SRS Labs Announces Results for Third Quarter
October 28, 1998
SANTA ANA, Calif., Oct. 27 /PRNewswire/ via
NewsEdge Corporation -- ** NOTE: TRUNCATED
STORY **
SRS Labs, Inc. (Nasdaq: SRSL), a leading
provider of audio and voice technology
solutions, today reported results for the third
quarter, ending September 30, 1998.
Revenue was $11,317,802 with net income of
$191,510 or $0.02 cents per share, compared to
revenue of $2,505,656 and net income of
$1,082,675 or $0.11 cents per share for the
third quarter of 1997. SRS Labs' business model
in 1997 consisted solely of licensing revenue. In
1998, SRS Labs completed a significant
acquisition that changed the business model
substantially; therefore the consolidated results
of 1998 are not comparable to SRS Labs' results
for the same year-earlier periods.
For the nine months ended September 30, 1998,
revenue was $30,000,568 with net loss of
($17,299,002) or ($1.53) per share after
acquisition related charges of $18,510,378,
consisting of the write-off of acquired
in-process research and development
associated with acquisitions completed during
the first quarter of 1998. In the year earlier
period, SRS Labs reported revenues of
$6,833,555 with net income of $2,625,705 or
$0.28 per share.
As of September 30, 1998, SRS Labs' balance
sheet included total cash and investments
available for sale of $21.1 million, total
shareholders equity of $25.9 million and no
long-term debt.
Chairman and CEO Thomas Yuen stated, "The
primary reasons for our less than expected
financial performance in the third quarter are
the weakness in the semiconductor industry;
the absence of expected up-front, licensing
prepayments by new customers; and the
erosion of our licensing revenue from the
computer industry, caused by the drastic
decline in PC prices and the commoditization of
the personal computer."
Mr. Yuen added, "The softness in the
PC-related, semiconductor industry effected our
performance more than we had anticipated.
Many of our chip partners experienced
difficulties this past quarter and did not perform
to expectations and their original forecasting.
We also had anticipated several large deals to
be closed during the third quarter; but due to
the slowdown of the global economy, new
customers in the telecommunications and
semiconductor industries opted to defer
up-front payments on licensing agreements in
lieu of higher per-unit licensing fees in the
future. We are pleased to report that SRS Labs
continues to generate positive cash from
operations and has a strong balance sheet."
Mr. Yuen continued, "In addition, the dynamics
of the computer industry have shifted
dramatically. Industry reports show that year to
date, 60% of the sales of personal computers
have been in the sub $1000, low-margin models.
Computers are becoming a commodity and the
ability to profitably license intellectual property
in this market is becoming more difficult.
Therefore, we have refocused our sales
strategy to provide our unique audio
technologies in integrated sub-systems through
Valence's low-cost, high volume design and
manufacturing capabilities. We intend to now
provide complete, external audio solutions to
computer and peripheral product manufacturers
around the world.
"While many outside factors contributed to our
financial performance, we also experienced a
significant transition internally this quarter,"
continued Mr. Yuen. "We appointed a new
President and COO, Tom Parkinson, who is a 25
year, hi-tech industry veteran with experience
selling to OEMs in the consumer audio,
telecommunications and entertainment
industries in the United States, China, Korea,
Japan, and Europe. Under his leadership, we
have reorganized our sales and marketing
departments to execute our new product and
marketing strategy.
"We have also opened two strategic business
development offices," Mr. Yuen continued. "One
is in San Diego, one of the nation's
telecommunications capitals, and the other is in
the Silicon Valley where the focus will be on
SRS Labs' semiconductor partners. Both of
these offices have been staffed with seasoned
sales and marketing representatives with proven
track records in developing new business in their
respective fields. Over the next few months, we
will also be launching new technologies and
focusing our sales and marketing efforts on high
growth markets, such as telecommunications,
set-top boxes, digital audio and video products,
and the Internet.
Mr. Yuen concluded, "We are very pleased with
the progress of our subsidiary, Valence
Technology, which despite the Asian economic
situation and the devastating summer flood in
China performed well this quarter, reduced its
inventory in the product side of our business,
and generated cash from operations. They have
begun selling chip implementation solutions of
our technologies to the Chinese consumer
electronics manufacturers."
"Below, we have detailed additional positive
developments that indicate the tremendous
opportunities that lie ahead. With our new sales
leadership in the United States, coupled with
our profitable overseas business operations, we
believe that we have put in place the correct
initiatives to improve both operationally and
strategically. It is our continued intention to
stay focused and remain disciplined with our
management approach and proven financial
controls to increase our shareholders' value and
provide the best audio and voice technology
solutions to OEMs worldwide."
