Valence, a Hong Kong based manufacturer of VCD's was just purchased by US firm SRS Labs.
SRS Labs to Acquire Leading Hong Kong Technology Firm for $19.5 Million
PR Newswire - February 25, 1998 16:17
To Accelerate SRS Brand Recognition And Revenue Growth
SANTA ANA, Calif., Feb. 25 /PRNewswire/ -- SRS Labs, Inc.
(Nasdaq: SRSL), the world's leading developer and licenser of audio
enhancement technologies, today announced that it has signed an agreement to
acquire all of the outstanding capital stock of Valence Technology, Inc. of
Hong Kong, for an aggregate purchase price of $19.5 million in cash and stock.
Valence is a leading ASIC (application-specific integrated circuit) chip
design company and manufacturer of premium consumer electronics products.
The acquisition is expected to accelerate the pace at which SRS Labs'
technology is distributed, and to substantially increase SRS Labs' revenue
base in China, one of the Company's most important growth markets. The
purchase price consists of $7.4 million in cash and 1.8 million shares of
common stock of SRS Labs. It is anticipated that the transaction will be
accounted for under the purchase method of accounting. The company expects to
incur a one time R&D charge related to the acquisition. The closing of the
acquisition is subject to various conditions and approvals contained in the
definitive agreements. The transaction is expected to close by March 31, 1998
if all conditions are satisfied and all approvals are obtained in a timely
manner.
Valence Technology, Inc. is a profitable privately held company with
revenues of approximately $30 million for the nine months ended December 31,
1997. The company operates five offices located in Hong Kong and China
(Chengdu, Shanghai and Shenzhen) with 130 employees. Valence was a recent
recipient of the prestigious Technology Achievement Award at the Hong Kong
Awards for Industry.
Valence is engaged in two primary areas of business. The first area of
business includes the design, manufacture and marketing of ASIC products. The
second area of business is the design, manufacture and marketing of consumer
electronics products. Within this area of business, Valence also manufactures
and sells the company's own Valence brand high-end product line of VCD (video
compact disc) players, amplifiers and electronic games.
SRS Labs is the world's leading developer and licenser of premium audio
enhancement technology to consumer electronics and computer OEMs. The Company
also participates in the emerging voice technology arena, with the recent
acquisition of the VIP (Voice Intelligibility Processor) technology. SRS Labs
has partnered with leading semiconductor manufacturers, such as AKM
Semiconductor, Chromatic Research, Cirrus Logic, LSI Logic, Medianix,
Mitsubishi Semiconductor, New Japan Radio, S3, SGS Thomson, Toshiba
Semiconductor and Zoran, to offer a variety of digital and analog chip
solutions of its SRS(R) 3D Sound technology as well as TruSurround(TM), its
latest virtual audio technology.
Audio technology from SRS Labs has shipped in more than 23 million
products worldwide, including televisions, home audio receivers, DVD players,
movie theater processors, mini-sound systems, car CD players, computers and
home digital pianos from more than 170 leading manufacturers, including AST,
Acer, Apple, Compaq, Dell, Gateway 2000, Hewlett Packard, Hitachi, IBM, Kawai,
Kenwood, Kurzweil, Micron, Mitsubishi, Nakamichi, Packard Bell, Pioneer, RCA,
Samsung, Sanyo, Sharp, Sony and Toshiba.
Last week, the Company released its 1997 results: for the year ended
December 31, 1997, SRS Labs reported record revenues of $10.1 million, and
record net income of $3.8 million or $0.35 per share, on 10.8 million diluted
shares.
Mr. Thomas C.K. Yuen, Chairman and Chief Executive Officer of SRS Labs and
a co-founder of AST Research, the computer brand that was the standard in
Asia, made the following comments: "The acquisition of Valence Technology
presents SRS Labs with several substantial opportunities. Our early
activities in China have proven successful, and now, with the addition of
Valence's local expertise and solid business foundation, we believe we will be
able to significantly expand the proliferation of the SRS brand name in China.
"With its revenue base, Valence represents an important business expansion
for SRS Labs. We believe that Valence's dedicated chip design team will
benefit SRS Labs and its chip partners by providing the ability to accelerate
the time to market of SRS Labs' technologies and by providing a quicker
seeding of the market. The Valence ASIC team will also provide cost-effective
reference designs, and we believe that our chip partners will appreciate this
type of R&D risk reduction.
"We believe that China and the VCD market represent a potential explosive
upside for SRS Labs, and Valence's current offerings of 3D amplifiers and VCD
players position SRS Labs extremely well to take advantage of this situation.
Additionally, if VCD becomes accepted as the set-top box in China, then the
powerful combination of SRS Labs' technologies and Valence's proven design,
distribution and implementation abilities will provide an advantage in
securing a leading position in the multi-billion dollar China consumer
electronics market.
"On its own merits," Mr. Yuen concluded, "Valence is a good investment.
Now, the recent Asian economic situation has enabled us to negotiate even
better terms for our shareholders."
For further information on SRS Labs, please visit the SRS Labs website at
www.srslabs.com.
Except for historical information contained herein, the matters set
forth in this press release, such as the statements of the Company in
paragraph two, and of Mr. Yuen in the paragraphs eight, nine, ten and
eleven of this release, include forward-looking statements and
projections (including statements concerning plans and objectives of
management for future operations and services) 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 financial goals
will be realized. Numerous factors 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
SRS Labs' ability to close the acquisition of Valence Technology, Inc., the
potential business benefits to SRS Labs of a combination with Valence
Technology, Inc., the potential for SRS Labs to successfully increase its
market penetration in China, and the stability of China and the Asian markets.
In addition, the results of the company may vary depending upon generally
applicable factors, including the extent to which SRS Labs' licensees
incorporate SRS or the company's other technologies into products, the
increase in SRS Labs licensee base, the acceptance of SRS Labs' new
technologies, the rate SRS Labs' semiconductor licensees manufacture and
distribute chips to OEMs, SRS Labs' ability to continue to effectively compete
with others in the field of audio enhancement technologies and general
business and economic conditions, and other risks detailed in the Company's
Form 10K and Form 10Q statements filed with the SEC.
SOURCE SRS Labs, Inc.
/CONTACT: Jennifer Drescher of SRS Labs, Inc., Director, Corporate
Relations, 714-442-1070 or jenniferd@srslabs.com; or Mary McCarthy of the OPUS
Group, 310-440-8600 or mmmcc@pacbe/
/Web site: srslabs.com
(SRS |
