SRS Labs, Inc. Reports First Quarter 2001 Results

SRS Technology Licensing Revenue Doubles Within Base Business;

Signs Licensing Contract With Major Japanese Cellular Phone Manufacturer



Apr 24, 2001, 01:00 ET from SRS Labs, Inc.

    SANTA ANA, Calif., April 24 /PRNewswire Interactive News Release/ -- SRS
 Labs, Inc. (Nasdaq: SRSL), the leading provider of innovative audio and voice
 technology solutions, today reported revenue of $4,330,881 and a net loss of
 $1,565,534, a loss of $0.12 per share, for Q1, 2001.  Revenue for the
 comparable prior year quarter was $7,190,552 with a net loss of $4,341,047, a
 loss of $0.36 per share.  The 2001 loss includes charges related to the
 previously announced restructuring of the SRSWOWCast.com subsidiary.  SRS Labs
 also reported that revenue from the SRS technology licensing portion of the
 Company's base business doubled in Q1 when compared to the prior year period
 and that the Company has completed a multi-year licensing contract with a
 major Japanese cellular phone manufacturer for the Company's proprietary
 WOWVoice(TM) technology.  ASIC revenues from the Company's subsidiary,
 ValenceTech, were down due to continued global weakness in the semiconductor
 market.
     According to SRS Labs Chairman and CEO Thomas Yuen, "While we saw a
 decline in revenues in a portion of our base business related to the
 semiconductor market, it was directly related to the global softness in the
 semiconductor industry which continued from Q4 of 2000.  We are beginning to
 see an improvement in the market and expect it to continue for the rest of
 this year.  In addition to the market improvement, we are now seeing higher
 quarterly royalty revenues from new licensing contracts."
     The Company's cash position remains strong at the end of Q1, 2001 with
 cash, cash equivalents and investments of approximately $24.7 million compared
 to approximately $28.9 million in Q1 2000.  The Company used $4 million of its
 cash in Q1 to pay down its $8 million debt and completed the pay-off on
 April 2, 2001.  The Company now has no external debt and has a strong cash
 position of $20.7 million.
     Yuen continued, "SRS Labs' new multi-year contract for licensing
 WOWVoice(TM) to a major Japanese cellular phone manufacturer marks the first
 time that our voice technologies have been featured in cellular phones in the
 Japanese market.  Also our subsidiary, SRSWOWcast, is focused on a new area of
 interest of licensing the SRS technologies to the broadcasting and streaming
 media markets.  They are receiving good response from leading companies in
 each of those two markets that we believe should create a strong revenue
 model.  SRS Labs has also strengthened our traditional technology licensing
 business over the past several quarters.  We are pursuing new technology
 licensing contracts and are optimistic that this trend will continue through
 the year.
     "We feel that our fundamental plan to return to profitability is clearly
 on track," Yuen concluded.  "While our ASIC business has slowed due to
 macroeconomic conditions, we believe that it too has stabilized and will begin
 to return with the rest of the market.  Our overall business is strong and we
 feel that during the rest of this year we will continue to move closer toward
 our goal of profitability."
     SRS Labs also reported today that it has accepted the voluntary
 resignation of one of its board members, Roger W. Johnson.
 
     About SRS Labs, Inc.
     SRS Labs is the world's leading provider of audio and voice enhancement
 technology solutions.  SRS Labs' business consists of licensing audio and
 voice technologies to manufacturers of consumer electronics,
 telecommunications equipment, game developers, and wireless and cellular phone
 manufacturers and also markets products for semi-pro and professional audio
 signal processing.  The Company's Hong Kong-based subsidiary, ValenceTech is a
 fabless award-winning leader in the design, manufacturing and distribution of
 components, integrated circuits, and sub-assemblies.  The Company's
 subsidiary, SRSWOWcast.com licenses audio technologies for broadcasting and
 streaming media.  For more information, visit http://www.srslabs.com.
 
     Except for historical information contained in this release, statements in
 this release, including the statements by Mr. Yuen in paragraphs 2, 4, and 5
 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 semiconductor business, 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 risks detailed in the
 Company's Form 10-K and other periodic reports filed with the SEC.
 
     SRS, WOWVoice and the SRS symbol are trademarks of SRS Labs, Inc.
 
     For further information, please contact Joanna Skrdlant, Director of
 Marketing, ext. 5138, joannas@srslabs.com, or James F. Gardner, Vice
 President, Operations, ext. 5010, jimg@srslabs.com, both of SRS Labs, Inc.,
 949-442-1070.
 