Update on Valence Business
-- Through Valence, SRS Labs scored a major
win in the multi-billion
dollar Asian VCD market with the completion of
a licensing agreement
with Idall, a leading Chinese electronics
manufacturer. Idall chose
SRS 3D Sound as its audio enhancement
standard and has begun shipping
SRS-enhanced VCD players. The Chinese VCD
market is estimated to be in
excess of 10 million units (1997) with Idall
holding an estimated 25%
of the market.
-- ASP, a division of Valence Technology, Inc.
which manufactures and
distributes chips for the domestic Asian
consumer electronics, gaming
and telecommunications industries, is one of the
winners of the 1998
Hong Kong Technology Achievement Award for
Industry.
-- Valence began promoting a chip module that
includes SRS 3D Sound plus
the FOCUS sound positioning enhancement
circuit developed by SRS Labs.
This new chip module is available for sale
through Valence's
established distribution channel in Asia.
-- In Q3 98, a total of twenty-two new
licensing agreements were signed
with Chinese and Hong Kong manufacturers, and
forty-one non-disclosure
documents were signed for evaluation of SRS
technologies.
Update on Technologies
VIP (Voice Intelligibility Processor) technology -
improves the intelligibility of the voice in noisy
environments and increases the clarity of voice
in quiet environments.
-- VIP was successfully launched in September
to the professional sound
market at the Audio Engineering Society (AES)
Show, the premier audio
convention in North America.
-- SRS Labs has completed the design of a
complete VIP OEM board that
includes a digital signal processor for sale to
manufacturers in the
professional sound reinforcement and public
address industries. The
board is currently available for customer
sampling.
-- VIP technology is available in a digital format
that can be customized
for use by telecommunications manufacturers
and DSP chip providers for
cellular phones. In the fourth quarter of 1998,
the Company
anticipates a licensing contract with one of the
largest Korean
cellular phone manufacturers, as well as the
finalization of a
relationship with an US-based, global provider of
DSP chips for
communications products.
TruSurround - 2 speaker playback of any
multi-audio signal, such as Dolby Pro Logic or
Dolby Digital - the audio standard of DVD.
-- TruSurround became available in Fujitsu's
Dolby Digital (AC-3) audio
decoder, MB86342B. The MB86342B is Fujitsu's
first semiconductor
product with one of SRS Labs' technologies and
is specifically designed
for advanced audio/voice consumer products,
such as DVD players, stereo
receivers, HDTV sets, laser disc players and
set-top boxes.
-- Consumer electronics giant, Sony Electronics,
continued its support
and adoption of SRS Labs' audio technologies.
This quarter, several
new lines of televisions were introduced with
either SRS 3D Sound or
TruSurround, including the new High Definition
Televisions (HDTV), High
Performance FD Trinitron(R), Wega(R), and
VideoScope(R) Big Screen
lines.
SRS 3D Sound
-- Apple Computer chose SRS 3D Sound to bring
state-of-the-art audio to
their newest consumer computer - the iMac.
After launching in early
August, the iMac is proving to be a widely
popular computer showing
record sales month-after-month.
-- SRS 3D Sound is included in Epson's
multimedia LCD projector, the
PowerLite 5500C.
-- Global consumer electronics manufacturers
continue to embrace SRS 3D
Sound with implementations in products from
Hitachi, Kenwood,
Mitsubishi, Pioneer, NuReality, RCA, Samsung,
Sharp, and Sony.
FOCUS - allows for the electronic repositioning
of a sound image from any non-optimally
located speaker.
-- FOCUS technology received notice of
allowability from the US Patent
Office with a patent issuance expected later
this year.
-- FOCUS was recognized as an Innovation in
Technology by the American
Electronics Association, and received it's first
enthusiastic product
review in the September 1998 issue of Car
Stereo Review which stated,
"SRS technology (FOCUS) makes a mediocre car
installation sound more
like a good home install, and, for that matter,
more like a real music
performance." FOCUS also continues to ship in
NEC's revolutionary
Euromint home audio product and NuReality's
VFX-4200 car amplifier.
-- FOCUS chips are sampling and production
quantities are available from
SRS Labs' chip partners, NJRC (New Japan
Radio) and Mitsubishi.
TruBass - provides deep, rich bass to small
speaker systems without the need for a
subwoofer or additional extra physical
components.
-- SRS Labs completed design specifications
and is testing first samples
of a chip module, which can be implemented and
purchased by any SRS
Labs customer in the audio/video and powered
speaker market.
Additionally IC and DSP specifications have been
released for
development of monolithic solutions.
SRS Headphone - provides the spatial
enhancement of SRS 3D Sound while using
headphones.
-- An analog chip of SRS Headphone is now
available for testing and
** NOTE: This story has been truncated from
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/CONTACT: Jennifer A. Drescher, Director of
Corporate Relations of SRS Labs, Inc.,
949-442-1070, Ext. 5110,
jenniferd@srslabs.com/ /Company News On-Call:
prnewswire.com
or fax, 800-758-5804, ext. 809275/ /Web site:
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[Copyright 1998, PR Newswire] |
