EX-99.1 3 e14835ex99_1.txt PRESS RELEASE Exhibit 99.1 Licensing Revenue Increased 46% and Semiconductor Revenue Grew 16% From Same Quarter Last Year SANTA ANA, Calif., May 13 /PRNewswire-FirstCall/ -- SRS Labs, Inc. (Nasdaq: SRSL), a leading provider of audio, voice and semiconductor technology solutions, today reported improved financial results for its first quarter ended March 31, 2003. For the three months ended March 31, 2003, the company reported consolidated revenue of $4,470,374, a 26 percent increase over revenue for the same period last year, and a net income of $42,534, or breakeven EPS, compared to a net loss of $690,733, or a loss of $0.05 per share for the same period last year. SRS Labs increased revenue from its technology licensing business by 46 percent over the same quarter last year and the company's Hong Kong-based Valence semiconductor group grew revenue 16 percent over the same period in 2002. Consolidated gross margin improved to 85 percent compared to last year's first quarter gross margin of 77 percent. The company's cash position remained strong at the end of the first quarter of 2003 with cash, cash equivalents and investments of approximately $21.8 million. Chief financial officer of SRS Labs Janet Biski said, "Our first quarter has generally been the toughest to achieve profitability due to Valence's traditionally slow sales period during the Chinese New Year holiday as well as increased year-end public company expenses and marketing expenses in January related to our major industry tradeshow, the Consumer Electronics Show. Despite these factors, we showed significant improvement over the first quarter of last year, mainly due to an increase in revenue of over $900,000. This quarter represents the first time that the company has achieved a profit in the first quarter of the year since 1997 and it is also the fourth consecutive profitable quarter." Thomas C.K Yuen, chairman and CEO of SRS Labs said, "Our licensing business remained strong as we increased the penetration of our technologies in our primary home theater market segments, including DVD players, set top boxes and televisions. We also expanded the application of our technologies in new product categories such as portable audio devices, software, and car audio as we built relationships with key licensees such as eDigital, InterVideo, and Kenwood." "On the semiconductor side, Valence continued to execute our plan to increase the ASIC client base and developed several new ASP chip offerings, some of which include proprietary SRS audio technologies. These new chips and other existing ASP chips now form an expanded product offering to address the underserved segments of the consumer electronics market," Yuen continued. "Overall, I am encouraged by our first quarter performance. As announced yesterday, we recently made several key personnel appointments, including Ted Franceschi as our new general manager of licensing. Through these appointments, I am pleased to have further strengthened our management team, which should help us to continue growing our business." In conjunction with SRS Labs' (Nasdaq: SRSL) first quarter results, you are invited to listen to its conference call that will be broadcast live over the Internet http://www.firstcallevents.com/service/ajwz381628483gf12.html or http://www.vcall.com/EventPage.asp?ID=83905 today, May 13, 2003 at 3pm EDT or link to the conference from the Investor section of SRS Labs' website at www.srslabs.com . About SRS Labs, Inc. Celebrating a decade in audio technology innovation, SRS Labs has become 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 technologies can be heard through products ranging from televisions, DVD players, cell phones, car audio systems and computers. The company also offers hardware and software tools to professionals and consumers for the production and broadcast of content featuring SRS technologies. SRS Labs' wholly owned subsidiary, ValenceTech, is located in Hong Kong and provides 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 above-referenced websites is not incorporated by reference into this press release. Except for historical information contained in this release, statements in this release, including those of Mr. Yuen and Ms. Biski, 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 including the potential adverse impact in Asia and elsewhere from the spread of SARS, 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: Investor, Tami Yanito of SRS Labs, Inc., +1-949-442-1070, ext. 3093, tami@srslabs.com SRS LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2003 2002 Revenues: Licensing $2,628,311 $1,795,722 Semiconductor 1,711,819 1,471,142 Other 130,244 288,516 Total revenues 4,470,374 3,555,380 Cost of sales 669,568 793,345 Gross margin 3,800,806 2,762,035 Operating expenses Sales and marketing 1,352,490 1,260,440 Research and development 1,081,215 965,076 General and administrative 1,314,610 1,233,525 Total operating expenses 3,748,315 3,459,041 Income (loss) from operations 52,491 (697,006) Other income, net 164,126 87,963 Minority interest 5,430 19,748 Income (loss) before income tax expense 222,047 (589,295) Income tax expense 179,513 101,438 Net income (loss) $42,534 $(690,733) Net income (loss) per common share: Basic $0.00 $(0.05) Diluted $0.00 $(0.05) Weighted average shares used in the calculation of net income (loss) per common share: Basic 12,798,238 12,669,407 Diluted 12,983,526 12,669,407 SRS LABS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2003 2002 (Unaudited) ASSETS Current Assets Cash and cash equivalents $13,225,769 $15,720,860 Accounts receivable, net 920,282 1,074,421 Inventories, net 855,092 807,382 Prepaid expenses and other current assets 407,870 462,442 Deferred income taxes 36,147 36,147 Total Current Assets 15,445,160 18,101,252 Investments available for sale 8,540,024 6,630,771 Furniture, fixtures & equipment, net 1,870,616 1,935,424 Goodwill, net 1,173,102 533,031 Intangible assets, net 1,908,903 1,957,359 Deferred income taxes 147,190 149,498 Total Assets $29,084,995 $29,307,335 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $815,604 $ 1,011,032 Accrued liabilities 1,715,192 2,347,702 Income taxes payable 323,448 341,172 Total Current Liabilities 2,854,244 3,699,906 Minority interest -- 325,371 Stockholders' Equity Preferred stock - $.001 par value; 2,000,000 shares authorized; no shares issued and outstanding -- -- Common stock - $.001 par value; 56,000,000 shares authorized; 13,213,498 and 12,876,314 shares issued; and 12,988,198 and 12,651,014 shares outstanding at March 31, 2003 and December 31, 2002, respectively 13,214 12,877 Additional paid in capital 56,957,625 55,966,589 Cumulative other comprehensive loss (173,778) (88,564) Accumulated deficit (29,847,709) (29,890,243) Less treasury stock at cost, 225,300 shares at March 31, 2003 and at December 31, 2002 (718,601) (718,601) Total Stockholders' Equity 26,230,751 25,282,058 Total Liabilities and Stockholders' Equity $29,084,995 $29,307,335