% compared to 69% in the prior year
quarter. Net income attributable to common stockholders was $1.4 million, or
$0.13 per diluted share, in the second quarter of 2003, compared to a net loss
attributable to common stockholders of $124,000, or ($0.03) per basic and
diluted share, in the second quarter of 2002.
For the six-month period ended June 30, 2003, DTS reported total revenues of
$23.5 million, representing an increase of 32% over $17.8 million in the same
period of 2002. Gross margins for the first six months of 2003 were 78% compared
to 71% in the prior year period. Net income attributable to common stockholders
was $2.9 million for the six-month period ended June 30, 2003, or $0.27 per
diluted share, compared to $885,000, or $0.10 per diluted share, in the same
period of 2002.
"Following our initial public offering in which we raised net proceeds of $63.2
million, DTS is pleased to report such solid results in our first quarterly
earnings announcement," commented Jon Kirchner, President and CEO of DTS. "We
saw progress across all areas of our business in the quarter, particularly in
our new product and emerging markets. We are pleased with our overall financial
progress, considering this has historically been our slowest quarter.
"Within our Consumer business, we continued to experience solid growth across
several segments. In addition, our broadcast trial with Swedish Radio has
continued to generate positive interest from consumers. In our DTS Entertainment
business, we released several important titles and laid the groundwork for
broader distribution partnerships, both in the U.S. and abroad.
"Our Theatrical Division continued to license its technology to leading studios
for incorporation of DTS soundtracks into major U.S. films. During the quarter,
we also began shipping our XD-10 Cinema Media player to our exhibition
customers. We expect the XD-10 Cinema Media player, together with our recently
introduced DTS-CSS system which offers compelling benefits for both foreign
subtitling and domestic captioning, to be significant drivers of growth in the
future."
CONFERENCE CALL INFORMATION
DTS will broadcast a conference call discussing the company's second quarter
results today, Thursday, August 7, 2003, starting at 5:00 p.m. Eastern Time. A
live Webcast of the call will be available from the Investor Relations section
of the company's corporate website at
http://phx.corporate-ir.net/phoenix.zhtml?c=142468&p=irol-IRHome. A replay of
the Webcast will begin two hours after the completion of the call, and will be
available through August 21, 2003. An audio replay of the call will also be
available to investors beginning at 7:00 p.m. ET on August 7, 2003, through
August 10, 2003, by dialing 800-405-2236 and entering the passcode 547171.
ABOUT DTS
Digital Theater Systems, Inc. (DTS) 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
100 million DTS-licensed consumer electronics products available worldwide. A
pioneer in multi-channel audio, DTS technology is in home theater, car audio, PC
and game console products, as well as 5.1 Music Discs, DVD-Video, DVD-Audio and
2
DVD-ROM software. Additionally, DTS is featured on more than 20,000 motion
picture screens worldwide. Founded in 1993, DTS is headquartered in Agoura
Hills, California and has offices in the United Kingdom, Japan and China. For
further information, please visit www.dtsonline.com.
DTS, DTS-ES and Neo:6 are trademarks of Digital Theater Systems, Inc.
INVESTOR RELATIONS CONTACTS: PRESS CONTACT:
Erica Abrams or Annie Palmore Kristin Thomson
the blueshirt group for DTS Director of Public Relations
415-217-7722 DTS
erica@blueshirtgroup.com 818-706-3525
annie@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, and other risks and uncertainties more fully described in the
Company's Form S-1 registration statement as declared effective on July 9, 2003
by the Securities and Exchange Commission. DTS assumes no obligation to update
any forward-looking statement to reflect events or circumstances arising after
the date on which it was made.
###
(TABLES TO FOLLOW )
DIGITAL THEATER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
2002 2003 2002 2003
---------- ---------- --------- ----------
(Unaudited) (Unaudited)
Revenues:
Technology and film licensing $ 6,237 $ 9,554 $ 13,524 $ 19,678
Product sales and other revenues 2,143 2,147 4,273 3,779
---------- ----------- --------- -----------
Total revenues 8,380 11,701 17,797 23,457
Cost of goods sold:
Technology and film licensing 967 1,045 1,933 1,885
Product sales and other revenues 1,608 1,744 3,308 3,317
---------- ----------- --------- -----------
Total cost of goods sold 2,575 2,789 5,241 5,202
---------- ----------- --------- -----------
Gross profit 5,805 8,912 12,556 18,255
Operating expenses:
Selling, general and administrative
(includes stock-based compensation of $22 and
$425 for the three and six months ended
June 30, 2003, respectively) 4,211 4,865 7,712 9,856
Research and development 1,031 1,174 1,861 2,344
---------- ----------- --------- -----------
Total operating expenses 5,242 6,039 9,573 12,200
---------- ----------- --------- -----------
Income from operations 563 2,873 2,983 6,055
Interest and other (income) expense, net 33 (13) 94 53
---------- ----------- --------- -----------
Income before provision for income taxes 530 2,886 2,889 6,002
Provision for income taxes 197 1,041 1,076 2,128
---------- ----------- --------- -----------
Net income 333 1,845 1,813 3,874
Accretion and accrued dividends on preferred stock (457) (467) (928) (935)
---------- ----------- --------- -----------
Net income (loss) attributable to common stockholders $ (124) $ 1,378 $ 885 $ 2,939
========== =========== ========= ===========
Net income (loss) attributable to common stockholders per
common share:
Basic $ (0.03) $ 0.31 $ 0.21 $ 0.66
========== =========== ========= ===========
Diluted $ (0.03) $ 0.13 $ 0.10 $ 0.27
========== =========== ========= ===========
Weighted average shares used to compute net income (loss)
attributable to common stockholders per common share:
Basic 4,295,419 4,500,885 4,295,419 4,462,479
========== ========== ========= ==========
Diluted 4,295,419 10,970,303 9,137,588 10,801,941
========== ========== ========= ==========
DIGITAL THEATER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
As of As of
December 31, June 30,
------------ ---------
2002 2003
------------ ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,907 $ 3,222
Short-term investments 2,144 2,156
Accounts receivable, net of allowance for doubtful accounts of $437
and $506 at December 31, 2002 and June 30, 2003, respectively 5,618 5,417
Inventories 4,646 5,394
Deferred tax assets, net 5,129 5,129
Prepaid expenses and other 729 1,402
------- -------
Total current assets 20,173 22,720
Property and equipment, net 3,099 3,014
Patents and trademarks 442 409
Deferred tax asset 2,049 2,049
Other assets 16 21
------- -------
Total Assets $25,779 $28,213
======= =======
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 2,638 $ 2,114
Accrued expenses 5,627 6,293
Income taxes payable 2,527 1,833
------- -------
Total current liabilities 10,792 10,240
Commitments and contingencies
Mandatorily redeemable preferred stock - $0.0001 par value, 10,000,000
shares authorized; 7,800,891 shares outstanding at
December 31, 2002 and June 30, 2003 21,302 20,919
Stockholders' equity (deficit):
Common stock - $0.0001 par value, 30,000,000 shares authorized;
4,412,116 and 4,566,924 issued and outstanding at
December 31, 2002 and June 30, 2003, respectively. 1 1
Additional paid-in capital (1,008) (578)
Accumulated deficit (5,308) (2,369)
------- -------
Total stockholders' deficit (6,315) (2,946)
------- -------
Total liabilities, mandatorily redeemable preferred stock and
stockholders' deficit $25,779 $28,213
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