SRSL Srs Labs, Inc. (MM)

Company announces 8 new license agreements and commencement of $15 million stock repurchase program SANTA ANA, Calif., Nov. 4 /PRNewswire-FirstCall/ -- SRS Labs, Inc. (NASDAQ:SRSL), the industry leader in surround sound, audio and voice technologies, reported financial results for the third quarter ended September 30, 2008. The company also has made available for download a slide presentation of financial data and analysis at http://www.srslabs.com/pdf/Q308earnings.pdf Recent Developments The second and third quarters for SRS were eventful and cause for optimism due to several developments. First is the solid management team that SRS now has in place, the best in its history. The Company has always had industry leading engineering talent. Now that talent has been complemented with new sales and marketing executives with proven industry credentials that have led to revamped sales and marketing organizations. Several positive developments occurred during the past two quarters, including 17 new license agreements with companies such as Hewlett-Packard, Vizio and NEC computer. Revenue from these newly signed licensees, along with expected revenue from additional license agreements anticipated to be signed in the near term, represent forecasted incremental revenue growth of approximately $7 million for 2009. In recognition of the deepening recession and uncertainties in the global marketplace, the Company is taking a conservative approach in its forecast for 2009 by maintaining our previously stated 25% revenue growth. There is no historic precedent for the current recession and therefore no basis to predict how long or how deep it will be, nor any certainty regarding what the recovery will look like. In recognition of these uncertainties, SRS is forecasting revenues that are substantially less than what might otherwise be forecast in a normal market. Third Quarter Financial Results Net revenues in the third quarter 2008 totaled $4.3 million, a decrease of 9% from $4.8 million in the same period a year ago. The decrease is primarily attributable to changes in the company's home entertainment segment with three of the Company's larger television customers. During the quarter, eight new license agreements were signed which are anticipated to start generating revenues in three to nine months as SRS technology is integrated into new consumer products. Operating expenses in the quarter totaled $4.9 million, an increase of 37% from $3.6 million in the same quarter a year ago. Of this increase, approximately $500,000 is comprised of one-time charges related to the company's ongoing investment in strengthening its sales and marketing departments, and approximately $179,000 is related to capital transaction activities. Net loss was $316 thousand or ($0.02) per basic and diluted share, versus a net income of $1.7 million or $0.10 per basic and diluted share in the third quarter of 2007. Quarter-end cash and cash equivalents and short-term and long-term investments totaled $46.7 million, as compared to $45.4 million at the end of the same quarter in the prior year. "During the quarter, we secured several new significant design wins in multiple segments and geographic regions," said Thomas C.K. Yuen, SRS Lab's Chairman and CEO. "These wins came primarily as a result of the investments we are making in broadening the bandwidth and improving the quality of our sales and marketing departments. More importantly, we have been able to benefit from the excellent new leadership in both of these critical areas to motivate and mobilize the respective teams in a disciplined and results oriented manner. Our sales team continues to identify new and significant business opportunities in nearly all of our segments which we believe will lead to healthy revenue growth in 2009." Yuen continued, "Due to the progress we are experiencing, I am happy to announce today that our board of directors has approved a new stock repurchase program under which we may acquire up to $15 million of our outstanding common stock for a period of up to six months commencing on November 7, 2008." Conference Call SRS Labs will hold a conference call later today (November 4, 2008) to discuss these third quarter 2008 financial results. Chairman and CEO, Thomas C.K. Yuen, and CFO, Ulrich Gottschling, will host the call starting at 5:00 p.m. Eastern Time. A question and answer session will follow management's presentation. Dial-In Number: 1-800-862-9098 International: 1-785-424-1051 Conference ID#: 7SRS The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website at http://www.srslabs.com/. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860. A replay of the call will be available after 8:00 p.m. Eastern Time that same day and until November 18, 2008 at: Toll-free replay number: 1-800-388-5895 International replay number: 1-402-220-1110 (No passcode required) About SRS Labs, Inc. Founded in 1993, SRS Labs is the industry leader in audio signal processing for consumer electronics. Beginning with the audio technologies originally developed at Hughes Aircraft, SRS Labs holds over 150 worldwide patents and is recognized by the industry as the foremost authority in research and application of human auditory principals. Through partnerships with leading global CE companies, semiconductor manufacturers and software partners, SRS audio, surround sound and voice processing technologies have been included in over one billion electronic products sold worldwide including HDTVs, mobile phones, portable media devices, PCs and automotive entertainment. In fact, SRS Labs is the de-facto standard of HDTV audio processing with nine of the top ten name brand flat panel TVs featuring SRS