SANTA ANA, Calif. — (BUSINESS WIRE) — February 22, 2011 — SRS Labs, Inc. (NASDAQ: SRSL), officially recognized as one of America’s Greatest Brands and the industry leader in surround sound, audio and voice technologies reported financial results for the fourth quarter and fiscal year ended December 31, 2010.
Revenues in the fourth quarter 2010 increased 1% to $7.1 million from $7.0 million in the same period a year ago. For the full year 2010, revenues increased 25% to a record $31.2 million from $25.0 million in 2009. The annual increase in revenue was primarily attributable to increased revenues in the home entertainment, personal telecommunications, automotive and personal computer markets.
Operating expenses in the fourth quarter 2010 increased 16% to $7.5 million from $6.4 million in the same quarter a year ago. For the full year 2010, operating expenses increased 23% to $28.1 million from $22.8 million in 2009. Investments over the past two years in key hires have paid dividends with our top line performance. Other than continuing to hire for key open or newly created positions to take advantage of market opportunities, we believe that we are staffed at an appropriate level to accommodate forecasted growth for 2011.
Net loss in the fourth quarter 2010 was $431,000 or $(0.03) per diluted share compared to net income of $473,000 or $0.03 per diluted share in the fourth quarter of 2009. For the full year 2010, net income increased 41% to $3.0 million or $0.19 per diluted share, from $2.1 million or $0.14 per diluted share in 2009.
Quarter-end cash and cash equivalents, and short and long-term investments totaled $43.1 million as of December 31, 2010, as compared to $42.8 million at the end of the prior quarter.
Management Commentary
“2010 was another milestone year for SRS as we successfully delivered upon our initial 25% growth target for the year. I am, nevertheless, disappointed for not achieving our more optimistic mid- year guidance, which raised our estimate from the initial 25% to 30% based on our momentum and the sales forecast of our key customers,” said Thomas C.K. Yuen, SRS Lab’s Chairman and CEO. “In the 2nd half of 2010, some of our customers experienced a slowdown in sales and that, in addition to some royalty reporting discrepancies, impacted our revenues in the fourth quarter. Our record results for the year, however, reflect solid execution of our strategic plans to drive top-line growth and diversify our revenue streams while successfully retaining our customer base, penetrating deeper within our key accounts, and adding new customers to our portfolio.”
“With an exciting, highly successful CES just behind us, we believe our basic IP licensing business outlook remains strong and should continue to grow organically in 2011. During more than 120 customer meetings conducted at the show, we experienced a significant level of interest in our technologies and services by both existing and prospect accounts. We also generated quite a bit of excitement among our partners, members of the press and industry experts for our vision related to the future of audio where our revolutionary Multi-Dimensional Audio concept was labeled as a game-changer and SRS referred to as a thought-leader.”
“Our expectations for 2011 remain strong as we build on the operational and financial momentum we achieved in 2010. Based on our robust pipeline of new opportunities, design wins in progress, and contracts signed, we expect revenues for fiscal 2011 to grow by 25% compared to 2010 and deliver improved profit margins.”
Conference Call
SRS Labs will hold a conference call later today (February 22, 2011) to discuss the results for the fourth quarter and year ended December 31, 2010. Chairman and CEO Thomas C.K. Yuen, CFO Ulrich Gottschling and CTO Alan Kraemer 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: 1-877-353-2262
Conference ID#: 40289846
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 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 6:00 p.m. Eastern time. Investors may also listen to the replay by dialing 1-800-642-1687 and entering conference ID#:40289846, available until March 8, 2011.
About SRS Labs, Inc.
