SRS Labs Reports Fourth Quarter 2009 Results

SANTA ANA, Calif., Feb. 23 /PRNewswire-FirstCall/ -- SRS Labs, Inc. (Nasdaq: SRSL), the industry leader in surround sound, audio and voice technologies, reported financial results for the fourth quarter and fiscal year ended December 31, 2009.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20070322/LATH036LOGO)

Fourth Quarter and Fiscal 2009 Results

Revenues in the fourth quarter 2009 increased 43% to $7.0 million from $4.9 million in the same period a year ago. For the full year 2009, revenues increased 36% to a record $25.0 million from $18.3 million in 2008. The increase was primarily attributable to increased revenues in the home entertainment, personal telecommunications and personal computer markets.

Operating expenses in the fourth quarter increased 34% to $6.4 million from $4.8 million in the same quarter a year ago. For the full year 2009, operating expenses increased 19% to $22.8 million from $19.1 million in 2008. The increase was primarily attributable to the continued investment in additional sales, marketing and engineering infrastructure.

Net income in the fourth quarter increased 244% to $473,000 or $0.03 per diluted share, an improvement from a net income of $137,000 or $0.01 per diluted share in the fourth quarter of 2008. For the full year 2009, net income increased 688% to $2.1 million or $0.14 per diluted share, from $271,000 or $0.02 per diluted share in 2008.

Quarter-end cash and cash equivalents, and short-term and long-term investments totaled $41.5 million as of December 31, 2009, as compared to $40.3 million at the end of the prior quarter.

Management Commentary

"2009 was a milestone year for SRS Labs," said Thomas C.K. Yuen, SRS Lab's chairman and CEO. "The investments we made in 2008 and 2009 provided the resources to build a substantial infrastructure to execute our strategic growth plan. These resources allowed us to develop new technologies, drive branding initiatives, and deploy a professional customer-focused sales team. From an operational perspective, we achieved what we set out to accomplish: strong top-line growth, diversification of our revenue and customer base, margin expansion, and penetration of key high growth target markets.

"Based upon the growth and results we achieved in 2009, we expect to continue to invest in our infrastructure as we grow revenues and expand market share.  Based on our current business conditions and expectations, we expect revenues for the fiscal year 2010 to exceed a 25% annual growth rate.  We also remain focused on continued operating margin expansion."

Conference Call

SRS Labs will hold a conference call later today (February 23, 2010) to discuss these fourth quarter and fiscal 2009 financial results. Chairman and CEO Thomas C.K. Yuen, CFO Ulrich Gottschling, VP of Marketing Allen Gharapetian, and VP of Global Sales Jeff Klaas 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: 866-206-7204

Conference ID#: 1428801

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and instruct 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.

Investors may also listen to the conference call live online via a link available on the SRS Labs investor relations home page at www.srslabs.com.

The website will host a replay of the call available after 8:00 p.m. Eastern time. Investors may also listen to the replay by dialing 1-866-837-8032 and entering conference ID#: 1428801, available until March 18, 2010.

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 audio post processing technologies based on the human auditory principles. Through partnerships with leading global CE companies, semiconductor manufacturers and software partners, SRS is recognized as the de facto standard in audio enhancement, surround sound, volume leveling and voice processing technologies. SRS solutions have been included in over one billion electronic products sold worldwide including flat panel HDTVs, STBs, mobile phones, portable media devices, PCs and automotive entertainment. SRS Labs supports its partners around the globe with a network of offices in regions including the U.S., China, Europe, Japan, Korea and Taiwan. For more information, visit www.srslabs.com. Visit SRS Labs' blog at www.soundingoff.srslabs.com, on Facebook at www.facebook.com/srslabs or on Twitter at www.twitter.com/srslabs.

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, competitive position, expansion and investment plans, and operating results and profitability. 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 loss of any significant customer; the acceptance of new SRS Labs products and technologies; our ability to increase our brand awareness and enter into new or expanded license arrangements; the impact of competitive products and pricing; general economic and business conditions that may adversely impact sales of consumer products incorporating our technologies or that otherwise may impact our operating results and future performance; the timely development and release of technologies by the Company; 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.