technology. Additionally, SRS Labs surround sound solutions provide the professional broadcast and recording industries with high-performance production, back-haul, storage, and transmission capability. SRS Labs supports manufacturers worldwide with offices in the US, China, Europe, Japan, Korea and Taiwan. For more information, visit http://www.srslabs.com/. Safe Harbor Statement This press release includes forward-looking statements that are based on our current expectations, estimates and projections about SRS Labs, Inc., management's beliefs and certain assumptions made by us, and events beyond our control, all of which are subject to change. Such forward-looking statements include, but are not limited to, statements relating to our future growth opportunities, expansion and investment plans, operating results and profitability, as well as the stock repurchase program. Forward-looking statements can often be identified by words such as "expects," "anticipates," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "likely," "potential," "continue," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results or the commitments made by us herein, and they are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those expressed in any forward-looking statement. The risks and uncertainties referred to above include, but are not limited to, the timely development, release and market acceptance of new SRS Labs' products and technologies, the impact of competitive products, technologies and pricing; the loss of any material customer, design win or license arrangement; the ability of our customers to gain broad market acceptance for products incorporating our technologies and the timing of our customers' sales; our ability to quickly and cost-effectively respond to technological changes and advancements; intellectual property disputes and the impact of pending litigation; the effectiveness of our expense and cost control and reduction efforts; general economic and political conditions and specific conditions in the markets we address; and such other factors described in our filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date they are made. We do not undertake any obligation to revise or update publicly any forward-looking statement for any reason. Company Contacts: Ulrich Gottschling Chief Financial Officer SRS Labs, Inc. Tel 949-442-5596 Matt Glover Investor Relations Liolios Group Tel 949-574-3860 SRS LABS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2008 2007 (unaudited) ASSETS Current Assets Cash and cash equivalents $41,733,491 $39,615,291 Accounts receivable, net 569,503 1,138,425 Prepaid expenses and other current Assets 833,099 893,388 Short-term investments 4,984,000 - Total Current Assets 48,120,093 41,647,104 Investments available for sale - 5,451,875 Property and equipment, net 360,561 309,727 Intangible assets, net 2,321,642 2,197,616 Deferred income taxes, net 2,986,421 1,776,202 Total Assets $53,788,717 $51,382,524 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $546,912 $529,063 Accrued liabilities 959,748 689,308 Deferred revenue 1,802,999 1,156,836 Total Current Liabilities 3,309,659 2,375,207 Commitments and Contingencies Stockholders' Equity Preferred stock --$.001 par value; 2,000,000 shares authorized; no shares issued or outstanding - - Common stock --$.001 par value; 56,000,000 shares authorized; 15,796,777 and 16,946,377 shares issued; and 15,782,577 and 15,778,715 shares outstanding at September 30, 2008 and December 31, 2007, respectively 15,798 16,947 Additional paid-in capital 69,582,396 74,143,772 Accumulated other comprehensive loss - (48,125) Accumulated deficit (19,021,532) (19,155,096) Treasury stock at cost, 14,200 and 1,167,662 shares at September 30, 2008 and December 31, 2007, respectively (97,604) (5,950,181) Total Stockholders' Equity 50,479,058 49,007,317 Total Liabilities and Stockholders' Equity $53,788,717 $51,382,524 SRS LABS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Revenues $4,319,433 $4,769,271 $13,438,565 $14,536,526 Cost of sales 22,107 36,850 88,426 115,912 Gross margin 4,297,326 4,732,421 13,350,139 14,420,614 Operating expenses*: Sales and marketing 2,451,026 1,460,185 7,078,563 5,104,195 Research and development 948,305 689,901 2,727,837 2,366,121 General and administrative 1,524,529 1,436,184 4,490,485 4,105,792 Total operating expenses 4,923,860 3,586,270 14,296,885 11,576,108 Operating (loss) income (626,534) 1,146,151 (946,746) 2,844,506 Interest income 310,219 508,825 1,093,543 1,511,585 (Loss)income before income taxes (316,315) 1,654,976 146,797 4,356,091 Income taxes - (18,800) 13,233 (18,800) Net (loss) income $(316,315) $1,673,776 $133,564 $4,374,891 Net (loss) income per common share: Basic $(0.02) $0.10 $0.01 $0.27 Diluted $(0.02) $0.10 $0.01 $0.26 Weighted average shares used in the calculation of net income (loss) per common share: Basic 15,779,486 16,268,524 15,778,493 16,160,970 Diluted 15,779,486 16,978,841 16,249,158 17,100,334 *Included in Q3 2008 total operating expenses is stock-based compensation expense of $425,191; $111,751 in sales and marketing, $85,734 in research and development, and $227,706 in general and administrative expenses. Included in Q3 2007 total operating expenses is stock-based compensation expense of $438,050; $112,162 in sales and marketing, $108,987 in research and development, and $216,901 in general and administrative expenses. DATASOURCE: SRS Labs, Inc. CONTACT: Ulrich Gottschling, Chief Financial Officer of SRS Labs, Inc., +1-949-442-5596, ; or Matt Glover, Investor Relations of Liolios Group, +1-949-574-3860, , for SRS Labs, Inc. Web Site: http://www.srslabs.com/

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