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TheStreet Open House

DTS Reports Preliminary Second Quarter 2013 Financial Results

Network-Connected Business Up 100%, Driving Solid Year-Over-Year Growth

Company Delays Conference Call and Form 10-Q Filing to Finalize Accounting Related to a Royalty Recovery Matter

CALABASAS, Calif., Aug. 7, 2013 (GLOBE NEWSWIRE) -- DTS, Inc. (Nasdaq:DTSI) today announced preliminary financial results for the second quarter ended June 30, 2013. The Company also announced the delay of its earnings conference call and the expected filing of its Form 10-Q to finalize the accounting related to a royalty recovery matter not reflected in the preliminary results below. The ultimate resolution of the matter may result in additional revenue or a balance sheet-related purchase accounting adjustment pertaining to the SRS acquisition.

"DTS delivered attractive revenue growth in the second quarter, driven by strong performance in our network-connected business, and we are pleased with our results to date," said Jon Kirchner, chairman and CEO of DTS, Inc. "Due to the complexity and ambiguity of certain rules surrounding accounting for business combinations, we are still working to finalize the accounting for this royalty recovery matter. We believe it is important to determine the proper accounting and are working aggressively to resolve the matter. We will hold our conference call as soon as the matter is finalized."

 
Preliminary Quarterly Financial Comparison
  Q2 2013 Q2 2012
Revenue $27.2 million $21.8 million
Year-over-year growth rate 25% 6%
 
GAAP Net income/(loss) $(2.0) million $(755,000)
GAAP Earnings/(loss) per share* $(0.11) $(0.05)
 
Non-GAAP Operating margin 13% 26%
Non-GAAP Net income $2.1 million $3.5 million
Non-GAAP Earnings per share* $0.11 $0.21
*Earnings/(loss) per diluted share net of tax
 
Other Preliminary GAAP Results
  Q2 2013 Amount per diluted share*
Stock-based compensation $2.9 million $0.10
Amortization of intangibles $2.5 million $0.08
Acquisition and integration-related costs $47,000 $0.00
*Amount per diluted share net of tax

The GAAP and non-GAAP reconciling items for the second quarters of 2013 and 2012 can be found in the "Non-GAAP Financial Metrics" schedule attached to this press release and on the investor relations portion of the Company's website at www.DTS.com .

Use of Non-GAAP Financial Information

Included within this press release are non-GAAP financial measures that supplement the Company's Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP to exclude charges and the related income tax effect for stock-based compensation, the amortization of intangible assets, and certain acquisition and integration-related charges. In addition, the Company's GAAP tax rate is currently subject to substantial volatility caused by three-year cumulative pre-tax losses in the US, which now require the Company to record a valuation allowance against all US Federal deferred tax benefits. Management believes that the Company's inability to utilize its US deferred tax benefits is temporary, and as a result, the appropriate measure for its effective tax rate, until such time as the valuation allowance issue is resolved, is to impute a normalized 40% effective tax rate on the pretax earnings of the Company. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Operations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate DTS' financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

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