    
    
                           SRS LABS, INC. AND SUBSIDIARY
                       CONDENSED CONSOLIDATED BALANCE SHEETS
    
                                          December 31,         December 31,
                                              2009                 2008
                                           -----------         -----------
                ASSETS
    Current Assets
      Cash and cash equivalents            $27,988,164         $31,599,087
      Accounts receivable, net                 179,114             332,711
      Prepaid expenses and other
       current assets                        1,147,151             864,095
      Short-term investments                12,963,000           7,836,000
                                            ----------           ---------
        Total Current Assets                42,277,429          40,631,893
    
    Long-term investments                      538,000                   -
    Property and equipment, net                599,794             423,921
    Intangible assets, net                   2,702,160           2,354,725
    Deferred income taxes, net               5,631,442           3,471,421
                                             ---------           ---------
        Total Assets                       $51,748,825         $46,881,960
                                           ===========         ===========
    LIABILITIES AND STOCKHOLDERS' EQUITY
    
    Current Liabilities
      Accounts payable                        $583,157            $314,382
      Accrued liabilities                    1,577,891             996,268
      Deferred revenue                       1,193,454           1,802,024
                                             ---------           ---------
        Total Current Liabilities            3,354,502           3,112,674
    
    Commitments and contingencies
    
    Stockholders' Equity
      Preferred stock-$0.001 par
       value; 2,000,000 shares
       authorized; no shares
       issued and outstanding                        -                   -
      Common stock-$0.001 par
       value; 56,000,000 shares
       authorized; 14,563,715 and
       14,419,418 shares issued
       and outstanding at December 31,
       2009 and 2008, respectively              14,565              14,420
      Additional paid-in capital            65,128,337          62,639,075
      Accumulated deficit                  (16,748,579)        (18,884,209)
                                           -----------         -----------
        Total Stockholders' Equity          48,394,323          43,769,286
                                            ----------          ----------
        Total Liabilities and
         Stockholders' Equity              $51,748,825         $46,881,960
                                           ===========         ===========

    
    
    
                             SRS LABS, INC. AND SUBSIDIARY
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            
                             Three Months Ended             Year Ended
                                 December 31,               December 31,
                             -------------------        -------------------
                             2009           2008        2009           2008
                             ----           ----        ----           ----
    
    Revenues              $6,974,921    $4,894,114 $24,964,577    $18,332,678
    Cost of sales             83,512        55,056     285,543        143,481
                              ------        ------     -------        -------
    
    Gross margin           6,891,409     4,839,058  24,679,034     18,189,197
    
    Operating expenses*:
      Sales and
       marketing           3,325,852     2,273,596  11,415,115      9,220,098
      Research and
       development         1,662,063     1,082,736   5,721,195      3,942,635
      General and
       administrative      1,439,570     1,422,597   5,656,616      5,913,081
                           ---------     ---------   ---------      ---------
    
        Total operating
         expenses          6,427,485     4,778,929  22,792,926     19,075,814
                           ---------     ---------  ----------     ----------
    
    Operating income
     (loss)                  463,924        60,129   1,886,108       (886,617)
    Interest Income           67,985       181,503     347,528      1,275,047
                              ------       -------     -------      ---------
      Income before
       income taxes          531,909       241,632   2,233,636        388,430
    Income taxes              58,843       104,311      98,006        117,543
                              ------       -------      ------        -------
    Net income              $473,066      $137,321  $2,135,630       $270,887
                            ========      ========  ==========       ========
    
    Net income per common
     share:
      Basic                    $0.03         $0.01       $0.15          $0.02
      Diluted                  $0.03         $0.01       $0.14          $0.02
    
    Weighted average
     shares used
     in the per share
     calculation:
      Basic               14,683,587    15,023,946  14,460,490     15,588,815
      Diluted             15,239,624    15,217,760  14,813,372     15,842,336
    
    *Included in Q4 2009 total operating expenses, is stock-based compensation
    expense of $525,717; $129,580 in sales and marketing, $123,696 in research
    and development, and $272,441 in general and administrative expenses. 
    Included in Q4 2008 total operating expenses, is stock-based compensation 
    expense of $435,035; $77,003 in sales and marketing, $104,946 in research 
    and development, and $253,086 in general and administrative expenses.  
    

SOURCE SRS Labs, Inc.