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DTS Reports Fourth Quarter And Fiscal 2012 Financial Results

The DTS, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11752

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause DTS' results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "planned," "expects," "believes," "intends," "strategy," "opportunity," "anticipates" and similar words. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or financial or operating performance; any statements regarding anticipated growth in the network-connected markets and in the Blu-ray, automotive and home AV markets; statements of belief and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to, the continued decline in optical disc media consummation, our ability to penetrate the on-line and mobile content delivery market and adapt our technologies for that market, the rapidly changing and competitive nature of the digital audio, consumer electronics and entertainment markets, the Company's inclusion in or exclusion from governmental and industry standards, continued customer acceptance of the Company's technology, products, services and pricing, risks related to ownership and enforcement of intellectual property, the continued release and availability of entertainment content containing DTS audio soundtracks, success of the Company's research and development efforts, risks related to integrating acquisitions, greater than expected costs, the departure of key employees, negative trends in the general economy, continued weakness in the global financial markets and decreases in consumer confidence, a loss of one or more of our key customers or licensees, changes in domestic and international market and political conditions, and other risks and uncertainties more fully described in DTS' public filings with the Securities and Exchange Commission, including DTS' most recent forms 10-K and 10-Q, available at www.sec.gov. Readers are urged not to place undue reliance on these forward looking statements, which speak only as of the date of this press release. DTS does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.

DTS-I

     
     
DTS, INC.
     
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
     
  As of December 31, 2012 As of December 31, 2011
  (Unaudited)
ASSETS
Current assets:    
Cash and cash equivalents  $ 57,831  $ 46,944
Short-term investments  14,214  38,697
Accounts receivable, net of allowance for doubtful accounts of $679 and $251 at December 31, 2012 and 2011, respectively  6,910  5,322
Deferred income taxes  1,782  1,296
Prepaid expenses and other current assets  4,572  1,823
Income taxes receivable, net  5,196  2,591
Total current assets  90,505  96,673
Property and equipment, net   33,325  32,800
Intangible assets, net  61,400  4,549
Goodwill  51,314  1,257
Deferred income taxes  26,312  13,574
Long-term investments  5,000  6,922
Other assets  4,826  3,695
Total assets  $ 272,682  $ 159,470
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:    
Accounts payable   $ 2,771  $ 1,056
Accrued expenses  15,954  3,605
Deferred revenue  7,659  1,121
Total current liabilities  26,384  5,782
Long-term debt  30,000  — 
Deferred income taxes  17,248  — 
Other long-term liabilities  17,720  7,886
     
Stockholders' equity:    
Preferred stock -- $0.0001 par value, 5,000 shares authorized at December 31, 2012 and 2011; no shares issued and outstanding  —   — 
Common stock -- $0.0001 par value, 70,000 shares authorized at December 31, 2012 and 2011; 20,710 and 20,536 shares issued at December 31, 2012 and 2011, respectively; 18,208 and 16,536 outstanding at December 31, 2012 and 2011, respectively  3  3
Additional paid-in capital  213,787  192,819
Treasury stock, at cost - 2,502 and 4,000 shares at December 31, 2012 and 2011, respectively  (59,848)  (107,222)
Accumulated other comprehensive income  659  644
Retained earnings  26,729  59,558
Total stockholders' equity   181,330  145,802
     
Total liabilities and stockholders' equity  $ 272,682  $ 159,470
         
 
DTS, INC.
         
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
         
         
  For the Three Months Ended December 31, For the Twelve Months Ended December 31,
  2012 2011 2012 2011
  (Unaudited)
         
Revenue  $ 29,775  $ 29,012  $ 100,649  $ 96,922
Cost of revenue  1,854  217  4,347  860
Gross profit  27,921  28,795  96,302  96,062
Operating expenses:        
Selling, general and administrative  21,098  13,296  78,409  52,904
Research and development  8,859  3,780  25,774  13,539
Total operating expenses  29,957  17,076  104,183  66,443
Operating income (loss)  (2,036)  11,719  (7,881)  29,619
Interest and other income (expense), net  (285)  (11)  (352)  311
Income (loss) before provision for income taxes  (2,321)  11,708  (8,233)  29,930
Provision (benefit) for income taxes  (2,623)  4,631  7,261  11,661
Net income (loss)  $ 302  $ 7,077  $ (15,494)  $ 18,269
         
Net income (loss) per common share:      
Basic  $ 0.02  $ 0.43  $ (0.89)  $ 1.08
Diluted  $ 0.02  $ 0.42  $ (0.89)  $ 1.04
         
Weighted average shares outstanding:      
Basic  18,467  16,541  17,446  16,982
Diluted  18,697  17,004  17,446  17,575
         
