SRSL Srs Labs, Inc. (MM)

SANTA ANA, Calif., Nov. 6 /PRNewswire-FirstCall/ -- SRS Labs, Inc. (NASDAQ:SRSL), a leading supplier of surround sound, audio, and voice technologies, announced today revenues for the three months ended September 30, 2007 of $4.8 million, as compared to $4.9 million for the same period in the prior year. Income from continuing operations for the three months ended September 30, 2007 increased $397 thousand or 31 percent to $1.7 million, or $0.10 per diluted share, compared to $1.3 million, or $0.08 per diluted share, for the same period in the prior year. Net income for the three months ended September 30, 2007 decreased $717 thousand, or 30 percent, to $1.7 million, or $0.10 per diluted share, compared to $2.4 million, or $0.15 per diluted share, for the same period in the prior year. During the three months ended September 30, 2006, the Company recognized net income of $1.1 million, or $0.07 per diluted share, from discontinued operations. Thomas C.K. Yuen, Chairman and CEO of SRS Labs, Inc., commented on the results of the Company's activities: 1. "Our revenues during the third quarter were negatively impacted by the declining use of our technologies at Sony Corporation and Toshiba PC. Additionally, earlier this year, we elected to modify our sales approach in our Greater China Region by allowing certain of our customers to license directly from us rather than through bundled arrangements with our integrated circuit partners. While this change of approach has impacted us unfavorably in the short term, we believe that in the long term having direct relationships with these customers will prove to be beneficial. 2. We are pleased to announce that during the quarter, we reached a non-exclusive agreement with LG Electronics to utilize our technologies through 2010 in their televisions and monitors. During the third quarter we recognized increased revenues from our largest licensee, Samsung Electronics, and entered into several new customer relationships, including a new relationship with a large China-based television manufacturer. Lastly, we continued to experience growth in our automotive segment, particularly with Japan-based car companies and suppliers. 3. We recently completed a strategic review of our business and are committed to continuing to invest in the growth of our business, particularly in our sales and marketing activities. 4. We have entered into a 30 day stand still agreement with Sony Corporation to allow both SRS and Sony Corporation the time to conduct additional evaluation and discussions regarding intellectual property issues. Sony Corporation has also dismissed its complaint for declaratory relief without prejudice. 5. The Company will commence a common stock repurchase program, in which SRS may acquire up to $10 million of its outstanding common stock. The repurchase program will commence November 12, 2007 and continue for a six month period." Conference Call SRS Labs will host a conference call and webcast at 2 p.m. Pacific Time today (5 p.m. Eastern Time) to review its third quarter 2007 results. The dial-in number for the call is (866) 802-4355; ask for "SRS Labs Q3 Results Conference Call." An audio replay of the conference call will be available until November 13, 2007 at 6:00 p.m. Pacific Time via telephone. The audio replay dial-in number is 866-837-8032, enter access code 994551. The call will also be webcast live over the Internet. Simply log-on to http://investor.shareholder.com/media/eventdetail.cfm?mediaid=28010&c=SRSL&med iakey=D41BFB75208C6029EB76B4DF64D67A7C&e=0 The webcast will be archived on http://www.srslabs.com/ for 60 days following the call. 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, cell phones, MP3 players, car audio systems, 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. Based in Santa Ana, Calif., the Company also has licensing representation in Hong Kong, Taiwan, Japan, China, Europe, and Korea. For more information about SRS Labs, Inc. please visit http://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, all statements in this release, including those of Mr. Yuen, are forward-looking statements that are based on management's beliefs, 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 or implied by forward-looking statements made by or on behalf of the Company. These factors include, but are not limited to, 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. Investor Contact: Ulrich Gottschling Chief Financial Officer (949) 442-5596 SRS LABS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2007 2006 (unaudited) ASSETS Current Assets Cash and cash equivalents $40,075,552 $35,011,425 Accounts receivable, net 1,932,893 1,180,879 Prepaid expenses and other current assets 655,518 808,940 Total Current Assets 42,663,963 37,001,244 Investments available for sale 5,353,920 5,226,705 Property and equipment, net 325,082 389,667 Intangible assets, net 2,250,553 2,045,139 Deferred income taxes, net 1,408,617 386,412 Total Assets $52,002,135 $45,049,167 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $360,455 $609,899 Accrued liabilities 806,077 1,295,236 Deferred revenue 457,006 399,565 Total Current Liabilities 1,623,538 2,304,700 Commitments and contingencies Stockholders' Equity Preferred stock-$.001 par value; 2,000,000 shares authorized; no shares issued or outstanding - - Common stock-$.001 par value; 56,000,000 shares authorized; 16,946,377 and 16,561,036 shares issued; and 16,272,279 and 15,886,938 shares outstanding at September 30, 2007 and December 31, 2006, respectively 16,947 16,562 Additional paid-in capital 73,705,815 70,574,176 Accumulated other comprehensive loss (146,080) (273,295) Accumulated deficit (20,194,640) (24,569,531) Treasury stock at cost, 674,098 shares at September 30, 2007 and December 31, 2006 (3,003,445) (3,003,445) Total Stockholders' Equity 50,378,597 42,744,467 Total Liabilities and Stockholders' Equity $52,002,135 $45,049,167 SRS LABS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Revenues $4,769,271 $4,910,203 $14,536,526 $13,505,710 Cost of sales 36,850 43,998 115,912 127,103 Gross margin 4,732,421 4,866,205 14,420,614 13,378,607 Operating expenses: Sales and marketing 1,460,185 1,743,660 5,104,195 5,494,445 Research and development 689,901 628,227 2,366,121 1,914,255 General and administrative 1,436,184 1,277,601 4,105,792 4,272,598 Total operating expenses 3,586,270 3,649,488 11,576,108 11,681,298 Operating income 1,146,151 1,216,717 2,844,506 1,697,309 Other income, net 508,825 291,236 1,511,585 694,954 Income from continuing operations before income taxes 1,654,976 1,507,953 4,356,091 2,392,263 Income taxes (18,800) 231,620 (18,800) 558,788 Income from continuing operations 1,673,776 1,276,333 4,374,891 1,833,475 Discontinued operations: Income from discontinued operations, net of income taxes - 853,523 - 1,017,079 Gain on disposal - 260,763 - 632,058 Income from discontinued operations - 1,114,286 - 1,649,137 Net income $1,673,776 $2,390,619 $4,374,891 $3,482,612 Income from continuing operations per common share: Basic $0.10 $0.09 $0.27 $0.13 Diluted $0.10 $0.08 $0.26 $0.11 Income from discontinued operations per common share: Basic $0.00 $0.07 $0.00 $0.11 Diluted $0.00 $0.07 $0.00 $0.10 Net income per common share: Basic $0.10 $0.16 $0.27 $0.24 Diluted $0.10 $0.15 $0.26 $0.21 Weighted average shares used in the calculation of net income per common share: Basic 16,268,524 14,939,806 16,160,970 14,663,767 Diluted 16,978,841 16,479,112 17,100,334 16,428,894 http://www.newscom.com/cgi-bin/prnh/20070322/LATH036LOGO http://photoarchive.ap.org/ DATASOURCE: SRS Labs, Inc. CONTACT: Investors, Ulrich Gottschling, Chief Financial Officer of SRS Labs, Inc., +1-949-442-5596, Web site: http://www.srslabs.com/

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