DTS Reports First Quarter 2005 Financial Results

Editor's note: Profits are way up at DTS....but their DVD division is soft...doh.

AGOURA HILLS, Calif.--(BUSINESS WIRE)--May 9, 2005--DTS (Digital Theater Systems, Inc.) (Nasdaq:DTSI - News) today reported results for the first quarter ended March 31, 2005.

For the first quarter of 2005, DTS reported revenue of $22.1 million, up 41% over $15.6 million in revenue reported in the first quarter of 2004. DTS reported net income for the first quarter of 2005 of $3.6 million, or $0.19 per diluted share, which compares to net income of $3.4 million, or $0.19 per diluted share, reported in the first quarter of 2004. Included in first quarter 2005 results was a one-time charge of $2.3 million, or $0.08 per share net of tax, for in-process research and development and $328,000, or $0.01 per share net of tax, for the ongoing amortization of purchased intangibles related to the January 3, 2005 purchase of Lowry Digital Images, Inc.

"We posted good revenue overall in the first quarter, driven by the positive resolution of licensing audit and enforcement activities and encouraging growth in the emerging areas of our consumer business, including car and PC, as well as good interest in cinema hardware," commented Jon Kirchner, president and CEO of DTS. "This was partially offset by some softness in our DVD trademark licensing, consistent with recent industry trends, and a slower than expected ramp in our digital images business. In addition, we continued to commit additional resources to our license enforcement activities, and for the first time have included costs associated with our digital images business in our operating results."

"In our consumer business, we made important progress in supporting our mandatory inclusion in the next generation optical disc standards, which is expected to drive substantial growth over time. Our emerging market opportunities continue to be an important contributor to our future, as the inclusion of DTS technology becomes more prevalent in luxury automobiles, our after-market PC presence grows, and we advance our position in the broadcast market. In the quarter, we continued to make important strides in our research and development efforts which we believe will result in strong revenue contributions over the long-term."

"In our cinema business in the first quarter, we demonstrated good growth in revenue from our XD10 platform and are encouraged by customer interest in this product for pre-show and captioning functions. We continue to believe in the long-term opportunity for our cinema business and our XD10 product platform as the market moves toward digital distribution of content. We are well positioned to capitalize on opportunities as this market evolves over time," concluded Jon Kirchner.

Conference Call Information

DTS will broadcast a conference call discussing the company's first quarter results today, Monday, May 9, 2005, starting at 5:00 p.m. Eastern Time. The live webcast of the call will be available from the Investor Relations section of the company's corporate website at www.dtsonline.com. A replay of the webcast will begin two hours after the completion of the call. An audio replay of the call will also be available to investors beginning at 7:00 p.m. ET on May 9, 2005, through May 13, 2005, by dialing 800-405-2236 and entering the passcode 11028048.

About DTS

DTS (Digital Theater Systems, Inc.) (Nasdaq: DTSI - News) is a digital technology company dedicated to delivering the ultimate entertainment experience. DTS decoders are in virtually every major brand of 5.1-channel surround processors, and there are more than 300 million DTS-licensed consumer electronics products available worldwide. A pioneer in multi-channel audio, DTS technology is in home theatre, car audio, PC and game console products, as well as 5.1 Music Discs, DVD-Video, DVD-Audio and DVD-ROM software. Additionally, DTS provides technology and services for audio delivery and image restoration and enhancement to the motion picture industry. DTS audio products are featured on more than 24,000 motion picture screens worldwide. Lowry Digital Images, a wholly-owned subsidiary of DTS, is an industry leader in image restoration and enhancement. Founded in 1993, DTS is headquartered in Agoura Hills, California and has offices in the United Kingdom, Canada, Japan and China. For further information, please visit www.dtsonline.com.

DTS is a trademark of Digital Theater Systems, Inc.