 
DTS, INC.
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
         
         
  For the Three Months Ended December 31, For the Twelve Months Ended December 31,
  2012 2011 2012 2011
  (Unaudited)
Cash flows from operating activities:        
Net income (loss)  $ 302  $ 7,077  $ (15,494)  $ 18,269
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization   3,333  1,470  9,625  5,337
Stock-based compensation charges   2,958  2,527  11,316  9,283
Deferred income taxes   (6,011)  2,403  (2,826)  2,873
Tax benefits from stock-based awards   8,553  238  8,661  314
Excess tax benefits from stock-based awards   (8,567)  (245)  (8,879)  (275)
Other   441  92  822  454
Changes in operating assets and liabilities, net of business acquisitions:  
Accounts receivable   (1,050)  (1,984)  5,316  649
Prepaid expenses and other assets   (2,056)  (235)  (2,381)  (1,044)
Accounts payable, accrued expenses and other liabilities   (1,297)  (978)  5,004  (5,600)
Deferred revenue  3,642  (894)  6,032  (5,537)
Income taxes receivable   (2,754)  223  (2,405)  (492)
Net cash provided by (used in) operating activities   (2,506)  9,694  14,791  24,231
Cash flows from investing activities:        
Purchases of held-to-maturity investments  --  (4,077)  (3,450)  (40,660)
Purchases of available-for-sale investments  (4,816)  (10,641)  (46,890)  (23,529)
Maturities of held-to-maturity investments  --  18,784  20,120  74,470
Maturities of available-for-sale investments  9,442  3,800  31,534  3,800
Sales of held-to-maturity investments  --  --  9,109  --
Sales of available-for-sale investments  --  --  24,760  --
Cash paid for business acquisitions, net  --  --  (59,616)  --
Purchases of property and equipment   (1,412)  (614)  (4,225)  (3,057)
Purchases of intangible assets  (162)  (132)  (584)  (545)
Net cash provided by (used in) investing activities   3,052  7,120  (29,242)  10,479
Cash flows from financing activities:        
Proceeds from the issuance of common stock under stock-based compensation plans  565  503  1,976  4,099
Repurchases and retirement of common stock for restricted stock tax withholdings  (19)  (74)  (985)  (1,585)
Excess tax benefits from stock-based awards   8,567  245  8,879  275
Proceeds from long-term borrowings  --  --  30,000  --
Purchases of treasury stock   (8,651)  (5,489)  (14,532)  (32,299)
Net cash provided by (used in) financing activities   462  (4,815)  25,338  (29,510)
Net change in cash and cash equivalents   1,008  11,999  10,887  5,200
Cash and cash equivalents, beginning of period   56,823  34,945  46,944  41,744
Cash and cash equivalents, end of period   $ 57,831  $ 46,944  $ 57,831  $ 46,944
         
         
Non-GAAP Financial Metrics        
(Amounts in thousands, except per share amounts)        
         
The following tables show the Company's GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.
         
  For the Three Months Ended December 31, For the Twelve Months Ended December 31,
  2012 2011 2012 2011
Cost of revenue:        
GAAP cost of revenue  $ 1,854  $ 217  $ 4,347  $ 860
Amortization of intangible assets  1,751  182  4,151  731
Stock-based compensation  --  4  --  12
Non-GAAP cost of revenue  $ 103  $ 31  $ 196  $ 117
         
Selling, general and administrative:        
GAAP selling, general and administrative  $ 21,098  $ 13,296  $ 78,409  $ 52,904
Amortization of intangible assets  253  140  551  462
Stock-based compensation  2,258  2,076  8,940  7,622
Acquisition and integration related costs*  3,412  --  13,469  --
Non-GAAP selling, general and administrative  $ 15,175  $ 11,080  $ 55,449  $ 44,820
         
Research and development:        
GAAP research and development  $ 8,859  $ 3,780  $ 25,774  $ 13,539
Amortization of intangible assets  --  45  90  179
Stock-based compensation  700  447  2,376  1,649
Acquisition and integration related costs*  1,340  --  2,234  --
Non-GAAP research and development  $ 6,819  $ 3,288  $ 21,074  $ 11,711
         
Operating income (loss):        
GAAP operating income (loss)  $ (2,036)  $ 11,719  $ (7,881)  $ 29,619
Amortization of intangible assets  2,004  367  4,792  1,372
Stock-based compensation  2,958  2,527  11,316  9,283
Acquisition and integration related costs*  4,752  --  15,703  --
Non-GAAP operating income  $ 7,678  $ 14,613  $ 23,930  $ 40,274
Non-GAAP operating income as a % of revenue 26% 50% 24% 42%
         
Net income (loss):        
GAAP net income (loss)  $ 302  $ 7,077  $ (15,494)  $ 18,269
Amortization of intangible assets  2,004  367  4,792  1,372
Stock-based compensation  2,958  2,527  11,316  9,283
Acquisition and integration related costs*  4,752  --  15,703  --
Tax impact of the above items  (3,886)  (1,158)  (11,581)  (4,262)
Non-GAAP net income  $ 6,130  $ 8,813  $ 4,736  $ 24,662
         
Non-GAAP diluted income (loss) per common share  $ 0.33  $ 0.52  $ 0.27  $ 1.40
         
Weighted average diluted shares outstanding:  18,697  17,004  17,790  17,575
         
* On July 20, 2012, DTS completed its acquisition of SRS Labs, Inc. in a cash-and-stock transaction. On July 5, 2012, DTS completed its acquisition of assets from Phorus, Inc. and Phorus, LLC.
     
     
Non-GAAP Financial Targets  
     
The following tables show the Company's fiscal year 2013 GAAP guidance reconciled to non-GAAP financial targets.
     
  Fiscal Year 2013
  Low High
Operating income as a % of revenue:  
     
GAAP operating income as a % of revenue 3% 6%
Amortization of intangible assets 9 9
Stock-based compensation 9 10
Non-GAAP operating income as a % of revenue 21% 25%
     
     
Net income per diluted share:    
     
GAAP net income per diluted share  $ 0.22  $ 0.31
Amortization of intangible assets  0.65  0.70
Stock-based compensation  0.73  0.78
Tax impact of the above items  (0.55)  (0.59)
Non-GAAP net income per diluted share  $ 1.05  $ 1.20
     
Weighted average shares used to compute Non-GAAP net income per diluted share (millions)  18.5  18.5
CONTACT: Media & Investor Contacts
         Sard Verbinnen & Co
         John Christiansen/Jenny Gore
         jchristiansen@sardverb.com/jgore@sardverb.com
         (415) 618-8750

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Stock quotes in this article: DTSI 

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