 
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (unaudited)
 
                                                       Quarter Ended
                                                          31-Mar
                                                     2001          2000
     Revenues:
       Chip & licensing revenue                  $2,248,394     $2,879,079
       Product and component sales                2,082,487      4,311,473
         Total revenues                           4,330,881      7,190,552
     Cost of sales                                2,301,290      4,848,701
 
     Gross margin                                 2,029,591      2,341,851
     Expenses:
       Sales & marketing                          1,391,380      1,284,734
       Research & development                       878,094        939,189
       General & administrative                   1,561,926      1,418,587
       Non-cash stock issuance cost                       0      3,111,859
 
     Loss from operations                        (1,801,809)    (4,412,518)
     Other income, net                              234,041        209,564
     Minority interest                               72,828              0
     Loss before income tax expense              (1,494,940)    (4,202,954)
     Income tax expense                              70,594        138,093
     Net loss                                   $(1,565,534)   $(4,341,047)
     Net loss per common share:
       Basic and Diluted                             ($0.12)        ($0.36)
     Weighted average number of shares used
      in the calculation of net loss
      per common share
      Basic and Diluted                          12,582,262     11,982,392
 
 
                                   SRS LABS, INC.
                            CONSOLIDATED BALANCE SHEETS
 
                                                   March 31,     December 31,
                                                     2001            2000
                                                 (Unaudited)
     ASSETS
       Current Assets
       Cash and cash equivalents                  $20,089,280    $24,128,480
       Investments available for sale               4,019,441      5,713,881
       Accounts receivable, net                     1,571,075        787,908
       Inventories, net                             2,671,218      3,068,478
       Prepaid expenses and other current assets      658,842        847,953
       Deferred income taxes                           38,116         38,116
 
         Total Current Assets                      29,047,972     34,584,816
 
       Investments available for sale                 586,569        582,849
       Furniture, fixtures & equipment, net         1,842,937      1,808,624
       Intangible assets, net                       3,322,519      3,692,218
       Deferred income taxes                          900,839        900,839
 
         Total Assets                             $35,700,836    $41,569,346
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current Liabilities
       Accounts payable                            $1,461,197     $1,603,401
       Accrued liabilities                          1,870,059      1,974,357
       Line of credit                               4,000,000      8,000,000
       Income taxes payable                         1,078,845      1,093,107
 
         Total Current Liabilities                  8,410,101     12,670,865
 
       Commitments and contingencies
       Minority interest                              522,897        595,428
 
     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; 12,657,344 and
        12,652,844 shares issued; and 12,586,244
        and 12,581,744 outstanding at March 31,
        2001 and December 31, 2000, respectively       12,658         12,653
       Additional paid-in capital                  55,063,009     55,060,403
       Deferred stock option compensation             395,464        376,052
       Cumulative other comprehensive loss            (56,654)       (64,950)
       Accumulated deficit                        (28,383,358)   (26,817,824)
       Less treasury stock at cost, 71,100 shares
        at March 31, 2001 and December 31, 2000,
        respectively                                 (263,281)      (263,281)
 
         Total Stockholders' Equity                26,767,838     28,303,053
         Total Liabilities and Stockholders'
          Equity                                  $35,700,836    $41,569,346
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE SRS Labs, Inc.
    SANTA ANA, Calif., April 24 /PRNewswire Interactive News Release/ -- SRS
 Labs, Inc. (Nasdaq: SRSL), the leading provider of innovative audio and voice
 technology solutions, today reported revenue of $4,330,881 and a net loss of
 $1,565,534, a loss of $0.12 per share, for Q1, 2001.  Revenue for the
 comparable prior year quarter was $7,190,552 with a net loss of $4,341,047, a
 loss of $0.36 per share.  The 2001 loss includes charges related to the
 previously announced restructuring of the SRSWOWCast.com subsidiary.  SRS Labs
 also reported that revenue from the SRS technology licensing portion of the
 Company's base business doubled in Q1 when compared to the prior year period
 and that the Company has completed a multi-year licensing contract with a
 major Japanese cellular phone manufacturer for the Company's proprietary
 WOWVoice(TM) technology.  ASIC revenues from the Company's subsidiary,
 ValenceTech, were down due to continued global weakness in the semiconductor
 market.
     According to SRS Labs Chairman and CEO Thomas Yuen, "While we saw a
 decline in revenues in a portion of our base business related to the
 semiconductor market, it was directly related to the global softness in the
 semiconductor industry which continued from Q4 of 2000.  We are beginning to
 see an improvement in the market and expect it to continue for the rest of
 this year.  In addition to the market improvement, we are now seeing higher
 quarterly royalty revenues from new licensing contracts."
     The Company's cash position remains strong at the end of Q1, 2001 with
 cash, cash equivalents and investments of approximately $24.7 million compared
 to approximately $28.9 million in Q1 2000.  The Company used $4 million of its
 cash in Q1 to pay down its $8 million debt and completed the pay-off on
 April 2, 2001.  The Company now has no external debt and has a strong cash
 position of $20.7 million.
     Yuen continued, "SRS Labs' new multi-year contract for licensing
 WOWVoice(TM) to a major Japanese cellular phone manufacturer marks the first
 time that our voice technologies have been featured in cellular phones in the
 Japanese market.  Also our subsidiary, SRSWOWcast, is focused on a new area of
 interest of licensing the SRS technologies to the broadcasting and streaming
 media markets.  They are receiving good response from leading companies in
 each of those two markets that we believe should create a strong revenue
 model.  SRS Labs has also strengthened our traditional technology licensing
 business over the past several quarters.  We are pursuing new technology
 licensing contracts and are optimistic that this trend will continue through
 the year.
     "We feel that our fundamental plan to return to profitability is clearly
 on track," Yuen concluded.  "While our ASIC business has slowed due to
 macroeconomic conditions, we believe that it too has stabilized and will begin
 to return with the rest of the market.  Our overall business is strong and we
 feel that during the rest of this year we will continue to move closer toward
 our goal of profitability."
     SRS Labs also reported today that it has accepted the voluntary
 resignation of one of its board members, Roger W. Johnson.
 