Founded in 1993, SRS Labs is the industry leader in audio signal processing for consumer electronics across the four screens: TV; PC; Mobile Phones; and Automotive Entertainment Systems. 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, software developers, and content aggregators, SRS is recognized as the de facto standard in audio enhancement, surround sound, volume leveling, audio streaming, and voice processing technologies. SRS solutions have been included in over two billion electronic products sold worldwide including flat panel HDTVs, AV products, STBs, PCs, mobile phones, and automotive entertainment and telematics systems. For more information, visit 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, our expansion, investment and diversification plans, and our future 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, our ability to enter into new or expanded license arrangements and increase our brand awareness; the loss of any significant customer; the acceptance of our products and technologies, and the acceptance of our customer’s products that incorporate our technologies; the impact of competitive products and pricing; the impact of emerging industry standards on our technologies; our ability to control our expenses, and the general economic and business conditions that may adversely impact sales of consumer electronics products general; 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 SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
December 31,
2010 |
December 31,
2009 |
|||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 10,697,827 | $ | 27,988,164 | ||||
| Accounts receivable, net | 1,191,847 | 179,114 | ||||||
| Prepaid expenses and other current assets | 1,069,900 | 1,147,151 | ||||||
| Short-term investments | 19,033,000 | 12,963,000 | ||||||
| Total Current Assets | 31,992,574 | 42,277,429 | ||||||
| Long-term investments | 13,323,000 | 538,000 | ||||||
| Property and equipment, net | 672,220 | 599,794 | ||||||
| Intangible assets, net | 2,761,432 | 2,702,160 | ||||||
| Deferred income taxes, net | 8,597,619 | 5,631,442 | ||||||
| Total Assets | $ | 57,346,845 | $ | 51,748,825 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 516,470 | $ | 583,157 | ||||
| Accrued liabilities | 1,434,970 | 1,577,891 | ||||||
| Deferred revenue | 601,825 | 1,193,454 | ||||||
| Total Current Liabilities | 2,553,265 | 3,354,502 | ||||||
| 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; 14,807,070 and 14,563,715 shares issued and outstanding at December 31, 2010 and 2009, respectively |
14,808 |
14,565 |
||||||
| Additional paid-in capital | 68,520,878 | 65,128,337 | ||||||
| Accumulated deficit | (13,742,106 | ) | (16,748,579 | ) | ||||
| Total Stockholders’ Equity | 54,793,580 | 48,394,323 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 57,346,845 | $ | 51,748,825 | ||||
|
SRS LABS, INC. AND SUBSIDIARIES |
|||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Revenues | $ | 7,064,827 | $ | 6,974,921 | $ | 31,220,389 | $ | 24,964,577 | |||||||
| Cost of sales | 121,302 | 83,512 | 349,621 | 285,543 | |||||||||||
| Gross profit | 6,943,525 | 6,891,409 | 30,870,768 | 24,679,034 | |||||||||||
| Operating expenses (i): | |||||||||||||||
| Sales and marketing | 3,441,384 | 3,325,852 | 13,470,852 | 11,415,115 | |||||||||||
| Research and development | 2,312,623 | 1,662,063 | 8,060,246 | 5,721,195 | |||||||||||
| General and administrative | 1,728,416 | 1,439,570 | 6,526,171 | 5,656,616 | |||||||||||
| Total operating expenses | 7,482,423 | 6,427,485 | 28,057,269 | 22,792,926 | |||||||||||
| Operating income (loss) | (538,898 | ) | 463,924 | 2,813,499 | 1,886,108 | ||||||||||
| Other income, net | 65,585 | 67,985 | 245,127 | 347,528 | |||||||||||
| Income (loss) before income taxes | (473,313 | ) | 531,909 | 3,058,626 | 2,233,636 | ||||||||||
| Income taxes (benefit) | (42,275 | ) | 58,843 | 52,153 | 98,006 | ||||||||||
| Net income (loss) | $ (431,038 | ) | 473,066 | $ 3,006,473 | $ 2,135,630 | ||||||||||
| Net income (loss) per common share: | |||||||||||||||
| Basic | $ | (0.03 | ) | $ | 0.03 | $ | 0.20 | $ | 0.15 | ||||||
| Diluted | $ | (0.03 | ) | $ | 0.03 | $ | 0.19 | $ | 0.14 | ||||||
| Weighted average common shares used in the per share calculations: | |||||||||||||||
| Basic | 14,765,715 | 14,683,587 | 14,670,751 | 14,460,490 | |||||||||||
| Diluted |
14,765,715 |
15,239,624 |
15,602,051 |
14,813,372 | |||||||||||
|
___________________________________________________________________________ (i) Includes share-based compensation expense as follows: |
|||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Sales and marketing | 191,018 | 129,580 | 703,876 | 511,301 | |||||||||||
| Research and development | 135,023 | 123,696 | 551,934 | 457,464 | |||||||||||
| General and administrative | 253,531 | 272,441 | 997,920 | 987,292 | |||||||||||
| Total share-based compensation expense | 579,572 | 525,717 | 2,253,730 | 1,956,057 | |||||||||||
Contact:
SRS Labs, Inc.
Ulrich Gottschling
Chief Financial Officer
949-442-5596
Email Contact
or
Liolios
Group, Inc.
Matt Glover
Investor Relations
949-442-5596
Email Contact