     About SRS Labs, Inc.
     SRS Labs is the world's leading provider of audio and voice enhancement
 technology solutions.  SRS Labs' business consists of licensing audio and
 voice technologies to manufacturers of consumer electronics,
 telecommunications equipment, game developers, and wireless and cellular phone
 manufacturers and also markets products for semi-pro and professional audio
 signal processing.  The Company's Hong Kong-based subsidiary, ValenceTech is a
 fabless award-winning leader in the design, manufacturing and distribution of
 components, integrated circuits, and sub-assemblies.  The Company's
 subsidiary, SRSWOWcast.com licenses audio technologies for broadcasting and
 streaming media.  For more information, visit http://www.srslabs.com.
 
     Except for historical information contained in this release, statements in
 this release, including the statements by Mr. Yuen in paragraphs 2, 4, and 5
 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 semiconductor business, 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 risks detailed in the
 Company's Form 10-K and other periodic reports filed with the SEC.
 
     SRS, WOWVoice and the SRS symbol are trademarks of SRS Labs, Inc.
 
     For further information, please contact Joanna Skrdlant, Director of
 Marketing, ext. 5138, joannas@srslabs.com, or James F. Gardner, Vice
 President, Operations, ext. 5010, jimg@srslabs.com, both of SRS Labs, Inc.,
 949-442-1070.
 
 
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (unaudited)
 
                                                       Quarter Ended
                                                          31-Mar
                                                     2001          2000
     Revenues:
       Chip & licensing revenue                  $2,248,394     $2,879,079
       Product and component sales                2,082,487      4,311,473
         Total revenues                           4,330,881      7,190,552
     Cost of sales                                2,301,290      4,848,701
 
     Gross margin                                 2,029,591      2,341,851
     Expenses:
       Sales & marketing                          1,391,380      1,284,734
       Research & development                       878,094        939,189
       General & administrative                   1,561,926      1,418,587
       Non-cash stock issuance cost                       0      3,111,859
 
     Loss from operations                        (1,801,809)    (4,412,518)
     Other income, net                              234,041        209,564
     Minority interest                               72,828              0
     Loss before income tax expense              (1,494,940)    (4,202,954)
     Income tax expense                              70,594        138,093
     Net loss                                   $(1,565,534)   $(4,341,047)
     Net loss per common share:
       Basic and Diluted                             ($0.12)        ($0.36)
     Weighted average number of shares used
      in the calculation of net loss
      per common share
      Basic and Diluted                          12,582,262     11,982,392
 
 
                                   SRS LABS, INC.
                            CONSOLIDATED BALANCE SHEETS
 
                                                   March 31,     December 31,
                                                     2001            2000
                                                 (Unaudited)
     ASSETS
       Current Assets
       Cash and cash equivalents                  $20,089,280    $24,128,480
       Investments available for sale               4,019,441      5,713,881
       Accounts receivable, net                     1,571,075        787,908
       Inventories, net                             2,671,218      3,068,478
       Prepaid expenses and other current assets      658,842        847,953
       Deferred income taxes                           38,116         38,116
 
         Total Current Assets                      29,047,972     34,584,816
 
       Investments available for sale                 586,569        582,849
       Furniture, fixtures & equipment, net         1,842,937      1,808,624
       Intangible assets, net                       3,322,519      3,692,218
       Deferred income taxes                          900,839        900,839
 
         Total Assets                             $35,700,836    $41,569,346
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current Liabilities
       Accounts payable                            $1,461,197     $1,603,401
       Accrued liabilities                          1,870,059      1,974,357
       Line of credit                               4,000,000      8,000,000
       Income taxes payable                         1,078,845      1,093,107
 
         Total Current Liabilities                  8,410,101     12,670,865
 
       Commitments and contingencies
       Minority interest                              522,897        595,428
 
     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; 12,657,344 and
        12,652,844 shares issued; and 12,586,244
        and 12,581,744 outstanding at March 31,
        2001 and December 31, 2000, respectively       12,658         12,653
       Additional paid-in capital                  55,063,009     55,060,403
       Deferred stock option compensation             395,464        376,052
       Cumulative other comprehensive loss            (56,654)       (64,950)
       Accumulated deficit                        (28,383,358)   (26,817,824)
       Less treasury stock at cost, 71,100 shares
        at March 31, 2001 and December 31, 2000,
        respectively                                 (263,281)      (263,281)
 
         Total Stockholders' Equity                26,767,838     28,303,053
         Total Liabilities and Stockholders'
          Equity                                  $35,700,836    $41,569,346
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X95986800
 
 SOURCE  SRS Labs, Inc.